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Under a new ruling of the Supreme Court, corporations can now be required to consent to personal jurisdiction if they want to do any business within a state. This is no matter how small the business within the state may be and even if that small business had nothing to do with the plaintiff’s claim as states may require an out-of-state corporation to consent to personal jurisdiction as part of registration to conduct any business within a state.

In this week’s 5-4 decision in Mallory v. Norfolk Southern R. Co., 2023 WL 4187749, Justice Gorsuch delivered the opinion of the Court. Looking to jurisprudence predating International Shoe, the Court ruled Norfolk Southern consented to jurisdiction of Pennsylvania state courts by way of Pennsylvania statute requiring corporations to register within the state. Justice Alito authored a separate opinion, concurring in part and concurring in the judgment that narrowly defines the question brought before the Court, and arguably invites a future dormant Commerce Clause challenge. The dissenting opinion by Justice Barrett warned of specific jurisdiction becoming “superfluous” for corporations, rendering the Court’s previous opinions in Daimler AG v. Bauman, 571 U.S. 117 (2014), and Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 U.S. 915 (2011), obsolete. She characterized the Court’s decision as a “sea change.”

Case Background

The plaintiff, a former mechanic of nearly 20 years for Norfolk Southern and a Virginia resident, alleged exposure to asbestos and other carcinogens while employed by Norfolk Southern from 1988 through 2005 for torts the plaintiff alleged occurred in Virginia and Ohio. There were no allegations of harmful contact or tortious actions in Pennsylvania. Plaintiff argued that Norfolk Southern consented to Pennsylvania court jurisdiction for his Federal Employer’s Liability Act (FELA) claim. Norfolk Southern is a Virginia corporation with its principal place of business located in Virginia.

The plaintiff filed his FELA case in a Pennsylvania trial court. Citing Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 582 U.S. 255 (2017), and the Due Process Clause as preventing a state from forcing every corporation doing business within the state to consent to general jurisdiction, the Pennsylvania trial court dismissed the plaintiff’s complaint with prejudice for lack of personal jurisdiction. The matter was transferred for instant appeal before the Pennsylvania Supreme Court.

The Pennsylvania Supreme Court found application of Pennsylvania’s long-arm statute over foreign corporations would be a violation of due process and that expressly conditioning the ability to do business in Pennsylvania upon submitting to general jurisdiction would not be voluntary consent required to waive due process rights. Defendant argued they were not at home in Pennsylvania and did not consent to jurisdiction by way of registering to do business in Pennsylvania. Defendant further argued decisions prior to International Shoe were implicitly overruled.

Opinion of the Court

In determining whether the Due Process Clause of the Fourteenth Amendment prohibits a state from requiring an out-of-state corporation to consent to personal jurisdiction to do business there, the opinion of the Court reasoned corporations may be required to consent to personal jurisdiction as a condition of registering to conduct business.

This interpretation stems from a case pre-dating International Shoe Co. v. Washington, 326 U.S. 310 (1945). In ruling Norfolk Southern consented to jurisdiction of Pennsylvania state courts, the Supreme Court found their decision in the 1917 case Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93, to be controlling, ruling that Norfolk Southern consented to personal jurisdiction in Pennsylvania state court by way of the corporation registering to be allowed to conduct business within Pennsylvania. Pennsylvania Fire presents a similar fact pattern in that the plaintiff was not a resident of and alleged no torts occurred in the state where the action was filed, and the defendant corporation was not domiciled in the state where the action was filed (Missouri). In the 1917 decision, the Court found that the defendant consented to jurisdiction when the defendant insurance company obtained a license to do business within Missouri and filed a power of attorney consenting to service of process in Missouri with the state’s department of insurance, as required by Missouri statute at the time. Further, the Pennsylvania Fire Court found that the defendant’s 14^th Amendment due process rights were not violated by finding the Missouri statute as governing jurisdiction as the defendant had consented to jurisdiction by the Missouri courts.

