Mark Lee
This June, in Mallory v. Norfolk Southern Railway Company,[1] the Supreme Court held that a Pennsylvania statutory scheme which requires out-of-state corporations to “consent” to general personal jurisdiction to do business in the state was consistent with Due Process.[2] This decision allows Robert Mallory, a Virginia resident, to bring a lawsuit in Pennsylvania state court against his former employer, Norfolk Southern, a company incorporated and headquartered in Virginia, for injuries allegedly sustained in the course of his employment at Norfolk Southern facilities in Ohio and Virginia.[3] While the majority insisted that this decision is consistent with its precedent,[4] it has the potential to displace the Court’s existing corporate personal jurisdiction jurisprudence and green light a forum shopping spree. But it is nevertheless unclear whether the Mallory decision can withstand a challenge under the Dormant Commerce Clause.
A Brief Overview of Corporate Personal Jurisdiction
The early conception of personal jurisdiction was set forth in the Court’s 1878 decision in Pennoyer v. Neff,[5] where the Court held that a state could exercise personal jurisdiction only over persons or property located within its territory.[6] With these territorial limitations in mind, state statutes sometimes required corporations to appoint an in-state agent to receive service of process which gave the corporate entity a “presence” in the state.[7] Although it was typically considered to be an unreasonable burden to require companies to defend against causes of action having no connection to the forum,[8] this was not always the case.[9] As the 20th century progressed, the Court’s decision in International Shoe Co. v. Washington[10] largely supplanted territorial notions of personal jurisdiction with a contacts-based test.[11] To exercise personal jurisdiction consistent with the Due Process Clause, the Court required that a plaintiff’s claims arose out of the defendant’s activities within the state or that the defendant had taken other such acts to render the corporation liable to suit.[12] Scholars later labeled these bases as specific personal jurisdiction and general personal jurisdiction.[13] Specific and general personal jurisdiction comport with due process because the defendant’s contacts with the forum make defending a suit consistent with “traditional notions of fair play and substantial justice.”[14] While there have been some interesting developments in specific jurisdiction over the years,[15] the focus of Mallory was general personal jurisdiction.[16] The Court has previously held that to exercise general personal jurisdiction, a corporate defendant’s contacts must be so extensive that the defendant is “essentially at home in the forum [s]tate.”[17] A corporation is considered to be “at home” wherever it is incorporated, has its principal place of business,[18] or is engaged in such substantial operations as to render it at home in that state.[19]
The Court’s Decision in Mallory v. Norfolk Southern Ry. Co.
In Mallory, the Court purportedly recognized another basis for the exercise of general jurisdiction, “consent” by registering to do business within a state.[20] Under Pennsylvania law, out-of-state corporations who register to do business in the Commonwealth contemporaneously agree to defend any cause of action against them.[21] The majority concluded that since the Court’s 1917 decision in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co.,[22] that a state can, consistent with the Constitution, require a company to “consent” to personal jurisdiction as a requirement of doing business in the forum.[23] In Pennsylvania Fire, the Court upheld a Missouri law which required out-of-state insurance companies to appoint a state official as the company’s agent to receive service of process and accept service on that official as valid in any suit.[24] Relying on Pennsylvania Fire, the Court made short work of Norfolk Southern’s arguments and ruled in Mallory’s Favor.
The Court’s decision in Mallory was only supported by a plurality of the justices, as Justice Coney Barrett joined by Chief Justice Roberts, Justice Kagan, and Justice Kavanaugh dissented. In her dissent, Justice Coney Barrett took issue with the majority’s acceptance of corporate registration as being synonymous with consent.[25] Justice Coney Barret contended that this view of consent effectively permits a state to “defeat the Due Process Clause by adopting a law at odds with the Due Process Clause.”[26] Furthermore, she argued that Pennsylvania’s assertion of general jurisdiction over every company doing business within its borders implicates federalist interests, as Pennsylvania is intruding on the prerogative of other states to adjudicate the rights of its citizens and enforce its laws.[27] Finally, Justice Coney Barrett contended that Pennsylvania Fire and other cases that utilize the territorial approach to personal jurisdiction and the legal fictions of “implied consent” and “corporate presence” were overruled by the Court’s decision in International Shoe.[28]
Potential Effects of & Challenges to the Mallory Decision
While the effects of the Court’s decision in Mallory are not yet clear, the most obvious consequence is that other states will enact statutory schemes subjecting corporations who do business in-state to general personal jurisdiction in their courts. It seems likely that state legislatures would be willing to enact legislation that has the potential to bring in extra revenue to their courts and attorneys. If this does become prevalent, national corporations will likely face increased litigation in states that have preferential choice-of-law provisions for plaintiffs, and personal jurisdiction may become the next preferred tool for forum shopping. Furthermore, if corporations are subject to general jurisdiction in several states by virtue of “consenting” by registering to do business in the forum, the concepts of general and specific jurisdiction set forth in International Shoe and developed by its progenies may become largely unnecessary.
