Cost Of Doing Business? Supreme Court Scrutinizes Constitutionality Of Requiring Companies To Consent To General Personal Jurisdiction

In an important case that could blow the doors open on personal jurisdiction so that corporations can be subject to suit anywhere they do business, the Supreme Court heard oral argument on Tuesday. In Mallory v. Norfolk Southern Railway Co., the Court must decide whether Pennsylvania can require companies to submit to general personal jurisdiction as a condition of registering to do business in the state. The Pennsylvania Supreme Court said no—compelled submission to general jurisdiction violates the Fourteenth Amendment’s Due Process Clause. After more than an hour of oral argument, even the most daring of Court watchers would be wary of making a prediction of how the case will be decided.

As a refresher: the Due Process Clause limits courts’ authority to exercise personal jurisdiction over defendants. Personal jurisdiction comes in two varieties: specific and general. A court with specific jurisdiction over an out-of-state defendant can only hear claims that specifically arise from the defendant’s contacts with the state. But a court with general jurisdiction can “hear any and all claims against” a defendant. Daimler AG v. Bauman, 134 S. Ct. 746, 751 (2014) (internal quotation marks and brackets omitted).  Traditionally, general jurisdiction requires that the defendant’s affiliations with the forum state “are so constant and pervasive as to render it essentially at home” there.  Id. But Pennsylvania’s long arm statute authorizes the exercise of “general personal jurisdiction” over corporations “qualifi[ed] as a foreign corporation” under Pennsylvania law—in other words, those that are registered under state law to do business in the state. That was plaintiff’s sole basis for general jurisdiction here. Plaintiff, a Virginia resident, sued his former employer in Pennsylvania state court, alleging that he had been exposed to harmful carcinogens in the course of his employment. But his former employer, Norfolk Southern, is a rail freight company with its principal place of business (at the time) in Norfolk, Virginia—not Pennsylvania.

In briefs filed in the Supreme Court over the summer, the parties sparred over the proper resolution of this question. Petitioner took a heavily historical approach, arguing that the original public meaning of the Due Process Clause permitted Pennsylvania’s jurisdictional consent scheme because similar statutes have been around a long time. According to Petitioner, courts before and after ratification of the Fourteenth Amendment upheld consent-by-registration statutes, and Congress itself enacted one for the District of Columbia in 1867. Respondent, meanwhile, focused more on modern general jurisdiction decisions, arguing that the principles outlined in decisions such as Goodyear and Daimler were irreconcilable with Petitioner’s position. A number of amici curiae also weighed in on both sides. Most notably, the Office of the Solicitor General, which represents the United States government in the Supreme Court, sided with respondents. The Solicitor General argued that a state court may not exercise general jurisdiction based solely on registration to do business, and urged the Court to limit its decision to the narrow context of general jurisdiction under the Fourteenth Amendment.                                                                           

At argument, the Justices grappled with how both parties’ arguments would affect the Court’s prior personal jurisdiction precedents. Justice Kagan pressed counsel for petitioner to explain why his position would not “gut” or outright “overrule” the Court’s decisions in Daimler and Goodyear. Meanwhile, Justice Gorsuch asked respondent’s counsel to harmonize its position with Pennsylvania Fire, a 1917 case in which the Court upheld a similar statute in an opinion that was authored by Justice Oliver Wendell Holmes and affirmed a decision by the legendary Learned Hand.  Chief Justice Roberts, on the other hand, asked petitioner’s counsel why cases that predated the Court’s watershed 1945 decision in International Shoe should not be “relegated to the dustbin of history.”

The Justices also closely questioned the advocates about the historical record. If only a handful of state laws were similar to Pennsylvania’s, Justice Thomas inquired, how would the Court know whether it had enough support to rule in favor of petitioner? Justice Barrett expressed some skepticism that the historical service of process statutes petitioner relied on were really comparable to Pennsylvania’s consent scheme.

One issue that seemed to interest the Justices was the precise nature of the constitutional right that respondent was asserting. Was it an out-of-state corporation’s Due Process right not to be haled into court where it did not have its principal place of business, its right of unfettered access to Pennsylvania’s market under the Dormant Commerce Clause, or some combination of the two? 

Further complicating the issue was the matter of consent. Why couldn’t respondent waive its constitutional rights by registering to do business, just as criminal defendants frequently waive their constitutional rights in court, Justice Jackson wanted to know. And several of the Justices presented the advocates with hypotheticals exploring the potentially coercive nature of jurisdictional statutes—could Pennsylvania have conditioned market access on a $100,000 payment, Chief Justice Roberts asked.

The Justices grilled advocates on both sides, including an attorney representing the Solicitor General’s office. In that questioning, some fault lines started to appear—Justice Kagan and Chief Justice Roberts seemed quite skeptical of petitioner’s position, while Justices Sotomayor, Gorsuch, and Jackson leaned harder on counsel for respondent and the government. But there was no clear indication of which way the Court would ultimately come out. So we will have to wait. At the latest, the Supreme Court will issue a decision by July 2023.