United States: Pennsylvania Supreme Court Holds Mandatory Registration Requirement Unconstitutional

Philadelphia, Penn. (March 24, 2022) - In December 2021, the Pennsylvania Supreme Court addressed the Keystone State's mandatory registration requirement as it relates to personal jurisdiction in the case Mallory v. Norfolk S. Ry. Co. 266 A. 3d 542 (2021). In short, the Supreme Court of Pennsylvania affirmed the Philadelphia Court of Common Pleas decision to dismiss the Mallory action for lack of personal jurisdiction, opining that Pennsylvania's mandatory registration requirement was unconstitutional to the extent that it afforded Pennsylvania courts general jurisdiction over foreign corporations that were not "at home" in Pennsylvania. More specifically, the court referred to the mandatory registration requirement as "legislatively coerced consent to general jurisdiction that was not voluntary."

Mallory v. Norfolk Southern Railway Company

The underlying facts in Mallory involve plaintiff Robert Mallory, a resident of Virginia, who filed a lawsuit pursuant to the Federal Employer's Liability Act (FELA), in the Philadelphia Court of Common Pleas, against defendant Norfolk Southern Railway (NSA). Mallory alleged that NSA was a Virginia railway corporation, with a principal place of business in Norfolk, Virginia. The complaint further alleged that Mallory was employed with NSA (in Ohio and Virginia) between 1988 through 2005, during which he was exposed to harmful carcinogens causing him to develop colon cancer.

NSA timely filed preliminary objections seeking dismissal of the complaint in its entirety due to lack of both specific and general personal jurisdiction. NSA further argued that the case did not arise in Pennsylvania, NSA was not "at home" in Pennsylvania, and NSA did not consent to jurisdiction by registering to do business in Pennsylvania. Mallory countered that NSA consented to personal jurisdiction by registering to do business in Pennsylvania. The trial court sustained NSA's preliminary objections, with prejudice, for lack of personal jurisdiction. Mallory appealed to the Pennsylvania Superior Court and by memorandum, upon application of NSA, the instant appeal was transferred to the Commonwealth's Supreme Court.

Pennsylvania Supreme Court's Analysis

Notably, the Pennsylvania Supreme Court reasoned that while all states require foreign corporations to register to do business within their boundaries, most state statutes do not provide expressly that the act of registering to do business in Pennsylvania constitutes a specific basis upon which a court may assert general jurisdiction. Accordingly, the court held that a foreign corporation's registration to do business in Pennsylvania does not constitute voluntary consent to general jurisdiction but, rather, "compelled submission to general jurisdiction by legislative command and cannot be constitutionally sanctioned." The court further held that Pennsylvania's statutory scheme is not only unconstitutional, but also violates due process to the extent that it affords Pennsylvania courts general personal jurisdiction over foreign corporations that are not at home in the Commonwealth.

Takeaway

While Mallory involves an action brought under FELA, prior to this decision, plaintiffs continuously relied on Pennsylvania's mandatory registration requirement as a basis for personal jurisdiction in matters such as mass tort litigation (asbestos cases and benzene case), various products liability cases, motor vehicle cases, and other general liability actions. This strategy was routinely implemented in the Philadelphia Court of Common Pleas (as in the instant case), presumably because Philadelphia is frequently referred to as a "judicial hellhole" for defendants. However, this recent decision by the Pennsylvania Supreme Court should prove to be beneficial moving forward for defendants and the defense bar. This is especially true in cases where a prospective plaintiff attempts to file an action in Pennsylvania, wherein both plaintiff and defendant are out of state residents, the occurrence did not arise in Pennsylvania, and the only basis for filing suit in Pennsylvania is based on a foreign defendant's registration to do business in the state.

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