Chaffin et al v. BHP Billiton et al
Filing
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MEMORANDUM OPINION AND ORDER by District Judge Judith C. Herrera granting 4 Defendant BHP Billiton Limited and BHP Billiton, PLC's Motion to Dismiss for Lack of Personal Jurisdiction. BHP Billiton Limited and BHP Billiton, PLC are dismissed without prejudice. (baw)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF NEW MEXICO
KENNETH S. CHAFFIN and TIFFANY CHAFFIN,
Plaintiffs,
v.
No. Civ. 18-519 JCH/JHR
BHP BILLITON (f.k.a. BROKEN HILLS
PROPRIETARY COMPANY LIMITED and
a.k.a. BHP BILLITON LIMITED or BHP
BILLITON GROUP), BILLITON, PLC (a.k.a.
BHP BILLITON, PLC), BHP BILLITON MINE
MANAGEMENT COMPANY, BHP
BILLITON NEW MEXICO COAL, INC.,
RUDI HALGRYN, and RYAN WAGGONER,
Defendants.
MEMORANDUM OPINION AND ORDER
On July 13, 2018, Defendants BHP Billiton Limited and BHP Billiton, PLC (collectively,
“Defendants” or “BHP Parent Companies”) filed a Motion to Dismiss for Lack of Personal
Jurisdiction (ECF No. 4). The Court, having considered the motion, pleadings, briefs, evidence,
applicable law, and otherwise being fully advised, concludes that Defendants’ motion to dismiss
should be granted and Defendants BHP Billiton Limited and BHP Billiton, PLC, should be
dismissed without prejudice for lack of personal jurisdiction.
I.
BACKGROUND
Since 1994, Plaintiff Kenneth Chaffin worked as an independent contractor and then
employee at the Navajo Mine in Fruitland, New Mexico. First Am. Compl. ¶ 13, ECF No. 1-1. On
February 24, 2016, Mr. Chaffin signed a written Employment Agreement. See Employment
Agreement, ECF No. 11-1 at 13 of 13. Mr. Chaffin alleges he was terminated in retaliation for
giving written notice in March 2016 of his need to take leaves of absences regarding the
mental/emotional health of his wife, Tiffany Chaffin. See First Am. Compl. ¶¶ 15-16, ECF No. 11. Plaintiffs assert that on June 3, 2016, Mr. Chaffin’s direct supervisor, Maintenance
Superintendent Ryan Waggoner, instructed Field Supervisor John Marts to have Mr. Chaffin
remove the Out of Service tag from the left-hand overhead crane on the 7920 dragline because Mr.
Waggoner said he had verified it was ok to operate. Id. ¶ 16(d) & (f). Plaintiffs contend that
Defendants terminated him on July 29, 2016, for purportedly violating BHP’s Log out – Tag out
standards, work management processes, Charter Values, and safety concerns, for the June 3, 2016
incident, but that his termination was pretext for his use of medical leave. See id. ¶¶ 15-19.
On March 11, 2018, Plaintiffs filed suit in the First Judicial District Court in the State of
New Mexico, and subsequently amended their complaint to assert claims for violating the Family
and Medical Leave Act, 29 U.S.C. § 2601 et seq.; negligent or fraudulent misrepresentation;
common-law wrongful discharge; intentional infliction of emotional distress; interference with
contract and prospective economic advantage; and punitive damages. See Compl. & First Am.
Compl., ECF No. 1-1. The claims all stem from the termination of Mr. Chaffin’s employment. See
id. Plaintiffs sued members of what they term the “BHP Group,” a collective reference to BHP
Billiton, LLC (“BHP”); BHP Billiton, PLC (“BHP PLC”); BHP Billiton Mine Management
Company (“MMCo”); BHP New Mexico Coal Company, Inc. (“NMC”), see First Am. Compl. ¶¶
3-4, ECF No. 1-1, as well as Rudi Halgryn, an alleged managerial agent of BHP, and Ryan
Waggoner, see id. ¶ 9.
