Mallory v. Norfolk S. Ry. Co.

266 A.3d 542

Robert MALLORY, Appellant

v.NORFOLK SOUTHERN RAILWAY COMPANY, Appellee

No. 3 EAP 2021

Supreme Court of Pennsylvania.

Argued: September 21, 2021

Decided: December 22, 2021

Daniel Caleb Levin, Laurence S. Berman, Luke Thomas Pepper, Levin Sedran & Berman, Philadelphia, PA, for Appellant Robert Mallory

Andrew John DuPont, Jonathan W. Miller, Locks Law Firm, Philadelphia, PA, for Appellant Amicus Curiae Locks Law Firm

David Alan Damico, Daniel Brennen Donahoe, Ira L. Podheiser, Burns White LLC, Pittsburgh, PA, Bruce Philip Merenstein, Ralph G. Wellington, Schnader Harrison Segal & Lewis LLP, Philadelphia, PA, for Appellee Norfolk Southern Railway Company

James Michael Beck, Life Sciences, Reed Smith LLP, Philadelphia, PA, for Appellees Amici Curiae Pennsylvania Defense Institute, Philadelphia Association of Defense Counsel, Washington Legal Foundation

Sharon L. Caffrey, Theresa A. Langschultz, Duane Morris LLP, Philadelphia, PA, for Appellee Amicus Curiae CSX Transportation, Inc.

Ruxandra Maniu Laidacker, The Criminal Appeals, Kline & Specter PC, Philadelphia, PA, Charles Lyman Becker, City of Philadelphia Law Department Appeals and Litigation Department, Philadelphia, PA, for Appellee Amicus Curiae The Pennsylvania Association for Justice

BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

CHIEF JUSTICE BAER

I. Introduction

Under Pennsylvania law, a foreign corporation "may not do business in this Commonwealth until it registers" with the Department of State of the Commonwealth. 15 Pa.C.S. § 411(a). Further, "qualification as a foreign corporation under the laws of this Commonwealth" constitutes a sufficient basis to enable Pennsylvania courts to exercise general personal jurisdiction over a foreign corporation.

42 Pa.C.S. § 5301(a)(2)(i). Pursuant to these statutes, a Virginia resident filed an action in Pennsylvania against a Virginia corporation, alleging injuries in Virginia and Ohio. The plaintiff asserted that Pennsylvania courts have general personal jurisdiction over the case based exclusively upon the foreign corporation's registration to do business in the Commonwealth.

The trial court held that our statutory scheme, affording Pennsylvania courts general personal jurisdiction over foreign corporations that register to do business in the Commonwealth, regardless of the lack of continuous and systematic affiliations within the state that render the corporation essentially at home here, fails to comport with the Due Process Clause of the Fourteenth Amendment to the United States Constitution.¹ The trial court further reasoned that it would violate due process to construe a foreign corporation's compliance with our mandatory registration statute as voluntary consent to Pennsylvania courts’ exercise of general personal jurisdiction. In this direct appeal, we address the propriety of the trial court's ruling.

Based on the United States Supreme Court's decision in Daimler AG v. Bauman , 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014), and its predecessor Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011), we agree with the trial court that our statutory scheme violates due process to the extent that it allows for general jurisdiction over foreign corporations, absent affiliations within the state that are so continuous and systematic as to render the foreign corporation essentially at home in Pennsylvania. We further agree that compliance with Pennsylvania's mandatory registration requirement does not constitute voluntary consent to general personal jurisdiction. Accordingly, we affirm the trial court's order, which sustained the foreign corporation's preliminary objections and dismissed the action with prejudice for lack of personal jurisdiction.

