LEGAL NEWS UPDATE: Mallory v. Norfolk Southern Railway Co., 600 U.S. ___ (2023)
Mallory v. Norfolk Southern Railway Co., 600 U.S. ___ (2023)
On June 27, 2023, the United States Supreme Court issued an opinion in Mallory v. Norfolk Southern Railway Co. This decision presents an interesting analysis of the issue of the scope of a state court’s personal jurisdiction. The case involves a Virginia resident plaintiff, who sued his Virginia based employer for injuries sustained in Ohio and Virginia, in Pennsylvania state court. The Pennsylvania Supreme Court ruled that it lacked personal jurisdiction over the defendant railroad. The United States Supreme Court accepted jurisdiction, and reversed the Pennsylvania Supreme Court, concluding that under the particular circumstances of this case, it was proper for Mr. Mallory to bring his claim in Pennsylvania, despite the lack of any connection, either by party or by injury, to the state.
The basis of the court’s decision is a Pennsylvania statute that provides that when a foreign corporation registers to do business in Pennsylvania, which includes appointing a registered agent to accept service of process, it also consents to the general jurisdiction of Pennsylvania state courts. If a foreign corporation wishes to conduct business in Pennsylvania and enjoy the benefits of accessing that market, it must also bear the burden of acceding to the jurisdiction of Pennsylvania courts for any lawsuit, regardless of where the parties are located or where the cause of action accrued.
Pennsylvania is the only state that has a statute that ties a requirement of accepting the state court’s general jurisdiction to corporate registration. It does not seem likely that this will become a trend, as this type of requirement is not enticing to foreign corporations. The Georgia Supreme Court reached a similar conclusion in Cooper Tire & Rubber Co. v. McCall, 312 Ga. 422, 863 S.E. 2d 81 (2021), holding that corporations that choose to do business in the state are on notice of the jurisdictional consequences of its case law. Pennsylvania and Georgia are the only two states in the country in which the cost for a foreign corporation of doing business includes exposure to the general jurisdiction of those states’ courts.
Justice Gorsuch wrote the majority opinion, which Justices Thomas, Alito, Sotomayor and Jackson joined. Justice Barrett wrote the dissenting opinion, which Justices Roberts, Kagan and Kavanaugh joined. The crux of the dissent is that for over 75 years the Due Process Clause has prevented state courts from asserting general jurisdiction over foreign corporations merely because they do business in the state. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct 154, 90 L.Ed. 95 (1945). The majority opinion allows states to circumvent that constitutional protection by legislative act.
Should you have any questions or concerns regarding how this opinion might affect your business interests, please do not hesitate to reach out to a Wicker Smith partner for clarification.
