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Whaley v. CSX Transportation, Inc.

Supreme Court of South Carolina
2005 S.C. LEXIS 38, 609 S.E.2d 286, 362 S.C. 456 (2005)
ELI5:

Rule of Law:

For purposes of determining venue, a corporation 'resides' only in a county where it either maintains its principal place of business or maintains an office and an agent for the transaction of business. The prior test, which allowed venue in any county where a corporation owned property and transacted business, is no longer valid.


Facts:

  • Danny Whaley was employed by CSX Transportation, Inc. (CSX) as a locomotive engineer.
  • On May 24, 2000, while Whaley was operating a locomotive, the cab became excessively hot.
  • Due to the heat, Whaley became disoriented, experienced nausea and cramping, and noticed he had stopped sweating.
  • Whaley called 911 and was taken to an emergency room, where he was diagnosed with heat exhaustion and dehydration.
  • After the incident, Whaley developed an inability to perspire upon exertion, which permanently prevented him from returning to work as a locomotive engineer.
  • CSX is a Virginia corporation with its principal place of business in Florida.
  • CSX owned railroad tracks and conducted business in Hampton County, South Carolina, but did not maintain an office or an agent for the transaction of business there.

Procedural Posture:

  • Danny Whaley filed a complaint against CSX in the Hampton County Court of Common Pleas (a trial court), asserting claims under the Federal Employer’s Liability Act (FELA) and the Locomotive Inspection Act (LIA).
  • CSX filed a motion to transfer venue to Greenwood County, arguing it did not 'reside' in Hampton County.
  • The trial court denied CSX’s motion to transfer venue.
  • The case proceeded to a jury trial in Hampton County, which returned a verdict for Whaley in the amount of $1,000,000.
  • The trial court denied CSX's post-trial motions, including a motion for Judgment Notwithstanding the Verdict (JNOV).
  • CSX, as the appellant, appealed the judgment and the denial of its motions to the Supreme Court of South Carolina.

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Issue:

Does a corporation 'reside' in a county for venue purposes under South Carolina law simply because it owns property and transacts business there, even if it does not have its principal place of business or an office and agent in that county?


Opinions:

Majority - Chief Justice Toal

No. A corporation does not reside in a county for venue purposes merely because it owns property and transacts business there. The court held that for venue to be proper, a corporation must either have its principal place of business in the county or maintain an office and agent for the transaction of business there. The court explicitly abolished the 'owns property and transacts business' test, explaining it was improperly created by conflating the distinct legal concepts of venue and personal jurisdiction from separate statutes. The statutory language that formed the basis for this test was removed by the legislature, eliminating any remaining support for it. Because CSX had neither its principal place of business nor an office and agent in Hampton County, venue was improper.


Concurring - Justice Pleicones

No. The author agrees with the majority that venue in Hampton County was improper because CSX did not reside there under the correct statutory test. However, the author would not have reached the secondary venue issue regarding convenience of the witnesses. The author also agrees with the disposition of the JNOV motions but would not have reached the preemption argument, as it was unnecessary after resolving the LIA claim on other grounds. The author concurs in the decision to remand the FELA claim for a new trial in the proper venue.



Analysis:

This decision significantly narrows the definition of corporate residency for venue purposes in South Carolina, providing more predictability for corporate defendants. By explicitly overturning the 'owns property and transacts business' test, the court curtailed the practice of forum shopping, where plaintiffs could sue corporations in nearly any county in which they conducted minimal business. The ruling mandates that lawsuits against corporations be filed in counties with a substantial connection, such as a principal place of business or a physical office with an agent. This change strengthens the defendant's right to be tried in a county of residence and limits litigation in venues chosen solely for a plaintiff's strategic advantage.

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