December 23, 2021

Pennsylvania Rejects Corporate Registration as Basis for Personal Jurisdiction

A recent Pennsylvania Supreme Court opinion provides out-of-state corporations more protection from litigation tourists, bringing the state’s general personal jurisdiction rules in line with U.S. Supreme Court precedent. In Mallory v. Norfolk Southern Railway Co., a unanimous court invalidated part of Pennsylvania’s corporate registration statute, holding that corporations that are not incorporated and do not have a principal place of business in Pennsylvania cannot be subject to general personal jurisdiction simply because they have registered to conduct business in the Commonwealth.

Mallory v. Norfolk Southern Railway Co.: Case Background

In a procedural posture undoubtedly familiar to Pennsylvania litigants, Virginia resident Robert Mallory filed personal injury claims in Philadelphia County against Virginia corporation Norfolk Southern Railway Co., alleging that his exposure to carcinogens while working for the company in Virginia and Ohio caused him to develop colon cancer. Because none of the relevant activity or injury occurred in Pennsylvania, there was no colorable basis for specific personal jurisdiction.

In May 2018, the Philadelphia trial court found there was also no basis for general personal jurisdiction because Norfolk was neither headquartered nor “at home” in the Commonwealth. The trial court also held that Pennsylvania’s statute conferring general personal jurisdiction by consent was unconstitutional. The case was transferred directly to Pennsylvania’s highest court on appeal.

The Jurisdictional Renaissance

As the Mallory opinion recognizes, since 2011 the U.S. Supreme Court has continually narrowed the exercise of general personal jurisdiction over out-of-state defendants. Historically, a corporation’s “continuous and systematic” activities in a state could subject it to general jurisdiction there — such as significant sales activities, a large employee footprint, an extensive advertising campaign or substantial manufacturing operations.

In 2011, the U.S. Supreme Court established that general jurisdiction is only warranted where the defendant’s contacts are so significant that they render the company “at home” in the state. Three years later, the Court explained that a company is essentially “at home” in only two places: where it is incorporated, and where its principal place of business is located (“[O]therwise, ‘at home’ would be synonymous with ‘doing business.’”). The Fourteenth Amendment’s Due Process Clause further “protects the defendant’s liberty interest” in not being subject to suit in a state where the defendant “has no meaningful contacts, ties or relations.”

Pennsylvania’s Unique Statute

While all 50 states have a corporate registration law, Pennsylvania’s statute is the only one which purports to confer jurisdiction by consent. That “clearly, palpably, and plainly violates the Constitution,” because it confers general jurisdiction absent a defendant’s significant forum-directed activity necessary to satisfy Due Process. The Mallory opinion concluded that “[s]imply stated, a statute may not require what the Constitution prohibits.” Taken to its logical extreme, all states could enact such a statute, rendering national corporations subject to jurisdiction coast-to-coast, a result decidedly inconsistent with Goodyear and Daimler.

The Mallory Court also rejected the plaintiff’s argument that Norfolk consented to jurisdiction in Pennsylvania by registering to conduct business there. While the Court recognized that waiver is generally a valid basis for jurisdiction, such consent must be “voluntary, knowing, and intelligent.” Companies doing business in Pennsylvania face a “Hobson’s choice”: lawfully register to do business and submit to general personal jurisdiction, or unlawfully avoid registering — but forgo the right to bring any lawsuit in the Commonwealth. That condition illegitimately requires the relinquishment of a constitutional right for the grant of a privilege. A state can neither claim general jurisdiction “over every corporation doing business within its borders” nor “legislatively coerce[] consent” to the same.

Questions? Contact the Authors.

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