State Jurisdictional Consent Laws are Constitutional
In Mallory v. Norfolk Southern Railway Co.,1 (“Mallory”), the United States Supreme Court ruled that a Pennsylvania law requiring out-of-state companies registering to do business in Pennsylvania to consent to jurisdiction in Pennsylvania courts on “any cause of action” against them is constitutional. Specifically, the Court found that the law comports with the Due Process Clause for the reasons articulated in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917). In other words, the Court in this 5-4 decision held that regardless of the location of or accrual of the facts giving rise to the cause of action, a company registered to do business in a state with a statutory scheme specifying that the company consents to jurisdiction by registering to do business there, has waived any jurisdictional defense. This determination is made without the need for a traditional general jurisdiction analysis examining factors including sufficient contacts with the state, and whether the corporate defendant is “at home” in the state.
Plaintiff Robert Mallory worked for Norfolk Southern for 20 years in Ohio and Virginia, where he was responsible for spraying boxcar pipes with asbestos, handling chemicals in the paint shop, and demolishing car interiors allegedly containing carcinogens. After leaving Norfolk Southern, he moved to Pennsylvania and then returned to Virginia. He later developed cancer and filed suit in Pennsylvania against Norfolk Southern under the Federal Employee’s Liability Act, 45 U.S.C. §§ 51-60, (“FELA”) which allows railroad employees to recover for damages for their employer’s negligence. Mr. Mallory lived in Virginia and claimed chemical exposures in Virginia and Ohio, but had no claim for exposure in Pennsylvania, as he never performed his job there, and alleged no connection to Pennsylvania.
Court Rejects Norfolk Southern’s ‘Not at Home’ Defense
Norfolk Southern was incorporated in Virginia and had its principal place of business in Virginia. Accordingly, Norfolk Southern argued that it was not at home in Pennsylvania, despite having extensive operations in the state, including managing over 2,000 miles of track, running three locomotive repair shops, and operating eleven rail yards. Norfolk Southern further argued that Mr. Mallory’s injuries had no connection to Pennsylvania, so any effort by the Pennsylvania courts to exercise personal jurisdiction violated the Due Process Clause of the Fourteenth Amendment. The Court disagreed, but not based on Norfolk Southern’s extensive contacts with the State of Pennsylvania.
Instead, the dispositive factor in the Court’s decision was Norfolk Southern’s registration to do business in Pennsylvania. Under its state law, Pennsylvania requires registering out-of-state companies to agree to appear in courts on “any cause of action” against such companies. Thus, by registering the business under the statute, Norfolk Southern had consented to general jurisdiction in Pennsylvania.
Precedent from 1917 Controls in 2023
Justice Gorsuch wrote for the majority, finding that a state law like Pennsylvania’s requiring companies that register to do business in their state to submit to general jurisdiction does not violate the Due Process Clause, citing precedent from more than a century ago in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co.2 Indeed, Mr. Mallory’s cause of action was “transitory” as opposed to “local” and he could sue the defendant wherever it may be found. As Norfolk Southern had registered to do business in Pennsylvania, it had consented to general jurisdiction in Pennsylvania, and could be “found there” in Mr. Mallory’s case. Norfolk Southern argued that International Shoe Co. v. Washington3 allowed only “specific jurisdiction” where suits arise out of or relate to the contacts with the state, and “general jurisdiction” where a corporation is incorporated or has its principal place of business. Norfolk Southern argued “no other bases for personal jurisdiction over a corporate defendant are permissible.”
Justice Gorsuch opined that this argument “oversimplified matters,” and found that International Shoe established “an additional road” to jurisdiction over an out of state corporate defendant beyond the road to jurisdiction established in Pennsylvania Fire. Justice Gorsuch stated: “Pennsylvania Fire held that an out-of-state corporation that has consented to in-state suits in order to do business in the forum is susceptible to suit there. International Shoe held that an out-of-state corporation that has not consented to in-state suits may also be susceptible to claims in the forum State based on ‘the quality and nature of [its] activity” in the forum.’ Therefore, no analysis of Norfolk Southern’s other contacts with the state was necessary as was the case in International Shoe, Goodyear Dunlop Tires Operations, S. A. v. Brown, 564 U. S. 915, 927–928 (2011) and Daimler AG v. Bauman, 571 U. S. 117, 129 (2014), where defendants had not expressly consented to jurisdiction.
Although Justice Gorsuch alluded to Norfolk Southern’s extensive contacts with the State of Pennsylvania, he did so only in response to Norfolk Southern’s argument that allowing jurisdiction over it in Pennsylvania would be “unfair” and would not comport with International Shoe. Justice Gorsuch asked the following question about Norfolk Southern’s contacts with Pennsylvania: “Given all this, on what plausible account could International Shoe’s concerns with ‘fair play and substantial justice’ require a Pennsylvania court to turn aside Mr. Mallory’s suit?” These extensive contacts, and the fact that jurisdiction comported with “fair play and substantial justice,” was simply not the basis of the Court’s decision. The Court’s opinion is clear that in similar cases where registering to do business in a state requires consent to jurisdiction on any claim brought in that state, no further analysis is required.
Implications of State Laws Expanding Personal Jurisdiction
State laws on the interplay between registration and jurisdiction vary immensely. The critical takeaway for companies from this decision is to review the laws of each state where they are registered to do business and, if contemplating registering to do business in a particular state, to consider the risk of potentially being sued in that state for claims that have no ties at all to the business conducted by the company there or to the state at all. Consider this hypothetical: a company registers to do business in a state with a statutory scheme like Pennsylvania’s, with registration constituting consent to jurisdiction on any cause of action. Then say an employee of that company is involved in an on-the-job auto accident in a completely different state with an out-of-state plaintiff. Although that accident and that plaintiff have no ties to the forum state, the cause of action may still be brought in the forum state, regardless of the company’s other contacts with the forum state. As Justice Barrett’s dissent in Mallory recognizes, “all a state must do is compel a corporation to conduct business there…and enact a law making registration sufficient for suit on any cause…[t]hen, every company doing business in the State is subject to general jurisdiction based on implied ‘consent’—not contacts. That includes suits, like this one, with no connection whatsoever to the forum.”
After the Mallory decision, registration to do business in certain states, like Pennsylvania, means that a company is subject to personal jurisdiction there for any lawsuit, regardless of whether it is related to the business of the company, regardless of where the Plaintiff is located, and regardless of where the cause of action accrued. For large businesses with in-house counsel, this raises the prospect of being forced to retain outside counsel should registration in a “new” state lead to a lawsuit there as a result of this new case.
1 600 U.S. ___ (2023)
2 243 U.S. 93 (1917)
3 326 U. S. 310 (1945)
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