• When a State requires a corporation to consent to jurisdiction as a condition of registering and doing business in the State, the Due Process Clause does not protect the corporation from suit even when the cause of action lacks a connection to the State. However, the dormant Commerce Clause might protect the business from such suits.
• If the corporation has not consented to suit in connection with registering to conduct business in that State, then the corporation’s amenability to suit may still depend on “the quality and nature of [its] activity” there.

On June 27, 2023, a fractured Supreme Court held in Mallory v. Norfolk Southern Railway Co. that a Pennsylvania law requiring out-of-state businesses to consent to the jurisdiction of the Pennsylvania courts as a condition of doing business in Pennsylvania did not violate the Fourteenth Amendment’s Due Process Clause.¹ The Court did not address whether the dormant Commerce Clause might preclude Pennsylvania from asserting general jurisdiction over out-of-state businesses.² The defendant remains free to raise such a dormant Commerce Clause challenge on remand.³

Background

Pennsylvania law “requires out-of-state companies that register to do business in the Commonwealth to agree to appear in its courts on ‘any cause of action’ against them.”⁴

The Pennsylvania Supreme Court held that the law unconstitutionally extends the jurisdiction of the Pennsylvania courts in violation of the Due Process Clause of the Fourteenth Amendment.⁵ The state court applied the “minimum contacts” analysis under International Shoe v. Washington, 326 U.S. 310 (1945). Under that approach, a court may assert personal jurisdiction over an out-of-state defendant only if the defendant had minimum contacts in the forum state and the suit did not offend “traditional notions of fair play and substantial justice.”⁶ The Pennsylvania court held that the Norfolk Southern Railway Company’s registration in doing business in the state was not sufficient under that standard.

The Supreme Court’s Decision

The Supreme Court disagreed. In a 5-4 ruling, the Court held that Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917) controlled.⁷ In Pennsylvania Fire, Gold Issue sued Pennsylvania Fire to collect on an insurance policy. Rather than suing in Gold Issue’s home state (Arizona), the insurer’s home State (Pennsylvania), or the State where the contract had been formed (Colorado), Gold Issue brought suit in Missouri state court.⁸ Missouri law required out-of-state insurers like Pennsylvania Fire to appoint an agent for service of process and consent to any suit in Missouri.⁹ Pennsylvania Fire had registered and consented to suit in Missouri accordingly. The Supreme Court upheld the constitutionality of the Missouri law.¹⁰

The Mallory Court likened the Pennsylvania law to the Missouri law upheld in Pennsylvania Fire: The law requires out-of-state corporations to register with the Department of State to do business within the State.¹¹ Once the business registers and thus qualifies as an out-of-state corporation, Pennsylvania courts may “exercise general personal jurisdiction” over the corporation, just as they could over in-state corporations.¹² The Court held that, like the Missouri law in Pennsylvania Fire, the Pennsylvania law did not offend the Due Process Clause.

The Pennsylvania court had presumed that Pennsylvania Fire had been “implicitly overruled” by subsequent precedent, yet the Supreme Court held that was incorrect and reaffirmed that lower courts must follow controlling Supreme Court decisions, unless or until the Court itself overrules them.¹³

After Mallory, if an out-of-state corporation consents to suit within a State as a condition of doing business within that State, then the Due Process Clause will not stand in the way of lawsuits against the business. If state law does not require such consent, then the corporation may still object to the personal jurisdiction of the courts based upon “the quality and nature of [its] activity” and the rule of International Shoe.¹⁴ The Court confirmed that the dividing line turns on the question of consent.

Justice Alito provided the necessary fifth vote for the majority and joined only part of the opinion. In his concurring opinion, Justice Alito agreed “that Pennsylvania Fire controls our decision here,” but only “due to [its] clear overlap with the facts of this case.”¹⁵ He contrasted the International Shoe line of cases, which deal with “constitutional limits on jurisdiction over non-consenting corporations,” with Pennsylvania Fire, in which the corporate defendant had consented to suit.¹⁶ Justice Alito believed that allowing such a suit to go forward in Pennsylvania was not “deeply unfair” to the defendant, because of the corporation’s extensive business conducted in Pennsylvania and the fact that it had “clear notice that Pennsylvania considered its registration as consent to general jurisdiction.”¹⁷ Justice Alito believed that such consent minimized any federalism concerns since the Court had “never held that a State’s assertion of jurisdiction unconstitutionally intruded on the prerogatives of another State when the defendant had consented to jurisdiction in the forum State.”¹⁸

