– The Supreme Court’s decision in Mallory v. Norfolk Southern Railway Co. has overturned the previous understanding of general jurisdiction for out-of-state businesses.
– General jurisdiction was previously believed to exist only in a defendant’s “home states” of incorporation and principal business operations, but now also includes states where foreign companies are required to consent to the state courts’ jurisdiction as a condition of doing business.
– The case involved a former Norfolk Southern employee who sued the company for developing cancer, even though the company was incorporated and headquartered in Virginia, and the lawsuit was brought in Pennsylvania state court where the employee did not live and where his cause of action did not happen. – Pennsylvania statute requires out-of-state corporations to register in order to do business in the state
– Upon registration, out-of-state corporations are subject to jurisdiction in Pennsylvania state courts
– The United States Supreme Court held that this requirement does not violate the Due Process Clause
– The Court’s decision was influenced by a previous case upholding a similar law in Missouri
– The Court emphasized that Norfolk Southern had consented to jurisdiction in Pennsylvania by registering to do business in the state 1. Justice Gorsuch rejected Norfolk Southern’s argument that the International Shoe Co. v. Washington decision undermined its earlier decision in Pennsylvania Fire.
2. The Court held that the Fourteenth Amendment permits suit against a corporate defendant if the quality and nature of the company’s activity in a state make it reasonable to maintain suit there.
3. The “minimum contacts” analysis is now routine, where courts analyze whether an out-of-state defendant has enough contacts with the forum state for its courts to have jurisdiction over that defendant.
4. Norfolk Southern argued that International Shoe permits no basis for jurisdiction over a corporate defendant beyond general and specific.
5. Justice Gorsuch disagreed, asserting that International Shoe expanded the ability of states to obtain personal jurisdiction over nonresident defendants.
6. He explained that jurisdiction can also be established through a defendant’s express or implied consent, as in Pennsylvania Fire.
7. Norfolk Southern had consented to suit in Pennsylvania by registering to do business in the state. – Justice Barrett criticized Pennsylvania’s statute as a “power grab” that violates defendants’ rights and the proper role of states in the federal system.
– She argued that the Due Process Clause does not allow state courts to assert jurisdiction over nonresident defendants solely because they do business in the state, unless they have consented to it.
– Justice Barrett warned that the ruling in Norfolk Southern v. Pennsylvania could lead other states to enact laws similar to Pennsylvania’s, conditioning the ability to do business in a state on a corporation’s consent to general jurisdiction, regardless of its connections to the state.
https://bergersingerman.com/news-insights/supreme-court-derails-contacts-based-approach-to-jurisdiction
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