II. Basic Principles of Personal Jurisdiction

To facilitate an understanding of the legal issue presented, we begin with a brief summary of the basic principles of personal jurisdiction. Personal jurisdiction is the authority of a court over the parties in a particular case. Ruhrgas Ag v. Marathon Oil Co ., 526 U.S. 574, 577, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999). Personal jurisdiction was originally tied directly to a defendant's presence within the forum state. Pennoyer v. Neff, 95 U.S. 714, 722, 24 L.Ed. 565 (1877) (holding that "every State possesses exclusive jurisdiction and sovereignty over persons and property within its territory"). Service of process on a defendant physically present in the forum State conferred personal jurisdiction over that defendant. Id. at 724. This territorial approach limited personal jurisdiction over corporations which, pursuant to state statutes, were generally only "present" in their state of incorporation and, thus, could not be served in other states, regardless of whether they conducted significant business in other states. Id. at 720 (providing that the "authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to exercise authority beyond those limits would be deemed in every other forum ... an illegitimate assumption of power..."). In an effort to subject foreign corporations to the jurisdiction of local courts in controversies arising from transactions in the forum State, states thereafter enacted registration statutes requiring foreign corporations to appoint in-state registered agents to receive service of process. Morris & Co. v. Skandinavia Ins. Co. , 279 U.S. 405, 408-09, 49 S.Ct. 360, 73 L.Ed. 762 (1929).

In 1945, the United States Supreme Court decided International Shoe Co. v. Washington , 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), in which the Court shifted its personal jurisdiction analysis away from the territorial approach described in Pennoyer and towards the modern-day contacts-focused analysis. International Shoe , 326 U.S. at 316-17, 66 S.Ct. 154. In that seminal decision, the High Court clarified that the Fourteenth Amendment's Due Process Clause protects the defendant's liberty interest in not being subject to the binding judgments of a forum with which the defendant has no meaningful "contacts, ties, or relations." Id. at 319, 66 S.Ct. 154. The Court explained that a tribunal's authority depends upon the defendant's minimum contacts with the forum State such that the maintenance of the suit "does not offend traditional notions of fair play and substantial justice." Id. at 316, 66 S.Ct. 154 (citing Milliken v. Meyer , 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940) ).

This focus on the nature and extent of a corporate defendant's relationship with the forum State led to the recognition of two categories of personal jurisdiction: specific (case-linked) jurisdiction and general (all-purpose) jurisdiction. Ford Motor Co., v. Mont. Eighth Judicial Dist. Court , ––– U.S. ––––, 141 S.Ct. 1017, 1024, 209 L.Ed.2d 225 (2021). For a state court to exercise specific jurisdiction, there must be an affiliation between the forum State and the underlying case or controversy, such as an activity or occurrence that takes place in the forum State and is, therefore, subject to the state's regulation. Id. at 1025.

Conversely, general jurisdiction extends to all claims brought against a foreign corporation; the claims "need not relate to the forum State or the defendant's activity there." Id. at 1024. A state may exercise general jurisdiction where the "continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities." International Shoe , 326 U.S. at 318, 66 S.Ct. 154. Thus, historically, a court could exercise general jurisdiction over all claims against a corporate defendant if the defendant had "continuous and systematic" business contacts in the forum state. Id. at 318, 66 S.Ct. 154. As discussed in detail, infra , the High Court's decisions in Goodyear and Daimler, however, have narrowed the concept of a state court's constitutionally permissible exercise of general personal jurisdiction over a foreign corporation, thereby altering the governing analysis.

Additionally, while not at issue in Goodyear and Daimler , it is well established that the requirement of personal jurisdiction "recognizes and protects an individual liberty interest," which, like other individual rights, may be waived in a variety of ways, including consenting to the personal jurisdiction of the court by appearance, contractually agreeing to personal jurisdiction, or stipulating to personal jurisdiction. Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 702-03, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). Thus, consent to jurisdiction by waiving one's due process rights is an independent basis for jurisdiction, assuming that the consent is given voluntarily. See Brady v. United States , 397 U.S. 742, 748, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970) (observing that waivers of constitutional rights must be voluntary, knowing, and intelligent).

III. Goodyear and Daimler Decisions

As the High Court's decisions in Goodyear and Daimler serve as the crux of this appeal, we review them at this juncture. In Goodyear , North Carolina plaintiffs whose sons died in a bus accident in France filed a wrongful death action in North Carolina against Goodyear USA, an Ohio corporation, and three Goodyear subsidiaries organized and operated in Luxembourg, Turkey, and France. The action alleged that the accident was caused by a defective tire manufactured at the plant of the foreign subsidiary in Turkey. Goodyear's foreign subsidiaries challenged North Carolina's exercise of general jurisdiction. The state courts found that general jurisdiction over the foreign subsidiaries was proper because some of the tires made abroad by the foreign subsidiaries had reached North Carolina through the stream of commerce. The issue on appeal was whether that exercise of general...