The Supreme Court Creates Increased Uncertainty By Expanding Doctrinal Scope Of Personal Jurisdiction

• Published date: 31 July 2023
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Court Procedure
• Law Firm: Rimon
• Author: Mr Michael S. Lazaroff

On June 27, 2023, the Supreme Court decided in Mallory v. Norfolk Southern Railway Co., 2023 WL 4187749 (2023) that the Due Process Clause of the Fourteenth Amendment did not prohibit the exercise of personal jurisdiction by a Pennsylvania state court based on a Pennsylvania statute mandating that an out-of-state entity be deemed to have consented to personal jurisdiction as a condition to registering to do business in Pennsylvania. The majority opinion was authored by Justice Gorsuch with Justice Thomas, Justice Alito, and Justice Sotomayor joining with respect to some or all of the decision; Justice Jackson and Justice Alito issued separate concurring opinions. Justice Barret issued a dissent joined by Chief Justice Robert, Justice Kagan and Justice Kavanaugh. This decision seems to expand the theoretical basis for out-of-state personal jurisdiction based on statute alone even for causes of action with no or little contact with the state so long as the statute can be deemed to have provided consent. However, it is not clear that this would apply to any states other than Pennsylvania and Georgia without any new legislation. Additionally, Justice Alito, in his concurrence, raised concerns about whether personal jurisdiction under this statute (or others like it) may be barred by the dormant Commerce Clause, an issue which likely will be considered on remand. Thus, it may be that ultimately there is limited or little practical long-term impact from this decision with regard to existing statutes.

Background

Petitioner Robert Mallory worked for Respondent Norfolk Southern ("Norfolk") as a mechanic for nearly 20 years. He did not work for Norfolk in Pennsylvania. He was unfortunately diagnosed with cancer, which he attributed to his time working for Norfolk doing such things as spraying boxcar pipes with asbestos, handling chemicals in the railroad's paint shop, and demolishing car interiors which contained carcinogens. As a result, he sued Norfolk under the Federal Employers' Liability Act (45 U.S.C. ' 51-60) in Pennsylvania State Court even though at the time that he filed the Complaint, Mr. Mallory lived in Virginia and the complaint alleged that he was only exposed to carcinogens in Ohio and Virginia. Norfolk, which, at the time the complaint was filed, was incorporated and headquartered in Virginia, moved to dismiss the lawsuit because inter alia the Pennsylvania state court's exercise of personal jurisdiction over Norfolk violated the Due Process Clause of the Fourteenth Amendment. Mallory, 2023 WL 4187749 at *3.

Mr. Mallory argued that there was no constitutional issue with the Pennsylvania State Court's exercise of personal jurisdiction. Norfolk registered to do business in Pennsylvania in accordance with a Pennsylvania statute requiring out-of-state companies that register to do business in Pennsylvania 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 "Pennsylvania Registration Statute"). Mr. Mallory argued that Norfolk had thus consented to personal jurisdiction in Pennsylvania by registering in the state in accordance with the Pennsylvania Registration Statute. In addition, Norfolk has significant contacts with Pennsylvania as it manages thousands of miles of track, operates rail yards and runs locomotive repair shops in Pennsylvania. Id.

The trial court found Pennsylvania's statutory scheme unconstitutional as it violated the Due Process Clause. The Pennsylvania Supreme Court affirmed. The Pennsylvania Supreme Court acknowledged that its decision disagreed with a 2021 decision from the Georgia Supreme Court which had rejected a similar Due Process argument with regard to a Georgia statute. Id. (citing Cooper Tire & Rubber Co. v. McCall, 312 Ga. 422, 863 S.E.2d 81 (2021)). The Supreme Court granted certiorari to resolve this split of authority and to determine "whether the Due Process Clause of the Fourteenth Amendment prohibits a State from requiring an out-of-state corporation to consent to personal jurisdiction to do business there". Mallory, 2023 WL 4187749 at *3. The Court noted that it was not reviewing the question raised below (but not decided) of whether "Pennsylvania's statutory scheme as applied here violates this Court's dormant Commerce Clause doctrine". Id. at n.3.

Decision

Justice Gorsuch writing for the majority/plurality explained that the "[t]he question before us [in this case] is not a new one. In truth, it is a very old question - and one this Court resolved in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93, 37 S.Ct. 344...