SCOTUS Expands Personal Jurisdiction Under PA Business Registration Statute

In a recent plurality decision in Mallory v. Norfolk Southern Railway Co., the Supreme Court upheld Pennsylvania’s business registration statute, which requires out-of-state businesses to consent to personal jurisdiction by Pennsylvania courts in order to do business in the state.  

The plaintiff in the underlying case, a Virginia resident, sued his former employer, a railway company headquartered in Virginia, in Pennsylvania state court for an injury that he allegedly obtained while working for the railroad in Ohio and Virginia.  The railway company argued that it could not be sued in Pennsylvania, and that the court’s exercise of personal jurisdiction over it under the state’s business registration statute would violate the Due Process Clause.  The Pennsylvania Supreme Court agreed with the railroad, dismissing the suit.  On appeal, however, the U.S. Supreme Court overturned the state court’s decision, remanding the case back to the state court. 

In finding that Pennsylvania’s statute complies with the Due Process Clause, the Court expanded the traditional grounds for personal jurisdiction over a corporation.  Since the Court’s 1945 decision in International Shoe Co. v. Washington, these grounds have been limited to the suit arising out of a corporation’s activities in the state where it is filed or a corporation having “minimum contacts” with the state, such as being incorporated or having its principal place of business in the state or conducting significant activities there.  Now, foreign corporations registered to do business in Pennsylvania may be sued in the state, regardless of where the lawsuit arose, where they are headquartered, or whether they have other connections to Pennsylvania.  Justice Gorsuch characterized Mallory’s holding as consistent with International Shoe, which he claimsdid not limit or displace then-existing grounds for personal jurisdiction, such as consent statutes similar to the Pennsylvania statute at issue in Mallory, but rather “simply provided a ‘novel’ way to secure personal jurisdiction.”

The Court’s analysis in Mallory was limited to the Due Process Clause; it did not address whether the Pennsylvania statute violates the dormant Commerce Clause or principles of state sovereignty.  Additionally, the Court’sholding only applies to Pennsylvania for now; the Court was careful to limit its reasoning to Pennsylvania’s statute and declined to “speculate whether any other statutory scheme and set of facts would suffice to establish consent to suit.”  While other states require foreign corporations to register to do business in their state, as noted in Justice Barrett’s dissent, no other state’s business registration statute currently appears to explicitly require a foreign corporation to consent to personal jurisdiction.