Washington, D.C. (June 28, 2023) – On June 27, 2023, the U.S. Supreme Court issued a sharply divided opinion that appears to backtrack on the Court's steady trajectory away from assertions of general jurisdiction in recent years, e.g. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011), Daimler AG v. Bauman, 134 S. Ct. 746 (2014), BNSF Railway Co. v. Tyrrell, 2017, 137 S. Ct. 1549 (2017). Relying on a case from 1917, Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U. S. 93 (1917), Justice Gorsuch, writing on behalf of the plurality, (Justices Gorsuch, Thomas, Sotomayor, and Jackson) (Justice Alito concurring) found that Norfolk Southern "consented" to jurisdiction in Mallory via 42 Pa. Cons. Stat. §5301(a)(2)(i),(b) by registering to do business in Pennsylvania. This statute, 42 Pa. Cons. Stat. §5301, specifically permits jurisdiction over a corporation "incorporat[ed] under or qualifi[ed]as a foreign corporation under the laws of this Commonwealth ... for any cause of action that may asserted against him, whether or not arising from acts enumerated in this section."
In Pennsylvania Fire, the U.S. Supreme Court addressed the Due Process Clause of the U.S. Constitution in connection with a Missouri law that required an out-of-state insurance company desiring to transact any business in the state to file paperwork agreeing to (1) appoint a state official to serve as the company's agent for service of process and (2) accept service on that official as valid in any suit. After more than a decade of complying with the law, Pennsylvania Fire was served with process and argued that the Missouri law violated due process. The Court unanimously found that there was "no doubt" that Pennsylvania Fire could be sued in Missouri because it had agreed to accept service of process in Missouri on any suit as a condition of doing business there.
It is clear the plurality in Mallory was troubled by the inequities of constitutionally permitting "tag-jurisdiction" on individuals but finding similar jurisdiction unconstitutional for corporations. The majority expressed the opinion that jurisdiction by consent has a long history of jurisprudence and that International Shoe v. Washington, 326 U.S. 310 (1945) and its progeny were an "additional road" to jurisdiction over foreign corporations that did not "consent" to suit. The Court also readily dispensed with Norfolk Southern's argument of unfairness given its connection to the state of Pennsylvania and the fear of infringing on the sovereignty of another state.
Dissenting Opinion in Mallory
The opinion was sharply criticized by the dissent (Justices Barrett, Kagan, Kavanaugh, and the Chief Justice) – authored by Justice Barrett – as wholly inconsistent with recent opinions of the Court in Daimler, Goodyear, and Tyrrell. Specifically, the dissent points out that in these recent cases, the Court has stated "[a]bsent an exceptional circumstance, a corporation is subject to general jurisdiction only in a State where it is incorporated or has its principal place of business." Adding the antecedent step of registration does not change that conclusion. If it did, "every corporation would be subject to general jurisdiction in every state in which it registered, and Daimler's ruling would be robbed of meaning by a back-door thief." The dissent further criticized the lack of clarity in the Pennsylvania act on consent to jurisdiction, noting, "If registration were actual consent, one would expect to see some mention of jurisdiction in Norfolk Southern's registration paperwork—which is instead wholly silent on the matter."
Implications of Mallory and Recommendations
From a practical standpoint, there is no doubt that Mallory will have an impact on corporations asserting a personal jurisdiction defense going forward. However, it is hard to reconcile Mallory with the holdings in Daimler, Tyrrell, and Goodyear. Thus, as the dissenting opinion in the case points out, while Mallory does not "formally overrule our traditional contacts-based approach to jurisdiction... it might as well. By relabeling their long-arm statutes, States may now manufacture 'consent' to personal jurisdiction."
For the immediate future, attorneys should carefully consult their state business registration and long-arm statutes and keep apprised of any legislative efforts to include jurisdictional "consent" requirements. With respect to Illinois, the Illinois Supreme Court in Aspen Am. Ins Co. v. Interstate Warehousing, Inc., 90 N.E.3d 440 (Ill. 2017), addressed the argument made in Mallory on consent via its Business Registration Act. Rejecting a consent argument, the Illinois Supreme Court held that (1) the Illinois Business Registration Act did not require consent to general jurisdiction as a condition of doing business, (2) the provision stating "foreign corporation 'shall be subject to the same duties [...] now or hereafter imposed upon a domestic corporation'" was insufficient to suggest consent to jurisdiction, and (3) registration with the Secretary of State and appointment of a service processer did not mean consent to all causes of action of any nature.
Similarly, in Missouri, the Missouri Supreme Court in State ex rel. Norfolk S. Ry. Co. v. Dolan, 512 S.W.3d 41 (Mo. 2017), stated that the "plain language of Missouri's registration statutes does not mention consent to personal jurisdiction for unrelated claims, nor does it purport to provide an independent basis for jurisdiction over foreign corporations that register in Missouri." Further, the Missouri Supreme Court stated that "the [Missouri] registration statute does not provide an independent basis for broadening Missouri's personal jurisdiction to include suits unrelated to the corporation's forum activities when the usual bases for general jurisdiction are not present. To the extent the holdings or dicta in prior cases suggest otherwise, they go beyond the language of the relevant statutes and should no longer be followed."
Read our follow-up alert on this decision, "A Commerce Clause Follow-Up Regarding SCOTUS's Mallory Personal-Jurisdiction Decision."
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