Mallory v. Norfolk Southern Railway Co.

Issues

Does requiring a corporation to consent to personal jurisdiction as a condition to do business in a state violate the Due Process Clause of the Fourteenth Amendment?

Oral argument:

November 8, 2022

Court below:

Supreme Court of Pennsylvania

This case asks the Supreme Court to consider whether the Due Process Clause permits consent-by-registration as a basis for personal jurisdiction. Pennsylvania’s consent-by-registration statute requires that foreign corporations registered in the state consent to general personal jurisdiction there. Robert Mallory contends that consent-by-registration statutes produce valid consent to personal jurisdiction because consent-by-registration has been traditionally accepted as a basis of personal jurisdiction, and recent cases have not overruled this notion. Norfolk Southern Railway Company counters that consent-by-registration statutes fail to provide valid consent because registration jurisdiction is neither widely accepted nor consistent with modern personal jurisdiction jurisprudence. The outcome of this case has heavy implications for businesses and state sovereignty.

Questions as Framed for the Court by the Parties

Whether the Due Process Clause of the 14th Amendment prohibits a state from requiring a corporation to consent to personal jurisdiction to do business in the state.

Facts

Robert Mallory (“Mallory”) is a Virginia resident who was an employee of Norfolk Southern Railway Company (“Norfolk”) from 1988 to 2005. Mallory v. Norfolk S. Ry. Co . at 551. Mallory sued Norfolk in a Pennsylvania state court for claims arising under the Federal Employers Liability Act. Id. He alleged that while employed by Norfolk in Ohio and Virginia he developed colon cancer as a result of exposure to dangerous carcinogens due to Norfolk’s negligence, carelessness, and recklessness in providing a safe work environment. Id.

Norfolk filed for preliminary injunctions and sought dismissal of the case for lack of personal jurisdiction. Id. Norfolk argued that because it is incorporated and has its principal place of business in Virginia, the Pennsylvania court lacks general jurisdiction; and, because Mallory’s injuries occurred in Ohio and Virginia rather than in Pennsylvania, the court lacks specific jurisdiction. Id. Therefore, Norfolk contends that the court has no power to hear the case. Id. Mallory countered that Norfolk consented to general jurisdiction when it registered to do business in Pennsylvania because Pennsylvania has a statute, 42 Pa.C.S. § 5301, which confers general jurisdiction to the state when a corporation is registered to do business there, and thereby the court has authority to hear this case. Id. at 551–52.

The trial court granted Norfolk’s preliminary injunctions and dismissed the case for lack of personal jurisdiction, stating that the Due Process Clause of the Fourteenth Amendment limits the scope of personal jurisdiction. Id. at 552. In particular, the trial court noted that, in Goodyear Dunlop Tires Operations, S.A. v. Brown and Daimler AG v. Bauman, the United States Supreme Court drastically restricted general jurisdiction over corporations to their places of incorporation, principal places of business, where their actions are so “continuous and systematic” that the corporations are “essentially at home,” and where they consent to general jurisdiction. Id. at 553. The trial court nevertheless found that Norfolk did not consent to general jurisdiction by registering to do business in Pennsylvania because the consent was involuntary and therefore invalid. Id. To further support its decision, the trial court also concluded that the 1917 Supreme Court case Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., which declared consent-by-registration statutes constitutional, had been overturned by later personal jurisdiction cases. Id. at 554.

Mallory appealed the decision to the Pennsylvania Superior Court, which then transferred the case to the Supreme Court of Pennsylvania. Id. at 555. The Supreme Court of Pennsylvania affirmed the judgment of the trial court, finding that Pennsylvania’s consent-by-registration statute violates Norfolk’s due process rights. Id. at 571. Specifically, the court reasoned that the Due Process Clause prevents a defendant from being subject to general jurisdiction in a state in which the defendant has “no meaningful contacts, ties, or relations.” Id. at 565.

Mallory then petitioned for a writ of certiorari to the Supreme Court, which was granted on April 25, 2022.

