Harrington v. Energy West, Inc.

Harrington v. Energy West, Inc., 2015 MT 233 (Aug. 11, 2015) (Baker, J.) (5-0, aff’d & rev’d)

Issue: (1) Whether the district court correctly considered evidence outside the pleadings in deciding Energy West’s 12(b)(1) motion to dismiss; and (2) whether the district court correctly dismissed Harrington’s suit for lack of subject matter jurisdiction.

Short Answer: (1) Yes; ad (2) no.

Affirmed in part and reversed in part, and remanded for further proceedings

Facts: Energy West is a Montana corporation with its principal place of business in Montana. It is a subsidiary of Gas Natural, Inc., an Ohio corporation with corporate offices in Montana and Ohio.

In February 2011, either Energy West or Gas Natural (the parties dispute which) hired Harrington as a corporate controller. While he held this position, Harrington lived in and worked primarily in Ohio. He provided services to several corporate subsidiaries of Gas Natural, including Energy West, and made four business trips to Montana over the course of 18 months. Energy West manages payroll and benefits for employees of Gas Natural and some of its subsidiaries. Energy West issued Harrington’s paychecks, and paid Harrington’s payroll taxes, withholdings, and insurance premiums to the state of Ohio.

Harrington’s employment was terminated on October 2012. He applied for and received unemployment through the state of Ohio.

In February 2013, Harrington sued Energy West in Cascade County, alleging wrongful discharge, negligent infliction of emotional distress, and defamation. Energy West moved to dismiss for lack of subject matter jurisdiction, and Harrington opposed the motion, requested a hearing, and requested limited discovery. The district court allowed limited discovery, and held a non-evidentiary oral argument in July 2014. 

Procedural Posture & Holding: Ruling from the bench, the district court granted Energy West’s motion to dismiss, determining that Ohio law governs Harrington’s claims and the Montana court lacked subject matter jurisdiction or, alternatively, that the exercise of jurisdiction in Montana was not appropriate. Harrington appeals, and the Supreme Court affirms in part and reverses in part.

Reasoning: (1) Matters outside the pleadings can be considered on a motion to dismiss for lack of subject matter jurisdiction. The district court properly relied on affidavits and documents submitted by the parties, and did not abuse its discretion by refusing to hold an evidentiary hearing.

(2) The district court reasoned that a Montana court lacks subject matter jurisdiction over a case involving a non-resident when Montana law does not govern. Additionally, the court determined that Ohio does not offer a statutory procedure and remedy for Harrington to contest his dismissal, and after engaging in a conflict-of-laws analysis, determined that Ohio law should apply.

The parties did not have a written employment contract, so there is no basis for determining what law the parties chose to govern their relationship. Section 187 of the Restatement (Second) Conflict of Laws does not apply in the absence of a contract, written or oral. The Court therefore relies on § 28-3-102, MCA, to determine what law governs the parties’ relationship. Based on where Harrington performed the majority of his duties, and where the contract was made, the Court affirms that Ohio law governs Harrington’s contract claims.

Because Ohio lacks a statute providing Harrington a remedy, he cannot rely on a Montana statute. However, that does not mean a Montana district court lacks subject matter jurisdiction. Conflict-of-laws analysis determines what law to apply; it does not determine subject-matter jurisdiction. The district court incorrectly held that application of Ohio law required dismissal for lack of subject-matter jurisdiction.

The district court appears to rely on forum non conveniens as an alternative ground for dismissal. Because the district court did not consider facts supporting this on the record, the Court reverses the dismissal and remands for further proceedings to determine whether forum non conveniens is appropriate.