Personal Jurisdiction And Foreign Corporation Registration Statutes: A Purple Haze, But The Sky Is Not Falling

• Published date: 11 July 2023
• Subject Matter: Litigation, Mediation & Arbitration, Compliance, Trials & Appeals & Compensation
• Law Firm: Perkins Coie LLP
• Author: Mr Eric B. Wolff and Stephanie Olson

The U.S. Supreme Court has held'by a 5-4 margin'that it did not violate due process for a Pennsylvania court to exercise jurisdiction over an asbestos case with no connection to Pennsylvania because of a unique Pennsylvania foreign corporation registration statute that requires consent to general jurisdiction to do business in the state. The case'Mallory v. Norfolk Southern Railroad Co.'immediately alarmed most large businesses, which are typically registered in many'and likely all'states as foreign corporations in order to do business. This Update provides guidance on the decision, other states to watch out for (if any), and what challenges defendants should preserve when challenging personal jurisdiction.

In sum, the result announced here in a majority opinion by Justice Gorsuch, joined by Justices Thomas, Alito (in part), Sotomayor, and Jackson, appears to be a one-off. The blend of conservative and liberal justices is legally and psychologically interesting, but the sky is not falling for multistate companies. The Court's "holding" is limited by the views expressed by Justice Alito in his concurrence and by the unified views of the four dissenters. In finding no due process violation, Justice Alito emphasized that the railroad employer had significant connections to Pennsylvania in addition to its consent to jurisdiction by way of the Pennsylvania registration statute. Thus, there is no majority holding that compliance with a foreign corporation registration statute standing alone suffices for consent to personal jurisdiction, even if the statute literally requires consent to "general jurisdiction." Justice Alito went on to suggest that such exercises of state jurisdiction could run afoul of the Court's Dormant Commerce Clause case law, and defendants should preserve that issue going forward.

There do not appear to be other state statutes currently that are close to Pennsylvania's, except for Georgia's statute as it has been construed by that state's Supreme Court. But, of course, states could change their laws to something akin to Pennsylvania's. On the current Court, at least, there would appear to be a solid five-vote majority for any such law'standing alone'being insufficient for exercising personal jurisdiction.

Background and Case Overview

In an increasingly common, history-focused majority opinion by Justice Gorsuch, the U.S. Supreme Court took a trip down memory lane in its personal jurisdiction analysis and resolution of Mallory v. Norfolk Southern Railroad Co. The case involved an asbestos lawsuit by a railroad employee, Mr. Mallory, who had worked for Norfolk Southern in Ohio. Norfolk Southern is based in Virginia but has significant operations in Pennsylvania. While the plaintiff had lived in retirement in Pennsylvania for a bit, he resided in Virginia at the time of filing suit, and Pennsylvania had no connection to the lawsuit other than being the home of Mr. Mallory's lawyers. He sued in Pennsylvania state court. Among the bases for personal jurisdiction, he cited a Pennsylvania registration statute that required Norfolk Southern to consent to Pennsylvania court jurisdiction over "any cause of action" against them.

As it turned out, the U.S. Supreme Court had previously held in 1917 that the consent obtained from an out-of-state corporation by way of compliance with a Missouri registration statute very similar to Pennsylvania's sufficed for due process purposes. See Pennsylvania Fire Ins. Co. Of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917). For good measure, that decision was authored by Justice Oliver Wendell Holmes and was unanimous. (Also of note, amidst the lengthening opinions from appellate courts: The opinion was barely over 1,000 words.)

Pennsylvania Fire, though, was nearly 30 years before International Shoe Co. v. Washington, 326 U.S. 310 (1945). It occurred amid an era of narrow, formalistic personal jurisdiction analysis based on either "presence" or "consent," with Pennoyer v. Neff, 95 U.S. 714 (1878), being the rule of the day...