The NCSL Blog

09

From the State and Local Legal Center

In Mallory v. Norfolk Southern Railway, the U.S. Supreme Court will decide the constitutionality of a state law that requires companies that conduct business in that state, consent to be sued in that state. 

us supreme courtRobert Mallory lives in Virginia and sued his employer, Norfolk Southern Railway, in Pennsylvania state court alleging it violated the Federal Employer's Liability Act. Mallory claims he was exposed to harmful carcinogens at work, though not in Pennsylvania. Norfolk Southern Railway’s principal place of business is in Norfolk, Va.

Norfolk Southern Railway has registered to do business in Pennsylvania, as state law requires. Per Pennsylvania law, “qualification as a foreign corporation under the laws of this Commonwealth” allows Pennsylvania courts to exercise general jurisdiction over a foreign corporation. 

Norfolk Southern Railway argues that the 14th Amendment’s Due Process Clause prohibits a state from requiring a corporation to consent to general jurisdiction to do business in the state. The Pennsylvania Supreme Court agreed.

In International Shoe Co. v. Washington (1945), the U.S. Supreme Court held a state court could exercise general jurisdiction over all claims against a corporation if the corporation had “continuous and systematic” business contacts in the state. 

In two more recent decisions, Goodyear Dunlop Tires Operations v. Brown (2011) and Daimler AG v. Bauman (2014), the U.S. Supreme Court has, according to the Pennsylvania Supreme Court, “narrow[ed] significantly the constitutional bases upon which a state court could exercise general personal jurisdiction over a foreign corporation.” 

Specifically, in Goodyear, the U.S. Supreme Court opined the general jurisdiction inquiry “is not whether a foreign corporation's in-forum contacts can be said to be in some sense 'continuous and systematic;' rather, it is whether that corporation's affiliations with the State are so 'continuous and systematic' as to render [it] essentially at home in the forum state.”

Mallory argued that none of the U.S. Supreme Court general jurisdiction cases “stand for the proposition that a foreign corporation may not validly consent to general jurisdiction by registering to do business in a state.”

Norfolk Southern Railway argued that Goodyear and Daimler set forth the minimum due process requirements for general jurisdiction. “[B]ecause all foreign corporations that conduct business in Pennsylvania must register, the ability to do business in the Commonwealth hinges upon compliance with mandatory registration provisions and cannot serve as a voluntary relinquishment of due process rights.”

The Pennsylvania Supreme Court agreed with Norfolk Southern Railway, opining: “to conclude that registering as a foreign corporation invokes all-purpose general jurisdiction eviscerates the Supreme Court's general jurisdiction framework set forth in Goodyear and Daimler and violates federal due process by failing to comport with International Shoe's ‘traditional conception of fair play and substantial justice.’ It would also be contrary to Daimler's directive that a court cannot subject a foreign corporation to general all-purpose jurisdiction based exclusively on the fact that it conducts business in the forum state.”

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This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.