By: Jarrad Wright
Deceptively simple, personal jurisdiction is one of the first concepts lawyers are taught in law school. At its most basic level, courts cannot hear civil cases against individuals or companies unless they have a connection to the state. It would be unfair for someone to be sued in a foreign state court if they have never visited the state or have any nexus to the state.
However, what seems simple in concept becomes difficult in practice, especially in an interconnected world-wide economy in which parties routinely communicate through the internet. As such, the courts are constantly re-evaluating the complex rules of personal jurisdiction, and over the decades various legal doctrines have developed over how much of a connection to a state one must have in order to be sued in that state.
The U.S. Supreme Court’s seminal decision in International Shoe v. Washington, 326 U.S. 310 (1945) set forth the minimum contacts test for personal jurisdiction in which courts examine the extent and nature of a litigant’s contacts with a foreign jurisdiction. Now the Court is considering to what extent and under what circumstances companies can be deemed to have consented to the jurisdiction of states in which they do business.
On November 8, 2022, the United States Supreme Court heard oral argument in Mallory v. Norfolk Southern Railway Co., Case No. 21-1168. In that case, a Virginia resident sued his Virginia based employer in Pennsylvania for violations of the Federal Employers’ Liability Act for occupational exposure to carcinogens. The plaintiff argued that Pennsylvania’s registration statute for foreign businesses provides that companies that register to do business in Pennsylvania also consent to personal jurisdiction for cases in Pennsylvania. This consent-by-registration scheme has been rejected by some states but not all states, and the issue was actively litigated in Pennsylvania. In December 2021, the Pennsylvania Supreme Court struck down the statute after finding that the statute violated the 14th Amendment’s Due Process Clause by coercing consent to jurisdiction, among other reasons.
Before the Supreme Court, attorneys for the Virginia employee argued that there was a long constitutional history of consent-by-registration in the United States and argued that such consent-by-registration statutes were not superseded by International Shoe but could co-exist with the minimum contacts doctrine. Norfolk Southern’s lawyers argued that the Pennsylvania law did not amount to voluntary consent as the company was forced to register to continue doing business in Pennsylvania. The Solicitor General’s Office supported Norfolk Southern’s concerns.
While it is always difficult and dangerous to read too much into the justices’ questions, particularly in non-political legal issues such as this, the questions raised by the justices indicate that members of the Court may be splitting but not along the usual ideological lines. Chief Justice Roberts’ and Justice Kagan’s questions pushed back upon the premise that International Shoe and such consent statutes could legally co-exist. In addition, Justice Alito and Justice Kavanaugh seemed concerned about the practical effects on businesses if states implement such statutes. On the other side, Justice Jackson Brown’s, Justice Sotomayor’s, and Justice Gorsuch’s questions indicated that they were more comfortable with the concept of such statutes. The case will be decided in 2023.
These types of civil business cases do not receive the publicity of many cases that make the news, but issues such as when and where a company can be sued have a tremendous impact. Venue shopping for favorable judges and jurisdictions has long existed and has impacted many types of legal cases over the years. The Court’s decision could keep the status quo or open the floodgates for more forum shopping. Either way, jurisdictional issues will continue to arise and be litigated because of the overlay of the modern interconnected world onto our historical system of federal courts and sovereign states.
DiMuroGinsberg, P.C. has decades of experience in handling civil disputes, including jurisdictional disputes. If you would like more information on this subject, contact Jarrad Wright at email@example.com.