Since the U.S. Supreme Court’s decision in International Shoe Co. v. Washington,1 more than a half century ago, federal courts have applied a contacts-based analysis to determine whether a court has personal jurisdiction over a defendant to render judgments affecting the rights of the defendant. But the recent Mallory2 decision may have introduced a new avenue for personal jurisdiction across the United States.
Case Background
Robert Mallory worked as a freight-car mechanic for Norfolk Southern Railway Company in Ohio and Virginia. After leaving Norfolk Southern, he moved to Pennsylvania and ultimately Virginia.
After leaving Norfolk Southern, Mallory was diagnosed with cancer, and he subsequently brought suit against Norfolk Southern under the Federal Employers’ Liability Act, 45 U.S.C. §§ 51 et seq. Norfolk Southern is incorporated and headquartered in Virginia, the allegedly injurious activity occurred in Ohio and Virginia, and Mallory was a Virginia resident at the time of filing. Mallory nonetheless filed his lawsuit in Pennsylvania state court. Norfolk Southern resisted the lawsuit, arguing that Pennsylvania could not exercise personal jurisdiction over Norfolk Southern,
Mallory’s arguments centered on Norfolk Southern’s presence in Pennsylvania and that Norfolk Southern is registered to do business in Pennsylvania. Pennsylvania 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. 42 Pa. Cons. Stat. §5301(a)(2)(i), (b). Therefore, Mallory argued personal jurisdiction was proper. The Pennsylvania Supreme Court disagreed, siding with Norfolk Southern, and Mallory appealed to the United States Supreme Court.
Supreme Court Holding
The question before the Court was thus whether the Pennsylvania statute violated the due process clause of the United States Constitution. In a 4-1-4 plurality decision, the U.S. Supreme Court vacated the decision of the Pennsylvania Supreme Court, and it held that an out-of-state corporation like Norfolk Southern may be required to consent to personal jurisdiction in Pennsylvania as a condition precedent to do business in the state.
The Court would not speculate on whether any other statutory scheme or set of facts would be sufficient to establish an entity’s consent to suit. Therefore, this decision was limited to analysis of Pennsylvania’s business registration statute. However, even the Justices themselves acknowledge the potentially far-reaching consequences of the decision.
Potential Impact
The future impact of Mallory may include:
- States other than Pennsylvania enacting similar statutes to exercise personal jurisdiction over entities registering to do business in their state.
- An increase of “litigation tourism” in Pennsylvania in the short run for businesses registered to do business in Pennsylvania (i.e., parties intentionally bringing cases in Pennsylvania thinking it will be a more favorable jurisdiction than other states).
- An increase in forum shopping by plaintiffs who could have a broader array of fora in which to file suit in the long run.
- Further litigation related to personal jurisdiction to test the boundaries of this decision and how it may call into question other standing personal jurisdiction precedents.
The impact of the Mallory decision may, as a whole, be limited by further decisions from federal courts, or it may be as broad as it seems at first glance.
Questions? We’re Here to Help
If you have questions about how this decision could impact your business, please contact a HAWS-KM attorney at (651) 227-9411.
