Perhaps overshadowed by landmark opinions in other areas, the U.S. Supreme Court’s recent 5-4 decision concerning personal jurisdiction in <em><a href="https://www.wcmlaw.com/wp-content/uploads/2023/07/Mallory-v.-Norfolk.pdf">Mallory v. Norfolk</a></em> may dramatically impact the nature of civil litigation against out-of-state defendants across the nation.
Personal jurisdiction refers to a court’s power to hear a claim against a certain entity. Generally<em>, </em>plaintiffs in civil claims can establish personal jurisdiction over a defendant if: (1) the defendant is “at home” in the forum state meaning they are incorporated or headquartered there (referred to as “general” jurisdiction); or (2) the defendant has “minimum contacts” with the state such that defending would not threaten “traditional notions of fair play and justice,” referred to as “specific” jurisdiction.
However, <em>Mallory</em> upheld a Pennsylvania law that requires any entity registering to do business in the state to consent to the general jurisdiction of the state’s courts, potentially subjecting businesses to general jurisdiction in any state where it registers to do business. In <em>Mallory,</em> the plaintiff worked as a freight mechanic with Norfolk Southern Railway Co. (“Norfolk”) in Ohio and Virginia for twenty years, and then briefly moved to Pennsylvania until his diagnosis with cancer. After moving back to Virginia, Mallory sued Norfolk for alleged workplace injuries in Pennsylvania court.
In response, Norfolk argued the court lacked personal jurisdiction because Norfolk was not headquartered or incorporated in Pennsylvania and did not have sufficient contacts with the state. Norfolk also argued that the consent statute violated the Due Process Clause and that the U.S. Supreme Court’s decision in <em>Pennsylvania Fire Insurance Co. v. Gold Issue Mining and Milling Company</em>, 243 U.S. 93 (1917), which found that a similar statute did not violate due process, had been overruled by subsequent cases addressing personal jurisdiction. The Supreme Court of Pennsylvania agreed with Norfolk and held that the statute was unconstitutional.
The U.S. Supreme Court majority disagreed, finding that the Due Process Clause does not prohibit states from requiring an out-of-state corporation to consent to being sued as a condition of doing business in the state. The Court found that it was irrelevant that Mr. Mallory no longer lived in Pennsylvania and was likely injured in Virginia and Ohio; instead, the Court acknowledged that entities like Norfolk can statutorily consent to jurisdiction by registering to do business in a state. The Court also found that the <em>Pennsylvania Fire</em> case had not been overruled and was controlling precedent.
While some fear that the <em>Mallory</em> decision will allow plaintiffs to engage in “litigation tourism” and “forum shopping,” others predict that it may be subject to challenge. Three members of the Court joined Justice Barrett in dissent, opining that Pennsylvania’s registration law violates the Due Process Clause while Justice Alito noted in his concurrence that the law also raises Dormant Commerce Clause concerns. That issue was not addressed in the decision and may form the basis for a subsequent challenge. Nonetheless, the decision will likely result in other states passing similar laws and expand the ability of states to obtain general jurisdiction over foreign and domestic companies doing business in multiple states.
Thank you to Nicholas Ozorowski for his contribution to this post. Please contact <a href="email@example.com">Andrew Gibbs</a> with any questions.