Analysis

TRADITIONAL BASIS OF PERSONAL JURISDICTION

Mallory argues that courts have traditionally viewed consent-by-registration statutes as producing constitutionally valid consent, and thus, these statutes should continue to be treated this way. Brief for Petitioner, Robert Mallory at 12. Mallory asserts that past treatment of “open, widespread, and unchallenged” practices should guide their treatment today and urges the Court to follow the “sanction of settled usage,” which has operated as the “actual law of the land.” Id. Applying these rules, Mallory reasons that courts viewed consent-by-registration statutes as constitutional both before and after the adoption of the Fourteenth Amendment in 1868. Id. at 12, 16. Mallory points out that, in 1867, Congress passed a consent-by-registration statute that required foreign corporations to submit to suits in the District of Columbia. Id. at 24. Moreover, Mallory contends that, by the time the Fourteenth Amendment was adopted, every state required foreign corporations to consent to jurisdiction in its state court as a condition to do business in that state. Id. at 12. Mallory argues that, because courts, Congress, and state legislatures have considered consent-by-registration statutes to comport with the Fourteenth Amendment, Pennsylvania’s consent-by-registration statute is constitutional. Id. at 28.

In opposition, Norfolk argues that courts have not traditionally viewed consent-by-registration statutes as producing constitutionally valid consent. Brief for Respondent, Norfolk Southern Railway Co. at 40. Norfolk argues that registration jurisdiction is not comparable to the widely accepted “tag jurisdiction,” which is when a state asserts jurisdiction over an out-of-state defendant through service of process in the state. Id. at 22. Norfolk asserts that tag jurisdiction has been “immemorially the actual law of the land” and no case in the 1800s or early 1900s ever questioned tag jurisdiction; in contrast, registration jurisdiction has never shared such widespread acceptance. Id. at 22. Moreover, Norfolk contends that the cases which Mallory cites concern specific jurisdiction, which applies only to cases related to the defendant’s activity within the state, and not general jurisdiction, which is the court’s authority to hear any type of case against the defendant. Id. at 39. Also, Norfolk points out that Pennsylvania is the only state to assert registration jurisdiction, and therefore, that registration jurisdiction does not enjoy the general acceptance that Mallory purports. Id. at 22.

COURT PRECEDENT

Mallory argues that court precedent has not overruled the constitutionality of consent-by-registration statutes and the Court should adhere to the principle of stare decisis in this case, which requires it to issue a decision in alignment with previous decisions. Brief for Petitioner at 31. Mallory asserts that International Shoe Co. v. Washington and its progeny, which held that a corporation could be subject to the jurisdiction of a state court if it has "minimum contacts" with that state, did not overturn Pennsylvania Fire, which found consent-by-registration statutes constitutional. Id. at 27–29. Mallory contends that International Shoe and its progeny, including Daimler and Goodyear, extended jurisdiction over defendants based on contacts where there was no consent. Id. at 29. Mallory reasons that extending jurisdiction over non-consenting defendants is conceptually different from that of consent-by-registration statutes, and thus, these cases did not limit jurisdiction where consent is given. Id. at 29, 30. Mallory posits that International Shoe and its progeny provided a separate basis for personal jurisdiction where consent is not required, but does not deem, by itself, consent-by-registration unconstitutional. Id. at 27. In the alternative, Mallory maintains that even if the applicability of these cases is ambiguous, the Court should avoid a ruling that implicitly contradicts a century of precedents. Id. at 30.

In particular, Mallory argues the Court should uphold precedent for four reasons. Brief for Petitioner at 31. First, Mallory urges the Court to uphold the ruling of Pennsylvania Fire because it was “plainly right” and not “egregiously wrong” as a matter of law. Id. at 32. Second, Mallory contends that Norfolk has not satisfied the “heavy burden” of persuasion that societal changes warrant overturning precedent. Id. Third, Mallory posits that the Court should uphold precedent because the consent-by-registration statutes are feasible and efficient. Id. According to Mallory, Pennsylvania’s consent-by-registration statutes impose only minor burdens on corporations with “clear procedures” and “bright-line notice.” Id. at 33. Finally, Mallory submits that other states have reasonably relied on Pennsylvania Fire in drafting their jurisdictional statutes. Id. at 34.

