The United States Supreme Court reversed the Pennsylvania Supreme Court’s decision in Mallory v. Norfolk Southern Railway Co., finding Pennsylvania’s consent to jurisdiction by corporate registration unconstitutional in a 5-4 opinion authored by Justice Neil Gorsuch on June 27, 2023. 142 S. Ct. 2646 (2023).

Case Background

Plaintiff Robert Mallory sued his former employer, Norfolk Southern, for alleged workplace injuries in Pennsylvania, despite the fact he was a Virginia resident and the alleged exposures occurred in Ohio and Virginia. Norfolk Southern was incorporated and maintained its principal place of business in Virginia.

Plaintiff sought to take advantage of Pennsylvania’s statutory regime which equated a corporation registering to do business in Pennsylvania as consent to general personal jurisdiction in Pennsylvania for any and all lawsuits. In December 2021, the Pennsylvania Supreme Court ruled this statute was unconstitutional and declared Pennsylvania courts do not have general personal jurisdiction over foreign corporations solely due to a corporation’s registration to do business in Pennsylvania.

The United States Supreme Court granted certiorari in February 2022, and heard argument in November 2022.

Majority Decision

The majority found Mallory was controlled by the Court’s 1917 decision in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917), where the Court held there was “no doubt” Pennsylvania Fire could be sued in Missouri by an out-of-state plaintiff on an out-of-state contract because it agreed to accept service of process in Missouri as a condition of doing business in Missouri. The Court opined Pennsylvania Fire controls Mallory because, similar to the Missouri statute, the Pennsylvania consent-by-registration statute required an out-of-state corporation to register with the Department of State to do business in Pennsylvania. Importantly, the Court noted Pennsylvania Fire held an out-of-state corporation consenting to in-state service is susceptible to suit therein, i.e., “express or implied consent” can ground personal jurisdiction.

Justice Jackson’s Concurrence

Justice Jackson issued a concurring opinion primarily on the issue of waivers for personal jurisdiction, describing waiver as a critical feature of personal jurisdiction and that such waiver would not present a Due Process barrier. Here, Justice Jackson found Norfolk Southern undoubtedly waived its personal jurisdiction rights by agreeing to register as a foreign corporation in exchange for the ability to conduct business in Pennsylvania, and emphasized Norfolk Southern was not compelled to register to do business in Pennsylvania.

Justice Alito’s Concurrence

Justice Alito’s partial concurring opinion lays out an avenue for Norfolk Southern to seek relief before the Pennsylvania Supreme Court (and possibly re-argument before the United States Supreme Court). In his concurrence, Justice Alito opined he was not convinced the Constitution permits a state to impose a submission-to-jurisdiction requirement, particularly in cases where there is no real connection to the state. Justice Alito noted such an argument was not addressed by the Pennsylvania Supreme Court, such that Norfolk Southern could presumably “renew the challenge on remand.” Justice Alito went on to argue the Constitution restricts a state’s power to regulate conduct that has little if any connection to the state’s interests, citing the Court’s decision in Pennoyer that long ago recognized a state’s exercise of jurisdiction over a non-resident could encroach upon the independence of other states.

Justice Alito also analyzed Pennsylvania’s registration by consent statute in the context of the Dormant Commerce Clause and, in no uncertain terms, suggested Pennsylvania’s assertion of jurisdiction over an out-of-state defendant in a suit brought by an out-of-state plaintiff on claims wholly unrelated to Pennsylvania, is a violation of the Commerce Clause. Further, Justice Alito opined the statutory regime discriminates against out-of-state companies and poses a significant burden on interstate commerce by requiring companies to defend against any lawsuits brought in Pennsylvania. Likewise, Justice Alito opined the Commonwealth has no legitimate local interest in hearing such a suit.

Dissenting Opinion

The dissenting opinion, written by Justice Amy Coney Barrett and joined by Chief Justice John Roberts and Justices Elena Kagan and Brett Kavanaugh, argues the majority’s decision “flies in the face of [the Court’s] precedent.” Justice Barrett notes the Pennsylvania registration by consent statutory regimes allow states to “manufacture consent” to personal jurisdiction, undermining the Court’s recent personal jurisdiction jurisprudence limiting general jurisdiction to (1) the place in which it is incorporated or (2) the place where it has its principal place of business. Justice Barrett argued the majority’s decision makes jurisdiction less about contacts, and more about consent. Further, Justice Barrett opined no such consent existed under Pennsylvania’s statutory regime, describing registration as a trigger for a “statutory repercussion” that cannot be considered true consent.

Notably, the dissent emphasizes the majority’s failure to acknowledge Pennsylvania Fire was decided before the Court’s transformative decision in International Shoe v. Washington, 326 U.S. 310 (1945), and, as noted in the Court’s own precedent, prior decisions inconsistent with International Shoe were overruled and litigants were informed not to place much weight in pre-International Shoe decisions.

Impact on Personal Jurisdiction Jurisprudence

Pre-Mallory, Supreme Court precedent was clear general personal jurisdiction for corporations existed in two places – where a corporation was incorporated, or where a corporation maintained its principal place of business. The Mallory decision creates a third potentially viable venue where a corporation may be subject to general personal jurisdiction, provided the statute at issue is similar to the Pennsylvania statute. While relatively few states have laws similar to Pennsylvania’s, Mallory may incentivize other states to adopt similar statutory regimes, broadening the potential jurisdictions in which a corporation may be subject to general personal jurisdiction. The Court’s decision in Mallory is also noteworthy to the extent it blurs the line between general personal jurisdiction and specific jurisdiction.

Justice Alito’s concurrence suggests a path forward for this case, with the Pennsylvania Supreme Court evaluating Pennsylvania’s law under the Dormant Commerce Clause. Should the Pennsylvania Supreme Court undertake such an analysis, it is within reason to assume this case will find its way back to the Court.

Harris Beach’s Mass Torts and Industry-wide Litigation attorneys monitor key court decisions for critical counsel to clients. If you have any questions about the matters in this legal alert or related matters, please contact attorney Abbie Eliasberg Fuchs at (212) 313-5408 and; attorney Bradley M. Wanner at (212) 912-3653 and; attorney Brian A. Bender at (212) 313-5405 and; or the Harris Beach attorney with whom you most frequently work.

This alert does not purport to be a substitute for advice of counsel on specific matters.

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