Analysis of the United States Supreme Court’s Ruling in Mallory v. Norfolk Southern Railway Co. Regarding Pennsylvania’s Jurisdiction Consent Statute: An Overview

| August 28, 2023

Analysis of the United States Supreme Court’s Ruling in Mallory

Analysis of the United States Supreme Court’s Ruling in Mallory v. Norfolk Southern Railway Co. Regarding Pennsylvania’s Jurisdiction Consent Statute: An Overview

August 2023

The United States Supreme Court’s ruling in Mallory v. Norfolk Southern Railway Co., 600 U.S. ___, 143 S. Ct. 2008 (2023) has created significant ambiguity with respect to jurisdictional protection for corporations. The Court rejected a constitutional due process challenge to Pennsylvania’s statutory arrangement providing that a corporation’s registration to conduct business within the state constitutes consent to allow Pennsylvania courts to “exercise general personal jurisdiction” in any lawsuit brought against that corporate entity. A plurality of four justices concluded that constitutional due process concerns are not implicated “when an out-of-state defendant submits to suit in the forum State” as the Pennsylvania business registration statutes require. Id. at 2043. Four justices dissented from this conclusion, recognizing that the absence of constitutional limitations on consent-by-corporate-registration statutes will open the door to a free-for-all with no practical limits on state courts’ exercise of jurisdiction. Id. at 2065 (Barrett, J., dissenting). His constitutional analysis contains competing elements. On the one hand, Justice Alito concluded that Pennsylvania’s statutory arrangement did not run afoul of due process limitations. But on the other hand, Justice Alito observed that other constitutional protections, including state sovereignty, federalism, and the dormant commerce clause, are likely infringed by the consent-by-registration statutory arrangement. Id. at 2050–51. Justice Alito’s assessment therefore leaves the constitutionality of Pennsylvania’s consent-by-registration statutes unresolved and subject to further litigation on remand. The impact of the Mallory decision will largely depend on how courts decide the alternative constitutional bases for invalidating the Pennsylvania statutes that Justice Alito raised. If Pennsylvania’s consent-to-jurisdiction statutory scheme is found unconstitutional, any significance of the Mallory due process ruling will be quite limited.

Nonetheless, the plaintiffs’ bar has already recognized that the Mallory ruling both opens the door to the pursuit of cases in Pennsylvania that have no connection to that state other than the corporate defendant’s registration, and may support other states’ adoption of similar consent-by-registration statutes. See Rayna Kessler and Ethen Seiderberg, “Mallory Gives Plaintiffs a Better Shot at Justice,” Law360 (July 27, 2023). These authors note that, although Pennsylvania is presently the only state to have enacted a statute that equates a corporation’s registration to do business with consent to general jurisdiction, “[t]he court’s ruling in Mallory may also encourage other states to follow Pennsylvania’s lead.” Id. Enactment of such statutes in other states appears doubtful until courts clarify the dormant commerce clause and other constitutional issues identified in Justice Alito’s Mallory concurrence.

In light of the potential for the plaintiffs’ bar to press consent-by-registration legislation similar to the Pennsylvania model, several approaches could be considered to ameliorate the adverse effects of any such enactments and give corporate parties at least some opportunity to limit abusive forum shopping.

Pursue constitutional challenges to registration-as-consent statutes. Because Pennsylvania’s statutory scheme remains constitutionally vulnerable, raising and supporting challenges under both the U.S. constitutional provisions identified by Justice Alito and also applicable state constitutional provisions would provide the most direct and complete response to the fairness threat posed by the Pennsylvania statute. Such litigation would also deter other states from pursuing legislation mirroring the Pennsylvania approach.
Codify the forum non conveniens doctrine. The forum non conveniens doctrine allows trial courts to dismiss an action if there is a more appropriate forum available to the plaintiff, even if venue and jurisdiction are proper in the trial court selected by the plaintiff. Some states, most notably Georgia, Texas and West Virginia, have adopted forum non conveniens These enactments could serve as model legislation for other states, and even could act as vehicles for inserting very specific criteria for courts to accept a case, such as the occurrence of an injury or the residence of the plaintiff within the judicial district in which the lawsuit is filed.
Expand considerations and provide constraints in state venue statutes. Many states have venue statutes that identify the particular trial courts in which a particular lawsuit may be filed. These statutes may also provide a pathway for limiting plaintiffs’ ability to file cases in problematic trial courts that have no connection to the parties of to the dispute, and may even afford corporate entities the opportunity to influence what courts are available. Adding provisions to venue statutes that designate the trial courts in which tort claims against foreign corporations are allowed could minimize the negative impact of consent-by-registration statutes.
Enable removal through innocent seller statutes to prevent attachment of local defendants in product liability lawsuits. Approximately 19 states have enacted innocent seller statutes that protect retailers and distributors against joinder in product liability lawsuits in the absence of exceptional circumstances. These statutes have the serendipitous effect in most states of enabling removal to federal courts. By opening a pathway to move product liability cases to federal court, innocent seller statutes may reduce the negative consequences of consent-by-registration statutes.