Norfolk counters that International Shoe has overturned Pennsylvania Fire, making registration jurisdiction obsolete and limiting jurisdiction to transactions in the forum state. Brief for Respondent at 14, 32–33. According to Norfolk, a corporation’s activity alone in a state is not enough to give rise to general jurisdiction, unless the activity is of such length and intensity that it renders the company virtually “at home.” Id. at 15. Norfolk argues that, under Mallory’s proposed rule, every state could adopt Pennsylvania’s statutory scheme, and thus, corporations would be subject to suit in any state where it does business, even when the claim bears no relation to its in-state activity. Id. Norfolk notes that the Court in Daimler called this scope of state power “unacceptably grasping.” Id. In effect, Norfolk argues that this vast scope of state authority would make the connection between the defendant, the forum state, and the underlying cause of action irrelevant to a court’s finding of jurisdiction. Id. Norfolk thus posits that these statutes can subject a corporation to general jurisdiction where it does not even do any business but is merely registered. Id.

Moreover, Norfolk argues that registration jurisdiction violates the principles underlying International Shoe and modern personal jurisdiction jurisprudence today, namely, that of interstate federalism and fairness. Brief for Respondent at 16. First, according to Norfolk, modern personal jurisdiction limits the territorial reach of a state’s power. Id. Norfolk argues that Mallory’s rule may permit a state to inappropriately exercise its power in cases where it has no interest at the expense of another, more suitable, sovereign. Id. at 16, 17. Norfolk adds that a ruling for Mallory would pose a risk to the international comity by subjecting registered foreign corporations to suit. Id. at 17. In addition, Norfolk posits that ruling for Mallory would undermine the traditional principle of fairness at the heart of modern personal jurisdiction jurisprudence by subjecting corporations to suit where they are viewed with hostility and suspicion in the eyes of local communities. Id. at 21.

THE DOCTRINE OF UNCONSTITUTIONAL CONDITIONS

Mallory argues that consent-by-registration statutes do not implicate the doctrine of unconstitutional conditions, under which “the government may not deny a benefit to a person because he exercises a constitutional right.” Brief for Petitioner at 10, 49. Mallory asserts that this doctrine does not apply to waiving a procedural right under the Due Process Clause. Id. at 48. Mallory contends that where the Court has found an unconstitutional condition, such as in Ins. Co. v. Morse, the Court expressly distinguished it from a statute requiring the appointment of an agent for service of process. Id. at 49. Moreover, Mallory asserts that the government often conditions benefits on the forfeit of a waivable procedural right; for example, the government conditions settlements of civil and criminal cases on the defendant’s waiver of their right to a jury trial. Id. Next, Mallory argues that, because tag jurisdiction does not violate the doctrine, neither does registration jurisdiction. Id. at 51. Mallory contends that, because personal jurisdiction is a “quintessential” waivable right and the failure to register only minimally burdens a corporation by restricting its ability to sue in the state, the Court should find that the doctrine of unconstitutional conditions does not apply. Id. at 50–51.

On the contrary, Norfolk contends that registration jurisdiction violates the doctrine of unconstitutional conditions. Brief for Respondent at 30. Norfolk argues that registration jurisdiction would impose a “blanket forfeiture” of defendants’ rights. Id. at 24. Norfolk asserts that, while a waiver of personal jurisdiction is permissible on a case-by-case basis, a blanket forfeiture is impermissible because it seeks to bind the defendant in advance. Id. Norfolk argues that a blanket forfeiture would subject a corporation to “countless suits involving countless parties” for claims that bear no reasonable relationship to the forum state. Id. at 18, 25. Moreover, Norfolk reasons that registration jurisdiction forces corporations to choose between personal jurisdiction protections and access to the state courts. Id. at 26.

