US Supreme Court Holds Business Registration Subjects Out Of State Companies To General Personal Jurisdiction

On 27 June 2023, in a plurality opinion authored by Justice Gorsuch, the United States Supreme Court issued its ruling in Mallory v. Norfolk Southern Railway Co.,¹ holding that a company's decision to register to do business in Pennsylvania amounts to consent to general personal jurisdiction in the Commonwealth. This decision has broad implications for companies that register (or have registered) in Pennsylvania and could serve as an unwelcome invitation to other states to create similar statutory schemes in line with Pennsylvania's.

CASE BACKGROUND

In Pennsylvania, foreign corporations may not do business unless they register with the Commonwealth.² At issue here, Pennsylvania's long-arm statute also provides that registration as a foreign corporation, in turn, submits the corporation to general personal jurisdiction.³ Thus, for decades, Pennsylvania served as fertile ground for plaintiffs' lawyers who preferred to litigate in the forum, even though the matter might have had no connection with the Commonwealth.

That changed in December 2021, when the Pennsylvania Supreme Court issued its decision in Mallory.⁴ In Mallory, the plaintiff sued his former employer Norfolk Southern for a violation of the Federal Employers' Liability Act, alleging that an occupational exposure caused his colon cancer.⁵ The plaintiff, a Virginia resident, worked for Norfolk Southern in Virginia and Ohio, not Pennsylvania.⁶

The Pennsylvania Supreme Court ultimately held that Pennsylvania's statutory scheme was unconstitutional "to the extent that it confers upon Pennsylvania courts general jurisdiction over foreign corporations that are not 'at home' in Pennsylvania pursuant to Goodyear⁷ and Daimler."^8,9 The Pennsylvania Supreme Court also "decline[d] to follow Pennoyer-era High Court decisions that resolve questions of general jurisdiction because they do not hold significant precedential weight in federal jurisprudence on the issue."^10,11 Turning then to the constitutional validity of the consent-by-registration scheme, the court concluded, "a foreign corporation's registration to do business in the Commonwealth does not constitute voluntary consent to general jurisdiction but, rather, compelled submission to general jurisdiction by legislative command."¹²

THE US SUPREME COURT'S HOLDING

The US Supreme Court reversed the state court decision, stating simply "[i]t is enough to acknowledge that the state law and facts before us fall squarely within Pennsylvania Fire's rule."¹³

That case, the Court explained, concerned a suit in Missouri state court, brought by an Arizona corporation against its Pennsylvania-based insurer, for benefits under its insurance policy executed in and insuring property in Colorado.¹⁴ On appeal from the Missouri Supreme Court, the US Supreme Court held there was "no doubt" the insurer could be sued in Missouri by an out-of-state plaintiff on an out-of-state contract, because it agreed to accept service of process in Missouri as a condition of doing business there.¹⁵

Emphasizing its relevance, the Court rebuked the Pennsylvania Supreme Court's dismissal of Pennoyer-era precedent, noting that it was the Supreme Court's "prerogative [to] overrul[e] its own decisions."¹⁶ The Court declined Norfolk...