Abstract
In Mallory v. Norfolk Southern Railway Co., the U.S. Supreme Court followed its over-century old precedent in Pennsylvania Fire Insurance Co. v. Gold Issue Mining Co. and held corporate registration meant that Pennsylvania’s exercise of jurisdiction did not violate the Due Process Clause, even though none of the underlying events occurred in Pennsylvania. Since 1945, U.S. jurisdiction has been dominated by the minimum-contacts test, which is thought to divide the jurisdictional world in half. “Specific” jurisdiction is jurisdiction based on events arising out of or related to the suit. “General jurisdiction” is jurisdiction based on unrelated contacts.
Until 2011, the Supreme Court had little to say about general jurisdiction, but then in a series of three cases it sharply limited general jurisdiction over corporations to states where they were “essentially at home.” In practice, this has come to mean that corporations are subject to general jurisdiction only in their state of incorporation or principal place of business. Combined with a series of cases mostly siding with defendants in special jurisdiction cases left plaintiffs searching for a U.S. forum, even though a substantial portion of the events giving rise to suit occurred in the U.S.
This brought a renewed interest in asserting jurisdiction over a registered corporation or other business entity. Pennsylvania Fire expressly approved this practice and the Supreme Court had never overruled it. Yet, lower courts were divided with some concluding that Pennsylvania Fire had been implicitly overruled by the Supreme Court’s “at-home” line of cases and others concluding that it was good law.
Five to four, the Supreme Court concluded that Pennsylvania Fire is still good law. Yet future complications await. The lead opinion was a four-vote plurality in places and a five-to-four majority in others. In his solo opinion, Justice Alito concluded that Pennsylvania Fire was good law as to the Due Process Clause but suggested that in cases like Mallory – in which the underlying events had little or nothing to do with the forum state – that the dormant Commerce Clause might render the assertion of jurisdiction unconstitutional.
A plurality of the Justices argued that allowing jurisdiction based on corporate registration is a logical counterpart to the rule that an individual defendant is amenable to jurisdiction if served while in the forum state even if only fleetingly there. Whether that rationale ultimately commands a majority of the Court remains to be seen.
The Court also left unanswered important questions about the nature needed of statutory authorization for jurisdiction. The Pennsylvania statute considered by the Mallory Court was unusual (perhaps unique) in expressly providing that registering a corporate agent (a condition of doing business in every state) submits the corporation to the jurisdictional power of the state. However, most state statutes (including the one considered in Pennsylvania Fire and in the Georgia Supreme Court case that created the split of authority that caused the Supreme Court to review that case) simply provide that the corporation must register to do business, without expressly addressing jurisdictional power. Because only Justice Alito addressed the Commerce Clause, the extent to which the Commerce Clause limits state-court jurisdiction (if at all) is an open question. It seems clear that if there is an obvious connection to the forum state (such as the plaintiff’s residence) that jurisdiction can be asserted under Alito’s view.
There’s also the worry – expressed by Alito and the four dissenters – that unchecked jurisdiction based on registration could lead to a forum-shopping bonanza for plaintiffs, most notably tort plaintiffs. However, there are sub-constitutional means (notably venue transfer and forum non conveniens) that limit forum choice. Moreover, it is far from clear that states will rush to embrace jurisdiction by corporate registration for fear of overloading their courts or creating a climate perceived as hostile to business. For instance, after New York’s high court ruled that its statutes did not allow for jurisdiction by registration, a bill was swiftly passed to reverse that outcome, but New York’s governor vetoed it.
Whatever the unanswered questions remain after Mallory though, it and the Supreme Court’s opinion unanimously approving jurisdiction over auto giant Ford Motor Co. in a state in which it did considerable business and in which a used Ford car sold in the forum state and causing injury there, the most recent turn from the Supreme Court is a welcome relief from the steady parade of cases relegating plaintiffs to irrational forums or effectively nonsuiting them. Mallory holds out the tantalizing possibility that U.S. jurisdictional law may be unshackled from the minimum contacts test.