Remote Control: Recent Case Highlights Factors Determining Employer’s Exposure To Litigation In States Where Remote Workers Are Based
Introduction:
A recent U.S. District Court of New Jersey court decision provides additional insight on what factors may affect whether employers are subject to personal jurisdiction in unintended forums by virtue of their employment of remote workers.
The unpublished opinion of Tripp v. Ascentage Pharma Grp. Int’l, No. 22-5934 (KM) (JBC), 2023 U.S. Dist. LEXIS 147949 (D.N.J. Aug. 23, 2023) involves employment-related claims by an employee against his former employer. The employee had worked remotely in New Jersey while the company was based in Maryland. After being terminated, the employee filed suit in the United States District Court for the District of New Jersey. The company sought to dismiss the complaint for lack of personal jurisdiction, or alternatively, to transfer the case to the U.S. District Court for the District of Maryland. The Court ruled that it did not have personal jurisdiction over the defendants and transferred the case.
Understanding what personal jurisdiction is and what factors may affect a finding of personal jurisdiction will help employers understand whether hiring a remote workforce expands their risk of subjecting themselves to litigation in foreign forums.
Background on Personal Jurisdiction
Some employers may not be familiar with the concept of “personal jurisdiction.” Personal jurisdiction essentially means that the particular Court in question has the ability to control, and the power or authority to make decisions that affect, that person. This concept is what keeps parties from being sued in states that they have no relationship with. For example, a company that operates in New Jersey and has no business or other nexus to the State of California, generally cannot be sued in California. Each state has its own statutes that govern personal jurisdiction, but all are subject to the concept of due process under the Fourteenth Amendment of the United States Constitution.
In New Jersey, personal jurisdiction can be found if a defendant has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Provident Nat’l Bank v. Cal. Fed. Sav. & Loan Ass’n, 819 F.2d 434, 437 (3d Cir.1987) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945)). Personal jurisdiction can be specific or general.
General personal jurisdiction may be established when a defendant has “continuous and systematic contacts with the forum state” such that it is “essentially at home” there. Chavez v. Dole Food Co., 836 F.3d 205, 223 (3d Cir. 2016) (citation omitted).
Specific personal jurisdiction “focuses on the relationship among the defendant, the forum, and the litigation.” Walden v. Fiore, 571 U.S. 277, 283-84, 134 S. Ct. 1115, 188 L. Ed. 2d 12 (2014) (citation omitted). This “analysis looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.” Id. at 285.
The intricacies of these analyses vary depending on the nature of the claims involved in the litigation.
Notwithstanding these intricacies, understanding the basic framework of personal jurisdiction can help a business assess its risk of being subject to litigation in locations other than its places of operation. Given remote workers for many organizations, this issue may not be something that an employer had previously considered, but becomes relevant if an employer decides to utilize a remote-based workforce.
Factors Determining Whether a Company May Expose Itself to Personal Jurisdiction in a Remote Worker’s Domicile
The case of Tripp v. Ascentage Pharma Grp. Int’l, No. 22-5934 (KM) (JBC), 2023 U.S. Dist. LEXIS 147949 (D.N.J. Aug. 23, 2023) dealt with the concept of specific personal jurisdiction. In that case, the Court analyzed the facts of the relationship between the defendant, the forum (New Jersey) and the claims set forth in the litigation.
The plaintiff did not assert general personal jurisdiction over the defendant, meaning he did not assert that the defendants had continuous and systematic contacts with New Jersey. As such, the Court in that case focused on whether specific personal jurisdiction over the defendants had been established. The Court ruled that it had not.
The Court ruled that for the particular claims involved, specific personal jurisdiction could only be established if: (1) the defendants purposely availed themselves of the forum (i.e. New Jersey); (2) the claims arose out of or related to at least one of the defendants’ in-state activities; and (3) it was established that exercising personal jurisdiction comported with notions of fair play and substantial justice. Id. at 11-12.
The Court discussed that an employee working remotely from a home office (in New Jersey) does not automatically subject his employer to the jurisdiction of the employee’s home state. Id. at 12. The Court held that some affirmative action by the employer targeting the forum state is necessary to satisfy a finding of specific personal jurisdiction. Id.
In the Tripp case, the Court found that although the plaintiff lived in New Jersey, had worked in New Jersey, had maintained business files in New Jersey and paid taxes in New Jersey, he failed to establish that the employer had purposely availed itself of the New Jersey forum because the actions of the company were not particular to New Jersey and could have occurred in any state where the employee chose to work.
In making this ruling, the court distinguished the facts of this case from another DNJ case which found that employment of a remote worker subjected the employer to personal jurisdiction in New Jersey. The Court discussed that in the case of Chadwick v. St. James Smokehouse, Inc., No. 14-cv-2708, 2015 U.S. Dist. LEXIS 38840, 2015 WL 1399121 (D.J.J. Mar. 26, 2015), personal jurisdiction in New Jersey was found over an employer where the remote worker was a New Jersey resident because it had also found that the defendants in that case had ‘many contacts with New Jersey demonstrating that they have purposefully availed themselves of the privileges of doing business there.’ Tripp v. Ascentage Pharma Grp. Int’l, at 12, citing Chadwick v. St. James Smokehouse, Inc. at 5. That case discussed that the employer worked with several New Jersey businesses, that the owner of the employer had appeared in a small claims proceeding in New Jersey and that the employee conducted essential business functions and thus the employer had placed a “key piece” of their business in New Jersey.
In contrast, the Court in Tripp v. Ascentage Pharma Grp. Int’l found that the defendants did not purposefully avail themselves of the privileges of doing business in New Jersey. The Court discussed that there were no facts present to establish such a finding, such as if the defendants had owned property in New Jersey or that it had sponsored any clinical trials in New Jersey. The Court found that the mere presence of a remote worker in New Jersey is not enough, on this own, to establish personal jurisdiction in New Jersey.
Conclusion:
Utilizing a remote work force is becoming more common in today’s economy. While the decision to hire remote workers is complex, one factor for consideration is whether the company is subjecting itself to “remote” litigation as well. This inquiry is fact-specific and may depend on local law and the nature of the claims in a particular lawsuit. However, having a basic understanding of personal jurisdiction and how a remote workforce may expand a business’ exposure to litigation in an increased number of forums is one element of hiring a remote workforce that an employer should consider.
Employers that would like legal counsel to review this issue are welcomed to contact any member of the Labor & Employment group here at Brown & Connery, LLP via e-mail or call 856-854-8900. Also, please visit the Brown and Connery website at www.brownconnery.com to learn more about our legal services.
By: Janine Leicht, Associate at Brown & Connery, LLP