Last week, amid its headline-generating decisions on affirmative action, religious accommodations in the workplace, and LGBTQ rights, the Supreme Court of the United States also issued its decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. _____ (2023) (slip op.), a decision which has the potential to expand a state’s jurisdiction over out-of-state corporations registered to do business there.
In a 5-4 decision, the Court held that a Pennsylvania law requiring out-of-state companies that register to do business in Pennsylvania to agree to appear in Pennsylvania courts on “any cause of action” against them comports with the Due Process Clause.
The plaintiff – a Virginia resident – alleged he developed cancer from two decades of exposure to carcinogens while working on railways in Ohio and Virginia. He sued his former employer, Norfolk Southern Railway Co., in Pennsylvania state court under the Federal Employers’ Liability Act, 45 U. S. C. §§ 51-60, a federal workers’ compensation scheme permitting railroad employees to recover damages for their employers’ negligence.
The plaintiff argued that his former employer – a company incorporated and headquartered in Virginia – was subject to jurisdiction in Pennsylvania based upon a state law requiring out-of-state companies that register to do business there to agree to appear in its courts on “any cause of action” against them. 42 Pa. Cons. Stat. §5301(a)(2)(i), (b) (2019).
The company argued that a Pennsylvania court’s exercise of personal jurisdiction over it would offend the Due Process Clause of the Fourteenth Amendment, pointing to longstanding precedent – International Shoe Co. v. Washington, 326 U.S. 310 (1945) – for the proposition that corporations may only be subject to two types of personal jurisdiction: one, “specific jurisdiction,” which permits suits that arise out of or relate to a corporate defendant’s activities in a state; and two, “general jurisdiction,” which permits suits against a corporate defendant in states where the corporation is incorporated or has its principal place of business.
Rejecting these arguments, the Court held that lawsuits premised on implied consent to jurisdiction do not deny a defendant due process of law.
Justice Alito wrote separately suggesting another avenue of attack on the Pennsylvania law, noting the “good prospect that Pennsylvania’s assertion of jurisdiction here – over an out-of-state company in a suit brought by an out-of-state plaintiff on claims wholly unrelated to Pennsylvania – violates the Commerce Clause.”
This issue is not yet settled, as the case has been remanded back to the Pennsylvania Supreme Court for further proceedings where it is expected that the company will renew its challenge against personal jurisdiction based upon the Commerce Clause.
Although only a few states currently have consent-by-registration laws such as the Pennsylvania law at issue, employers should be cautious; this case may spur other states to consider similar legislation.
The Court’s slip opinion may be found here.