Pennsylvania Supreme Court Holds That Requiring Consent To Personal Jurisdiction In Order To Do Business In Pennsylvania Violates Due Process

• Published date: 30 December 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Trials & Appeals & Compensation
• Law Firm: Schnader Harrison Segal & Lewis LLP
• Author: Mr Barry Alexander and Peter Moomjian

In a December 22, 2021 decision that will have far-reaching effects, the Pennsylvania Supreme Court held in Robert Mallory v. Norfolk Southern Railway Company that Pennsylvania's consent-by-registration statutory framework is unconstitutional, and thus could not provide a basis for finding personal jurisdiction.¹ The Court noted: "Our 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."

Background

In deciding Daimler AG v. Bauman, the U.S. Supreme Court said in 2014 that its holding - only in the exceptional case will general personal jurisdiction exist over a corporate entity in a forum other than in its state of incorporation or principal place of business - merely applied prior case law; it did not overrule or modify it. In practice, however, this decision, as well as the Court's 2011 decision in Goodyear Dunlop Tires Operations, have had a profound effect on litigation in the United States, dramatically narrowing the scope of general personal jurisdiction and requiring plaintiffs' attorneys to rely on alternative arguments to support personal jurisdiction.

One argument that frequently has been raised in the wake of Goodyear and Daimler is that a company's registration to do business in a state and concomitant appointment of an agent for service in the forum constitute consent to personal jurisdiction in that forum. This issue has been of particular note in Pennsylvania, which is the only state whose law expressly provides that registering to do business allows Pennsylvania courts to exercise personal jurisdiction over a company incorporated elsewhere. 42 Pa. C.S. ' 5301(a)(2)(i).

The Trial Court Decision

Robert Mallory, a Virginia resident, filed suit against Norfolk Southern Railway Company ("Norfolk Southern"), a Virginia corporation, in the Philadelphia Court of Common Pleas, asserting a claim pursuant to the Federal Employer's Liability Act ("FELA"). Mallory asserted that he suffered harm due to exposure to carcinogens while working for Norfolk Southern in Ohio and Virginia. Norfolk Southern filed preliminary objections seeking dismissal of the complaint based on a lack of personal jurisdiction.

As there was no other reasonable basis for finding personal jurisdiction, the central issue was whether Norfolk Southern consented to...