WASHINGTON – A nonprofit legal organization has urged the U.S. Supreme Court to uphold limits on general personal jurisdiction for out-of-state defendants, in the case of a Virginia man who claimed his ill health was the result of his exposure to cancer-causing substances while working for the Norfolk Southern railroad.
The Washington Legal Foundation (WLF) filed an amicus brief in Mallory v. Norfolk Southern Railway Company on Sept. 2, advising the nation’s high court to recognize that Pennsylvania’s long-arm statute, which says any out-of-state corporation which registers to do business in Pennsylvania may be sued there for any dispute no matter its origin, violates the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution.
“The Court’s case law on personal jurisdiction has evolved over the past century. During World War I, plaintiffs could easily avoid the limits the Fourteenth Amendment’s Due Process Clause imposes on state courts’ exercise of personal jurisdiction over foreign defendants. Today, the Court has closed those loopholes and limits the States’ exercise of personal jurisdiction over defendants,” the amicus brief stated, in part.
“Under current law, only states where a corporation is incorporated or headquartered may exercise general jurisdiction over the company. But Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Min. & Mill. Co. (1917), has given some states an excuse to exercise general jurisdiction over almost every company that has even a remote link to the states. These courts hold that every company that registers to do business in a state consents to general jurisdiction there.”
According to the WLF, the Court should “explicitly bar states from exercising general jurisdiction over a corporation based solely on the company’s registering to do business in those states.”
“Mallory never argued in the Pennsylvania courts that the original meaning of the Fourteenth Amendment supports consent-by-registration jurisdiction. The first time Mallory made that argument was in the petition. This Court should not consider arguments that a party raises for the first time in this Court,” the brief continued.
“This Court’s modern personal-jurisdiction jurisprudence has overruled or abrogated Pennsylvania Fire. The Court considers several factors when deciding whether to overrule precedent. If the Court does not believe that it has already overruled Pennsylvania Fire, and weighs these stare decisis factors, it should conclude that all the factors support overruling that decision.”
The WLF holds that Pennsylvania Fire is “unworkable in today’s ecommerce environment” and finds that the U.S. Supreme Court has previously “overruled precedent because of the unworkability of an old rule in the ecommerce era” and “other recent decisions have similarly overruled unworkable precedents.”
“This Court should do the same here,” per the WLF.
Background in Mallory v. Norfolk Southern Railway Company
On April 25, the U.S. Supreme Court granted a petition for a writ of certiorari in the case, meaning that further arguments in the case will be heard there.
According to counsel for plaintiff Robert Mallory, each federal circuit court and a number of state supreme courts across the country have addressed consent-by-jurisdiction statutes, with a diverse array of results – which, they argued, should compel the top court in the land to step in and restore uniformity to the matter.
Meanwhile, Norfolk Southern replied the consent-by-jurisdiction statute subject was not worthy of continued review, and countered that resurrecting that law in the Keystone State would permit plaintiffs to forum-shop, without any regard for whether the case had any relevant connection the chosen venue.
Back on Dec. 22 of last year, a unanimous ruling, authored by Supreme Court of Pennsylvania Chief Justice Max Baer and joined by all of his colleagues, found that the practice of out-of-state companies consenting to general jurisdiction in order to conduct business in Pennsylvania, stripped such companies of due process protections.
In the 2014 case Daimler AG v. Bauman, the U.S. Supreme Court decided, barring extraordinary circumstances, conferral of general jurisdiction over an out-of-state defendant would only apply if the corporation in question was “at home,” meaning where it was incorporated or maintained its principal place of business.
But in Pennsylvania, corporations wanting to do in the business in the state are required to register with the Pennsylvania Department of State, as per state law – and that such registration “constitutes a sufficient basis for the exercise of general personal jurisdiction over the foreign corporation.”
