Are there any constitutional limits to general jurisdiction after the U.S. Supreme Court decided Mallory v. Norfolk Southern Railway Co. at the end of June 2023?
There should be nothing controversial about a plaintiff suing a company in a state where the parties were when some claim accrued. But it is unusual for a plaintiff to sue a company in a state where neither the plaintiff, the company, nor the events giving rise to the claim occurred. In other words, it is odd to think that a plaintiff can sue a company alleging any claim in any state asserting general jurisdiction.
Before June 27, 2023, a company would have been subject to general jurisdiction in its principal place of business and the state where it incorporated. After, a company is also subject to general jurisdiction where it has registered to receive service of process ignoring where the parties are, or the events occurred. Norfolk Southern involved parties and events that have no connection to Pennsylvania. The Court reasoned that a Pennsylvania Jurisdiction Statute amounted to Norfolk Southern consenting to general jurisdiction within the state. The decision did not turn on facts about whether Norfolk Southern conducted continuous and systematic business within Pennsylvania to subject it to general jurisdiction, although a concurrence in the judgment did discuss those factors. Instead, finding general jurisdiction turned on construing the statute. And traditional due process factors did not bar Pennsylvania from hailing Norfolk Southern into court for any claim alleged despite International Shoe, its progeny, and the dissent. An open question remains: do statutes that subject businesses to general jurisdiction who are also engaging in interstate commerce violate the commerce clause to the Constitution? Time will tell.
But for now, businesses and their insurance carriers should consider what it means to be subject to general jurisdiction in the states where they have registered to conduct business as a foreign company. In evaluating the risk, consider that internet-based businesses who intend to conduct business with people in the several states may be subject to general jurisdiction despite Mallory v. Norfolk Southern Railway Co. if there are enough contacts with the state to satisfy the continuous and systematic factor. In evaluating jurisdiction, businesses should focus on those states for which there are not continuous and systematic contacts and decide whether it must register as a foreign company. And if so, does the registration include what the Supreme Court has now construed as consent to general jurisdiction.
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Jon Polenberg is a senior trial lawyer for Becker & Poliakoff, P.A., headquartered in Ft. Lauderdale, FL, who regularly represents clients for their matters proceeding in state court, federal court, arbitration, and regulatory agencies. Jon also heads up e-discovery and data analytics for the firm’s business litigation practice. He represents clients in both symmetric and asymmetric matters involving varied complex e-discovery and legal issues.