California Restricts Principles of “General” Personal Jurisdiction

In BNSF Railway Company v. Superior Court (Kralovetz) (Filed 3/27/2015, No. B260798), the California Court of Appeal, Second District, held a Delaware railroad corporation, with its principal place of business in Texas, was not subject to “general” personal jurisdiction in California, despite California housing 8.1% of the corporation’s total workforce, accounting for 6% of the corporation’s revenue, and containing just under 5% of its total track mileage.

Plaintiff, Vicki Kralovetz, filed suit in California Superior Court against defendant, BNSF Railway Company (“BNSF”), and others, for wrongful death. Plaintiff contended her husband was exposed to asbestos products manufactured by BNSF in Kansas while working at a dismantling facility owned by BNSF’s predecessor in interest. Plaintiff claimed the exposure caused her husband to contract mesothelioma, which resulted in his death.

BNSF specially appeared and moved to quash the complaint for lack of personal jurisdiction. The trial court denied the motion, concluding BNSF “physically conducts continuous and systematic business in California” by owning 1,149 miles of railroad track in the state, employing 3,520 people in the state, and by generating 6% of its overall revenue there. The trial court specifically distinguished the United States Supreme Court decisions in Daimler AG v. Bauman (2014) 134 S.Ct. 746 (“Daimler”) and Goodyear Dunlop Tires Operations, S.A. v. Brown (2011) 131 S.Ct. 2846 (“Goodyear”), noting general personal jurisdiction in those cases was not appropriate because the contacts with the forum state were based on conduct of subsidiaries of the defendants. According to the trial court, BNSF’s contacts were direct (not through subsidiaries) and of a sufficient nature to conclude it was “essentially at home” in California.

BNSF appealed and the Second District Court of Appeal reversed. The Court of Appeal began its analysis by noting both parties agreed that the only potential basis for personal jurisdiction was under principles of “general jurisdiction.” The Court reasoned that Daimler and Goodyear limited the application of general jurisdiction by framing the issue as whether the corporation’s “affiliations with the State are so continuous and systematic as to render it essentially at home in the forum state.” Citing to Daimler, the Court noted “[g]eneral 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….”

The Court held that despite having 6% of its revenue generated by California activities, over three thousand employees in the state, and owning over one thousand miles of railroad track, BNSF could not properly be considered “essentially at home” in California. The Court thus found that upon appraisal of the corporation’s activities in their entirety, the business BNSF transacted in California “constitutes a relatively small portion of its overall operations” negating a finding of general jurisdiction over BNSF.

This case is important as it signifies a constriction of “general” personal jurisdiction principles and provides context for the “essentially at home” language used by the U.S. Supreme Court in Daimler and Goodyear when analyzing general personal jurisdiction. Despite BNSF having a large California operation, the Court of Appeal focused instead on the size of such operations in relation to its nationwide activities, which it found relatively small in comparison. This decision is very favorable to nationwide corporations, allowing them to limit the possible forums in which they must litigate when “specific” personal jurisdiction cannot otherwise be established.

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March 31, 2015