July 10, 2018
On May 30, 2018, a Philadelphia, Pennsylvania trial court rejected a personal injury plaintiff’s argument that an out-of-state corporation consented to personal jurisdiction when it filed registration to conduct business in Pennsylvania. In an opinion written by the Honorable Arnold L. New, in Mallory v. Norfolk Southern Railway Company, the court reasoned that its exercise of personal jurisdiction over Norfolk Southern and other foreign corporations must conform to the Due Process Clause of the Fourteenth Amendment to the United States Constitution. This provision limits a state’s authority to exercise personal jurisdiction over non-resident corporations. Judge New rejected the notion that a Pennsylvania court may exercise jurisdiction over a foreign corporation whenever the corporation has voluntarily registered itself to do business in Pennsylvania regardless of the corporation’s presence or whether the cause of action is related to the corporation activities in Pennsylvania.
In his opinion, Judge New summarized traditional personal jurisdiction jurisprudence. In order to establish personal jurisdiction over a foreign corporation, a plaintiff must show that the corporation’s activities in the forum state establish either specific or general jurisdiction. Specific jurisdiction turns on the existence of some concrete relationship between the forum and the activities attributed to the corporation and involved in the underlying controversy. General personal jurisdiction, on the other hand, may exist when a corporation’s operations within the state justify suit against it in an action arising from dealings which are distinct from those operations. More specifically, according to United States Supreme Court precedent including the 2014 Daimler v. AG Bauman decision, a court may exercise general jurisdiction over a corporation if its affiliations within the state are so continuous and systematic as to render it essentially at home in the forum state.
The Plaintiff in Mallory could not establish specific jurisdiction. All of the tortious activities as well as the injury in question occurred outside of Pennsylvania. None of the activity giving rise to Mallory took place in Pennsylvania. The court then discussed whether general personal jurisdiction was viable. According to Judge New, for Pennsylvania courts to acquire general personal jurisdiction over a foreign corporation, the corporation must be incorporated in Pennsylvania, have its principal place of business in Pennsylvania, or have consented to the exercise of jurisdiction. As Norfolk Southern is a Virginia corporation with a principal place of business located in Virginia, the Plaintiff was unable to meet the “essentially at home” standard at issue in Daimler.
In the absence of either specific or traditional general jurisdiction, Plaintiff was left with the remaining argument that Norfolk Southern consented to the exercise of jurisdiction. In support of his position that Norfolk Southern consented to the jurisdiction of the court, the Plaintiff pointed out that Norfolk Southern had filed a registration to conduct business in Pennsylvania. That registration was filed pursuant to the Pennsylvania Associations Code. Under the Code, foreign corporations must register within the Commonwealth before conducting business within Pennsylvania pursuant to 15 Pa.C.S. § 411 (a). Mallory attempted to persuade the court that, under the long arm statute and Code, any corporation choosing to register as a foreign corporation under Pennsylvania’s statute is deemed to consent to general jurisdiction. In other words, according to the Plaintiff’s position, a corporation has two choices: (1) doing business in Pennsylvania while concomitantly consenting to general personal jurisdiction, or (2) not doing business in Pennsylvania.
Judge New sided with Norfolk Southern that a foreign corporation does not submit to general jurisdiction by choosing to register as a foreign corporation in Pennsylvania. The court agreed with the Plaintiff that a foreign corporation may consent to the jurisdiction of a court. Where, for example, a business voluntarily appears before the court or contractually agrees to submit to a court’s jurisdiction, the court may exercise its authority over that entity. However, that consent must be voluntary in order not to violate the Constitutional limit on a state’s authority to exercise personal jurisdiction over a non-resident corporation.
The court ruled that federalism limits the exercise of general jurisdiction by consent. Relying on Supreme Court precedent, the court stated there must be a voluntary appearance or other act in order to establish consent to jurisdiction. In Mallory, the court ruled the Plaintiff did not show a voluntary act. Rather, Pennsylvania law requires foreign corporation to submit to general jurisdiction in exchange for the right to do business in Pennsylvania. Judge New stated that corporations like Norfolk Southern, which are faced with a Hobson’s choice of registration or the avoidance of business in Pennsylvania, are not volunteers. A state simply cannot claim general jurisdiction over every corporation doing business within its borders.
As Pennsylvania’s mandatory corporation registration statute attempts to do what the Supreme Court has prohibited, the court decided, it lacked personal jurisdiction. For this reason, the court dismissed the complaint.