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Barrett v. Union Pacific Railroad Co.

Supreme Court of Oregon, En Banc

March 2, 2017

Christopher S. BARRETT, Plaintiff-Adverse Party,
v.
UNION PACIFIC RAILROAD COMPANY, Defendant-Relator.

          Argued and submitted November 10, 2016

         Original proceeding in mandamus CC 15CV27317 [*]

          Wendy M. Margolis, Cosgrave Vergeer Kester LLP, Portland, argued the cause and filed the briefs for relator. Also on the brief was Julie A. Smith.

          Douglas A. Rossi, Rossi Vucinovich PC, Seattle, argued the cause for adverse party. James K. Vucinovich filed the brief for adverse party. Also on the brief was Paul S. Bovarnick, Rose Senders & Bovarnick LLC, Portland.

          Lisa T. Hunt, Law Office of Lisa T. Hunt, Lake Oswego, filed the brief for amicus curiae Oregon Trial Lawyers Association.

          Lawrence M. Mann, Alper & Mann, PC, Bethesda, Maryland, filed the brief for amicus curiae Academy of Rail Labor Attorneys.

         Case Summary:

Plaintiff brought an action in Oregon against a foreign corporation to recover for injuries that he sustained in Idaho. The corporation moved to dismiss because Oregon lacks general jurisdiction over it. The trial court denied the motion, and the Supreme Court issued a peremptory writ of mandamus to the trial court.

         Held:

(1) Under Daimler AG v. Bauman, 571 US, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014), a state ordinarily can exercise general jurisdiction in one of two places: where the corporation is incorporated and where it maintains its principal place of business; (2) this case does not come within the limited exception recognized in Daimler to that rule: Oregon cannot be considered a surrogate for the corporation's state of incorporation or principal place of business; and (3) the Federal Employee Liability Act does not bring this case within the exception that Daimler recognized.

         Peremptory writ to issue.

          KISTLER, J.

         The primary question in this case is whether the Due Process Clause of the Fourteenth Amendment permits Oregon to exercise general jurisdiction over an interstate railroad for claims unrelated to the railroad's activities in this state. The trial court ruled that it could exercise general jurisdiction over the railroad and denied the railroad's motion to dismiss plaintiff's negligence action for lack of personal jurisdiction. After the railroad petitioned for a writ of mandamus, we issued an alternative writ to the trial court, which adhered to its initial ruling. The case accordingly came to us for briefing and argument. We now hold that due process does not permit Oregon courts to exercise general jurisdiction over the railroad.

         Plaintiff sustained injuries while working for Union Pacific Railroad Company "as a spiker machine operator near Minidoka, Idaho."[1] According to plaintiff's complaint, the machine that he used to set spikes was in a "state of disrepair, " which subjected him to "excessive vibration and jarring." Additionally, Union Pacific's decision to reduce "the spiker machine's customary three-[person] crew to a two-[person] crew" placed greater physical demands on plaintiff, causing or contributing to the injuries he suffered. As a result of Union Pacific's alleged negligent maintenance of the spiker machine and its decision to reduce the number of persons operating that machine, plaintiff suffered economic and noneconomic damages totaling approximately $615, 000.

         Union Pacific is a Delaware corporation with its principal place of business in Omaha, Nebraska.[2] It currently operates railroads in 23 states, including Oregon. It has been engaged in business in Oregon on an ongoing basis for a substantial period of time; one of its now-merged subsidiaries first began operating in Oregon in 1863.[3] Oregon also forms a significant part of Union Pacific's business. The company owns approximately 32, 000 miles of track in 23 states, with approximately 3.4 percent of those tracks in Oregon. In terms of the amount of track that Union Pacific owns, Oregon is thirteenth among the 23 states. Oregon is ninth in terms of employees and fourteenth among the 23 states in revenues generated.

