& Securities

Today, in Mallory v. Norfolk Southern Railway Co., the Supreme Court held (5-4) that a State may require a company to consent to the all-purpose jurisdiction of its courts as a condition for registering to do business in that State. Writing for the majority, Justice Gorsuch observed that the Supreme Court has long held that States and their courts may exercise all-purpose (i.e., general) personal jurisdiction over any individual who is properly served within their territorial boundaries, even if only temporarily so. Justice Gorsuch reasoned that exposing companies to all-purpose personal jurisdiction in any State in which they are registered to do business is no different, citing to the Court’s decision in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co. in 1917. Because consent has always been recognized as a valid ground for the exercise of all-purpose jurisdiction, the majority viewed its decision as doing nothing more than reaffirming that principle.

The decision has significant and far reaching implications. All States require a company wishing to do business within their borders to register, and all of those States require the company to appoint an agent to receive service of process within the State. If that is sufficient to expose a company to all-purpose jurisdiction under the theory of consent, then companies could now effectively be sued in any court in the United States for virtually any case. Pennsylvania—the State at issue in Mallory—has one of the more explicit business registration statutes when it comes to consent, but other States are likely to amend their registration statutes going forward to conform. Notably, the majority was comprised of an unusual lineup, combining Justices typically viewed as the most conservative with those perceived as the most liberal (Gorsuch, joined by Thomas, Alito, Sotomayor, and Jackson). The Justices typically viewed as more moderate joined together in the dissent (Barrett, joined by Roberts, Kagan, and Kavanaugh).

There are, however, several outstanding issues that may provide viable defenses against the exercise of such jurisdiction. First, cases brought in federal court must also comport with the federal venue statute, which gives preference to the jurisdictions in which the defendant resides or in which the events giving rise to the claim occurred. Some States have similar venue statutes. Second, the majority expressly left open the possibility that the Dormant Commerce Clause may constrain the exercise of jurisdiction in these circumstances, even if the Due Process Clause does not. Justice Alito addressed this issue in his concurrence, expressing some support for that position. And third, state courts may construe their respective statutes to not require consent to all-purpose jurisdiction, even though the statutes could extract such consent without offending due process. Companies facing lawsuits in jurisdictions to which they have no significant connection should consider each of these arguments in deciding whether to oppose jurisdiction.