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Supreme Court Affirms State Corporate Registration Law in Personal Jurisdiction Case

The justices’ ruling could have far-reaching effects for corporate defendants, allowing plaintiffs to choose favorable out-of-state venues.

By Susan Frederick  |  June 29, 2023

In Mallory v. Norfolk Southern Railway Co., the Supreme Court upheld the constitutionality of a Pennsylvania law requiring out-of-state companies that want to do business in the state to register and consent to appear in a Pennsylvania court if they are sued.

This type of law is known as a “long-arm” statute.

The court held that the law does not violate due process requirements in the Constitution’s 14th Amendment. Justice Neil Gorsuch, writing for the 5-4 majority, said that it did not matter if the conduct at issue in the lawsuit occurred in a different state, nor did it matter if the company’s principal place of business was in another state.

The court reasoned that under Pennsylvania law, “qualification as a foreign corporation” shall permit state courts to “exercise general personal jurisdiction” over a registered foreign corporation, just as they can over domestic corporations.

Robert Mallory worked for Norfolk Southern Railroad in Ohio and Virginia for nearly 20 years. Norfolk Southern is headquartered in Virginia but registered to do business in Pennsylvania, making it a “foreign corporation” under Pennsylvania law. After he left the company, he lived in Pennsylvania before moving back to Virginia. He was diagnosed with colon cancer and sued Norfolk Southern in Pennsylvania, claiming that he developed the disease from working for the railroad.

Norfolk Southern argued for dismissal of the case because Mallory never worked for the company in Pennsylvania, and the company was incorporated in Virginia. It further argued that Pennsylvania’s exercise of personal jurisdiction over a foreign company would violate the 14th Amendment’s due process clause.

The court reasoned that under Pennsylvania law, “qualification as a foreign corporation” shall permit state courts to “exercise general personal jurisdiction” over a registered foreign corporation, just as they can over domestic corporations, 42 Pa. Cons. Stat. §5301(a)(2). Having registered in Pennsylvania, Norfolk Southern acquired the benefits and the burdens of domestic corporations, which meant that it could be sued in Pennsylvania.

Historical Precedent

The court’s ruling is based on the 1917 case Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U. S. 93, which it deemed to be determinative. Pennsylvania Fire held that it doesn’t matter if the plaintiff resides outside of the state or that the cause of action of the lawsuit did not occur in Pennsylvania, concluding “an out-of-state corporation that has consented to in-state suits in order to do business in the forum is susceptible to suit there.” The court noted that, historically, a lawsuit involving an injury that might have happened anywhere “was generally considered a ‘transitory’ action that followed the individual … which meant that a suit could be maintained by anyone on any claim in any place the defendant could be found.”

The court also noted that as companies expanded into more states over time, some sought to avoid being sued in any state, arguing that their status as a foreign corporation violated due process. As a result, some state legislatures responded to this strategy by passing laws that required out-of-state corporations to consent to in-state lawsuits as a condition of being able to conduct business in that state.

Justice Amy Coney Barrett, writing for the dissent, argued that the Pennsylvania law does violate due process under the seminal case of International Shoe v. Washington, 326 U. S. 310, 317 (1945), because the due process clause “does not allow state courts to assert general jurisdiction over foreign defendants merely because they do business in the State.” She agreed with Norfolk Southern that International Shoe permits a foreign corporation to be sued only in its principal place of business or in a state where the injury occurred. She concluded that one purpose of the due process clause is to put guardrails around a state’s authority in instances where a foreign company has insufficient ties or connections to it. She cautioned that “states may now manufacture consent to personal jurisdiction.”

The majority opinion noted that all states and Washington, D.C., have some type of long-arm statute in place allowing out-of-state companies to be sued if certain requirements are met. Gorsuch concluded that “not every case poses a new question. This case poses a very old question indeed—one this court resolved more than a century ago in Pennsylvania Fire.”

Susan Frederick is NCSL’s senior federal affairs counsel.

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