Discussion

STATE SOVEREIGNTY AND FORUM SHOPPING

The American Association for Justice (“AAJ”), in support of Mallory, argues that disallowing registration jurisdiction infringes upon the states’ interest in granting their citizens and residents access to a convenient forum to address harm from out-of-state corporations. Brief of Amicus Curiae American Association for Justice, in Support of Petitioner at 28. AAJ contends that in cases in which the forum state has no real legitimate interest, state courts can simply refuse to exercise their jurisdiction through the doctrine of forum non conveniens, a discretionary power that allows the court to dismiss or transfer the case when there exists a more suitable forum. Id. at 29–30. In addition, the Center for Auto Safety (“CAS”) and the Attorneys Information Exchange Group (“AIEG”), in support of Mallory, argue that restricting registration jurisdiction further infringes upon state sovereignty by stripping states of the legitimate interest in adjudicating cases that involve corporations that do business in their territory. Brief of Amici Curiae Center for Auto Safety and Attorneys Information Exchange Group, in Support of Petitioner at 24–25. CAS and AIEG warn that such a restriction on jurisdiction is doubly unjust because it harms both the specific state involved and all states with similar statutes. Id.

The Atlantic Legal Foundation (“ALF”), in support of Norfolk, counters that allowing registration jurisdiction would infringe upon state sovereignty because a state can usurp the jurisdiction of another state that has a greater interest in the claim. Brief of Amicus Curiae Atlantic Legal Foundation, in Support of Respondent, at 19–20. This is especially true, according to the ALF, when the claim is unrelated to the forum state, filed by a non-resident, and against an out-of-state corporation. Id. In addition, the DRI Center for Law and Public Policy and the International Association of Defense Counsel (collectively “DRI”), in support of Norfolk, warn that such an expansion of personal jurisdiction over corporations would further threaten state sovereignty through widespread forum shopping, in which plaintiffs can simply choose the forum that they believe is most favorable. Brief of Amici Curiae DRI Center for Law and Public Policy and International Association of Defense Counsel, in Support of Respondent at 15. Virginia and seven other states, in support of Norfolk, elaborate that forum shopping harms state sovereignty because allowing the plaintiff to choose the most favorable forum can undermine the states’ incentives to pick and enforce their own rules. Brief of Amici Curiae Virginia et al., in Support of Respondent at 23–24.

EFFECT ON BUSINESSES

Public Citizen, in support of Mallory, argues that disallowing consent-by-registration statutes would negatively impact corporations by unfairly benefitting large corporations over small businesses. Brief of Amicus Curiae Public Citizen, in Support of Petitioner at 17. Public Citizen elaborates that while large corporations could dodge general jurisdiction in states in which they do frequent business by not incorporating or having their principal place of business there, small businesses cannot benefit from such a “jurisdictional loophole.” Id. at 18. Furthermore, Public Citizen cautions that prohibiting consent-by-registration statutes would force small businesses and individuals to bear the costs of litigating at the corporations’ home rather than at their own home, where the corporation may still have “extensive contacts” and thus bear less of a burden. Id.

DRI, in support of Norfolk, counters that allowing consent-by-registration statutes would negatively impact businesses because they would have to bear the cost of managing cases across the country no matter how unrelated the claim is to the corporation’s activities in the state. Brief of Amici Curiae DRI, in Support of Respondent at 14. Additionally, DRI argues that widespread consent-by-registration statutes would cause uncertainty for corporations by complicating the jurisdictional and choice-of-law processes. Id. at 9, 14. Professor Lea Brilmayer, in support of Norfolk, contends that such an expansion of general jurisdiction would weaken the predictability that corporations value when making business decisions, as they would no longer be able to rely on established jurisdictional rules to assess their potential liability in a forum. Brief of Amicus Curiae Professor Lea Brilmayer, in Support of Respondent at 21.