The Exceptional Case

The Exceptional Case

Daimler placed a corporation’s home at its place of incorporation and its principal place of business, then left a narrow door open in a footnote. The Court did “not foreclose the possibility that in an exceptional case” a corporation’s operations in some other forum “may be so substantial and of such a nature as to render the corporation at home in that State,” and it named Perkins as the example.¹ The same footnote shut the door on Daimler itself, because the company’s California activities “plainly do not approach that level.”² BNSF Railway Co. v. Tyrrell carried the qualification forward: absent exceptional circumstances, general jurisdiction exists only where the corporation is at home, meaning its place of incorporation or principal place of business.³ The rule thus has a built-in escape hatch, and the hatch is narrower than the phrase “exceptional case” suggests.

Place of incorporation and head office are the usual markers of where a corporation is centered, and most of the time marker and center coincide. Perkins is the case in which they came apart. The Japanese occupation had shut down the Philippine mining company’s mines, and Ohio became the place from which its remaining business was directed. As the Court later put it, Ohio could be considered “a surrogate for the place of incorporation or head office.”⁴ The claim had no tie to Ohio, so the only basis for the court’s power was the defendant’s own relationship with the forum, and for the duration of the war Ohio was where the company lived.

The reservation sets two requirements. The operations must be “so substantial,” which is a question of quantity, and “of such a nature,” which is a question of the role those operations play in the life of the corporation. Quantity alone cannot qualify a forum, because a large national business has large operations in many states at once. In BNSF the railroad had over 2,000 miles of track and thousands of employees in Montana, and the Court still held that it was not at home there.⁵ A retailer with dozens of stores in a state where it is neither incorporated nor headquartered shows the same pattern: the stores may give it continuous and systematic contacts, but they do not make it at home, and a state does not become an exceptional case just because it has many of the retailer’s stores.⁶

The Perkins company differed in the one respect the Basel manufacturer lacks: it had no other center. Its Philippine mines had been shut, and Ohio was where what remained of the business was directed. The nature requirement therefore asks whether the forum has become the locus of the corporation’s important decisions, as Ohio was in Perkins, and a count of employees in the forum does not answer that question.

The Court keeps the exception narrow for a reason built into the rule. If a corporation were at home wherever its operations are substantial, “at home” would become synonymous with the doing-business tests framed before specific jurisdiction evolved, and Daimler refused to allow that.⁸ General jurisdiction calls instead for an appraisal of a corporation’s activities in their entirety, nationwide and worldwide, and a corporation that operates in many places can scarcely be deemed at home in all of them. The exception therefore has to look for the center of the enterprise, since a tally of presence would revive the old test under a new name.⁹ A wider exception would also restore the plaintiff’s ability to choose among forums unconnected to the dispute, the forum-shopping incentive that general jurisdiction over unrelated contacts creates.¹⁰ And the Court has said that general jurisdiction now occupies a less dominant place than specific jurisdiction in the contemporary scheme, and that it has declined to stretch general jurisdiction beyond limits traditionally recognized.¹¹

Lower courts have taken the hint. They have been reluctant to find general jurisdiction over a corporation anywhere but its place of incorporation or principal place of business.¹² Before Daimler, the cases that allowed general jurisdiction on unrelated contacts usually involved facts fairly similar to Perkins, and any additional forum today will probably have to approach that paradigm.¹³ The Court still disclaims the view that those two places are the only possible homes, but Daimler and BNSF make clear that any other home must be something very close to them.¹⁴ In Goodyear, Daimler, and BNSF the defendants were each found not at home, so the Court has described the exception without ever applying it in a plaintiff’s favor.

A later concurrence suggests the question is not frozen. Concurring in the judgment in Ford Motor Co. v. Montana Eighth Judicial District Court, Justice Gorsuch, joined by Justice Thomas, observed that speaking of a corporation’s one or two “homes” seems almost quaint when corporations with global reach often have massive operations in several states, and he wrote that the Court has begun cautiously expanding the old rule in exceptional cases.¹⁵ The opinion came in a specific-jurisdiction case and spoke for two Justices, so it holds nothing about general jurisdiction. It shows that the exception is acknowledged and its reach unsettled, and it gives no support to the claim that large operations in several states make a corporation at home in each.

Daimler itself divided over what Perkins shows. The majority read it as a case about where the company was run: the occupation had shut the Philippine mines, and Ohio was the center of the company’s wartime activities.¹⁶ Justice Sotomayor, concurring in the judgment, stressed Perkins’s statement that the mining company’s Ohio contacts, though “continuous and systematic,” were but a “limited . . . part of its general business.” The majority replied that “limited” described the shrinkage the occupation caused, and that no fair reader of Perkins could take it to mean anything other than that Ohio was the center of the wartime activities.¹⁷ Justice Sotomayor accordingly read Goodyear’s “at home” to require the inquiry Perkins required: whether an out-of-state business has the kind of continuous and substantial in-state presence that a parallel local company would have.¹⁸

The disagreement matters for how you argue the exception. The majority’s reading fits an appraisal of the corporation’s activities in their entirety, nationwide and worldwide, because Ohio was the center of the wartime company.¹⁹ Justice Sotomayor’s reading would ask instead for a presence like a parallel local company’s. The majority’s reading is the law, so a plaintiff invoking the exception must show a Perkins-like center. Yet the concurrence itself accepted “at face value” that general jurisdiction is not limited to the place of incorporation and the principal place of business, reasoning that otherwise the Court’s analysis of the defendants’ in-state contacts in Perkins, Helicopteros, and Goodyear would have been irrelevant, since none of those defendants was sued at either place.²⁰ Both sides thus treated the exception as real, and their quarrel concerned what it takes to use it.

On an exam, a plaintiff invoking the exception earns credit only when the facts make the forum a surrogate for the head office: the ordinary home has been displaced, and the corporation’s affairs are being directed from the forum. Large payrolls, many stores, a long rail network, and a big share of revenue describe doing business, which the Court retired as a basis for all-purpose jurisdiction. A problem that supplies only those facts is answered by checking the paradigm forums first, finding that the forum is neither, and then turning to specific jurisdiction for any claim that grows out of the forum activity. The exception is the plaintiff’s last argument, and it wins only on facts that resemble the wartime Ohio office.