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Royal v. Missouri & Northern Arkansas Railroad Co., Inc.

United States District Court, W.D. Arkansas, Texarkana Division

August 17, 2016

SHAWN ROYAL and REGINA ROYAL PLAINTIFFS
v.
MISSOURI & NORTHERN ARKANSAS RAILROAD COMPANY, INC.; RAILAMERICA, INC.; and GENESEE & WYOMING, INC. DEFENDANTS

          MEMORANDUM OPINION

          Susan O. Hickey, United States District Judge.

         Before the Court are six motions for summary judgment filed by Defendants Missouri & Northern Arkansas Railroad Company, Inc. (“MNA”); RailAmerica, Inc. (“RA”); and Genessee & Wyoming, Inc. (“GWI”). (ECF Nos. 23, 29, 35, & 38). Plaintiffs Shawn Royal and Regina Royal[1]have filed responses to each of Defendants’ motions. (ECF Nos. 55, 59, 62, & 65). Defendants have filed replies. (ECF Nos. 73, 75, 77, & 82). The Court finds these matters ripe for its consideration.

         In their motions for summary judgment, Defendants assert that (1) Separate Defendants RA and GWI are entitled to summary judgement because Plaintiffs cannot establish that they are subject to personal jurisdiction in Arkansas and the record fails to support Plaintiffs’ negligence claims against them (ECF No. 23); (2) Plaintiffs’ FELA claims fail because Royal is not an employee of a railroad (ECF No. 29); (3) Defendants owed no duty of care to Royal (ECF No. 35); and (4) Defendants are entitled to summary judgment on certain FELA claims, negligence claims, and damages claims (ECF No. 38).

         For the reasons discussed herein, the Court finds that Summary Judgment should be granted in favor of Defendants on all of Plaintiffs’ claims. Because the Court finds that summary judgment should be granted, it is unnecessary for the Court to consider Defendants additional motions for summary judgment regarding preemption (ECF No. 26) and causation (ECF No. 32).

         I. BACKGROUND

         This case involves a number of different entities, and the relationships of those entities to one another are of importance in analyzing Defendants’ summary judgment arguments. The Plaintiffs are Shawn Royal and his wife, Regina Royal. Shawn Royal is an employee of North American Railway Services (“NARS”) which performs work on railroads. NARS entered into a contractual agreement with RailAmerica (“RA”) to do work on one of RA’s railroad’s, Missouri and Northern Arkansas (“MNA”). In 2012, Genesee & Wyominc, Inc. (“GWI”) acquired RA through a stock-purchase agreement.

         Plaintiffs allege that, on or about September 25, 2012, Plaintiff Shawn Royal was operating a ballast regulator along MNA’s tracks when the machine suddenly stopped and he was thrown into the windshield and then off of the machine. The purpose of a ballast regulator on a railroad is to pick up ballast[2] and move it onto the rails. Plaintiff asserts that the accident occurred because his machine pulled a large piece of rock, called rip rap, onto the rails and then ran into the rip rap. In their Complaint, Plaintiffs allege that Royal was injured as a result of improper track surfacing, improper ballast, rip rap, obstruction of safe passage of track machinery, and conditions that violate the Federal Railroad Safety Act regulations relating to track safety standards. Plaintiffs seeks relief pursuant to the Federal Employers’ Liability Act (“FELA”) and state law negligence for damages incurred from the accident.

         II. STANDARD

         A motion for summary judgment will be granted if the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). To establish that a genuine issue of material fact exists, the nonmoving party must show that (1) there is a factual dispute, (2) the disputed fact is material to the outcome of the case, and (3) the dispute is genuine. RSBI Aerospace, Inc. v. Affiliated FM Ins. Co., 49 F.3d 339, 401 (8th Cir. 1995). A dispute is genuine only if a reasonable jury could return a verdict for either party. Id.; Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); see also McLaughlin v. Esselte Pendaflex Corp., 50 F.3d 507, 510 (8th Cir. 1995).

         III. RAILAMERICA AND GENESEE & WYOMING, INC.

         A. JURISDICTION

         Separate Defendants RA and GWI assert that they are entitled to summary judgment because Plaintiffs cannot establish that RA and GWI are subject to personal jurisdiction in the state of Arkansas. Alternatively, they assert that the record fails to support Plaintiffs’ negligence claims against them. Plaintiffs respond that Defendants have ignored corporate formalities and acted as alter egos of one another, and, thus, the exercise of personal jurisdiction over RA and GWI does not offend due process.

         The Eighth Circuit has not decided whether the defense of lack of personal jurisdiction may be raised in a summary judgment motion or whether, by its nature, it must be raised in a motion to dismiss. Pope v. Elabo GmbH, 588 F.Supp.2d 1008, 1012 (D. Minn. 2008). Other courts have found that a motion raising the defense of lack of personal jurisdiction is necessarily a motion to dismiss under Rule 12(b)(2), and not a motion for summary judgment under Rule 56. See, e.g., Robinson v. W. NIS Enter. Fund, No. C97-41, 1999 WL 33656834 (N.D. Iowa Mar. 31, 1999). Treating the motion as a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction is necessary because “[i]f the court has no jurisdiction, it has no power to enter a judgment on the merits and [instead] must dismiss the action.” 10A Wright, Miller & Kane, Civil 3d § 2713, at 239. Accordingly, the Court will treat this summary judgment motion as a motion to dismiss under Rule 12(b)(2).

