Foreign Corp's Registration To Do Business In Pennsylvania Does Not Confer General Jurisdiction

• Published date: 28 January 2022
• Subject Matter: Corporate/Commercial Law, Transport, Corporate and Company Law, Aviation
• Law Firm: Holland & Knight
• Author: Ms Judy R. Nemsick

A recent Pennsylvania Supreme Court decision falls in alignment with several other jurisdictions that do not confer general jurisdiction over a foreign corporation based on its registration to do business in the state. In Mallory v. Norfolk S. Ry. Co.,¹ the Court affirmed that the state's corporate registration statute² is unconstitutional to the extent that it confers general jurisdiction over foreign corporations that are not "at home"³ in Pennsylvania. The Court further held that the registration statute does not constitute voluntary consent by a foreign corporation to general jurisdiction.

Relying on Daimler AG v. Bauman and its predecessor, Goodyear Dunlop Tires Operations, S.A. v. Brown,⁴ the Court held that the state's "statutory scheme of conditioning the privilege of doing business in the Commonwealth on the submission of the foreign corporation to general jurisdiction in Pennsylvania courts strips foreign corporations of the due process safeguards guaranteed in Goodyear and Daimler."⁵ In Mallory, the Virginia plaintiff filed a Federal Employers Liability Act (FELA) lawsuit against a Virginia railway company that has its principal place of business in Virginia for injuries sustained in Ohio and Virginia. The case had no connection to the forum state, other than general jurisdiction based on Pennsylvania's registration statute. The Court found "such broad jurisdictional authority is incompatible with the Fourteenth Amendment. Simply stated, a statute may not require what the Constitution prohibits."⁶

The Court recognized that a constitutional analysis was necessary because Pennsylvania's registration statute is peculiar in that it expressly provides that the act of registering to do business constitutes a basis upon which a court may assert all-purpose general jurisdiction over claims against a foreign corporation.⁷

The Court further recognized the "Hobson's choice" that foreign corporations face to either lawfully register to do business in the state or not do business in Pennsylvania at all. Clearly, no voluntary consent exists; it is coerced. Moreover, if the registration statute was upheld, then "every national corporation [would be] subject to the general jurisdiction of every state. This reality flies in the face of Goodyear and Daimler and cannot be condoned."⁸

Pennsylvania is in accord with other states on this issue.⁹ A few months ago, the New York Court of Appeals addressed this question and, in a 5-2 opinion, similarly held that a...