BHP is incorporated in Australia, headquartered in and doing business in Australia, while
BHP PLC is incorporated in the United Kingdom, headquartered in and doing business in the
United Kingdom. See Decl. of Jennifer Lopez ¶ 3, ECF No. 4-1; Decl. of Shawn Goeckner ¶ 3,
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ECF No. 4-2. Although they operate as a single economic entity, they are separate legal entities
with separate share listings and share registers. Lopez Decl. ¶ 3, ECF No. 4-1. Neither BHP nor
BHP PLC had any involvement in any personnel or employment decision concerning Mr. Chaffin.
Id. ¶ 7. BHP was the indirect owner of MMCo, and at all times indirectly owned all shares of stock
in MMCo, which did business only in New Mexico operating the Navajo Mine from January 1,
2014 through December 31, 2016. Goeckner Decl. ¶ 4, ECF No. 4-2. BHP also was and is the
indirect owner of all shares of stock in NMC, which was and is registered with the New Mexico
Secretary of State and did business in New Mexico. Id. ¶ 5. NMC at all relevant times directly
owned all shares of stock in MMCo, but effective January 1, 2017, NMC sold all shares of MMCo
to Navajo Transitional Energy Company. Id. ¶ 6. Neither BHP nor BHP PLC was or is registered
to do business in New Mexico, and neither did or does business in New Mexico. Id. ¶ 8.
The written Employment Agreement signed by Mr. Chaffin contains a section entitled
“Commencement of Employment & Employer” stating:
Your employer is BHP Billiton Mine Management Company (BHPB MMCo).
Generally, a reference to “Company” refers to your employer.
BHP Billiton is the ultimate parent Company of BHPB MMCo. Employment for
all three Companies is administered by a single company, which is currently BHP
Billiton New Mexico Coal, Inc.
Employment Agreement ¶ 2, ECF No. 11-1. The Employment Agreement explained, “You are
employed in a global resources company. Accordingly, you may be required to travel to other
locations including to another city or overseas in the course of your work.” Id. ¶ 4.
The Employment Agreement contained a “Termination by the Company” section, which
provided: “The Company may terminate your employment at any time, for any reason or no reason,
by giving you the period of written notice shown in Schedule 1 or payment in lieu of some or all
of the notice.” Id. ¶ 20. The Employment Agreement further stated: “The Company may
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immediately terminate your employment” when certain conditions were met. Id. According to the
“Definitions” section, “Company means the employing company specified in Schedule 1.” Id. ¶
30. Schedule 1 in turn provided under Item “Employing Company” the following “Detail”:
Generally, your employer is BHPB MMCo if you perform work only for Navajo
Mine.
BHP Billiton is the ultimate parent Company of BHPB MMCo.
The administrator of your employment is:
BHP Billiton New Mexico Coal Inc….
Id., Schedule 1, ECF No. 11-1 at 11 of 13. “Group Company” was defined as “a member of the
Group including the Company,” and “Group” meant “BHP Billiton Limited, BHP Billiton Plc,
their respective controlled entities and any entities jointly controlled by BHP Billiton Limited and
BHP Billiton Plc.” Id. ¶ 30.
Elsewhere, the Employment Agreement stated “Company policies” applied regarding
compensation, see id. ¶ 11; incentives occurred “at the Company’s discretion,” id. ¶ 12;
participation may occur “in a Company sponsored retirement plan,” id. ¶ 13; reimbursement of
expenses was subject to “the Company’s policy on expenses,” id. ¶ 15; the “Company may deduct
from any money … due to you from any Group Company any money which you owe to any Group
Company,” id. ¶ 16; “the Company” and “Company Policy” applied regarding holiday and other
leave, id. ¶ 17; and resignation required notice to “the Company,” id. ¶ 19. By signing the
Employment Agreement, Mr. Chaffin consented to undertake medical testing as required by the
Company and any Group Company; to allow monitoring, recording, and surveillance of
communications via “the Group’s information technology systems”; and to the Company and any
Group Company collecting, using, storing, and disclosing personal and health information for any
lawful purpose. See id. ¶ 7(a)-(c). Mr. Chaffin also agreed to “promote and protect the interests of
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the Group,” id. ¶ 8(e); “co-operate with the Group in complying with its obligations on health and
safety,” id. ¶ 8(h); keep Company management informed regarding “the conduct of the business
of the Group,” id. ¶ 8(i); and disclose “to the Company or Group Management any serious
misconduct or wrongdoing within the Group,” id. ¶ 8(j). The Employment Agreement prohibited
Mr. Chaffin from investing in securities of a company “similar to or in competition with the Group
or any Group Company.” Id. ¶ 10(a).
