The Legal Brief
U.S. SUPREME COURT ADDRESSES PENNSYLVANIA’S CONSENT-BY-REGISTRATION STATUTE
July 7, 2023
By: Isaiah C. Robinson
Last week, the Supreme Court of the United States issued a wave of opinions. Included with those cases is an under-the-radar opinion that should put companies on notice. In Mallory v. Norfolk Southern Railway Co., No. 21-1168, the Supreme Court held that a Pennsylvania statute subjecting foreign corporations to general personal jurisdiction because they registered their business in Pennsylvania was constitutional and did not violate the Due Process Clause. A fractured 5-4 Court[1] held that the statute does not violate a defendant’s Due Process rights. The statute provides that foreign corporations registered under Pennsylvania laws consent to general personal jurisdiction in Pennsylvania courts.[2] The majority likened the facts of this case to the Court’s 1916 decision in Gold Issue Mining & Milling Co. v. Pennsylvania Fire Ins. Co.[3] In that case, the Supreme Court upheld a Missouri statute that permitted general personal jurisdiction over foreign corporations that appoint an agent for service of process in their state.[4] Because the facts of Pennsylvania Fire and Mallory were nearly identical, the majority of justices held the Pennsylvania statute was constitutional.
A plurality of Justices[5] would have even gone a step further to hold that a foreign corporation is subject to general personal jurisdiction in any state where they are registered to do business. The plurality reasoned that the statute does not offend the “traditional notions of fair play and substantial justice.”[6]
In his concurring opinion, Justice Alito agreed that the facts of this case and the statute at issue were identical to Pennsylvania Fire. However, Justice Alito suggested that the consent-by-registration statute violates the Commerce Clause.
The remaining Justices dissented, noting that this decision opens the door for other states to enact consent statutes like Pennsylvania’s. The dissent argued that not only does the statute violate a corporation’s Due Process rights, but corporations are also only subject to general personal jurisdiction in (1) the state where the corporation’s principal place of business is located; (2) the state where the corporation is incorporated; or (3) the contacts with the state are so systematic, continuous, and substantial, the corporation is considered “at home” in that state.[7]
Although Pennsylvania is the only state with a statute that explicitly confers general personal jurisdiction on foreign corporations, the Supreme Court’s decision in Mallory allows for states to enact laws that confer general personal jurisdiction on foreign corporations. Notably, Georgia, through its developed case law, also confers general personal jurisdiction onto foreign corporations.[8]
Whether any courts will adopt the plurality’s reasoning that a corporation will be subject to general jurisdiction in any state where the corporation is registered to do business is currently unknown. But the majority opinion does have an immediate impact on foreign corporations registered in Pennsylvania: as of now, foreign corporations registered in Pennsylvania can be brought into a Pennsylvania court for actions that occurred outside of the state. Companies should be aware that other states have now been given a green light to enact these laws.
This ruling does not close the book on the constitutionality of Pennsylvania’s law. There is foreshadowing that the Supreme Court could readdress this case. Justice Samuel Alito alluded that this statute violates the Commerce Clause by unconstitutionally discriminating against foreign corporations. In footnote 3, the plurality acknowledges that even though the Supreme Court did not consider whether Pennsylvania’s consent-by-registration statute violated the Commerce Clause, Pennsylvania courts could consider the issue on remand. With four justices already believing the statute is unconstitutional and Justice Samuel Alito hinting at the same conclusion, there is a chance this case could return to the Supreme Court soon.
For the complete opinion in Mallory v. Norfolk Southern Ry. Co., you can visit https://www.supremecourt.gov/opinions/22pdf/21-1168_f2ah.pdf.
[1] Justice Gorsuch delivered the opinion of the Court, with Justices Thomas, Sotomayor, and Jackson joining the whole opinion. Justice Alito joined to form a majority with respect to Parts I and III-B of the opinion.
[2] See 42 Pa. Cons. Stat. Ann. § 5301(a)(2)(i) (West 2023).
[3] 243 U.S. 93 (1917).
[4] Id. at 95.
[5] The plurality includes Justice Gorsuch, Justice Thomas, Justice Sotomayor, and Justice Jackson.
[6] See Int’l Shoe Co. v. Wash., 326 U.S. 310 (1945).
[7] See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011); Daimler AG v. Bauman, 571 U.S. 117 (2014).
[8] See Cooper Tire & Rubber Co. v. McCall, 863 S.E.2d 81 (Ga. 2021); Allstate Ins. Co. V. Klein, 422 S.E.2d 863 (Ga. 1992).