Supreme Court Upholds Personal Jurisdiction by Corporate Registration

In Mallory v. Norfolk Southern Railway Co., 600 U.S. __ (June 27, 2023), the United States Supreme Court upheld a Pennsylvania law that enables a plaintiff to show general personal jurisdiction over an out-of-state corporation based only upon that company’s registering to do business in Pennsylvania. 42 Pa. Const. Stat. § 5301(a)(2). It is well established that general personal jurisdiction permits a court to adjudicate any and all claims against an out-of-state corporate defendant only where a plaintiff demonstrates that the defendant has substantial contacts with the forum state. The majority decision, however, rules that a plaintiff need not engage in a contacts analysis where a state, such as Pennsylvania, has a corporate registration law deeming corporate registration as consent to jurisdiction. Other states will now likely emulate Pennsylvania by adopting similar statutory provisions authorizing general personal jurisdiction over out-of-state corporations registered to do business in those states even where there has been no showing of substantial state contacts.

The plaintiff in Mallory is a Virginia resident, claiming workplace injuries suffered in Ohio and Virginia. The Defendant is a railroad company incorporated and having its principal place of business in Virginia. Nonetheless, the legal action was filed in Pennsylvania state court and Plaintiff asserted personal jurisdiction simply because the Defendant had formally registered to do business in Pennsylvania pursuant to the Pennsylvania corporate registration law. Pennsylvania’s Supreme Court, however, dismissed the case, holding that the state’s jurisdiction by corporate registration rule was unconstitutional under the Due Process Clause of the 14^th Amendment to the United States Constitution.

The United States Supreme Court reversed in a 5-4 decision. The majority framed the relevant issue as whether the 14^th Amendment’s Due Process Clause “prohibits a State from requiring an out-of-state corporation to consent to personal jurisdiction to do business there.” It held that the Court had already ruled over a hundred years ago in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917) “that laws like Pennsylvania’s comport with the Due Process Clause.” It rejected the argument that Pennsylvania Fire has been overruled by several intervening Supreme Court cases such as International Shoe Co. v. Washington, 326 U.S. 310 (1945), Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 U.S. 919 (2011), and Daimler A.G. v. Bauman, 571 U.S. 117 (2014) , which require a general personal jurisdiction showing of the defendant’s substantial contacts with the forum. Rather, the majority held that “Pennsylvania Fire’s rule for consent-based jurisdiction has not been overruled” and “International Shoe governs [only] where a defendant has not consented to [the] exercise of jurisdiction.”

The dissent sharply criticized the majority ruling as “circumvent[ing]” the “traditional contacts-based approach to jurisdiction.” It explained that International Shoe and its progeny established a rule “that the Due Process Clause does not allow state courts to assert general jurisdiction over [out-of-state] defendants merely because they do business in the state.” The dissent emphasized that, in Goodyear, Daimler and other cases, the Supreme Court “roundly rejected” recent attempts at invoking general personal jurisdiction even in states where a corporation engages in continuous and systematic business, and limited general personal jurisdiction, absent exceptional circumstances, to the corporation’s “home” state (i.e., its state of incorporation and the state where its headquarters or principal place of business is located). The dissent cautioned that the majority opinion appears to have now found “a way around th[e] settled rule” whereby a state can “enact a law making [corporate] registration sufficient for suit on any cause” and “[t]hen, every company doing business in the State is subject to general jurisdiction based on implied ‘consent’ – not contacts.” The dissent predicts that “if States take up the Court’s invitation to manipulate registration,” the longstanding contacts-based analysis governing personal jurisdiction “will be obsolete.”     

Finally, while he joined the majority ruling, Justice Alito wrote separately to highlight other possible constitutional restrictions that could prohibit states from imposing a consent to jurisdiction requirement on out-of-state corporations registering to do business. Most specifically, he pointed to the Dormant Commerce Clause, which restricts a state from regulating commercial conduct that has little connection with the state’s interests.

We will continue to monitor the Mallory litigation as it proceeds on remand and provide an update on any further attempts to challenge the Pennsylvania jurisdiction by registration rule. We also will continue to monitor state corporate registration laws and provide updates as to which states allow for general jurisdiction based upon corporate registration.