The two most thrilling words to readers of legal blogs must be “personal jurisdiction.” In the term that starts October 2022, the United States Supreme Court will consider a case that will determine the constitutionality of state statutes that compel companies to consent to personal jurisdiction by registering to do business in the state.[1]
Personal jurisdiction is the court’s authority over the parties before it, and typically considers whether it is fair and just for a defendant to be forced to defend itself in a jurisdiction other than where it is based. There are two flavors of personal jurisdiction: general—a defendant may be sued even for conduct unrelated to its contact with the forum—and specific—a defendant may be sued only for conduct related to the defendant’s contact with the forum.[2] In some states, the statutes governing foreign companies’ registering to do business in the state constitute consent to general jurisdiction in the state; that is, by registering to do business, the foreign company is agreeing that it can be sued for acts even unrelated to its presence in the state.
In the upcoming case, a Virginia-based railroad was sued in Pennsylvania, where it was registered to do business. In Pennsylvania, out-of-state companies must register to conduct business in the Commonwealth, and registration subjects the company to general personal jurisdiction. The argument by the petitioners is that the line of cases outlining the well-known “minimum contacts” test applies in those situations where jurisdiction has not been consented to and not when jurisdiction is by consent. In an important recent case, the Supreme Court commented on the lack of cases on general jurisdiction specifically over non-consenting foreign corporations.[3] Because jurisdiction by consent has been enforced by the Supreme Court, such as through commercial agreements, general jurisdiction via consent through a registration statute is equally valid. The respondents argue that almost all recent cases have rejected the notion that simply registering to do business in a state may subject a company to suit for anything and everything.
Many companies register to do business outside their home states, and they can often plan on the potential for their being sued in those foreign states being limited to their contacts and not wholly unrelated actions. Not every state dictates that registration amounts to consent to general personal jurisdiction. Rhode Island’s long-arm statute, for example, does not mention registration to do business and defines personal jurisdiction as anything that is not contrary to the constitution or laws of the United States. If states can extract consent to general jurisdiction through registration statutes, however, many national and regional companies may be liable to suit where they previously would not have been. On the other hand, the petitioners point out that consent-by-registration-statute is no different from individuals frequently being forced to consent to jurisdiction in a foreign state as the cost of entering into myriad agreements in modern society, often with little opportunity to negotiate.
Companies that conduct business, and therefore register to do business, outside their home state may be interested in the outcome of this Supreme Court case. The case is Mallory v. Norfolk Southern Railway Co., and oral argument is scheduled for November 8.
[1] Mallory v. Norfolk Southern Railway Co., No. 21-1168.
[2] Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 35 (1st Cir. 2016); see also Ben & Jerry’s Homemade, Inc. v. Coronet Priscilla Ice Cream Corp., 921 F. Supp. 1206, 1210 (D. Vt. 1996) (explaining distinction between general and specific jurisdiction).
[3] Daimler AG v. Bauman, 571 U.S. 117, 129 (2014) (Our post-International Shoe opinions on general jurisdiction, by comparison, are few. “[The Court’s] 1952 decision in Perkins v. Benguet Consol. Mining Co. remains the textbook case of general jurisdiction appropriately exercised over a foreign corporation that has not consented to suit in the forum.” (Citation omitted)).
