June 30, 2022

Volume XII, Number 181

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Can a State Require a Corporation to Consent to General Personal Jurisdiction as A Condition of Doing Business in The State? the U.S. Supreme Court Is Set to Decide.

The long-running dispute over the constitutionality of Pennsylvania’s consent-by-registration scheme persists. On 25 April 2022, the U.S. Supreme Court granted certiorari in Mallory v. Norfolk Southern Railway Co.1 In Mallory, the plaintiff, a Virginia resident, sued his Virginia-based employer for a violation of the Federal Employers’ Liability Act, alleging that his occupational exposure to carcinogens in Virginia and Ohio caused his colon cancer.2 In response to the defendant’s challenge to personal jurisdiction, the plaintiff alleged that, under Pennsylvania law, the defendant consented to personal jurisdiction by registering to do business in Pennsylvania as a foreign corporation.

As we discussed only a few months ago, in December 2021 the Pennsylvania Supreme Court struck down as unconstitutional Pennsylvania’s consent-by-registration scheme, which conveys general personal jurisdiction over a corporate defendant via the defendant’s registering to do business in Pennsylvania.3 The court held that the statutory scheme violated due process to the extent it conferred general jurisdiction over foreign corporations not “at home” in Pennsylvania based simply on the act of registering to do business in the state. The court further recognized that, though a defendant may waive personal jurisdiction by consent, the fact that Pennsylvania’s statutes offer “reasonable notice” that registration as a foreign corporation in Pennsylvania subjects them to general jurisdiction does not render their consent to jurisdiction voluntary. Rather, consent is “coerced” because foreign corporations wishing to conduct business in Pennsylvania have no choice but to register.

In his 18 February 2022, petition for a writ of certiorari, Mallory argued that a “well-entrenched split” exists between state supreme courts over whether the due process clause permits consent by registration and the federal courts of appeals are likewise “sharply divided” over the question. In support, Mallory looked to a recent Georgia Supreme Court case, Cooper Tire & Rubber Co. v. McCall,4 which upheld Georgia’s own consent-by-registration statutory scheme. Mallory also contended that the Pennsylvania Supreme Court’s holding “flouts a long and unbroken line” of U.S. Supreme Court precedent regarding jurisdictional consent and contravenes the “original public meaning of the Constitution.”

In its 8 March 2022, brief in opposition, Norfolk Southern explained that, excepting Cooper, the holding of which depended on “bizarre” circumstances unique to Georgia law (which the Georgia Supreme Court requested the state legislature remedy), “there is no real post-Daimler [AG v. Bauman]5 disagreement” over the constitutionality of consent-by-registration. Norfolk Southern further argued that the Pennsylvania Supreme Court’s holding was correct and that a holding to the contrary would “eviscerate” due process, violate federalism, and run counter to decades of Supreme Court precedent, the effect of which would be to “invite[] egregious forum shopping.”

With the Supreme Court’s grant of certiorari in Mallory, the permissibility of Pennsylvania’s consent-by-registration scheme is again an open question, the outcome of which will determine whether out-of-state defendants can be hauled into Pennsylvania courts for conduct occurring completely outside the state. The decision is also likely to have a significant impact in other jurisdictions by determining the extent to which states can require consent to general personal jurisdiction as a condition of doing business. As a result, the Supreme Court’s decision in Mallory is one that should be watched closely by companies doing business—not only in Pennsylvania—but throughout the United States.


FOOTNOTES

1 Mallory v. Norfolk S. Ry. Co., --- S. Ct. ---, No. 21-1168, 2022 WL 1205835, at *1 (U.S. Apr. 25, 2022).

2 See Hudson M. Stoner, David A. Fusco, & David R. Fine, Pennsylvania Supreme Court Rejects Business Registration As Means For Consent To Personal Jurisdiction, K&L GATES HUB (Jan. 26, 2022).

3 See id.; see also Mallory v. Norfolk S. Ry. Co., 266 A.3d 542, 547 (Pa. 2021).

4 312 Ga. 422 (2021) (petition for writ of certiorari filed Dec. 20, 2021).

5 571 U.S. 117 (2014).

Copyright 2022 K & L GatesNational Law Review, Volume XII, Number 124
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About this Author

Hudson Stoner Commercial Disputes Attorney K&L Gates Pittsburgh, PA
Associate

Hudson Stoner is an associate at the firm’s Pittsburgh office. He is a member of the commercial disputes practice group.

Mr. Stoner served as a summer associate at the firm where he researched and prepared memoranda on various topics including insurance, intellectual property, construction, and toxic tort litigation.

412-355-6364
David Fusco Litigation Dispute Resolution Attorney
Partner

David Fusco is a partner in our Pittsburgh office practicing in the litigation and dispute resolution group. He concentrates his practice in a variety of areas, including complex commercial litigation, product liability, and toxic tort. David has significant experience implementing national defense strategies in mass tort claims throughout the United States and has tried cases to verdict in Georgia, New York, Pennsylvania, and South Carolina. He has also served as trial counsel for cases in Alabama, Connecticut, Illinois, Louisiana, Missouri, Ohio, and West Virginia.

Professional...

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David Fine Lawyer KL Gates Harrisburg
Partner

David R. Fine is an appellate lawyer with broad experience in both federal and state courts. He has practiced in the Second, Third, Seventh, Ninth and Eleventh federal circuits; the Pennsylvania Supreme Court, Pennsylvania Superior Court and Pennsylvania Commonwealth Court; the Florida Supreme Court and the Florida Third District Court of Appeal; the Texas Court of Appeals; the Arizona Court of Appeals, the Oregon Court of Appeals and the Maryland Court of Appeals. Mr. Fine frequently serves as lead counsel in briefing or arguing appeals (and sometimes in both), and he...

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