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Over the past several decades, the venue laws of the State of South Carolina have been interpreted broadly. Accusations arose that plaintiffs, both residents and non-residents of the state, were able to selectively file claims in counties based upon a county’s plaintiff-friendly reputation, such as Hampton County. Hampton County has a reputation of being so favorable to plaintiffs that companies such as Wal-Mart recently sold the only property it owned in the county to avoid being subject to suit there. On February 2, 2005, however, amid debate on a statutory change that sought to correct the perception that forum shopping was available in South Carolina, the South Carolina Supreme Court took the first step toward a narrower interpretation of even the existing statute.1

In Whaley v. CSX Transportation, Inc., Op. No. 25953 (Feb. 2, 2005, S.C.), the plaintiff suffered illness or injury while working for CSX Transportation, Inc. (“CSX”). Mr. Whaley lived and worked out of an area in the upper portion of the state and operated a train route from Greenwood to Laurens. It was while operating on this route that Mr. Whaley became disoriented and began suffering a number of symptoms of illness. He has since that time been limited in his physical activities. Whaley filed a complaint against CSX in Hampton County, South Carolina. Despite the plaintiff’s residence in another county some distance from Hampton and despite the fact that the plaintiff had suffered the injury/illness in this distant county, Whaley chose Hampton County as the venue for his suit. CSX moved for a change of venue, which was denied by the trial court. Ultimately, the Hampton County jury awarded Whaley a verdict in the amount of $1,000,000. CSX filed post-trial motions on a number of issues, including venue. These motions were denied. CSX appealed.

The trial court relied on prior South Carolina Supreme Court cases interpreting what the venue statute meant when it required suit to be filed against a foreign corporation, such as CSX, in the county in which it resides.

The earliest decisions interpreting the venue statute’s residency requirement determined that foreign corporations resided in any county in which they had an office and agent for the transaction of business. However, in 1941, the state’s supreme court reevaluated its position on venue for domestic corporations and broadened the definition of venue for those companies to include any county where the corporation owns property and transacts business. It based this expansion of venue not on the venue statute but rather on a statute that addressed service of process on such domestic corporations. Six years later the court did not apply this expansion to foreign corporations, but in 1964 the statute concerning service of process and jurisdiction upon which the court had relied in expanding venue appropriate for suits against domestic corporations was amended to include provision for service of process and jurisdiction as to foreign corporations. Now that the service statute included both types of corporations the court was prepared to apply the same expansive understanding of venue to both foreign and domestic corporations and did so in Lott v. Claussens, Inc., 251 S.C. 478, 163 S.E.2d 615 (1968). The court affirmed this interpretation again in 1980 in the cases that have since been relied upon by courts such as the trial court in the Whaley case to permit cases against corporate defendants in any county in which they owned property and transacted business regardless whether the corporation maintained an office or agent in that county. In re Asbestosis Cases, 274 S.C. 421, 266 S.E.2d 773 (1980).

Soon after the In re Asbestosis Cases decision, however, the legislature amended the service statute, omitting the phrase “own property and transact business” from that provision. In addition, the revised version of this statute again dealt only with domestic corporations, the provision for service on a foreign corporation being moved to an entirely different section of the South Carolina Code. Though the statutory language on which the “owns property and transacts business” test relied no longer existed, courts continued to apply this test to determine venue issues. The South Carolina Supreme Court put an end to that test.

In doing so the South Carolina Supreme Court first concluded that the test was improperly created by the court in the first place, having relied on a statute that addressed a completely different concept – service of process and jurisdiction. The court observed that a court may have personal jurisdiction over a party without venue being proper in that court. The court went on to explain that even if at its creation the “owns property and transacts business” test had been proper, statutory changes to the provision upon which it was based necessitated its abolishment. Thus, finally, after decades of alleged forum shopping in the state, venue is only proper over a corporate defendant where that defendant resides; and such defendants reside only where (1) it maintains its principal place of business or (2) it maintains an office and agent for the transaction of business.

Prior to this recent decision, it was believed that corporate defendants, most notably CSX, which had railroad tracks that ran through Hampton County and had thus been deemed to own property and transact business in that forum, could be subject to suit in counties such as Hampton regardless of whether the accident or parties had any real connection with that location. The recent decision of the South Carolina Supreme Court has made venue law interpretation significantly more rigorous in that State.

 

Endnotes

1 A number of tort reform measures, to include changes to the venue statute, are expected to be passed by the South Carolina General Assembly this session.

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