US Supreme Court reaffirms States’ ability to compel personal jurisdiction waivers, but invites further challenges

In a fractured and narrow opinion, the US Supreme Court on Tuesday, in Mallory v. Norfolk Southern Railway Co.,¹ vacated and remanded the Pennsylvania Supreme Court's decision that had struck down, on due process grounds, a state law providing that by registering to transact business in Pennsylvania, out-of-state corporations thereby consented to personal jurisdiction for all claims. In an opinion by Justice Gorsuch, a five-justice majority concluded that the Court's earlier precedent in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co.² had upheld a similar registration-based jurisdiction statute, and that precedent required reversal of the decision of the Pennsylvania Supreme Court.

The Pennsylvania statute before the Court "requires out-of-state companies that register to do business in the [state] to agree to appear in its courts on 'any cause of action' against them."³ It was under this statute that Robert Mallory, a Virginia resident and former employee of Virginia-based Norfolk Southern, sued the railroad in Pennsylvania for his exposure to asbestos and carcinogens.⁴ The question before the Court—"whether the Due Process Clause of the Fourteenth Amendment prohibits a State from requiring an out-of-state corporation to consent to personal jurisdiction to do business there,"⁵—was answered in the negative by a majority of Justices. Relying on Pennsylvania Fire, the majority reasoned that Norfolk Southern "concedes that it registered to do business in Pennsylvania, that it established an office there to receive service of process, and that in doing so it understood it would be amenable to suit on any claim."⁶ It was, therefore, not the Pennsylvania Supreme Court's place to deviate from clearly applicable and controlling Supreme Court jurisprudence.

Beyond this bottom-line conclusion, however, the Court left open other challenges to personal jurisdiction that out-of-state companies would be well advised to keep in mind. In particular, Justice Alito refused to join the plurality's due process analysis, and stated explicitly that he was "not convinced . . . that the Constitution permits a State to impose such a submission-to-jurisdiction requirement" on out-of-state corporations. In Justice Alito's view, the Pennsylvania statute may not advance a "'legitimate local public interest'" as required under the Court's Dormant Commerce Clause framework.⁷ This is so because a "State generally does not have a legitimate local interest in vindicating the rights of non-residents harmed by out-of-state actors through conduct outside the State."⁸ He, along with the plurality, invited the Pennsylvania Supreme Court to consider on remand whether the Pennsylvania statute was unconstitutional under the Dormant Commerce Clause.⁹

In light of the Court's decision in Mallory, business both large and small should be attentive to the potential consequences for personal jurisdiction that a company may subject itself to by virtue of registering to do business in another state. The Court's reaffirmance of Pennsylvania Fire may invite states to enact statues mirroring that in Pennsylvania, thereby exposing defendants to litigation in multiple venues that otherwise would lack personal jurisdiction.

But, the limited scope of the Court's actual holding in Mallory preserves important arguments for defendants contesting expansive theories of personal jurisdiction. Justice Alito's separate opinion highlighting the Dormant Commerce Clause concerns with these types of statutes merits special attention. Businesses facing litigation in states with registration-based jurisdiction statutes should raise Dormant Commerce Clause challenges early. A state's ability to "manufacture 'consent' to personal jurisdiction" may prove short-lived.¹⁰