         Plaintiff brought this action in Oregon to recover for injuries that he sustained in Idaho. In response to Union Pacific's motion to dismiss for lack of personal jurisdiction, plaintiff raised essentially two arguments. First, he argued that Oregon has general jurisdiction over Union Pacific under the Federal Employees Liability Act (FELA), 35 Stat 65, as amended, codified as 45 USC sections 51-60. Second, he argued that, apart from FELA, Oregon has general jurisdiction over Union Pacific because Union Pacific's actions in Oregon were "so substantial and of such a nature as to justify suit against [Union Pacific] on causes of actions arising from dealings entirely distinct from those activities." (Quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011).) On review, plaintiff adds a third argument. He contends that Oregon has specific jurisdiction over Union Pacific in this case. We begin with plaintiff's second argument.[4]

          I. GENERAL JURISDICTION

         ORCP 4 L authorizes Oregon courts to exercise personal jurisdiction over out-of-state defendants to the extent permitted by the state and federal constitutions. Union Pacific identifies no state constitutional limit on the trial court's authority to hear plaintiff's claims, and the question accordingly becomes whether due process permits Oregon to exercise general jurisdiction over Union Pacific. In answering that question, we focus initially on the Court's discussion of general jurisdiction in Daimler AG v. Bauman, 571 U.S. __, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014).

         The Court held in Daimler that California courts could not exercise general jurisdiction over Daimler AG, a German public stock company, to hear claims that were unrelated to that state.[5] 134 S.Ct. at 762. We discuss Daimler in greater detail below. Essentially, however, the Court explained that a corporation will be "at home" in a state and thus subject to general jurisdiction in two paradigmatic places: the corporation's place of incorporation and its principal place of business. Id. at 760. Although the Court did not foreclose the possibility that a corporation could be "at home" in other places, it identified a limited set of "exceptional" circumstances that will provide comparable contacts. Id. at 761 n 19. In doing so, the Court rejected the argument that plaintiff raises here-that a substantial and continuous business presence within a state is, in and of itself, sufficient to give rise to general jurisdiction over an out-of-state corporate defendant. Id. at 761-62.

         In reaching those conclusions, the Court began by tracing the development of specific and general jurisdiction. The Court explained that both doctrines find their roots in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The plaintiff's claim in International Shoe arose out of the defendant's contacts with the forum state, and the question in that case was whether those in-state contacts were sufficient to give the forum state personal jurisdiction over the defendant. That type of personal jurisdiction, now called specific jurisdiction, turns on "'the relationship among the defendant, the forum, and the litigation.'" Daimler, 134 S.Ct. at 754 (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977)). That is, specific jurisdiction "depends on an affiliatio[n] between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation." Goodyear, 564 U.S. at 919 (alteration in original; internal quotation marks omitted).

         International Shoe also recognized a related but separate category of personal jurisdiction, which has been labeled general jurisdiction. More specifically, International Shoe recognized that a foreign corporation's "continuous corporate operations within a state [may be] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities." 326 U.S. at 318. The Court did not have occasion in International Shoe to determine how substantial an out-of-state corporation's activities within the forum state must be before the forum could exercise general jurisdiction over the corporation. International Shoe, as well as most of the Court's subsequent personal jurisdiction cases, have focused instead on specific jurisdiction.

         After International Shoe and before Daimler, only three of the Court's cases had considered when a foreign corporation's contacts with a forum will be sufficient to permit the forum state to exercise general jurisdiction over it. One case held that a Philippine mining company that temporarily had relocated to Ohio during the Second World War was subject to general jurisdiction in Ohio. See Daimler, 134 S.Ct. at 756 (describing Perkins v. Benguet Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952)). As the Court explained in Daimler, "[g]iven the wartime circumstances, Ohio could be considered a surrogate for the [mining company's] place of incorporation or head office." Id. at 756 n 8 (internal quotation marks omitted); see also Goodyear, 564 U.S. at 928 (describing Perkins the same way).[6] Each of the other two cases concluded that the out-of-state defendant's occasional contacts with the forum state were insufficient to give that state general jurisdiction. Goodyear, 564 U.S. at 929;[7] Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).[8]

         The Court's decision in Goodyear has proved notable not so much for its holding but for its explanation of when a corporation's activities within a forum state will be sufficient to give rise to general jurisdiction. The Court explained in Goodyear that "[a] court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." 564 U.S. at 919. The Court did not define with any specificity in Goodyear when a foreign corporation will be "essentially at home" in the forum state; the contacts in that case were so few that further definition was unnecessary.[9] Rather, the task of defining when a foreign corporation will be "essentially at home" fell to Daimler.

