Now What: Recent Supreme Court Decision Opens the Door for Expanded Corporate Personal Jurisdiction
Here at Foley, we routinely represent companies, whether manufacturers, distributors, service providers, or others that are, by necessity, registered to do business in most or all of the fifty states. For years, the U.S. Supreme Court has given those companies and others like them every reason to expect lawsuits, if they come, will be filed only in a state where an incident occurred, or in the state(s) where the company was incorporated and had its principal place of business. A few weeks ago, that may have changed for the foreseeable future.
On June 27, 2023, the United States Supreme Court issued its decision in Mallory v. Norfolk Southern Railway Co. (600 U.S. ___, slip op.), finding that when defendant Norfolk Southern registered to do business in Pennsylvania, it thereby consented to jurisdiction in Pennsylvania’s courts…for any lawsuit, even one originating outside Pennsylvania.
Yes, the opinion from the 4-justice plurality has potentially broad consequences, and deserves the extra emphasis. It provides a potential new path for general personal jurisdiction for corporations, goes the opposite direction of other recent Supreme Court decisions on personal jurisdiction and is thus – particularly for any company doing business in most or all states –worthy of special attention.
The Plurality Opinion in Mallory Finds Consent (via Registration) to Constitute a Valid Source for General Jurisdiction
Mallory arose when the plaintiff, a former freight-car mechanic previously employed by defendant Norfolk Southern, developed cancer he attributed to his employment and sued for damages. Plaintiff lived in Virginia, alleged exposure to potential carcinogens only in Ohio and Virginia, and defendant was both incorporated and had its principal place of business in Virginia. So plaintiff filed his lawsuit in…Pennsylvania?
Plaintiff believed jurisdiction existed merely because Norfolk Southern had registered to do business in Pennsylvania, where a statute permits jurisdiction over corporations registered in Pennsylvania “for any cause of action that may be asserted against him, whether or not arising from acts enumerated in this section.” But the Pennsylvania Supreme Court agreed with Norfolk Southern and affirmed that the case should be dismissed for lack of personal jurisdiction under U.S. Supreme Court precedent.
At the U.S. Supreme Court, the plurality reversed the Pennsylvania Supreme Court, based on Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U. S. 93 (1917). There, the Supreme Court upheld a Missouri law requiring an out-of-state company to appoint a Missouri official for service of process and accept service on that official as valid in any suit. Here, Justice Alito provided the fifth vote, and agreed that Pennsylvania Fire controlled the outcome, but clearly had doubts that it could still be good law, as explored further below.
The Dissent Points Out This Could Neuter Much of the Court’s Recent Personal Jurisdiction Cases
The dissent criticized the majority for creating inconsistent precedent not just with the Court’s recent personal jurisdiction decisions but also with the seminal International Shoe Co. v. Washington, 326 U. S. 310 (1945) decision by allowing a third route to jurisdiction, through “consent.” Mallory, dissenting slip op. at 5, 14. This jurisdiction-by-consent was particularly offensive since it did not seem to be knowing “consent” at all, but rather “compelled submission to general jurisdiction by legislative command” that was not even explained in the registration papers companies needed to file. Id. at 5.
The dissent was clearly concerned that the plurality’s opinion would create a roadmap for more states to end run around the Supreme Court’s recent personal jurisdiction cases focused on whether a corporation is “at home” in the state where the suit is brought, in favor of forcing corporations to “consent” to general jurisdiction for any lawsuit brought in that state as a condition of doing business there. Id. at 4, 18.
Do Other States Currently Require Consent to Jurisdiction for Corporate Registration?
The Mallory plurality seemed focused on what it viewed as the “incongruous” result that an individual could be sued in any state where they are found, but that a corporation could, in certain instances, be sued only in the state(s) where it is registered and has its principal place of business. Mallory, p. 1. However, the plurality seemed to ignore that while this would still only subject an individual to suit in a single state, it could potentially subject corporations to suit in every state. And it’s no secret that some plaintiffs love to forum shop whenever possible (some of the justices clearly believed that’s what brought Mr. Mallory’s lawsuit to Pennsylvania).
While Pennsylvania is currently the only state with statutes expressly dictating that corporate registration means consent to jurisdiction for any cause of action, Minnesota, Georgia, and Puerto Rico courts have interpreted certain statutes to allow general jurisdiction by consent as well, and it may not be long before other states with active plaintiffs’ bars follow Pennsylvania’s path and enact a similar statute.
In the near term, attorneys must closely scrutinize the business registration and long-arm statutes in any relevant state, and also follow along carefully for any lobbying and legislative efforts to amend those statutes in light of Mallory. Every state handles registration and service of process slightly differently, so each state may require unique analysis, particularly if a motion to dismiss a lawsuit is needed.
Mallory also bears watching on remand. Justice Alito’s partial concurrence raised the dormant Commerce Clause as a potential alternative roadmap to dismiss the case. With at least five potential votes at the U.S. Supreme Court level to strike down the Pennsylvania statute on that basis, the case could come back before appellate courts. It remains to be seen whether other states will wait to see the ultimate result before amending their statutes, or if they’ll instead amend as quickly as possible, counting on the lengthy delay in every lawsuit for jurisdiction over thousands of lawsuits at a minimum in the interim. Either way, companies should look to retain experienced outside counsel that can forcefully advance arguments against personal jurisdiction for lawsuits without connection to the forum state.