While the Court’s decision is seemingly final regarding personal jurisdiction, Justice Alito’s concurrence raised that this decision may run afoul of the dormant Commerce Clause which “prohibits state laws that unduly restrict interstate commerce.”[29] Under applicable precedent, “once a state law is shown to discriminate against interstate commerce ‘either on its face or in practical effect,’ the burden falls on the State to demonstrate both that the statute ‘serves a legitimate local purpose,’ and that this purpose could not be served as well by available nondiscriminatory means.”[30] Justice Alito noted that Pennsylvania’s registration statute likely discriminates against out-of-state companies or imposes a significant burden on interstate commerce and was skeptical of a state’s interest in adjudicating claims by non-residents harmed by out-of-state actors through conduct outside the state.[31] Nevertheless, a successful challenge under the dormant Commerce Clause faces long odds in light of the Court’s decision in National Pork Producers Council v. Ross,[32] which displayed the current Court’s division on breadth of the dormant Commerce Clause and its general reluctance to use it to invalidate state law.[33] Therefore, while the Court’s decision in Mallory has the potential to have significant effects on corporate personal jurisdiction, it seems likely that the Court has not yet said its last word. So, is the International Shoe on the other foot? We will just have to wait and see.
[1] 600 U.S. 122 (2023).
[2] Id. at 146.
[3] Id. at 126.
[4] Id. at 146 (“[U]nder our precedents a variety of ‘actions of the defendant’ that may seem like technicalities nonetheless can ‘amount to a legal submission to the jurisdiction of a court.’” (quoting Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 704–705 (1982))).
[5] 95 U.S. 714 (1878).
[6] Id. at 722.
[7] See Charles W. “Rocky” Rhodes, Nineteenth Century Personal Jurisdiction Doctrine in a Twenty-First Century World, 64 Fla. L. Rev. 387, 436 (2012) (“To alleviate the injustice from a corporation’s avoidance of its obligations where they arose, states began to require, as a statutory condition for the corporation to do business in the state, that the corporation register with state authorities and appoint an agent to accept service of process in cases related to its forum activities.”).
[8] See Simon v. S. Ry. Co., 243 U.S. 93, 130 (1915) (“statutory consent of a foreign corporation to be sued does not extend to causes of action arising in other states.”).
[9] See Penn. Fire Ins. Co. of Phila. v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917).
[10] 326 U.S. 310 (1945).
[11] In Burnham v. Superior Court of Cal., 495 U.S. 604 (1990), the Court upheld transient or “tag” jurisdiction as being consistent with Due Process but noted that consent and presence were purely fictional, and that International Shoe cast those fictions aside.
[12] International Shoe, 326 U.S. at 317–318.
[13] See Arthur T. von Mehren and Donald T. Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136–37 (1966).
[14] International Shoe, 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
[15] For a discussion about developments in specific personal jurisdiction see generally Anthony Petrosino, Rationalizing Relatedness: Understanding Personal Jurisdiction’s Relatedness Prong in the Wake of Bristol-Myers Squibb and Ford Motor Co., 91 Fordham L. Rev. 1563, 1563 (2023).
[16] Mallory v. Norfolk S. Ry. Co., 600 U.S. 122, 124 (2023).
[17] Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).
[18] Daimler AG v. Bauman, 571 U.S. 117, 137 (2014).
[19] Id. at 139 n.19.
[20] See Mallory, 600 U.S at 135–136.
[21] 42 Pa. Cons. Stat. § 5301(a)(2)(i), (b).
[22] 243 U.S. 93 (1917).
[23] Id. at 96.
[24] Id. at 96–97.
[25] Mallory, 600 U.S at 167.
[26] Id. at 168.
[27] Id. at 169–170.
[28] Id. at 177.
[29] Id. at 157–63.
[30] Maine v. Taylor, 477 U.S. 131, 138 (1986).
[31] Mallory, 600 U.S. at 161–63.
[32] 598 U.S. 356.
[33] Ross, 598 U.S. 356 (affirming dismissal for failure to state a claim on a dormant Commerce Clause challenge of a California law barring the sale of pork from pigs confined in a cruel manner).
