Supreme Court Holds That State Statute Requiring Out-Of-State Companies To Consent To General Personal Jurisdiction As A Condition Of Doing Business Does Not Violate Due Process

• Published date: 10 July 2023
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Trials & Appeals & Compensation
• Law Firm: Shearman & Sterling LLP
• Author: Shearman & Sterling LLP

On June 27, 2023, the Supreme Court of the United States held 5-4 that a Pennsylvania statute requiring an out-of-state company to submit to general personal jurisdiction within the Commonwealth when registering to do business there did not violate the Due Process Clause of the Fourteenth Amendment. Mallory v. Norfolk S. Ry. Co.,'U.S.', 2023 WL 4187749 (2023). The Court left open, however, whether Pennsylvania's statute might violate the dormant Commerce Clause doctrine, a question which will likely be considered by the Pennsylvania Supreme Court on remand.

Plaintiff worked for defendant railway company as a mechanic for nearly 20 years, first in Ohio and then in Virginia, but never in Pennsylvania (although he lived for a period of time in Pennsylvania after retiring from the company). After plaintiff left the company, he was diagnosed with cancer, which plaintiff alleged was caused by his work for defendant. Id. at *3. At the time he filed suit, plaintiff was a Virginia resident and defendant was incorporated and headquartered in Virginia. Id. Plaintiff, however, brought suit against the company in Pennsylvania state court, asserting claims under a federal workers' compensation law. Id.

Plaintiff argued that, because defendant had registered to do business in Pennsylvania, it had submitted to general personal jurisdiction in the Commonwealth by virtue of a Pennsylvania law requiring out-of-state companies that register to do business in Pennsylvania to agree to appear in a Pennsylvania court on "any cause of action" against them. See id. (citing 42 Pa. Cons. Stat. ' 5301(a)(2)(i), (b) (2019)). Although the Pennsylvania Supreme Court agreed with plaintiff's reading of the statute as purportedly authorizing the exercise of personal jurisdiction over defendant, it held (while acknowledging that its reasoning conflicted with the Georgia Supreme Court's recent decision in Cooper Tire & Rubber Co. v. McCall, 863 S.E.2d 81 (2021)) that Pennsylvania's statute violated the Due Process Clause.

The Supreme Court reversed. A narrow majority (Justices Gorsuch, Thomas, Sotomayor, Jackson, and Alito) concluded that the case was squarely controlled by the Supreme Court's 1917 decision in Pennsylvania Fire, which had held that the Due Process Clause does not prohibit a State from exercising personal jurisdiction over a non-resident corporation, even with respect to claims having no connection to the State, if the corporation has consented (or effectively consented) to...