Mallory v. Norfolk Southern Railway Company And The Potential Rise Of Consent-Based Jurisdiction

A case before the Supreme Court could drastically change the exposure of corporations to suits in inconvenient forums. Mallory v. Norfolk Southern Railway Company concerns certain Pennsylvanian statutes requiring business entities to submit to general jurisdiction when registering to do business in the state.¹ While Pennsylvania is the only state with such a statutory scheme, with Supreme Court approval, similar legislation will likely be proposed in other states.²

The central issue in Mallory is whether the relevant Pennsylvania statutes run afoul of the 14th Amendment Due Process Clause.³ On the case's path up to the Supreme Court, the trial court and the Supreme Court of Pennsylvania answered this question in the affirmative.⁴

Originally, individuals were only subject to jurisdiction where they resided, and corporate entities were only subject to jurisdiction where they were incorporated.⁵ Individuals were (and still are) also subject to jurisdiction when they are served within the forum state.⁶

This changed with International Shoe Co. v. Washington, where the Court moved away from its previous approach to personal jurisdiction.⁷ The Court in International Shoe found that persons, both actual and legal, may be subject to jurisdiction outside of their home state when they had minimum contacts with the forum state and such contacts were related to the cause of action.⁸ This would come to be known as "specific jurisdiction." International Shoe further held that the Due Process Clause requires a finding of jurisdiction over a defendant to "not offend traditional notions of fair play and substantial justice[,]" so that defendants are not subject to jurisdiction in forums to which they have little relation.⁹ International Shoe also posited that a corporation would be subject to personal jurisdiction in places where it had "continuous and systematic" contacts regardless of whether its contacts related to the cause of action.¹⁰ This form of jurisdiction is now known as "general jurisdiction."

Later case law from the Supreme Court, however, narrowed the "continuous and systematic" avenue for establishing personal jurisdiction.¹¹ Now, personal jurisdiction may only be established where a corporation is incorporated, where its principal place of business is located, where it is essentially "at home", or where the cause of action arose out of the corporations contact with the forum state.¹² Upholding the Pennsylvania law would, therefore, be a marked departure from the Court's recent jurisprudence on personal jurisdiction over corporations.

During oral argument in Mallory, several of the Justices seemed skeptical that the Pennsylvania statute could survive in light of the Due Process Clause's protection of a legal person's liberty from being sued in forums where they have little contact, as established in International Shoe.¹³ While the petitioner argued that the Court has approved of similar statutory schemes, Justice Roberts noted that such schemes were upheld pre-International Shoe.¹⁴ Another obstacle for the petitioner is that the scheme may violate the Dormant Commerce Clause, as the law conditions access to commerce within the state on consenting to general jurisdiction. One could readily argue that this would unduly burden interstate commerce.¹⁵

On the other hand, Justice Gorsuch seemed to suggest an approach that would subject corporations to jurisdiction wherever they are served, a form of personal jurisdiction previously reserved only for individuals.¹⁶ This would transform statutes found in all states that require a corporation to designate a registered agent for service of process into something akin to Pennsylvania's scheme; corporations would be subject to jurisdiction under any circumstance in the state where they are served.¹⁷

Based on the questions posed during oral argument, Justice Sotomayor, Justice Gorsuch, and Justice Jackson appear to believe that International Shoe does not foreclose this form of consent-based jurisdiction, while Chief Justice Roberts, Justice Alito, Justice Kavanaugh, and Justice Kagan appear to hold the opposite view. Justice Thomas's questions were focused mostly on whether the railroad could have consented to jurisdiction through its registration in Pennsylvania. Similarly, Justice Barret's questions focused on whether a corporation being forced to consent to general jurisdiction to do business is being coerced to give up a constitutional right.

Based on the questions from the Justices, it is difficult to discern if the Court will overturn the Pennsylvania Supreme Court's finding that the scheme was unconstitutional. A decision on the case is likely to be released sometime this summer, when the Court traditionally publishes its orders.

Footnotes

¹ "Under Pennsylvania law, a foreign corporation 'may not do business in this Commonwealth until it registers' with the Department of State of the Commonwealth. 15 Pa.C.S. § 411(a). Further, 'qualification as a foreign corporation under the laws of this Commonwealth' constitutes a sufficient basis to enable Pennsylvania courts to exercise general personal jurisdiction over a foreign corporation." 42 Pa.C.S. § 5301(a)(2)(i). Mallory v. Norfolk S. Ry. Co., 266 A.3d 542, 546-47 (Pa. 2021), cert. granted, 212 L. Ed. 2d 605 (2022).
² Justice Kavanaugh: "A couple questions. Only Pennsylvania has a statute like this, correct?" Ashley C. Keller (Counsel for Petitioner): "Pennsylvania modernized its statute, I believe, in 1978, so it does look unusual."
³ See Mallory, 266 A.3d at 546-47.
⁴ Id.
⁵ Id. (citing Pennoyer v. Neff, 95 U.S. 714, 722-24 (1877)).
⁶ Id.
⁷ See 326 U.S. 310, 316-17 (1945).
⁸ Id.
⁹ Id.
¹⁰ Id. at 318.
¹¹ Eg. Daimler AG v. Bauman, 571 U.S. 117, 119 (2014); e.g. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011).
¹² Daimler AG, 571 U.S. at 138-39.
¹³ For example, Justice Kagan noted that the "consent by registration [form of jurisdiction] came about because it was . . . necessary in a pre-International Shoe world."
Oyez, supra note 2.
¹⁴ Chief Justice Roberts: "Doesn't International Shoe sort of relegate that body of cases to the dust bin of history?"
Oyez, supra note 2.
¹⁵ Justice Alito: "If excluding a foreign corporation from the state would violate the dormant Commerce Clause, can you prevail?"
Oyez, supra note 2.
¹⁶ Justice Gorsuch: "I mean, if tag jurisdiction was always permissible since time immemorial for persons, how can it be unconstitutional condition to say a corporation must abide by more or less the same rules as we require of individuals?"
Oyez, supra note 2.
¹⁷ Currently, all states require the appointment of an agent to accept service of process for corporations registering to do business within the state.

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