On December 22, 2021, the Supreme Court of Pennsylvania issued a decision in Mallory v. Norfolk S. R.R. Co., Civ. A. No. 3 EAP 2021, Slip. Op. J-49-2021, at 33, 44 (Pa. Dec. 22, 2021) that is sure to become the pillar of jurisdictional challenges going forward. The Court unanimously held that general jurisdiction does not exist solely on the basis of a company’s registration to do business in Pennsylvania. In so doing, the Commonwealth’s highest court eviscerated plaintiffs’ go-to opinion to the contrary, Webb-Benjamin LLC v. International Rug Group, LLC, 192 A.3d 1133 (Pa. Super. 2018), and emphasized that Pennsylvania’s long-arm statute, 42 Pa. C.S. § 5301(a)(2)(i), which provides that companies registering to do business in the Commonwealth consent to general jurisdiction, “clearly, palpably, and plainly violates the Constitution.” Mallory, Slip. Op. J-49-2021, at 33. This welcomed clarification brings Pennsylvania’s general jurisdiction jurisprudence in line with the United States Supreme Court’s precedent and, hopefully, puts an end to litigation that does not belong in Pennsylvania against defendants who merely registered to do business there.
The Pennsylvania Supreme Court in Mallory considered whether a corporate defendant who is not incorporated in Pennsylvania and whose principal place of business is outside of the Commonwealth may, nevertheless, be subject to general jurisdiction solely on the basis of its registration to do business in the Commonwealth. The plaintiff, a Virginia resident, filed an action in Pennsylvania against a Virginia corporation, alleging injuries sustained in Virginia and Ohio. Mallory, Slip. Op. J-49-2021, at 9. The trial court granted defendant’s preliminary objections and dismissed the complaint with prejudice reasoning that it would violate Due Process to construe a foreign corporation’s compliance with Pennsylvania’s mandatory business registration statute as a voluntary consent to Pennsylvania courts’ exercise of general personal jurisdiction. Mallory, Slip. Op. J-49-2021, at 13. The trial court further observed that, “[b]y requiring foreign corporations to submit to general jurisdiction as a condition of doing business here, Pennsylvania’s statutory scheme infringes upon our sister state’s ability to try cases against their corporate citizens.” Mallory, Slip. Op. J-49-2021, at 15.
On direct appeal to the Pennsylvania Supreme Court, plaintiff argued that registration to do business in the Commonwealth establishes consent to general personal jurisdiction under Pennsylvania’s long-arm statute, 42 Pa. C.S. § 5301(a)(2)(i), which expressly states that Pennsylvania courts may exercise general personal jurisdiction over corporations that qualify as foreign corporations under the law, while such qualification required registration to do business within the state. For further support, plaintiff cited to Webb-Benjamin LLC v. International Rug Group, LLC, 2018 Pa. Super. 187 (2018), a Superior Court holding that consent-by-registration was a valid basis for personal jurisdiction.
The highest court unanimously rejected this familiar tune. Mallory, Slip. Op. J-49-2021, at 38. In so doing, the Court sharply noted that Pennsylvania’s statutory scheme, which “affords Pennsylvania courts general personal jurisdiction over foreign corporations, regardless of whether the foreign corporation has incorporated in the Commonwealth, established its principal place of business here, or is otherwise ‘at home’ in Pennsylvania . . . clearly, palpably, and plainly violates the Constitution.” Mallory, Slip. Op. J-49-2021, at 33, 35. The Court also pointed out that, “to conclude that registering as a foreign corporation invokes all-purpose general jurisdiction eviscerates the Supreme Court’s general jurisdiction framework set forth in Goodyear and Daimler and violates federal due process by failing to comport with International Shoe’s traditional conception of fair play and substantial justice.” Mallory, Slip. Op. J-49-2021, at 36.
Prior to Mallory¸ several trial courts have held that consent to general jurisdiction by registration violates the foreign defendant’s due process rights. See, e.g., Hill v. Safety-Kleen Sys., Inc., No. 170301021 (C.P. Philadelphia Aug. 3, 2018); Davis v. U.S. Steel Corp., No. 170401879 (C.P. Philadelphia Aug. 2, 2018); Walker v. Safety-Kleen Sys., Inc., No. 180100015 (C.P. Philadelphia Aug. 2, 2018); Pennington v. U.S. Steel Corp., No. 160501092 (C.P. Philadelphia Aug. 27, 2018); In re Asbestos Prod. Liab. Lit. (No. VI), 384 F.Supp. 3d 532, 545 (E.D. Pa. 2019). But the Mallory opinion provided some much needed-clarity from the Commonwealth’s highest court and it is sure to have far-reaching effects both on pending cases and future cases as there is nothing in the opinion that prevents the holding from applying to pending cases.
After Mallory, foreign defendants hailed to Pennsylvania courts solely on the basis of their registration to do business in the Commonwealth should be able to avoid Pennsylvania litigation based on the lack of general personal jurisdiction. Those whose preliminary objections were previously overruled on this basis, or summary judgments denied, should seek reconsideration in light of the recent change in the law. Note that motions for emergency relief or petitions for stay may be appropriate as well, depending on the procedural posture of your litigation and each county’s local rules. If you are a foreign defendant sued in Pennsylvania solely on the basis of occurrences outside of the Commonwealth, and your only connection to Pennsylvania is that you are registered to do business here, please reach out to our Pennsylvania-licensed attorneys to discuss your options based on Mallory.
Jurisdiction by consent remains a hotly contested issue. The Toxic Tort Monitor recently reported on a contrary decision in Cooper Tire & Rubber Co. v. McCall where Georgia’s Supreme Court held that registration to do business sufficed for general jurisdiction. Check in frequently for updates from other jurisdictions. https://www.toxictortmonitor.com/2021/11/georgia-supreme-court-reaffirms-consent-by-registration-theory-of-personal-jurisdiction/