Justice Barrett, joined by three justices, dissented and expressed concern that the Court’s ruling would invite States to promote forum shopping: “All a state must do is compel a corporation to register to conduct business there (as every State does) and enact a law making registration sufficient for suit on any cause (as every State could do). Then, every company doing business in the State is subject to general jurisdiction based on implied ‘consent,’—not contacts. That includes suits, like this one, with no connection whatsoever to the forum.”¹⁹

Although the Court’s decision is likely to promote such forum shopping, Justice Alito’s fifth vote did leave open the possibility of the alternative argument that the Pennsylvania law violated the dormant Commerce Clause. The Pennsylvania Supreme Court did not need to address that alternative argument in its decision, and the Supreme Court did not consider it.²⁰ In his concurring opinion, Justice Alito stressed his view that “there is a good prospect that Pennsylvania’s assertion of jurisdiction here—over an out-of-state company in a suit brought by an out-of-state plaintiff on claims wholly unrelated to Pennsylvania—violates the Commerce Clause.”²¹

Justice Alito’s invitation to defendants to raise a dormant Commerce Clause objection to the Pennsylvania law is particularly interesting, because recent cases at the Court, including earlier this term, have recently narrowed the scope of its protection to cases where a State has engaged in “purposeful discrimination” against interstate commerce.²² In his Mallory concurrence, Justice Alito suggested that “Pennsylvania’s law seems to discriminate against out-of-state companies by forcing them to increase their exposure to suits on all claims in order to access Pennsylvania’s market while Pennsylvania companies generally face no reciprocal burden for expanding operations into another State.”²³

Justice Alito’s opinion invites the possibility that the Court may strike down the Pennsylvania law in a future case—either under the dormant Commerce Clause or perhaps through a fractured opinion that lacks a majority rationale. It is equally possible that Mallory will invite corporations to be sued in a State for conduct that occurs elsewhere and that this decision may invite a host of new state laws aimed at hot-button issues involving corporate defendants from climate change to abortion and healthcare. Whether the Supreme Court places limits on the States’ authority to subject business to registration-consent regimes remains to be seen.

Conclusion

In the wake of Mallory, if a corporation has consented to jurisdiction to conduct business in a State, then subsequent suits may proceed without violating the Fourteenth Amendment’s Due Process Clause. Yet corporate defendants may still object to those laws as running afoul of the dormant Commerce Clause.

* The authors would like to thank Thomas Koenig and Benjamin Pontz for their contributions to this OnPoint

1. 600 U.S. ____ (June 27, 2023). Justice Gorsuch wrote the majority opinion, joined by Justices Thomas, Alito (in part), Sotomayor, and Jackson. Justice Jackson concurred, and Justice Alito concurred in part and in the judgment. Justice Barrett, joined by Chief Justice Roberts and Justices Kagan and Kavanaugh, dissented.
2. Mallory, Slip Op. at 4 n.3.
3. Mallory, Slip Op. at 2 (Alito, J., concurring in part and concurring in the judgment).
4. Mallory, Slip Op. at 3 (majority op.) (quoting 42 Pa. Cons. Stat. § 5301(a)(2)(i), (b) (2019)).
5. Id.
6. Int’l Shoe, 326 U.S. at 316.
7. Mallory, Slip Op. at 4.
8. Id. at 8.
9. Id.
10. Id. at 9.
11. Id. at 10.
12. Id. at 11.
13. Id. at 12.
14. Id. at 14 (quoting Int’l Shoe, 326 U.S. at 319).
15. Mallory, Slip Op. at 5 (Alito, J., concurring in part and concurring in the judgment).
16. Id. at 4.
17. Id. at 4 (citing Int’l Shoe, 326 U.S. at 316).
18. Id. at 8.
19. Mallory, Slip Op. at 1 (Barrett, J., dissenting).
20. See Mallory, Slip Op. at 4 n.3 (majority op.).
21. Mallory, Slip Op. at 11 (Alito, J., concurring in part and concurring in the judgment).
22. See Nat’l Pork Producers Council v. Ross, 598 U.S. __ (2023).
23. Mallory, Slip Op. at 12 n.7 (Alito, J., concurring in part and concurring in the judgment).