In Daimler and other cases, it was argued that Pennsylvania’s business registration leading to general jurisdiction-arrangement violated the Fourteenth Amendment’s Due Process Clause. Pennsylvania is the only state whose law explicitly states that registering to do business allows Pennsylvania courts to exercise personal jurisdiction over a company headquartered elsewhere.
Mallory, a Virginia man, initially brought suit against Norfolk Southern Railway Company, a Virginia corporation, in the Philadelphia County Court of Common Pleas, alleging a claim pursuant to the Federal Employers Liability Act.
Mallory argued he was exposed to carcinogenic substances during the time he worked for Norfolk Southern in Ohio and Virginia – while Norfolk Southern filed preliminary objections wanting the case dismissed, due to a lack of personal jurisdiction.
Mallory cited the statute which explains Pennsylvania courts can confer general personal jurisdiction over companies classified as foreign corporations under the law, as such a designation required registration to do business within the state.
In contrast, Norfolk Southern, countered that because “all foreign corporations doing business in Pennsylvania are required to 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.”
Ultimately, the Philadelphia County Court of Common Pleas dismissed the complaint with prejudice and sided with Norfolk Southern, believing that since its registration to do business in Pennsylvania led to its consent not being voluntarily obtained.
According to the trial court’s ruling, “Pennsylvania’s statutory scheme creates an impermissible Hobson’s choice between relinquishing its right to due process by registering to do business in the Commonwealth and thereby submitting to the general jurisdiction of Pennsylvania courts, or foregoing the privilege of doing business in Pennsylvania” – and also leads to unconstitutional infringement on the court systems of other states to oversee cases involving businesses from those other jurisdictions.
As the trial court’s ruling found the Pennsylvania general personal jurisdiction statute was unconstitutional, the state Supreme Court received Mallory’s appeal.
The Supreme Court unanimously upheld the trial court’s decision that Pennsylvania’s general jurisdiction statute was unconstitutional, since it conferred jurisdiction on foreign corporations only because they registered to do business in Pennsylvania.
“The exercise of jurisdiction over defendant in this case does not satisfy due process as required by Goodyear and Daimler. Here, a Virginia plaintiff filed the FELA action against defendant, a foreign railway company, which is incorporated in Virginia and has its principal place of business there, alleging injuries in Virginia and Ohio. It is obvious that no specific jurisdiction lies in Pennsylvania, as there is no connection whatsoever between the case and the forum state. It is equally clear that defendant did not incorporate in Pennsylvania and does not have its principal place of business here. Further, there is no indication that this is an otherwise ‘exceptional case,’ where the circumstances demonstrated that defendant is essentially ‘at home’ in Pennsylvania so as to afford our courts general jurisdiction.”
Baer and the rest of the state Supreme Court found that Pennsylvania’s “statutory scheme of conditioning the privilege of doing business in the Commonwealth on the submission of the foreign corporation to general jurisdiction in Pennsylvania courts, strips foreign corporations of the due process safeguards guaranteed in Goodyear and Daimler.”
“Legislatively coerced consent to general jurisdiction is not voluntary consent and cannot be constitutionally sanctioned. Accordingly, our statutory scheme is unconstitutional to the extent that it affords Pennsylvania courts general jurisdiction over foreign corporations that are not at home in the Commonwealth. Accordingly, we affirm the order of the trial court, which sustained defendant’s preliminary objections and dismissed the action with prejudice for lack of personal jurisdiction,” Baer concluded.
Meanwhile, the Supreme Court of Georgia, citing Pennsylvania Fire, came to the opposite conclusion for a similar Georgia law and the U.S. Supreme Court agreed to resolve the split in authority between the top courts in Pennsylvania and Georgia.
Oral arguments in Mallory v. Norfolk Southern Railway Company are due to take place before the U.S. Supreme Court on Nov. 8.
U.S. Supreme Court case 21-1168
Supreme Court of Pennsylvania case 3 EAP 2021
Philadelphia County Court of Common Pleas case 170901961
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com