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Georgia Federal Court Addresses Court’s Personal Jurisdiction over Parent Corporate Entity

photo_356_20051102Although it’s an obvious concern, a plaintiff should always make sure that he’s both suing the proper party and filing his action in a court that has the authority to bring the selected party into court. When a plaintiff fails to assure either factor, he or she risks creating an avoidable hassle that ultimately delays recovery for his or her losses. In its recent ruling, Walden v. CSX Corporation, Inc., a Georgia federal court addressed whether to grant a defendant’s motion to dismiss in light of the fact the plaintiff appeared to make not one, but both, of the aforementioned errors.

Walden involved a train accident in Richmond County, Georgia in June 2012. On the 24th of that month, the plaintiff alleges that a train owned by the defendant, CSX Corporation, dragged him over 50 feet, resulting in injuries that required hospitalization. On the two-year anniversary of this accident, the plaintiff brought a personal injury suit against CSX, alleging negligence on the part of CSX. The case was originally filed in state court, but CSX had the case removed to federal court based on the diversity of citizenship of the parties. Following removal, CSX made a motion to dismiss, asserting various grounds for dismissal, including the court’s lack of personal jurisdiction. The plaintiff failed to respond to this motion, which strongly intimated that the plaintiff might have sued the wrong corporate entity.

In order to bring a defendant into court, the court must have personal jurisdiction over the defendant. Although this is federal court, Rule 4 of the Federal Rules of Civil Procedure provides that a federal district court sitting in diversity jurisdiction may not exercise personal jurisdiction greater than that of the state court of general jurisdiction  where the district court is located. See Fed. R. Civ. Pro. 4(k). Accordingly, federal district courts apply a two-step process to determine whether they have personal jurisdiction over a party. Diamond Crystal Brands v. Food Movers Int’l, 593 F.3d 1249, 1257-58 (11th Cir. 2010). “[T]he exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution.” Id.

In support of its motion to dismiss, CSX submitted an affidavit that noted that CSX was incorporated in Virginia and is merely a holding company that owns various subsidiaries, including CSX Transportation, which likely actually owns and operates the train that injured the plaintiff. In addition, the affidavit averred that CSX never constructed, maintained, or operated a railroad in Georgia, does not maintain offices or conduct business in Georgia, and is not licensed to conduct business in Georgia. In light of this evidence, the district court concluded that CSX had no contacts with the state of Georgia that would subject it to the exercise of personal jurisdiction under the Georgia long-arm statute. See O.C.G.A. § 9-10-91. Although unnecessary for resolution of the case, the court further noted that ownership of a subsidiary that could be subject to a court’s jurisdiction is not sufficient to justify the exercise of personal jurisdiction over the parent corporation. See e.g., Drumm Corp. v. Wright, 755 S.E.2d 850, 854 (2014) (” [If] a parent and subsidiary maintain separate and distinct corporate entities, the presence of one in a forum state may not be attributed to the other.”)

Although having to re-file this case against the proper defendant in a court that could exercise personal jurisdiction would be hassle enough, one should remember that the statute of limitation for personal injury claims in Georgia is two years. Since the plaintiff filed this case against the improper party on the two-year anniversary of the injury, the statute of limitations has likely expired, assuming the plaintiff had not already brought an action against CSX Transportation. Accordingly, one should always be certain to act promptly and perform all necessary due diligence prior to taking legal action. Indeed, the assistance of competent counsel goes a long way in simplifying this process, and someone injured as a result of a possible act of negligence should always consider finding experienced legal representation. The Atlanta negligence attorneys at the Law Office of Terrence R. Bethune have brought many negligence cases in both state and federal courts and have ample experience with the pre-litigation due diligence process. If you’ve recently been injured and are curious about the options you have, feel free to contact us for a complimentary case evaluation.

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