Defendants BHP and BHP PLC, the BHP Parent Companies, moved to dismiss for lack of
personal jurisdiction, arguing that they had no connection to the events alleged by Plaintiffs and
no connection to the state of New Mexico to satisfy New Mexico’s Long-Arm Statute and due
process. See Defs.’ Mot. 1, 5-10, ECF No. 4. Plaintiffs contend that this Court may exercise
jurisdiction over the BHP Parent Companies because they represented themselves as entering a
written contract to be Mr. Chaffin’s direct and joint employer. Pls.’ Resp. 1, 3, ECF No. 11.
II.
STANDARD
The personal jurisdiction requirement flows from the Due Process Clause, protecting an
individual’s liberty interest in avoiding the burdens of litigating in an unfair or unreasonable forum.
Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1210-11 (10th Cir. 2000). Federal Rule
of Civil Procedure 12(b)(2) allows a party to assert by motion the defense of lack of personal
jurisdiction. Fed. R. Civ. P. 12(b)(2). “The plaintiff bears the burden of establishing personal
jurisdiction over the defendant.” Behagen v. Amateur Basketball Ass’n of U.S.A., 744 F.2d 731,
733 (10th Cir. 1984). Where no evidentiary hearing is held, a plaintiff only needs to make a prima
facie showing that personal jurisdiction exists. Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1229
(10th Cir. 2006). The court may consider all factual pleadings, as well as affidavits and other
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evidence, but must resolve all factual disputes in the plaintiff’s favor. See id. at 1229; Behagen,
744 F.2d at 733.
III.
LEGAL ANALYSIS
To determine whether a court may exercise jurisdiction over a defendant in a federal
question case, the court must examine (1) whether the federal statute confers jurisdiction by
authorizing service of process on the defendant, and (2) whether the exercise of jurisdiction would
violate due process. See Peay, 205 F.3d at 1209. Defendants contend that the FMLA does not
provide for nationwide service of process, and Plaintiffs do not contest that assertion.
Consequently, the court must apply the law of the state in which the district court sits. See
Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (holding
that where neither federal act provided for nationwide service of process, Federal Rule of Civil
Procedure 4(k)(1)(A) commands court to apply law of state in which district court sits).
