United States Supreme Decides “Game Changing” Case on General Personal Jurisdiction Over a Foreign Corporation

by Melinda S. Kollross

In another decision involving some peculiar judicial alignments, the Supreme Court issued a 5-4 decision in Mallory v. Norfolk Southern Railway Company, No. 21-1168 (U.S. June 27, 2023). It 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 SCOTUS reversed, and its decision will certainly 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” all 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.

SCOTUS Reverses—Forum Shopping Will Be The Norm

In a 5-4 decision issued on June 27, 2023, the United States Supreme Court reversed holding that the Due Process Clause of the Fourteenth Amendment does not prohibit a State from requiring an out-of-state corporation to consent to personal jurisdiction to do business there. Justices Gorsuch, Thomas, Alito, Sotomayor and Jackson formed the majority, while Justices Barrett, Roberts, Kagan and Kavanaugh dissented. According to the majority, the outcome was dictated by its prior decision Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U. S. 93 (1917), where the Court unanimously held that laws like Pennsylvania’s comport with the Due Process Clause. The majority saw no good reason to overrule that decision, and thus reaffirmed its validity.

The impact of this decision can perhaps be best understood by these words by Justice Gorsuch, writing for the majority:

“If having to defend this suit in Pennsylvania seems unfair to Norfolk Southern, it is only because it is hard to see Mallory’s decision to sue in Philadelphia as anything other than the selection of a venue that is reputed to be especially favorable to tort plaintiffs. But we have never held that the Due Process Clause protects against forum shopping.” (Slip Op. p. 5)