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Volume XII, Number 335

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Does A State Have Personal Jurisdiction When The Plaintiff, Defendant And Incident Are Outside The State?

After contracting colon cancer, Robert Mallory sued Norfolk Southern in the Pennsylvania Court of Common Pleas under the Federal Employers’ Liability Act, alleging workplace exposure to carcinogens.   Even though Mr. Mallory filed suit in Pennsylvania, he did not work for Norfolk Southern in that state nor was he living in there.  Norfolk Southern is a Virginia corporation with its principal place of business in that state when the complaint was filed.  The lawsuit's only nexus to Pennsylvania was Norfolk Southern's registration as a foreign corporation in Pennsylvania.   The jurisdictional hook for the lawsuit was a Pennsylvania statute that provides a company’s registration as a foreign corporation” is deemed “a sufficient basis of jurisdiction to enable the tribunals of this Commonwealth to exercise general personal jurisdiction over” the corporation.  42 Pa. Cons. Stat. § 5301(a)(2)(i).  Earlier this month, the United States Supreme Court heard oral arguments on whether the Constitution permits Pennsylvania to require an out-of-state corporation to “consent” to general personal jurisdiction—and thus to being sued for any cause of action, even if the litigation has no relation to the state—as a condition of doing business there.  Mallory v. Norfolk Southern Railway Co., U.S. S. Ct. Case No. No. 21-1168

California, like Pennsylvania and other states, prohibits foreign corporations from transacting intrastate business without registering with the Secretary of State.  Cal. Corp. Code § 2105.  While California's registration form requires the foreign corporation to  consent irrevocably to service of process, the state does not require that they consent to general jurisdiction.  AM Trust v. UBS AG, 681 F. App'x. 587, 588-89 (9th Cir. 2017).  See Court Rules Registration To Transact Intrastate Business Does Not Establish General Jurisdiction.

Is The Failure To Register, Consent?

An adverse ruling in Mallory will likely spell trouble for a different California statute - Corporations Code Section 2203(a).  That statute provides that a foreign corporation that transacts intrastate business without registration is deemed to consent to the jurisdiction of California courts.  Section 2203 appears to be even more constitutionally questionable than the Pennsylvania statute because Pennsylvania at least requires the affirmative act of registration to establish consent.  

© 2010-2022 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 327
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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