Suttle v. Reich Bros. Construction Co.

Background

A Mississippi resident sued over a negligence claim in the Eastern District of Louisiana. The defendants included a local partnership and its individual members who live in the Western District of Louisiana, and a Texas insurance company that had qualified to do business in Louisiana. The local defendants argued the suit was in the wrong federal district and the lower courts dismissed them, leaving the case only against the insurance company.

Reasoning

The central question was whether a foreign corporation that has qualified to do business in a State counts as a “resident” of a particular federal district in that State under the federal venue statutes. The Court reviewed longstanding decisions holding that a corporation’s legal residence for venue is generally only where it was incorporated. It explained that statutes allowing suits where a corporation “transacts business” or “is found” show Congress knows how to make a corporation amenable elsewhere, and the earlier Neirbo decision did not change the meaning of “residence.” The Court concluded the Texas insurer was not a resident of the Eastern District, and the local defendants had timely asserted their venue privilege, which they had not waived.

Real world impact

Practically, plaintiffs cannot join local co-defendants in a chosen federal district just because a foreign company has qualified to do business there. Local defendants can insist on being sued where they live unless they waive that right. The Court noted that any change to these venue rules must come from Congress, not the courts.