iIn Mallory v. Norfolk Southern R. Co., the Supreme Court sought to answer an important personal jurisdiction question: whether the Due Process Clause of the Fourteenth Amendment prohibits a State from requiring an out-of-state corporation to consent to personal jurisdiction to do business in that state. The answer: No, the consent requirement does not violate the Due Process Clause.
Background
On June 27, 2023, the Supreme Court, in a narrow 5-to-4 decision, upheld the constitutionality of a Pennsylvania law that requires out-of-state companies that register to conduct business in the Commonwealth to agree to appear in its courts on “any cause of action” against them. 42 Pa. Cons. Stat. § 5301(a)(2)(i),(b)(2019). The Court determined that the statute does not violate the Due Process Clause of the Fourteenth Amendment and a state can require an out-of-state business to consent to general personal jurisdiction as a condition of registering to do business in that state.
The appellant in this case was Robert Mallory who lived in Virginia and worked for Norfolk Southern Railroad Company that was incorporated in Virginia. After Mallory left the company, he was diagnosed with cancer which he attributed to exposure to toxic chemicals while working for Norfolk Southern in Virginia and Ohio. Mallory brought suit against Norfolk Southern in Pennsylvania state court. Norfolk claimed that Pennsylvania lacked personal jurisdiction to hear the case. However, Norfolk Southern had voluntarily registered to do business in Pennsylvania. Registration requires out-of-state companies to agree to give Pennsylvania courts personal jurisdiction over “any cause of action” against them per 42 Pa. Cons. Stat. § 5301(a)(2)(i),(b)(2019).
Norfolk argued that the Pennsylvania law violated the Due Process Clause of the Fourteenth Amendment because a general all-purpose jurisdiction requirement for registering a business in a state was not consent but a “compelled submission to general jurisdiction by legislative command.” The Supreme Court of Pennsylvania agreed with Norfolk and the statute was deemed unconstitutional. On certiorari, the Supreme Court of the United States reversed.
Mallory Holding
The Supreme Court majority opinion determined that Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917) remained gold law and controlled the ultimate outcome of Mallory. Pennsylvania Fire Ins. Co. of Philadelphia held that a Missouri law similar to the Pennsylvania statute did not deny a defendant due process of law. The Court explained that this precedent had direct application to the case and must be followed pursuant to stare decisis principles. Therefore, the statute does not violate the Due Process Clause.
3 of the majority opinion mentions that Norfolk Southern argued below that the statute also violated the Commerce Clause. The Court, however, did not grant certiorari to address that argument, which remained for consideration on remand.
What does this mean for businesses?
Before Mallory, state courts were split on whether this type of consent to general personal jurisdiction violated the Due Process Clause. Now that the Supreme Court has determined that the Pennsylvania statute is constitutional, it is possible that more states will require consent to general personal jurisdiction to be registered for business in the state. Businesses should read registration statutes carefully and be prepared for lawsuits in any state it is registered to conduct business.
You can read the recent Supreme Court decision here: https://www.supremecourt.gov/opinions/22pdf/21-1168_kifl.pdf