         However, where the district court considers evidence outside the pleadings in ruling on a Rule 12(b)(2) motion, the standards of Rule 56 apply. Radaszewski by Radaszewski v. Telecom Corp., 981 F.2d 305, 309-10 (8th Cir. 1992), cert. denied, 508 U.S. 908 (1993). Consequently, a motion to dismiss for lack of personal jurisdiction which involves evidence outside the pleadings may be granted only if the record, viewed in the light most favorable to the non-moving party, does not raise any genuine issue of fact material to the question of personal jurisdiction over the moving party. Id.

         RA and GWI argue that dismissal is appropriate because they do not have sufficient minimum contacts with the state of Arkansas to fairly subject them to personal jurisdiction, and there is no basis in the record for piercing MNA’s corporate veil under the alter-ego approach to establish personal jurisdiction. Plaintiffs assert that RA wholly owns MNA, a railroad operating in Arkansas of which RA is in active and direct control. Plaintiffs assert that the Master Service Agreement between Royal’s employer, NARS, and RA demonstrates that RA maintained direct control over the performance of NARS and its employees on MNA’s tracks and thus RA is subject to personal jurisdiction in Arkansas. Plaintiffs assert that the relationship between RA and GWI raises a fact issue with respect to the propriety of the Court’s exercise of personal jurisdiction over GWI.

         “When personal jurisdiction is challenged by a defendant, the plaintiff bears the burden to show that jurisdiction exists.” Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 820 (8th Cir. 2014). A federal court sitting in diversity can exercise personal jurisdiction over a defendant only if doing so comports with both the long-arm statute of the state in which the federal court is located and the Due Process Clause of the Fourteenth Amendment. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 463 (1985); Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 561 (8th Cir. 2003). “Arkansas’s long-arm statute provides for jurisdiction over persons and claims to the maximum extent permitted by constitutional due process.” Pangaea, Inc. v. Flying Burrito LLC, 647 F.3d 741, 745 (8th Cir. 2011) (citing Ark. Code. Ann. § 16-4-101).

         Exercising jurisdiction over a defendant is constitutionally permissible if the defendant has “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457 (1940)). The Eighth Circuit has established a five-factor test to determine the sufficiency of a nonresident defendant’s contacts with the forum state. Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1073 (8th Cir. 2004). The five factors are: 1) the nature and quality of contacts with the forum state; 2) the quantity of the contacts; 3) the relation of the cause of action to the contacts; 4) the interest of the forum state in providing a forum for its residents; and 5) convenience of the parties. Id. at 1073-74 (quoting Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996)). The Court should give significant weight to the first three factors. Id. at 1074. A nonresident corporation’s “affiliations with the State [must be] so continuous and systematic as to render [it] essentially at home in the forum state.” Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014) (internal quotations omitted). The Supreme Court has said that it is only in an exceptional case when a corporation’s operations in a forum other than its formal place of incorporation or principal place of business may be so substantial as to render the corporation at home in that state. Daimler AG, 134 S.Ct. at 761 n.19.

         For a defendant nonresident parent corporation, personal jurisdiction may also be based on the activities of the nonresident corporation’s in-state subsidiary, but only if the parent “so controlled and dominated the affairs of the subsidiary that the latter’s corporate existence was disregarded so as to cause the residential corporation to act as the nonresidential corporate Defendant’s alter ego.” Epps v. Stewart Information Servs. Corp., 327 F.3d 642, 648-49 (8th Cir. 2003). Mere ownership of a resident company is insufficient to subject the parent to jurisdiction. Id. at 650. Thus, Plaintiffs must be able to pierce the corporate veil under Arkansas law to establish jurisdiction in this way. Id. at 649.

         In Arkansas, the doctrine of piercing the corporate veil is applied when the facts warrant its application to prevent injustice. Humphries v. Bray, 611 S.W.2d 791, 793 (Ark. App. 1981) (citing Aetna Casualty and Surety Company v. Stover, 327 F.2d 288 (8th Cir. 1964)). Piercing the fiction of a corporate entity should be applied with great caution. Banks v. Jones, 390 S.W.2d 108, 111 (Ark. 1965). It is only when the privilege of transacting business in corporate form has been illegally abused to the injury of a third person that the corporate entities should be disregarded. Rounds & Porter Lumber Co. v. Burns, 225 S.W.2d 1, 3 (Ark. 1949).

         RA is a Delaware corporation with its principal place of business in Jacksonville, Florida. RA is not authorized by the Secretary of State to do business in Arkansas. RA did not own any property in Arkansas and did not have employees in Arkansas. RA and MNA were controlled and operated by separate and distinct boards of directors and employed separate personnel.

         GWI acquired RA in 2012. GWI is a Delaware corporation with its principal place of business in Darien, Connecticut. GWI also is not authorized by the Secretary of State to do business in Arkansas, does not own any property in Arkansas, and does not have any employees in Arkansas. Since GWI’s acquisition of RA, GWI and MNA ...


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