SIDEBAR — United States Supreme Court Set To Decide “Game Changing” Case On General Personal Jurisdiction Over A Foreign Corporation

January 3, 2023 / CM Reports / Writing and Speaking

By Melinda S. Kollross

We wish to alert our friends in the defense and insurance industries of a case that will soon be decided by the United States Supreme Court. Mallory v. Norfolk Southern Railway Company, 266 A.3d 542 (Pa. 2021), cert. granted, No 21-1168, 2022 U.S. LEXIS 2118 (U.S. April 25, 2022).  It squarely addresses whether “due process allows a state to assert general personal jurisdiction over a foreign corporation simply because it registers to do business there, as required by state law.” The Pennsylvania Supreme Court said “no”, but if SCOTUS reverses, it could severely increase “forum shopping” and impact the way personal injury and wrongful death cases involving foreign corporate defendants are tried in the various states of the United States.

The Underlying Mallory Facts:

Under Pennsylvania law, foreign corporations must register with the state to do business in the state. This registration under the Pennsylvania statutory scheme constitutes “a sufficient basis” by itself to enable Pennsylvania trial courts to exercise general personal jurisdiction over a foreign corporation. 

Mallory filed a Federal Employer’s Liability Act suit in a Pennsylvania state court against Norfolk Southern Railway (Norfolk) which was incorporated and had its headquarters in Virginia. Norfolk is an interstate carrier owning approximately 2,200 miles of track in Pennsylvania. Norfolk registered to do business in Pennsylvania pursuant to Pennsylvania law. Mallory, who was a resident of Virginia, alleged that he developed colon cancer because of his exposure to asbestos while working for Norfolk in both Virginia and Ohio. Mallory did not allege that he suffered any harmful occupational exposures in Pennsylvania. Simply put, Mallory’s case had nothing to do with Pennsylvania and could not have been brought in Pennsylvania against Norfolk but for the Pennsylvania statutory scheme where the mere act of registration acts as a consent to general personal jurisdiction over registered foreign corporations such as Norfolk.

The Pennsylvania High Court Decision:

Norfolk moved to dismiss Mallory’s action contending that it would violate its federal due process rights to have the case tried in Pennsylvania because of a lack of both personal and general jurisdiction since the case did not arise in Pennsylvania and Norfolk was not otherwise “at home” in Pennsylvania by being incorporated there or having its principal place of business in Pennsylvania. The trial court dismissed the action, and further granted Norfolk’s motion to transfer Mallory’s appeal to the Pennsylvania Supreme Court for a direct appeal.

The Pennsylvania Supreme Court affirmed the trial court’s decision dismissing Mallory’s action on jurisdictional grounds. The Court expressly ruled that the Pennsylvania statutory scheme of conditioning the privilege of doing business in Pennsylvania on the submission of the foreign corporation to general jurisdiction in Pennsylvania courts deprived foreign corporations of the due process safeguards guaranteed in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), and Daimler AG v. Bauman, 571 U.S. 117 (2014). The Court found that legislatively coerced consent to general jurisdiction was not voluntary consent and could not be constitutionally sanctioned. Accordingly, the Court held that the Pennsylvania statutory scheme was unconstitutional to the extent that it afforded Pennsylvania courts general jurisdiction over foreign corporations that were not at home in the Commonwealth by being either incorporated in Pennsylvania or having their principal place of business there.

The SCOTUS Proceedings:

The United States Supreme Court granted Mallory’s petition for certiorari, meaning that at least four Justices on the court want to hear the case involving registration jurisdiction. The case has been fully briefed and oral argument was held on November 8, 2022.

According to one long-time court observer who listened to and reviewed the oral argument, the jurisdictional issue presented by the Mallory case appears to cut across the ideological predilections of the several justices, and a final decision could see some strange “bedfellows” on both the majority and dissenting sides, unless a unanimous opinion is issued. According to this observer, Justices Gorsuch, Sotomayor, and Jackson appeared to side with Mallory and against Norfolk. Justice Alito acknowledged that Norfolk was a large corporation that could litigate anywhere, but Justice Kagan was skeptical of the arguments advanced by Mallory.  Amy Howe, “Jurisdictional Dispute Appears to Scramble the Court’s Usual Ideological Lines.”

A further illustration of how Mallory presents unusual alignments is shown by the fact that the Solicitor General appeared for the Biden Administration to support the corporate defendant instead of the personal injury plaintiff. The Biden Administration argued that upholding the notion of registration jurisdiction “poses risks to international comity by allowing state courts to hear cases against foreign defendants arising out of occurrences in foreign countries”.

Learning Point: Several industry groups and associations have filed amici briefs before the Supreme Court explaining the dire consequences that will occur across the national litigation landscape if the Supreme Court reverses and upholds the notion of registration jurisdiction over foreign corporations. Amici such as the National Association of Manufactures and the Product Liability Council have argued to the Court if it holds for the plaintiff Mallory, manufacturers may be subject to the jurisdiction of courts in states that have little or no relationship to the lawsuit and that unfairly subject them to liability exposure greater than the appropriate state forums.  

We are monitoring the Mallory proceedings and will immediately report on the Supreme Court’s decision when issued.

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