Facts
- Mary Scanapico, a New York resident, was traveling by train from Florida to New York.
- She bought her ticket in Florida.
- While she was a passenger, a suitcase fell from an overhead rack and injured her.
- The injury occurred in Virginia, on track owned by the Richmond, Fredericksburg & Potomac Railroad Company (RF&P).
- At the time of the injury, the train was being operated by an RF&P crew.
- RF&P’s own railroad line ran between Richmond, Virginia and Washington, D.C.
- For many years before the accident, through trains running between New York and Florida regularly traveled over RF&P’s Washington–Richmond segment, with RF&P crews operating that portion.
- Tickets for the New York–Florida route were regularly sold in New York and heavily advertised in New York, and RF&P received revenue through joint tariff arrangements for transportation that included travel over its line.
- RF&P’s New York-related activities included freight solicitation in New York by two employees (including one who resided in New York), the issuance in New York (by connecting railroads) of through tickets and through bills of lading covering transportation partly over RF&P’s line, and the daily presence of RF&P freight cars in New York as part of interstate trains operated by other railroads.
- Scanapico sued RF&P in federal court in the Eastern District of New York, and RF&P moved to quash service and dismiss for lack of personal jurisdiction and as an undue burden on interstate commerce.
Issues
- Whether RF&P’s New York activities were sufficient under New York’s “doing business” standard (CPLR 301) and the Due Process Clause to permit a New York federal court to exercise personal jurisdiction over RF&P for an injury that occurred in Virginia.
- Whether exercising jurisdiction over RF&P in New York, on these facts, imposed an unconstitutional burden on interstate commerce under the Commerce Clause.
Decision
- The district court denied RF&P’s motion to quash service and dismiss, and permitted an interlocutory appeal under 28 U.S.C. § 1292(b).
- A divided Second Circuit panel affirmed the district court’s order.
- On rehearing en banc, the Second Circuit sustained the exercise of personal jurisdiction over RF&P based on its continuing business activities connected to New York.
- The court also rejected RF&P’s Commerce Clause objection and allowed the case to proceed in the Eastern District of New York.
Legal Principles
- A foreign corporation may be subject to general personal jurisdiction in New York under CPLR 301 when its in-state activities, considered together, show continuous and substantial business presence in the state.
- In evaluating “doing business,” courts may consider more than direct in-state operations, including sustained revenue-producing participation in the forum market through interline arrangements (such as through ticketing and through bills of lading), ongoing in-state solicitation tied to the defendant’s commercial interests, and other regular contacts reflecting a stable business connection with the forum.
- Due process permits jurisdiction when the defendant has sufficient contacts with the forum and it is fair, in light of those contacts and the nature of the defendant’s activities, to require the defendant to defend there even if the injury occurred elsewhere.
- The Commerce Clause does not bar jurisdiction merely because the defendant participates in interstate transportation; the question is whether the forum’s assertion of jurisdiction, given the defendant’s forum contacts, places an excessive burden on interstate commerce.
Conclusion
The Second Circuit (en banc) held that New York could exercise personal jurisdiction over RF&P because RF&P’s ongoing New York business activities—freight solicitation, revenue-sharing through tickets and bills of lading issued in New York, and regular presence of its freight cars in the state—amounted to doing business in New York and satisfied due process, and because requiring RF&P to defend the suit in New York did not impose an unconstitutional burden on interstate commerce.