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

The Supreme Court heard oral arguments Tuesday in a landmark case that could open the door to personal jurisdiction, allowing corporations to be sued wherever they do business. 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 Due Process Clause of the Fourteenth Amendment. After more than an hour of oral argument, even the most ardent Court watchers would be cautious about predicting how the case will be decided.

As a refresher: The Due Process Clause limits the power of courts to exercise personal jurisdiction over defendants. Personal jurisdiction is of two types: specific and general. A court with special jurisdiction over an out-of-state defendant may hear only claims specifically arising out of the defendant’s contacts with the state. But a court of general jurisdiction may “try all claims against” the defendant. Daimler AG v Bauman, 134 S. Ct. 746, 751 (2014) (internal quotation marks and brackets omitted). Traditionally, general jurisdiction has held that a defendant’s connection to the forum is “so constant and widespread as to be essentially at home.” Id. But Pennsylvania’s long-arm statute permits the exercise of “general personal jurisdiction” over corporations in a “qualified” manner.[ed] as a foreign corporation” under Pennsylvania law, in other words, those incorporated under state law to do business in the state. That was plaintiff’s sole basis for general jurisdiction here. The plaintiff, a resident of Virginia, sued his former employer in Pennsylvania state court, alleging that he had been exposed to harmful carcinogens on the job. But his former employer, Norfolk Southern, is a railroad freight company with its principal place of business (at the time) in Norfolk, Virginia, not Pennsylvania.

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In briefs filed with the Supreme Court in the summer, the parties argued over the proper resolution of this issue. Petitioner took a very historical approach, arguing that the original public meaning of the Due Process Clause permitted Pennsylvania’s jurisdictional consent scheme because similar statutes have long existed. According to petitioner, the courts upheld consent-to-registration statutes before and after the ratification of the Fourteenth Amendment, and Congress itself enacted one for the District of Columbia in 1867. Meanwhile, the respondent focused more on contemporary general jurisdiction decisions, arguing that the principles set out in decisions such as Good year and Daimler were incompatible with the position of the petitioner. Several amici curiae also weighed in on both sides. Of particular note is that the Attorney General’s Office, which represents the US government in the Supreme Court, sided with the respondents. The Attorney General argued that a state court could 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.

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During the argument, the justices wrestled with how the two sides’ arguments would affect the Court’s previous personal jurisdiction precedents. Justice Kagan asked the petitioner’s counsel to explain why his position would not “overturn” or outright “nullify” the Court’s decisions Daimler and Good year. Meanwhile, Judge Gorsuch asked the defendant’s attorney to coordinate his position with Pennsylvania fire, a 1917 case in which the Court upheld similar laws in an opinion authored by Justice Oliver Wendell Holmes and upholding the legendary Learned Hand decision. On the other hand, Chief Justice Roberts asked the petitioner’s counsel why the cases decided before the Court’s 1945 decision. International shoes should not be “thrown into the dustbin of history”.

The judges also questioned attorneys closely about the historical record. If only a few state laws were similar to Pennsylvania’s, Justice Thomas asked, how would the Court know if it had sufficient support to rule in favor of the petitioner? Judge Barrett expressed some skepticism that the historic due process statute relied upon by the petitioner was indeed comparable to Pennsylvania’s consent scheme.

One of the issues that appeared to interest the justices was the precise nature of the constitutional rights asserted by the defendant. Was it an out-of-state corporation’s Due Process right not to be sued if it did not have its principal place of business, its right to unfettered access to the Pennsylvania market under the Dormant Commerce Clause, or some combination of the two?

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The issue was further complicated by the issue of consent. Why couldn’t the defendant waive her constitutional rights by registering to do business, just as criminal defendants often waive their constitutional rights in court, Judge Jackson wanted to know. And several justices posed hypotheticals to attorneys as they explored the jurisdictional statute’s potentially coercive nature — whether Pennsylvania could condition market access on a $100,000 payment, Chief Justice Roberts asked.

The judges spoke to lawyers for both sides, including a lawyer representing the Solicitor General’s office. Some fault lines began to emerge in this survey, with Justice Kagan and Chief Justice Roberts appearing rather skeptical of the petitioner’s position, while Justices Sotomayor, Gorsuch, and Jackson leaned more heavily on the counsel of the respondent and the government. But there was no clear indication of how the Court would ultimately come out. So we’ll have to wait. The Supreme Court will make a decision by July 2023 at the latest.

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