Supreme Court Changing Where You Can Be Sued

In three decisions over the past five years, the Supreme Court has curtailed the power of courts over out-of-state and international defendants by restricting both general personal jurisdiction and specific personal jurisdiction. In Daimler AG v. Bauman, it held that the Constitution permits general jurisdiction in a court only where a company is incorporated or has its principal place of business. The exception is a case where a corporation’s operations are “so substantial and of such a nature as to render the corporation at home in that State.” In BNSF Railway Co. v. Tyrrell it made clear that a corporation doing business in many states cannot “be deemed at home in all of them.” In Bristol-Myers Squibb Co. v. Superior Court, it held that specific jurisdiction exists only where there is a “connection between the forum and the specific claims at issue.”

In the future, defendants can expect to see plaintiffs develop new jurisdictional theories, or creative extensions of existing theories, still left open by the Supreme Court. For example, traditionally, a corporation can be sued where it has voluntarily submitted to jurisdiction. Consequently,
a forum selection clause within a contract can still create specific jurisdiction over a dispute arising from that contract.

The Supreme Court has interpreted the Constitution to favor global commerce and local litigation. Despite some resistance from various courts and plaintiffs, most lower courts are implementing this directive and limiting defendants’ exposure to suit in far-flung locales.