Justice Gorsuch prefaced the opinion of the Court with a hypothetical that surmises application of the Due Process Clause in Mr. Mallory’s case is similar to that of the Court’s view of tag jurisdiction. The opinion of the Court is narrowed to frame the issue not as how does personal jurisdiction under International Shoe of specific and general jurisdiction apply to corporate defendants, but reiterated that in International Shoe the defendant corporation was not registered to conduct business and had not agreed to accept process in the state court to which they were hailed, describing International Shoe as “an additional road to jurisdiction over out-of-state corporations.” Further, the opinion of the Court notes a previous explanation of International Shoe by the late Justice Scalia: “International Shoe simply provided a ‘novel’ way to secure personal jurisdiction that did nothing to displace other ‘traditional ones.’”

Concurrence But an Invitation to Challenge

Justice Alito prefaced his concurrence with, “Assuming that the Constitution allow a State to impose such registration requirement…”. Justice Alito’s concurrence reiterates that consent is a separate basis for personal jurisdiction and that International Shoe and its progeny have not expressly overruled Pennsylvania Fire. The concurring opinion does not deny that forum shopping may increase following the Court’s decision but considers that the Due Process Clause protects against forum shopping.

The Justice makes an apparent argument that the Dormant Commerce Clause may negate Pennsylvania’s jurisdiction over the defendant in this claim, but lacking a Commerce Clause claim before the Court, he finds for the plaintiff. Justice Alito made a lengthy review of the Court’s previous decisions as to the Commerce Clause and describes the clause as a “vital constraint on States’ power over out-of-state corporation.” The opinion goes so far as to state, “[t]here is reason to believe that Pennsylvania’s registration-based jurisdiction law discriminates against out-of-state companies.”

A Cogent and Cautionary Dissent

Justice Barrett, being joined by Chief Justice Roberts, Justice Kagan, and Justice Kavanaugh in dissent, essentially finds the matter of general jurisdiction over out-of-state corporations to have been decided by International Shoe and its progeny, and the 1917 case in which the majority bases the Court’s decision as being implicitly overruled. The dissenting opinion makes a number of warnings of potential consequences of the Court’s decision, suggesting states may choose to “manufacture” or “elicit” consent to personal jurisdiction by corporations by relabeling their long-arm statutes, as well as invoking arguments based upon the Due Process Clause as the Court applied in Bristol-Myers regarding the role of states and consent to personal jurisdiction as they apply to federalism and the treatment of states as co-equal sovereigns.

The dissent reiterates the Court’s holdings in World-Wide Volkswagen, Goodyear, and Daimler on states’ authority to assert jurisdiction over out-of-state corporations. It found that Pennsylvania lacks the authority to exercise personal jurisdiction on corporations solely based upon its own statute, quoting the Pennsylvania Supreme Court ruling that the statute “clearly, palpably, and plainly violates the Constitution.”

The dissenting opinion was not based solely on cautions based upon the progeny of International Shoe. The dissent also calls into question how analogous the consent was between Pennsylvania Fire and Mallory, noting the express power of attorney filed with the state’s department of insurance by Pennsylvania Fire’s defendant and the form submitted by Norfolk Southern named “Commercial Registered Office Provider,” which does not use the word “agent,” and does nothing to hint at the word “jurisdiction.” This disparity was also noted in the opinion of the Pennsylvania Supreme Court.

Additionally, the dissent challenges the majority’s analogy of similarity of consent by registration with that of tag jurisdiction. The dissent highlights the reasoning of the Court’s decision in Burnham v. Superior Court of Cal., County of Martin, 495 U.S. 604 (1990), cited by the majority, which ultimately acknowledged that tag jurisdiction would not satisfy the contacts-based test for general jurisdiction.

Conclusion

The issue of establishing personal jurisdiction over corporate defendants by way of registration to do business within a state may not be fully resolved. Justice Alito’s concurrence makes future challenges based upon the Commerce Clause probable. Additionally, while Justice Gorsuch’s opinion of the Court began with a hypothetical pulled from recent events and suggested bringing suit in a neighboring state, questions of future decisions questioning how the Court’s decision in Mallory will shape future forum non-conveniens claims remain to be seen. In the interim, the Court’s decision should be a cautionary tale to corporations for potential to remain in a state forum even if transacting a small amount of business and where the claim at issue had little to nothing to do with the state.

We at HeplerBroom anticipate further blog posts regarding this decision.