         On that issue, there was no dispute in Daimler that the German corporation's own activities in California were insufficient to permit that state to exercise general jurisdiction over it. Rather, the plaintiffs' theory (and the Ninth Circuit's holding) turned on the proposition that Mercedes Benz USA (MBUSA), Daimler's United States subsidiary, was Daimler's agent, that MBUSA's in-state activities were attributable to Daimler, and that MBUSA was subject to general jurisdiction in California-a proposition that was undisputed in that case.

         In considering that theory, the Court questioned whether, even if MBUSA were Daimler's agent, its activities were attributable to Daimler. Id. at 759 (holding out the possibility that MBUSA's activities in California would be attributable to Daimler only if MBUSA were Daimler's alter ego). In a similar vein, the Court questioned whether an agent's contacts with the forum would be attributable to the principal for the purpose of establishing general jurisdiction even though those contacts would be attributable to the principal for the purpose of establishing specific jurisdiction. Id. Finally, the Court questioned whether California could exercise general jurisdiction over MBUSA. See id. at 758.

         The Court concluded, however, that "[e]ven if we were to assume that MBUSA is at home in California, and further to assume MBUSA's contacts are imputable to Daimler, there would still be no basis to subject Daimler to general jurisdiction in California, for Daimler's slim contacts with the state hardly render it at home there." Id. at 760. In reaching that conclusion, the Court identified two paradigmatic places where a corporation will be "at home": "the place of incorporation and principal place of business." Id. The Court did not "foreclose the possibility that in an exceptional case, see, e.g., Perkins" a corporation could be at home in some place other than its place of incorporation and its principal place of business. Id. at 761 n 19. However, the Court rejected the plaintiffs' argument that a corporation will be at home "in every State in which a corporation engages in a substantial, continuous, and systematic course of business"-an argument that the Court described as "unacceptably grasping." Id. at 761 (internal quotation marks omitted).[10]

         The Court explained why MBUSA's activities in California-even if they were imputed to Daimler and even if they were sufficient to give rise to general jurisdiction over MBUSA-were not sufficient to establish general jurisdiction over Daimler:

"[T]he general jurisdiction inquiry does not 'focu[s] solely on the magnitude of the defendant's in-state contacts.' * * * General jurisdiction instead calls for an appraisal of a corporation's activities in their entirety, nationwide and worldwide. A corporation that operates in many places can scarcely be deemed at home in all of them. Otherwise, 'at home' would be synonymous with 'doing business' tests framed before specific jurisdiction evolved in the United States. *** Nothing in International Shoe and its progeny suggests that 'a particular quantum of local activity' should give a State authority over a 'far larger quantum of . . . activity' having no connection to any in-state activity."

Id. at 762 n 20 (citation omitted; bracket in original). The Court reasoned that, if MBUSA's California activities gave that state general jurisdiction over Daimler, then every other state in which MBUSA's sales were sizeable could also assert general jurisdiction over Daimler-a result that the Court rejected as an "exorbitant exercis[e] of all purpose jurisdiction." Id. at 761.

         Given Daimler, we conclude that Oregon may not exercise general jurisdiction over Union Pacific. There is no dispute that Union Pacific has engaged in a "substantial, continuous, and systematic course of business" in Oregon. However, Union Pacific's activities in Oregon, while substantial, are only a small part of its larger business activities in 23 states. To paraphrase the Court's reasoning in Daimler, if Oregon can exercise general jurisdiction over Union Pacific because that company's activities in this state are substantial and continuous, then every state in which Union Pacific has engaged in similar activities can assert general jurisdiction over it, and the Court was clear that a rule of decision that results in multiple jurisdictions simultaneously asserting general jurisdiction over an out-of-state defendant is at odds with the Due Process Clause.[11]

         Plaintiff, however, advances three interrelated reasons why Daimler does not foreclose Oregon from exercising general jurisdiction over Union Pacific. He contends initially that the touchstone of International Shoe is "fairness" and that there is nothing unfair in subjecting Union Pacific to general jurisdiction in a state, such as Oregon, where it has a substantial and continuous business presence. Second, and perhaps in support of the first point, plaintiff notes that Union Pacific employs 1, 700 persons in Oregon, has an annual Oregon payroll of $144.6 million, owns and operates almost 1, 100 miles of track throughout the state, and generates over $645 million annually in revenue from its Oregon operations. Finally, plaintiff notes that this case is factually distinguishable from Daimler. It does not require attributing the activities of an in-state agent to a foreign corporation to hear a claim that arose in another country, as in Daimler. ...


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