The US Supreme Court hears an oral argument on where companies can be sued

The constitutionality of Pennsylvania’s “registration statute,” which requires corporations registering to do business in Pennsylvania consent to Pennsylvania’s “general personal jurisdiction,” was the subject of an oral argument in the U.S. Supreme Court on 8 November 2022.

In Mallory v Norfolk Southern Railway Co., No. 21-1168, the judges heard argument that Pennsylvania may require companies that want to do business in Pennsylvania to agree to file a lawsuit in Pennsylvania state court, regardless of where the request arose. Pennsylvania is the only state that specifically requires companies to consent to their personal jurisdiction as part of the registration process.

General personal jurisdiction

Underlying the personal jurisdiction law is whether it is “fair” to sue a person or company in a particular state.

Under general personal jurisdiction, the precept in question in Mallory, a state court has personal jurisdiction over any resident of that state. In Daimler AG v Bauman, 571 US 117 (2014), the Supreme Court held that a corporation is a resident of any state in which its connections are so continuous and systematic that it makes the corporation “essentially at home” in the state. The simplest example is a corporation incorporated and headquartered in a specific state is a resident or resides in that state.

Pennsylvania’s registration statute effectively lowers the bar on general personal jurisdiction. It requires companies to consent to the jurisdiction of the Pennsylvania state courts simply by registering to do business in Pennsylvania. Most states require companies to register to do business in their state, but Pennsylvania is the only one that specifically requires companies to consent to the state’s personal jurisdiction as part of the registration process.

State and federal courts are divided on whether merely registering to do business in a state subjects a corporation to that state’s general jurisdiction. State courts in New York and New Mexico have ruled that a corporation is Not subject to general jurisdiction in a state only because he registered to do business there. Georgia state courts said otherwise: registering to do business in a state is sufficient to confer general personal jurisdiction.

Background

The facts in Mallory show the paradoxical scope of Pennsylvania’s consent registration law. Petitioner Robert Mallory, a Virginia resident, says he was exposed to toxic chemicals that gave him cancer while working for the Norfolk Southern Railway Company in Virginia. Mallory neither lived nor worked in Pennsylvania nor did his alleged injury occur in Pennsylvania, but he is suing in Pennsylvania state court under the Pennsylvania Registration Consent Act.

Norfolk Southern challenged the state court’s jurisdiction. Ultimately, the Pennsylvania Supreme Court found Pennsylvania’s registration statute unconstitutional. He has declared: “[A] the court cannot subject a foreign company to universal jurisdiction based solely on the fact that it carries on business in the State of the forum”. Since allowing Pennsylvania courts to exercise personal jurisdiction over a company is a requirement for registering to do business in Pennsylvania, the Pennsylvania Supreme Court said the company cannot be said to voluntarily consent to general personal jurisdiction.

Oral argument

During the oral argument, the judges appeared divided on the issue as he questioned both sides.

Judge Samuel Alito pressed Mallory’s attorney on equity and whether consent to jurisdiction is voluntary if it is a condition of doing business in Pennsylvania. Similarly, Chief Justice John Roberts appeared to dismiss Mallory’s argument that consent-jurisdictional laws have a long history in American jurisprudence, stating that “history and tradition go on.” Judge Brett Kavanaugh noted the potential effect on businesses, warning that if “every state” enacts a similar statute, potential plaintiffs could file suits in any state in which the company operates, regardless of where the alleged harm occurred.

Judge Elena Kagan cited the case as seminal jurisdiction International Shoe Co. v. Washington326 US 310 (1945), which, in its view, “eliminates the need” for a fictitious consent such as the Pennsylvania registration consent scheme.

On the other hand, Judge Ketanji Brown Jackson said he didn’t necessarily see a conflict between the Pennsylvania statute and International shoe. Judge Sonia Sotomayor noted that Norfolk Southern could not claim that Pennsylvania forced it to consent to jurisdiction, because the company has more employees and more miles of railroad track in Pennsylvania than in any other state.

Potential impact on employers

The decision inside Mallory v. Norfolk Southern Railway could affect employers transacting business in more than one state, especially the where is it employees could sue. If the Supreme Court agrees that Pennsylvania’s statute is constitutional, more states could require companies to consent to their courts’ broad jurisdiction through business registration. Any business that transacts business in multiple states should be prepared to defend a lawsuit in any state court where it registers to do business.

We will continue to follow up on this case and provide updates. Based across the country and familiar with state courts in the United States and Puerto Rico, Jackson Lewis attorneys are available to discuss the potential impact of the Supreme Court decision on employers’ business operations and help companies prepare .

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