Mallory v. Norfolk Southern Railway Co.
On June 27, 2023, the U.S. Supreme Court, in deciding Mallory v. Norfolk Southern Railway Co., upheld Pennsylvania’s business registration statute requiring out-of-state corporations (those not headquartered or incorporated in the Commonwealth) to consent to be subject to any suit in Pennsylvania courts as a condition of registering to do business here.
In Mallory, a Virginia resident sued his former employer, a Virginia corporation, in Pennsylvania state court to recover for injuries allegedly caused by exposure to carcinogens during his employment with the corporation in Virginia and Ohio. Plaintiff asserted that Pennsylvania had jurisdiction over the corporation because by registering to do business in Pennsylvania, the corporation consented to be sued in the Commonwealth. Pennsylvania law requires out-of-state companies that register to do business in the Commonwealth to consent to appear in its state courts on “any cause of action” against them. The corporation argued that Pennsylvania did not have jurisdiction over it because such a consent-based jurisdiction statute violated the Due Process Clause of the Fourteenth Amendment.
PA Business Registration Statute
The U.S. Supreme Court held that Pennsylvania’s business registration statute requiring out-of-state corporations to consent to personal jurisdiction in Pennsylvania as a condition of registering to do business in the state did not violate the Due Process Clause. Accordingly, the Court concluded that even though the Virginia plaintiff no longer lived in Pennsylvania and his cause of action against his Virginia-based employer did not arise in Pennsylvania, Pennsylvania had jurisdiction to hear the case because the corporation consented to jurisdiction by registering to do business in the Commonwealth.
Business Registration In Other States
Some other states such as Georgia and Minnesota also have similar statutes purporting to permit jurisdiction over foreign companies on the sole basis of registering to do business in that state. Further, as a result of the Supreme Court’s ruling that the Due Process Clause does not prohibit Pennsylvania from requiring out-of-state corporations to consent to jurisdiction as a condition of registering to do business in the state, other states may consider enacting similar registration statutes. Multi-state companies should monitor such legislation of the states in which they are registered to do business.
Lastly, it is also important to note that Justice Alito’s concurrence suggests that on remand, this state statute may not survive other constitutional challenges, particularly the Commerce Clause. Thus, the full significance of Court’s decision remains to be seen.