SCOTUS ruling in Mallory raises concerns among business community

The U.S. Supreme Court’s recent ruling in Mallory v. Norfolk Southern has created concern in the business community that corporations could be forced to defend lawsuits in jurisdictions far afield from their corporate headquarters. 

However, legal experts say that with additional hearings scheduled regarding the Pennsylvania law at the center of this case, the Supreme Court’s decision in Mallory may not be the last word on the question of where corporations can be sued. 

Supreme Court rules corporations can be sued anywhere they are registered

Mallory involved a lawsuit filed in Pennsylvania by a Virginia railroad worker who was diagnosed with colon cancer. Even though the alleged injuries in the case occurred in Virginia and Ohio, the lawsuit was filed in Pennsylvania on the grounds that the defendant, Norfolk Southern Railway, was registered to do business there. In 2021, the Pennsylvania Supreme Court dismissed the lawsuit, ruling that the state’s so-called “long arm” statute – which permitted lawsuits against companies registered in the state even if the case had no other connection to Pennsylvania – violated the 14th Amendment to the U.S. Constitution. 

By a 5-4 majority, the U.S. Supreme Court overturned the Pennsylvania Supreme Court’s ruling and remanded the case for further hearing. Writing for the majority, Justice Neil Gorsuch stated that the Court’s 1917 ruling in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917) allows states to have “registration by consent” laws, such as the Pennsylvania “long arm” statute at the center of Mallory.

SCOTUS ruling in Mallory raises concerns among legal experts

Although relatively few states have “registration by consent” laws such as Pennsylvania’s, legal experts have raised concerns that the Supreme Court’s ruling in Mallory could prompt other states to enact similar policies, or could provide lower courts with the grounds to expand corporations’ implicit consent to be sued in states outside the location of their principal offices.

What is especially concerning for many corporations about the Court’s ruling in Mallory is that it appears to signal a reversal following a decade of Supreme Court decisions that clearly defined where corporations were subject to litigation.

The Court’s 2011 decision in Goodyear Dunlop Tires v. Brown and its 2014 ruling in Daimler AG v. Bauman effectively limited the jurisdictions where a corporation could be sued to the location where the plaintiff was injured, or to where the corporation that is being sued is incorporated or headquartered.

Justice Amy Coney Barrett’s dissenting opinion in Mallory expressed concerns that the decision pushed the Court’s rulings in Goodyear and Daimler “halfway out the door”, and could render both cases “obsolete” if more states adopt laws like the Pennsylvania “long arm” statute.

Some attorneys have also raised concerns that Mallory could open the door to forum shopping among plaintiffs who believe that their lawsuits stand a better chance of prevailing if filed in jurisdictions outside of where a defendant corporation is headquartered, especially in courts where rules regarding apportionment of liability, expert witnesses, or burdens of proof are more favorable to plaintiffs.

SCOTUS ruling in Mallory leaves questions unresolved

While the Supreme Court’s ruling in Mallory has raised concern in the business community, legal experts have cautioned that the Court’s decision in the case may not be the final word on the matter, citing a concurring opinion in the case written by Justice Samuel Alito.

In Mallory, Justice Alito voted with the Court’s 5-4 majority, writing that it was “not so deeply unfair” that Norfolk Southern should be forced to defend a lawsuit in Pennsylvania by virtue of its being registered to do business there. 

However, in his concurring opinion, Justice Alito also raised concerns that laws such as Pennsylvania’s “long arm” statute may violate the Constitution’s Commerce Clause, which restricts states from passing laws that burden interstate commerce or discriminate against other states.

When Mallory returns to the Pennsylvania Supreme Court, legal experts say that it is likely that Norfolk Southern will raise Justice Alito’s arguments regarding the Commerce Clause.

Experts also say that Mallory leaves additional questions unresolved as to how significant a corporation’s connections to a state need be to subject the company to the jurisdiction of a state where general due process principles would make a lawsuit otherwise impermissible. While Mallory makes clear that the extent of these connections clearly matters to the Court, the precise point at which it is “not deeply unfair” to subject a corporation to litigation outside the limits proscribed in Goodyear and Daimler will likely only be resolved in follow-on litigation.

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