This Report summarizes opinions issued on April 28 and May 2, 2022 (Part I); and cases granted review on April 25 and May 2, 2022 (Part II).
Case Granted Review: Mallory v. Norfolk Southern Railway Co., 21-1168
Mallory v. Norfolk Southern Railway Co., 21-1168. The Court will consider “[w]hether the Due Process Clause of the Fourteenth Amendment prohibits a state from requiring a corporation to consent to personal jurisdiction to do business in the state.” Petitioner Robert Mallory, a Virginia resident, sued Virginia-based Norfolk Southern in Pennsylvania superior court, claiming that exposure to carcinogens while working for the company caused him to develop colon cancer. Although Norfolk Southern is registered to do business in Pennsylvania, Mallory did not allege that any harmful exposure occurred in Pennsylvania. Under Pennsylvania law, however, a foreign corporation’s registration to do business in the state constitutes “a sufficient basis of jurisdiction to enable the tribunals of [Pennsylvania] to exercise general personal jurisdiction over” the corporation. 42 Pa. Cons. Stat. §5301(a)(2)(i). Norfolk Southern filed preliminary objections, arguing that the superior court lacked personal jurisdiction. The court agreed, concluding that Pennsylvania’s statutory scheme “forced” companies to choose between consenting to general jurisdiction and conducting business in the state: “‘Faced with this Hobson’s choice, a foreign corporation’s consent to general jurisdiction in Pennsylvania can hardly be characterized as voluntary.’” The Pennsylvania Supreme Court agreed, concluding that Pennsylvania’s consent-by-registration scheme “does not constitute voluntary consent to general jurisdiction but, rather, compelled submission to general jurisdiction by legislative command.” 266 A.3d 542. The court therefore held that the statutory scheme did not comport with due process and did not confer general jurisdiction over foreign corporations.
Jurisdiction over foreign or out-of-state corporations has largely been guided by International Shoe Co. v. Washington, 326 U.S. 310 (1945), in which the Court shifted its jurisdictional analysis away from territorial considerations that focused on a defendant’s presence within the forum state, as set forth in Pennoyer v. Neff, 95 U.S. 714 (1877). Instead, International Shoe considered a company’s contacts, ties, or relations within the forum state, such that maintenance of the suit “does not offend ‘traditional notions of fair play and substantial justice.’” International Shoe, 326 U.S. at 316 (citation omitted). Depending on the nature and extent of the contacts, a forum state could have “specific (case-linked) jurisdiction” or “general (all-purpose) jurisdiction” over a corporate defendant. If general jurisdiction applies, neither the claims at issue nor the defendant’s conduct needs to relate to the forum state. The Court recently clarified general jurisdiction principles in Daimler AG v. Bauman, 571 U.S. 117 (2014), and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), to require more than simply doing business in the state for jurisdiction to attach: “[a] court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Daimler AG, 571 U.S. at 127 (quoting Goodyear, 564 U.S. at 919).
Mallory argues that International Shoe and its progeny have no bearing on this case because Norfolk Southern voluntarily consented to general jurisdiction in Pennsylvania when it registered to do business in the state, consistent with due process principles. He maintains that the Pennsylvania Supreme Court “conflated a defendant’s consent and its contacts with a state—two distinct grounds for personal jurisdiction,” and “flouted” longstanding precedent such as Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917), which Mallory claims “held that a corporation’s consent to jurisdiction through a registration statute is constitutionally valid.” Mallory also argues that intervening decisions on jurisdiction did not overturn that century-old precedent because those cases involved non-consenting defendants: “Just as International Shoe left undisturbed the validity of a court’s jurisdiction over an individual physically present in the state, a corporation’s consent to jurisdiction through a registration statute remains a ‘traditional’ and valid basis of jurisdiction.” Mallory further contends that conditioning the right to conduct business within Pennsylvania on consent to jurisdiction is not coercive because Norfolk Southern “wields immense commercial power” and “can withstand the economic loss of the Pennsylvania market.” Mallory also asserts that the Court’s precedents contemporaneous with adoption of the Fourteen Amendment “recognizing the validity of registration statutes comports with the original public meaning of the Due Process Clause” and that any conflict with International Shoe or its progeny should resolve in favor of the original meaning of the Due Process Clause.
Norfolk Southern does not dispute that a corporation may voluntarily consent to general jurisdiction, but says that its own consent under the registration statute was not voluntary and violated due process principles. First, the company maintains that Goodyear and Daimler “‘dramatically altered’ the general jurisdiction analysis” by requiring that “affiliations with the State are so ‘continuous and systematic’ as to render them essentially home’ there.” Preserving the statutory scheme, according to the company, would contravene “‘Daimler’s directive that a court cannot subject a foreign corporation to general all-purpose jurisdiction based exclusively on the fact that it conducts business in the forum state.’” (Citation and quotation marks omitted.) Second, Norfolk Southern maintains that it was not at home in Pennsylvania and cited the Pennsylvania Supreme Court’s conclusion that the consent-by-registration scheme “is contrary to the concept of federalism, because it infringes upon our sister state[s’] ability to try cases against their corporate citizens.” (Citation and quotation marks omitted.) Third, the company points out that Mallory’s reliance on Pennoyer-era cases like Pennsylvania Fire does not support the consent-by-registration scheme because “[t]hose cases were decided ‘when courts applied a territorial approach to general jurisdiction,’ which was displaced by International Shoe.” Finally, Norfolk Southern argues that the consent-by-registration scheme violates “the unconstitutional conditions doctrine” by “‘impermissibly condition[ing] the privilege of doing business in Pennsylvania upon a foreign corporation’s surrender of its constitutional right to due process.”