A new decision by the United States Supreme Court has greatly expanded the locations where corporations can be sued. Traditionally, corporations are considered to be citizens of the states in which they are incorporated or where they have their principal place of business, and can be sued in those states just like any other citizen. However, in order for a corporation to do business outside its home state, it generally has to “register” in that state. Some states, such as Pennsylvania, also require such foreign corporations to consent to be sued in the state as a condition of doing business there. Prior to this new decision, corporations argued that there were still limits on this “consent to sue” arising out of the Due Process Clause of the United States Constitution, and as a result, there had to be some connection between the state and the plaintiff bringing suit or the wrongful conduct giving rise to the suit.
In its new decision in Mallory vs. Norfolk Southern, the Supreme Court, in a 5-4 ruling, rejected that position, finding that the Due Process Clause does not limit suits against a corporation that has registered to do business in another state, if that state’s law has a consent-to-suit provision. The Mallory decision arose out of a suit brought in Pennsylvania by an employee of Norfolk Southern, claiming that he developed colon cancer as a result of Norfolk’s failure to provide a safe working environment. Mallory is a Virginia resident and claimed this his exposure to the carcinogens occurred while he was working for Norfolk in Ohio.
Norfolk sought to dismiss the case, arguing that it was incorporated in Virginia and had its principal place of business there, depriving the Pennsylvania court of general jurisdiction over it for suits where the injury and alleged wrongful conduct did not occur in Pennsylvania. Mallory countered by arguing that because Norfolk registered to do business in Pennsylvania, and Pennsylvania has a statute purporting to confer general jurisdiction over any corporation registered to do business there, the court had general jurisdiction over Norfolk.
The trial court dismissed the case, finding that the Due Process Clause of the Fourteenth Amendment limits the scope of personal jurisdiction. The Supreme Court of Pennsylvania affirmed the judgment of the trial court on the grounds that Pennsylvania’s registration statute violated Norfolk’s due process rights, and that the Due Process Clause requires a corporation to have “meaningful contacts, ties, or relations” with the forum, even in jurisdictions with a consent-to-suit statute.
The Supreme Court reversed the rulings below, holding that the statute conferring jurisdiction did not violate Norfolk’s due process rights. The Court noted that “personal jurisdiction is a personal defense that may be waived or forfeited.” By registering to do business in Pennsylvania, Norfolk waived its defense to personal jurisdiction within the state. Norfolk had attempted to counter this outcome by arguing that it did not “voluntarily” waive its defense to personal jurisdiction because it was compelled to do so by statute. The Court rejected this notion, finding that Norfolk could have decided the burden was too much and decided not to do business in Pennsylvania. Moreover, the Court noted that overturning Norfolk’s “consent” to suit would call into question similar consents to suit in other contexts, such as forum selection clauses in contracts.
The Supreme Court’s decision has far-reaching implications for multi-state corporations. Submitting to general jurisdiction in multiple states will make managing litigation more difficult and complicates evaluating potential litigation risks. Moreover, now that the Supreme Court has given the green light, it is likely that additional states will add “general jurisdiction” requirements to their statutory schemes.
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