Supreme Court holds that consent to jurisdiction statute in Pennsylvania does not violate the due process clause
Ruling in Mallory v. Norfolk Southern Railway Co., a fragmented majority of the Supreme Court held that a Pennsylvania statute requiring non-Pennsylvania corporations to consent to general personal jurisdiction in Pennsylvania as a condition of registering to do business in the Commonwealth does not offend the constitutional right to due process.
Although a five-member majority of the Court agreed that the Pennsylvania statute in question survived due process scrutiny, the justices did not agree on a single legal rationale for that decision. As explained in greater detail below, the justices’ disagreement suggests that Mallory is unlikely to be the last word on so-called “consent to jurisdiction” statutes, and that corporate defendants who might suddenly find themselves haled into unfamiliar state courts should take a wait-and-see approach before reconsidering their registration status.
Petitioner Robert Mallory was a decades-long employee of Norfolk Southern Railway with little connection to Pennsylvania. He resided in Virginia (although he did live in Pennsylvania for a brief time before filing suit) and alleged that he was exposed to carcinogens in Ohio and Virginia. Despite these facts and Norfolk Southern’s incorporation and headquarters in Virginia, Mr. Mallory brought suit against Norfolk Southern in a Pennsylvania state court.
Critically, Norfolk Southern registered as a foreign corporation doing business in Pennsylvania and, in accordance with its registration obligations, consented to the general personal jurisdiction of Pennsylvania’s courts. This consent notwithstanding, Norfolk Southern challenged Mr. Mallory’s suit on personal jurisdiction grounds. Ultimately, after winding its way through the Pennsylvania court system, the Supreme Court of Pennsylvania held that the Pennsylvania statute requiring out-of-state corporations to consent to Pennsylvania’s general personal jurisdiction as a condition of their business registration violated the due process clause. Mr. Mallory then appealed to the Supreme Court of the United States.
A majority of justices agreed that Pennsylvania’s consent to jurisdiction statute did not violate Norfolk Southern’s due process rights but split on the justification for that conclusion. Justice Neil Gorsuch, in the lead opinion, found that the matter was controlled by the Supreme Court’s 1917 decision in Gold Issue Mineral & Mining Co. v. Pennsylvania Fire Insurance Co. of Philadelphia.
In that case, the Supreme Court found that a defendant could properly be haled into Missouri state court – even though the accident giving rise to the litigation took place in Colorado and none of the parties had any connection to Missouri. As the basis for its decision, the Court found that the defendant insurance company consented to jurisdiction by complying with a Missouri statute obligating out-of-state insurance companies doing business in Missouri to appoint a state official as the company’s agent for service of process and to accept service on that official as valid in any suit. In Justice Gorsuch’s view, the issue of consent to suit presented in Mallory was identical to the one presented in Pennsylvania Fire, and thus compelled the same result, ie, that a corporation’s consent to jurisdiction as part of the business registration process was valid and complied with due process.
Justice Gorsuch’s application of Pennsylvania Fire did not command a majority. Of the remaining opinions, Justice Samuel B. Alito authored the one most consequential for putative corporate defendants.
Specifically, Justice Alito noted that although he agreed with the Court’s result relating to due process, he was not persuaded that consent to jurisdiction statutes like Pennsylvania’s passed muster under the Dormant Commerce Clause, which prohibits states from enacting measures that unduly restrict interstate commerce.
As both he and Justice Gorsuch recognized, the Dormant Commerce Clause issue was not decided by the Supreme Court of Pennsylvania, and so it remained an open question. Justice Alito also seemed to invite Congress to intervene, noting its power under the Commerce Clause— – though not unlimited – to regulate the extent to which states can claim jurisdiction over suits involving out-of-state parties and non-state related conduct.
What does this mean for putative corporate defendants?
First, although the Supreme Court’s decision in Mallory might seem like a victory for forum-shopping plaintiffs, a closer reading suggests that putative plaintiffs may not win the war. Indeed, as the various opinions suggest, the Court’s decision in Mallory is not the end of jurisdictional challenges (the decision is not even the end of the jurisdictional challenge in Mallory). After remand, the Pennsylvania courts will need to specifically address whether its consent to jurisdiction scheme violates the Constitution’s Dormant Commerce Clause – a question that may return to the Supreme Court. It is unclear how the Pennsylvania courts will address that issue, nor is it obvious how the many pending personal jurisdiction motions to dismiss (or even recently decided motions for reconsideration on that issue) will be decided.
Corporate defendants should not abandon their jurisdictional defenses lightly. Not only is this battle going to proceed within the courts, including potentially the Supreme Court, but the Court’s decision may also prompt Congressional action. Justice Alito specifically noted that Congress “has the authority to change the … rule” pursuant to the Commerce Clause, subject, of course, to any other relevant constitutional limit.” In other words, in Justice Alito’s view, Congress could moot the question of whether consent to jurisdiction statutes are constitutional by regulating whether, where, and how citizens of different states can bring suit.
Any action by Congress to accept the Justice’s invitation should be monitored closely. Beyond that, it will be important to monitor the legislative efforts of the individual states to modify their existing registration statutes to add or remove a consent (either implied or express) to jurisdiction component. Indeed, at the current time, only a handful of states have registration statutes akin to Pennsylvania’s from the general personal jurisdiction perspective.
At this point, companies potentially subject to litigation in Pennsylvania as a result of their registration should not act hastily by immediately withdrawing their registration or abandoning jurisdictional defenses already lodged in existing litigation. It is simply too early to tell how the issue will be fully and finally resolved.
DLA Piper continues to monitor the developments on this issue. Should you have any questions about how best to position yourself in Pennsylvania and elsewhere, please reach out to any of the authors to discuss.
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