The Supreme Court Revisits Personal Jurisdiction Over Corporate Defendants

On Wednesday, the United States Supreme Court issued a significant ruling on personal jurisdiction over corporate defendants in Mallory v. Norfolk Southern Railway Co.—specifically, corporations that are authorized to conduct business in Pennsylvania. For those corporations, the simple act of registering with the Pennsylvania Department of State means the corporation has consented to being sued in Pennsylvania—by anyone and for conduct that happened anywhere. 

What happened in Mallory?
The plaintiff, Mr. Mallory, filed a lawsuit in a Pennsylvania state court against his former employer, Norfolk Southern Railway, alleging that his cancer diagnosis resulted from his work at Norfolk Southern, where he had handled asbestos and other carcinogens. Mr. Mallory did not reside in Pennsylvania when he filed his lawsuit, nor did his case involve any actions that occurred in Pennsylvania. Moreover, Norfolk Southern was not incorporated or headquartered in Pennsylvania. Nevertheless, Justice Gorsuch delivered a majority opinion holding that a Pennsylvania court could exercise personal jurisdiction over Norfolk Southern.

Pennsylvania, like several other states, provides that a corporation cannot conduct business in the state until it registers with the Pennsylvania Department of State as a foreign corporation. Pennsylvania law is unique, however, because merely registering with the state confers general personal jurisdiction in Pennsylvania over a foreign business.  

In Mallory, Norfolk Southern conceded that it had registered to do business in Pennsylvania since 1998, had established an office there to receive service of process, and that in doing so, it understood it would be amenable to suit on any claim. Norfolk Southern nevertheless argued that Pennsylvania’s law violated the Due Process Clause of the Fourteenth Amendment for a variety of reasons, including that Norfolk Southern had “not really submitted” to personal jurisdiction in Pennsylvania; Pennsylvania’s law was inconsistent with notions of “fair play and substantial justice”; and Pennsylvania’s law implicated federalism concerns.

While the Justices took different views on Norfolk Southern’s various arguments, a majority at least concluded that Pennsylvania’s law did not violate the Due Process Clause because of the Court’s precedent from over 100 years ago. In the 1917 Pennsylvania Fire case, the Court looked at a Missouri law that required any out-of-state insurance company “desiring to transact any business” in the state to file paperwork agreeing to (1) appoint a state official to serve as the company’s agent for service of process, and (2) accept service on that official as valid in any suit. Because of that law, the Court held there was “no doubt” a corporation could be sued in Missouri by an out-of-state plaintiff on an out-of-state contract because it had agreed to accept service of process in Missouri on any suit as a condition of doing business there.

The Mallory majority determined that Pennsylvania’s law and the facts fell squarely within the precedent established by Pennsylvania Fire and ruled against Norfolk Southern.

Mallory reflects a departure from how most states have ruled on the corporate consent-by-registration approach to personal jurisdiction.
As noted, Pennsylvania is unique insofar as its corporation registration law has an express provision that registration amounts to a corporation’s consent to personal jurisdiction. Corporation registration laws in other states are silent on this consent-to-jurisdiction issue, leaving the question open for the courts to interpret. With the exception of Georgia (in the 2021 Cooper Tire case), state courts addressing the question (including Arizona, Florida, New Jersey, Texas, Delaware, and Missouri) have found in accord with Justice Barrett’s dissent in Mallory: that simply registering to do business in a state is not the equivalent of consenting to personal jurisdiction in that state.

These courts, like Justice Barrett, have concluded that the Pennsylvania Fire decision was overruled in 1945 by International Shoe, which held that the Due Process Clause tolerates personal jurisdiction over corporate defendants only in lawsuits that “arise out of or relate to” a corporate defendant’s activities in the forum state or where the corporation is “at home”—i.e., its state of incorporation and its principal place of business.

Looking Forward
Corporations should be aware that in addition to the two bases for personal jurisdiction under International Shoe, a third basis exists in Pennsylvania (and Georgia) for those corporations registered to do business in those states. While some commentators have hypothesized that other states may pass laws similar to Pennsylvania’s law, that law has been on the books for a long time yet remains unique in its express language about personal jurisdiction. Accordingly, whether Mallory will inspire other state legislatures to adopt Pennsylvania’s approach remains to be seen. Corporations should remain current on the status of the laws regarding matters of personal jurisdiction over corporate defendants.