In the dispute over where companies can be sued, original arguments and business interests collide

CASE PREVIEW

Norfolk Southern Railway locomotives at a rail yard near Harrisburg, Pennsylvania. (Caseyjonz via Wikimedia Commons)

The Supreme Court will hear Tuesday in a major dispute over personal jurisdiction — the power of a court to hear a lawsuit against an accused. The question in Mallory v Norfolk Southern Railway Co. is whether a Pennsylvania court may hear a lawsuit brought against a Virginia-based railroad company by a Virginia man who worked for the Virginia and Ohio railroads. If the judges answer “yes,” companies could soon be sued for all kinds of claims in many or all of the states in which they do business.

background

Under personal jurisdiction law, a plaintiff can always sue a corporation in the state in which the corporation is incorporated or in the state in which it has its principal place of business. Because the courts of these states have “general” jurisdiction over the company. But the ability to sue a company in other states is more limited. Typically, a lawsuit in another state is only permissible in two circumstances: first, if the company has voluntarily consented to being sued in that state, and second, if the company engages in activities related to the plaintiff’s claim there.

Mallory is about a law in Pennsylvania designed to give general jurisdiction to any company doing business in that state. Pennsylvania requires foreign corporations to register with the state if they wish to do business there, and under state law, such registration gives the Pennsylvania courts general jurisdiction over these corporations. Various business groups — as well as the Biden administration — warn that if the Pennsylvania system persists, other states will follow suit, an outcome that would dramatically expand states’ ability to exercise jurisdiction over corporations. But proponents of the Pennsylvania law say it is consistent with the original understanding of the constitution and must be upheld under the current court’s historic approach to many constitutional issues.

The plaintiff in this case is Robert Mallory, who worked for the Norfolk Southern Railway Co. for 17 years. During that time, Mallory says, he was exposed to asbestos and other cancer-causing chemicals and was diagnosed with colon cancer as a result. Mallory went to court in 2017 to hold the railroad liable. Although the facts underlying the lawsuit did not occur in Pennsylvania, Mallory contended that the Pennsylvania courts had jurisdiction over Norfolk Southern because the railroad was registered to do business there.

A state court dismissed Mallory’s case, agreeing with Norfolk Southern that it did not have jurisdiction over the railroad. Pennsylvania’s registration system, the court concluded, violates the due process clause of the 14th Amendment – which, among other things, guarantees fair treatment by the government – by allowing state courts to have jurisdiction over foreign corporations in all circumstances. The Pennsylvania Supreme Court upheld that ruling, prompting Mallory to appear before the Supreme Court earlier this year.

Mallory’s arguments

In his brief to the Supreme Court, Mallory alleges that the Pennsylvania Supreme Court’s decision that the registration system was unconstitutional was inconsistent with the “original public meaning” of the 14th Amendment — that is, as the Amendment was commonly known at the time would have been understood was ratified in 1868. Efforts to recognize “original public meaning” have become increasingly important in constitutional interpretation in recent years. By 1868, Mallory says, all states required that extrastate corporations wishing to do business in the state consent to personal jurisdiction, even if the corporations could not otherwise have been brought to court there. Around the same time, Mallory adds, Congress passed a similar requirement for the District of Columbia.

Mallory also points to the 1917 Supreme Court decision Pennsylvania Fire Insurance Co. of Philadelphia v Gold Issue Mining & Milling Co., which found that a non-governmental body consented to jurisdiction in Missouri when, in accordance with the law, it appointed an agent to receive “service of process” — the legal documents beginning a lawsuit. The Supreme Court never overturned its decision Pennsylvania firewrites Mallory, and there is no good reason to do so now.

Mallory rejects any suggestion that the court’s subsequent personal jurisdiction rulings in any way undermine the jurisdiction established by it Pennsylvania fire. The decision of the court of 1945 in International Shoe Co. v. Washingtonwhich held that a state may have jurisdiction over an out-of-state defendant if the defendant has sufficient contacts with the state such that it would not be unfair for the defendant to face a charge there, “simply established an additional basis for jurisdiction over defendants from abroad.” The judges a International shoe Mallory stresses that I have not considered whether jurisdiction over out-of-state defendants is constitutional where the defendant has consented to jurisdiction. According to Mallory, Norfolk acquiesced to Pennsylvania jurisdiction under the state registration system.

The 1990 Supreme Court decision in Burnham v. Supreme Court also makes it clear, Mallory adds, that Pennsylvania’s registration system is constitutional. in the burnham, the Supreme Court upheld “day jurisdiction” – the concept of exercising jurisdiction over a defendant outside of the state on which the complaint was served during a visit to the state. If the accused in burnham — a New Jersey father — can be sued for visiting California to see his kids, Mallory insists there’s nothing unfair about also allowing Norfolk Southern, which has registered to do business in Pennsylvania and “thousands of miles on railroad tracks and a dozen “facilities” there to be sued in Pennsylvania.

The Norfolk Southern arguments

Norfolk Southern counters that the Pennsylvania program is “an anachronism — designed in another era to solve a problem that no longer exists, based on a doctrinal foundation that vanished decades ago.” In fact, Pennsylvania is the only state using such a system, and even Pennsylvania has not spoken out in its defense in this case. Norfolk Southern explains that until the 20th century, companies could avoid being sued for their activities in states where they did business unless there were laws requiring foreign companies to appoint representatives who accept a lawsuit. But after that International shoethe railroad continues, such laws are no longer necessary because a state’s courts may have “special” jurisdiction — the limited authority to hear claims arising out of a company’s domestic activities — over non-state companies.

But even if International shoe didn’t undermine Pennsylvania fireNorfolk Southern will notify the judges of the decision Pennsylvania fire would still not save the Pennsylvania program. Norfolk Southern and other non-state corporations did not consent to Pennsylvania jurisdiction simply by registering to do business there, the railroad says, because the registration process says nothing about consent.

The recent decisions of the Supreme Court in Goodyear Dunlop Tires Operations vs. Brown and Daimler AG against Baumannargues Norfolk Southern, also made it clear that a state has general jurisdiction only over companies that are “home” in the state.

Norfolk Southern disputes Mallory’s original view of the 14th Amendment, writing that “Mallory grossly misrepresents the law and practice of the ratification period.” Unlike the Pennsylvania system, Norfolk said the statutes Mallory cites “overwhelmingly govern claims arising out of” dealings in the forum. Mallory cannot point to “decisions that applied universal registration jurisdiction prior to ratification, and only one decision that did so over the next 28 years,” concludes Norfolk Southern.

The Biden administration filed a brief in support of Norfolk Southern. She warns judges that if Mallory prevails, state courts could also hear lawsuits against foreign defendants arising from their conduct abroad – which the government says could damage the federal government’s relations with other countries.

This article was originally published by Howe on the Court.

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