Today’s post comes from guest author Jon Rehm, from Rehm, Bennett & Moore.
One of the biggest and least understood developments of the current session of the Supreme Court session is how the Supreme Court has undercut the power of state courts to decide cases. This development may also impact the traditionally state law centered world of workers’ compensation.
In Bristol Meyer-Squibb v. Superior Court the Supreme Court held that non-California residents could not join a class action against Bristol Meyer-Squibb in California state court. In Tyrell v. BNSF the Supreme Court held that North Dakota residents could not sue the BNSF in Montana state court in an FELA case.
Despite Bristol-Meyer and the BNSF having a substantial number of employees and doing a substantial amount of business in California and Montana respectively, the Supreme Court held that it would violate due process to subject defendants to litigation in those states. State court litigation should be limited to states where a defendant is incorporated, where they are headquartered or where the events in the case took place..
Bristol-Meyer and Tyrell both rely on the Daimler v. Bauman case that was decided in 2014. In her dissent in Daimler, Justice Sonia Sotomayor wrote that the effect of Daimler was “to shift the risk of loss from multinational corporations to the individuals harmed by their actions.” Essentially Sotomayor believes that the rule that a corporation can be sued in any state court where they have substantial contacts has been repealed. Sotomayor was the lone dissenter in both the Tyrell and Bristol Meyers case.
The constitutional basis for limiting state court jurisdiction is the due process clause of the 14th Amendment. The use of the due process clause to weaken the ability of states to regulate corporate conduct has echoes of the so-called Lochner era where state laws that impeded on contracts were overturned unless they were based on general police powers.
So-called forum shopping gets a bad rap from tort reformers. Terms like “judicial hellhole” have coined by pro-corporate legal advocacy groups. But the ability to pick a forum to bring a legal case is inherent in a federal system like we have in the United States. Lawyers have a duty to bring cases in a forum where they think it is most favorable to their client. Corporate and management interests also engage in forum shopping. In November business interests persuaded a business-friendly federal judge in Texas to block enforcement of the so-called blacklist rule that would have prevented employers who violated workplace safety and fairness laws from receiving federal contracts.
Workers’ compensation laws were enacted during the Lochner era and were held to be constitutional because they were enacted under state police powers under the 10th Amendment. But the mere fact that workers’ compensation laws were enacted under 10th Amendment authority of the states does not mean corporate friendly federal courts can not find a way to strip states of jurisdiction over certain workers’ compensation claims. This is particularly true for workers who may be able to claim workers’ compensation benefits in multiple states.
In Magnolia Petroleum v. Hunt, the Supreme Court ruled that an employee who was injured in Texas but lived in Louisiana could not claim workers’ compensation in his home state of Louisiana because he had already accepted benefits in Texas. The court held that the Hunt could not collect benefits in Texas because of the full faith and credit clause of the U.S. Constitution.
Justice Hugo Black’s dissent in the case that pointed out that the only reason that Hunt received workers compensation benefits in Texas was signing a form in the hospital after the accident. Black also forcibly denounced the idea that Hunt was double- collecting benefits in Texas and Louisiana for two reasons. First, Louisiana offset the benefits that Hunt received in Texas. Secondly, Black stated “the aggregate of the awards from both states, if added together, would be far less than the total loss suffered by respondent. The Texas allowance scarcely amounts to a “recovery” in the sense of giving full compensation for loss, and has been described by a Texas court to be “more in the nature of a pension than a liability for breach of contract, or damages intact.”
Black’s description of the benefits available to injured workers who could claim benefits in two states is as true as it is now as it was 73 years ago when Magnolia came out.
In Magnolia, Black also drew parallels between how the due process and full faith and credit clauses could be used to protect corporate interests.
“For more than half a century the power of the states to regulate their domestic economic affairs has been narrowly restricted by judicial interpretation of the federal Constitution. The chief weapon in the arsenal of restriction, only recently falling into disrepute because of overuse, is the due process clause. The full faith and credit clause, used today to serve the same purposes, is no better suited to control the freedom of the states.”
Three years later Magnolia was distinguished by the McCartin decision. In McCartin the Supreme Court allowed an employee to collect benefits in Wisconsin who had first collected benefits in Illinois to collect benefits in both states because unlike Texas, Illinois had no laws stating accepting workers’ compensation benefits in Illinois ruled out a claimant from receiving benefits in another state.
In 1980, the Supreme Court applied McCartin in Thomas v. Washington Gas and Light to rule that an injured employee could collect benefits in Washington D.C. and Virginia.
But the decision in Thomas was far from the enthusiastic endorsement of multi-jurisdiction workers’ compensation claims voiced by Justice Black in his dissent in Magnolia. Three concurring Justices criticized McCartin but upheld the award of benefits to Thomas based on the legal doctrine of stare decisis. Two justices, including William Rehnquist, dissented ruling that Magnolia should still govern multi-jurisdictional claims. Current Chief Justice John Roberts clerked for Rehnquist and holds a great deal of respect and affection for his former boss.
Considering how eager the majority of the Supreme Court is to limit the jurisdiction of state courts, I would be very concerned if the constitutional of multi-jurisdictional workers compensation claims were reviewed by the Roberts’ court.