New Mexico’s long-arm statute uses a three-step test to decide if personal jurisdiction
exists: (1) the defendant’s act must be one enumerated in the long-arm statute; (2) the plaintiff’s
cause of action must arise from the act; and (3) there must be sufficient minimum contacts with
New Mexico to satisfy due process. See Tercero v. Roman Catholic Diocese of Norwich, 2002NMSC-018, ¶ 8, 132 N.M. 312. The reach of New Mexico’s long-arm statute extends personal
jurisdiction as far as constitutionally permissible. Id. ¶ 6. The constitutional standard requires that
a defendant have enough contacts with the state so that asserting jurisdiction over the defendant
will not offend traditional notions of fair play and substantial justice. See id. (quoting Int’l Shoe
Co. v. Washington, 326 U.S. 310, 320 (1945)). The defendant’s conduct and connection with the
forum state must be such that it would reasonably anticipate being haled into court there. WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
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In analyzing personal jurisdiction, each defendant’s contacts with the state must be
assessed individually. Calder v. Jones, 465 U.S. 783, 790 (1984). Corporate ownership alone is
insufficient for personal jurisdiction. Central States, Southeast and Southwest Areas Pension Fund
v. Reimer Express World Corp., 230 F.3d 934, 943 (7th Cir. 2000) (“[W]e hold that constitutional
due process requires that personal jurisdiction cannot be premised on corporate affiliation or stock
ownership alone where corporate formalities are substantially observed and the parent does not
exercise an unusually high degree of control over the subsidiary.”). See also Alto Eldorado P'ship
v. Amrep, 2005-NMCA-131, ¶ 32, 138 N.M. 607 (“As a general rule, the mere relationship of
parent corporation and subsidiary corporation is not in itself a sufficient basis for subjecting both
to the jurisdiction of the forum state, where one is a nonresident and is not otherwise present or
doing business in the forum state.”) (quoting Smith v. Halliburton Co., 118 N.M. 179, 182, 897
P.2d 1198, 1201 (Ct. App. 1994)). A corporation will be subject to jurisdiction if the acts of its
agents and employees that are made within the course and scope of the agency or employment are
enough to justify the exercise of jurisdiction. See Int’l Shoe, 326 U.S. at 316-17. Applying the test
here, the analysis of whether Defendants transacted business or committed a tortious act in New
Mexico merges with the minimum contacts analysis. See Tercero, 2002-NMSC-018, ¶ 10.
The minimum contact requirement may be satisfied in two ways – through general or
specific jurisdiction. See Trujillo v. Williams, 465 F.3d 1210, 1218 & n.7 (10th Cir. 2006). A court
may maintain general jurisdiction when the defendant’s contacts with the forum state are
continuous and systematic. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
415-16 (1984). A court may exercise specific jurisdiction if a defendant has purposefully directed
his activities at the residents of the forum and the lawsuit results from injuries arising out of or
relating to those activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). Not just
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any contact with the resident of a forum will establish minimum contacts with that forum; rather,
the court must look at whether there is an act in which the defendant purposefully availed itself of
the privileges of conducting activities within the forum state, thus invoking the benefits and
protections of the state’s laws. Trujillo, 465 F.3d at 1219 (quoting Hanson v. Denckla, 357 U.S.
235, 253 (1958)). A single act can support jurisdiction, so long as it creates a substantial connection
to the forum. Burger King, 471 U.S. at 475 n.18.
Plaintiffs argue that the BHP Parent Companies were joint employers in, and a single,
integrated enterprise in controlling Mr. Chaffin’s employment, its administration, and its
termination, and that the causes of action arise from his termination. They cite Sandoval v. City of
Boulder, 388 F.3d 1312 (10th Cir. 2004), for the joint employer test used in Title VII cases to
determine liability of two nominally separate entities who share or co-determine matters governing
the essential terms and conditions of employment. See id. at 1323. This Court is not convinced that
the joint employer test used for liability purposes supplants the test used for personal jurisdiction
and will follow the authority that treats the two inquiries separately. See, e.g., Central States,
Southeast and Southwest Areas Pension Fund, 230 F.3d at 944 (“a state or federal statute cannot
transmogrify insufficient minimum contacts into a basis for personal jurisdiction by making these
contacts elements of a cause of action, since this would violate due process”); Alto Eldorado
Partnership, 2005-NMCA-131, ¶ 25 (“An alter ego theory under substantive corporate law
principles is not a substitute for minimum contacts.”). Regardless of whether the BHP Parent
Companies are joint employers of Mr. Chaffin, the proper focus is on the acts of each of the parent
companies in the forum state. See Calder, 465 U.S. at 790. Evidence relevant to whether parent
companies are joint employers may be relevant to and help satisfy the parent company’s minimum
contacts with the forum. See Alto Eldorado Partnership, 2005-NMCA-131, ¶ 26 (“While we might
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decline to directly superimpose ill-fitting and questionably relevant principles of substantive
corporate liability law onto our constitutional jurisdictional inquiry, the relationship between a
parent and its subsidiary may be crucial in evaluating jurisdiction itself.”).
