Cost of doing business? The Supreme Court is reviewing the constitutionality of companies’ obligation to consent to universal personal jurisdiction

The Supreme Court heard a hearing Tuesday in an important case that could force open the doors to personal jurisdiction so companies can be sued wherever they do business. in the Mallory v Norfolk Southern Railway Co. the court must decide whether Pennsylvania can require corporations to submit to general personal jurisdiction as a condition of registering to do business in the state. The Pennsylvania Supreme Court said no — the forced submission to common jurisdiction violated the due process clause of the Fourteenth Amendment. After more than an hour of hearings, even the boldest court observer would be wary of predicting how the case will be decided.

As a reminder, the due process clause limits the courts’ power to exercise personal jurisdiction over defendants. Personal jurisdiction comes in two flavors: specific and general. A court with special jurisdiction over a foreign defendant can hear only claims that specifically arise from the defendant’s contacts with the state. However, a court of general jurisdiction may hear “all claims against” an accused. Daimler AG against Baumann, 134 S.Ct. 746, 751 (2014) (internal quotation marks and parentheses omitted). Traditionally, universal jurisdiction requires that the defendant’s affiliation with the court state be “so constant and pervasive as to be essentially at home there.” ID. But Pennsylvania’s Long Arm Statute authorizes the exercise of “general personal jurisdiction” over corporations “qualified[ed] as a foreign corporation” under Pennsylvania law – in other words, those registered under state law to conduct business in the state. That was Plaintiff’s sole basis for general jurisdiction here. The plaintiff, a Virginia resident, sued his former employer in a Pennsylvania state court alleging exposure to harmful carcinogens during his employment. But his former employer, Norfolk Southern, is a rail freight company headquartered (then) in Norfolk, Virginia — not in Pennsylvania.

In briefs filed with the Supreme Court over the summer, the parties argued over the proper resolution of this issue. The petitioner took a strongly historical approach, arguing that the original publicity of the Due Process Clause allowed for Pennsylvania’s judicial consent regime, as similar laws have long existed. According to the petitioner, before and after the Fourteenth Amendment was ratified, the courts upheld consent through registration statutes, and Congress itself enacted one for the District of Columbia in 1867 outlined in decisions such as: Good year and Daimler are incompatible with the plaintiff’s position. A number of Amici Curiae also intervened on both sides. Notably, the Office of the Solicitor General, which represents the United States government before the Supreme Court, sided with respondents. The Solicitor General argued that a state court could not exercise general jurisdiction solely on the basis of registration to conduct business, and asked the court to limit its decision to the narrow context of general jurisdiction under the Fourteenth Amendment.

In the argument, the judges grappled with how both parties’ arguments would affect the court’s personal jurisdiction precedents. Judge Kagan urged the petitioner’s attorney to explain why his position would not “eviscerate” or completely “overrule” the court’s decisions Daimler and Good year. Meanwhile, Judge Gorsuch asked the defendants’ attorney to reconcile his position with him Pennsylvania fire, a 1917 case in which the court upheld a similar law in an advisory opinion written by Judge Oliver Wendell Holmes, upholding a decision by the legendary Learned Hand. Chief Justice Roberts, on the other hand, asked the petitioner’s attorney why cases that predated the 1945 turn of the court International shoe should not be “relegated to the dustbin of history”.

The judges also questioned the attorneys extensively about the historical records. If only a handful of state laws were similar to Pennsylvania’s, Judge Thomas asked, how would the court know if it had enough support to rule in the petitioner’s favor? Judge Barrett expressed some skepticism that the historical service of process statutes relied on by the petitioner was truly comparable to Pennsylvania’s consent system.

One issue that seemed to interest the judges was the precise nature of the constitutional right that the defendant was asserting. Was it a non-state corporation’s right not to be sued if it had no principal place of business, its right to unrestricted access to the Pennsylvania market under the Dormant Commerce Clause, or a combination of both?

Another complication was the issue of consent. Why couldn’t the defendant waive his constitutional rights by registering to do business, just as criminal defendants often waive their constitutional rights in court, Judge Jackson wanted to know. And several of the judges presented the attorneys with hypotheses examining the potentially coercive nature of jurisdiction laws — Pennsylvania could have limited market access to a $100,000 payment, Chief Justice Roberts asked.

The judges grappled with attorneys on both sides, including an attorney representing the office of the solicitor general. Some fault lines emerged from this questioning – Justice Kagan and Chief Justice Roberts seemed quite skeptical of the petitioner’s position, while Justices Sotomayor, Gorsuch and Jackson leaned more heavily on the defendant’s and the government’s attorneys. But there was no clear indication of how the dish would ultimately turn out. So we will have to wait. The Supreme Court will make a decision by July 2023 at the latest.

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