The U.S. Supreme Court recently issued an opinion in Mallory v. Norfolk Southern Railway Co. that will likely have a significant impact on where litigation is initiated in the United States, particularly if more states follow Pennsylvania’s lead in passing legislation requiring companies who do business locally to consent to personal jurisdiction.
The Underlying Case
In Mallory v. Norfolk Southern Railway Co., No. 21-1168 (U.S. June 27, 2023), plaintiff Robert Mallory, a resident of Virginia, sued Virginia-based Norfolk Southern, his former employer, in Pennsylvania. The lawsuit alleged that Mallory suffered damages related to exposure to toxic chemicals while working for Norfolk Southern in Virginia and Ohio. The alleged basis for jurisdiction in Pennsylvania was that Norfolk Southern consented to it by registering to do business there.
All out-of-state corporations that desire to do business in Pennsylvania must register as foreign corporations. Pennsylvania law provides that “qualification as a foreign corporation” allows state courts to “exercise general personal jurisdiction” over the corporation.
Norfolk Southern argued that Pennsylvania’s law tying registration to jurisdiction violated the U.S. Constitution’s Due Process Clause. Pennsylvania’s own courts agreed.
The Supreme Court’s Decision
On June 27, 2023, the U.S. Supreme Court, in a 5-4 decision, reversed the Pennsylvania courts and ruled that the Due Process Clause does not prohibit a state from requiring an out-of-state corporation to consent to personal jurisdiction. Justice Gorsuch, writing for the majority, explained: “If having to defend this suit in Pennsylvania seems unfair to Norfolk Southern, it is only because it is hard to see Mallory’s decision to sue in Philadelphia as anything other than the selection of a venue that is reputed to be especially favorable to tort plaintiffs. But we have never held that the Due Process Clause protects against forum shopping.”
The dissent argued that the majority’s ruling permits states to bypass due process requirements and manufacture consent to jurisdiction. Moreover, the dissent asserted that Pennsylvania’s registration process does not explicitly explain that registration results in consent.
Implications
The Mallory decision will almost certainly increase forum shopping, particularly if more states adopt foreign corporation registration requirements similar to those in Pennsylvania. Corporations who do business in multiple states should carefully review, and continue to monitor, statutory developments that could impact whether they may be subject to jurisdiction in states in which they’re not headquartered, and in which they have what they might consider—in business (if not legal) terms—a relatively minor presence.
For more information regarding Alto Litigation’s litigation practice, please contact one of Alto Litigation’s partners: Bahram Seyedin-Noor, Bryan Ketroser, or Joshua Korr.
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