Turning to the forum contacts, Plaintiffs cite the Employment Agreement and a Payroll
Authorization Agreement Form (“Payroll Form,” ECF No. 11-2). The Payroll Form, according to
its face, “is to update the bank details for direct deposits,” and has “bhpbilliton” at the top of the
form, but is signed off as “NMC Payroll Department, BHP Billiton New Mexico Coal.” Payroll
Form, ECF No. 11-2. The Employment Agreement contains language suggesting that BHP and
BHP PLC could, as a member of the “Group Company,” authorize or demand certain actions of
Mr. Chaffin (e.g., demanding drug and alcohol testing). Moreover, the Agreement suggests that
under specific circumstances, Mr. Chaffin’s employing company was not exclusively MMCo. See
Employment Agreement, Schedule 1 (“Generally, your employer is BHPB MMCo if you perform
work only for Navajo Mine.”) (emphasis added), ECF No. 11-1 at 11 of 13.
Nevertheless, an individual’s contract with an out-of-state defendant does not, alone,
establish sufficient minimum contacts. TH Agric. & Nutrition, LLC v. Ace European Group Ltd.,
488 F.3d 1282, 1287 (10th Cir. 2007). “To determine whether a nonresident defendant has
purposefully established minimum contacts with the forum state by contracting with another party,
we therefore examine ‘prior negotiations and contemplated future consequences, along with the
terms of the contract and the parties' actual course of dealing.’” Id. at 1288 (quoting Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 479 (1985)). The Employment Agreement defined Mr.
Chaffin’s employer generally as MMCo and stated the administrator of his employment was NMC.
There are no facts indicating that either BHP or BHP PLC, through any of its employees, officers,
or directors, were involved in the negotiations of the contract or exercised any control or authority
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over Mr. Chaffin during his employment. Nor is there evidence linking BHP or BHP PLC to any
action involving Mr. Chaffin’s termination. For example, there is no allegation that an employee
or director in BHP or BHP PLC directed Mr. Chaffin’s termination or that the entities had
overlapping officers and directors with MMCo or NMC to suggest that actions by the subsidiary
companies were controlled by the BHP Parent Companies. Other than the language in the
Employment Agreement that suggests BHP or BHP PLC could exercise some degree of authority
over Mr. Chaffin’s employment duties, there is no evidence that either parent company ever did
take any action in New Mexico. Finally, the Payroll Form is not sufficient contact with New
Mexico to invoke the protections of New Mexico’s laws. Cf. Central States, Southeast and
Southwest Areas Pension Fund, 230 F.3d at 945-46 (explaining that fax cover page’s indication
that it was sent by parent company/subsidiary was insufficient to show either that corporate
formalities were not substantially observed or that parent company controlled the subsidiary to
unusually high degree to justify personal jurisdiction over parent company). Plaintiffs have
therefore failed to make a prima-facie showing that either BHP or BHP PLC has minimum contacts
with New Mexico such that exercising jurisdiction would not offend traditional notions of fair play
and substantial justice.
Nor does the evidence amount to continuous, systematic contact by BHP or BHP PLC to
invoke general personal jurisdiction. Cf. Helicopteros, 466 U.S. at 416-19 (holding that chief
executive officer’s one trip to Texas for contract-negotiation session, corporation’s accepting
checks drawn on Texas bank, and corporation’s purchasing goods from Texas were insufficient to
create general jurisdiction over foreign corporation). See also Bristol-Myers Squibb Co. v. Superior
Court of California, San Francisco County, 137 S.Ct. 1773, 1780 (2017) (defining paradigm forum
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for exercise of general jurisdiction over corporation as one in which corporation is fairly regarded
as at home).
IT IS THEREFORE ORDERED that Defendant BHP Billiton Limited and BHP Billiton,
PLC’s Motion to Dismiss for Lack of Personal Jurisdiction (ECF No. 4) is GRANTED.
Defendants BHP Billiton Limited and BHP Billiton, PLC, are dismissed without prejudice for
lack of personal jurisdiction.
____________________________________
UNITED STATES DISTRICT JUDGE
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