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Wednesday, November 09, 2022
(Guest Post) The Mallory Argument on Personal Jurisdiction via Corporate Registration
The following is by Rocky Rhodes (South Texas) and Andra Robertson (Case Western); this is the latest in a series of posts on the case. I have been focused on elections and Tuesday's other argument, but I hope to add something to this discussion later this week.
The Supreme Court heard argument yesterday in Mallory v. Norfolk Southern Railway Co., which addresses the constitutional limits on states asserting jurisdiction over a nonresident corporate defendant that registers to do business in the state. Under 42 Pa. C.S. § 5301, state courts obtain “general jurisdiction” over a nonresident corporation registering to do business. Mallory claims that this statute supports Pennsylvania’s jurisdiction over his FELA claim against his employer Norfolk Southern Railway because the railroad is registered to business in the state—even though Mallory is a citizen of Virginia, the railroad is incorporated with a then-principal place of business in Virginia (now in Atlanta, Georgia), and his claim arose from his alleged exposure to carcinogens in Virginia and Ohio. The railroad counters that the exercise of personal jurisdiction violates the Due Process Clause and the unconstitutional conditions doctrine. We had a series of posts on this case on Prawfs shortly after certiorari was granted last April (see here, here, and here), and Howard invited us back to report on the oral argument and the briefing in the case. We’ll highlight the primary positions of the parties, the Justices who pushed back, and some interesting tidbits for our fellow jurisdictional aficionados.
Originalism and the Historical Archival Brief
Mallory’s primary argument is that the Pennsylvania statute is constitutional under the original public meaning of the Fourteenth Amendment. His merits brief includes an exhaustive compilation of state statutes during the 1800s tying corporate registration to a state’s adjudicative jurisdiction, with the first of these statutes appearing in the 1820s. This listing is not a surprising strategy for a plaintiff confronting a Court that has a reputation for being sympathetic to business interests while also (at least sometimes) singing the praises of originalism. Such historical archival compilations may become as commonplace in constitutional cases before the Roberts Court as the Brandeis brief was during the Lochner era.
But several Justices questioned the impact of these statutes, as did the railroad. Justice Barrett doubted that all the listed statutes were on point—some involved questions of service of process and others did not authorize all claims against the registering defendant, but rather only claims brought by a resident of the forum. The railroad also argued that most of the statutes were distinguishable and that nineteenth century cases did not support that jurisdiction was appropriate under these statutes when the plaintiff was a nonresident and the cause of action arose outside the forum. Mallory responded that all the statutes were relevant, while admitting that there were very few cases that employed these statutes in “foreign cubed” cases, where neither the defendant nor the plaintiff was a resident of the forum and the events giving rise to the claim occurred outside the forum. The statutes were more commonly applied in “foreign squared” cases, where at least the plaintiff was a resident of the forum. But in response to Justice Alito, Mallory maintained that the existence of the statutes was enough—he did not have to show a tradition of those statutes being applied by the courts to establish original public meaning.
Justice Thomas asked a question that he was able to avoid (by discounting the many proffered analogies to gun restrictions in the Founding and Reconstruction eras) in his opinion this summer in New York State Rifle & Pistol Association v. Bruen—how many state statutes are necessary to establish the original meaning? Mallory responded that was a difficult issue, but thought the compilation of statutes in the brief satisfied the requirement. But that would not be the case, of course, if the Court views the statutes as distinguishable.
Registration as Consent?
Justice Thomas also embarked on questioning that became a consistent theme throughout the argument—is the Pennsylvania statute really evidence of consent? Justice Kagan queried whether the registration-to-do-business form could be a form of actual consent when it does not specify the consequences of the registration: “All the piece of paper does is comply with a state law requirement that everyone who does business in the state has to make their identities known . . . [s]o where is the consent to jurisdiction in that?” Wasn’t any such “consent” therefore fictional, and how would that differ from a statute providing that intrastate business activities would subject a nonresident corporate defendant to general jurisdiction? The railroad also hammered this point, arguing that ex ante consent was only permissible in a private contract (apparently like the adhesion contracts corporations force on consumers with arbitration agreements or forum selection clauses), but not in an agreement with the state.
Mallory responded that pieces of paper matter—incorporation is a matter of filing papers that grants the state general personal jurisdiction, and the same should occur when a nonresident corporation registers to do business and the state by statute specifies the jurisdictional consequences of that registration. This was supported, Mallory continued, by the longstanding history and tradition of statutes and judicial decisions recognizing registration to do business as a constitutionally permissible method to obtain consent to personal jurisdiction.
Chief Justice Roberts replied that “history and tradition move on” and indicated that the minimum contacts analysis in International Shoe Co. v. Washington dispensed with these older cases. But Mallory maintained that International Shoe recognized jurisdiction based on “consent to be sued or authorization to an agent to accept service of process.” He continued that consent was a traditional basis of jurisdiction—like the tag jurisdiction upheld in Burnham v. Superior Court—and could exist side-by-side with the minimum contacts standard (although no one discussed how Shaffer v. Heitner might impact that possibility). Justice Gorsuch also rallied to Mallory’s defense, arguing that, if tag jurisdiction can exist alongside International Shoe, so can consent jurisdiction through registration.
Justices Kagan and Kavanaugh were concerned that this would effectively undercut the “at home” standard for general jurisdiction from Daimler AG v. Bauman and Goodyear Dunlop Tires Operations, S.A. v. Brown. Justice Kavanaugh noted that, if the Court found in favor of Mallory, “every state could have a statute like this,” meaning “that every business would be at home throughout the country.” This would, as the Second Circuit colorfully maintained, rob Daimler of meaning “by a back-door thief.”
Corporations v. Natural Persons
Justice Gorsuch answered this concern by returning to tag jurisdiction, reiterating a question from his concurrence in Ford Motor Co. v. Montana Eighth Judicial District Court: why should corporations have special protections from jurisdiction based on registration when individuals in a forum state can be tagged? Mallory agreed that there was no basis for such a distinction: “Obviously, the language of the Fourteenth Amendment speaks to persons, and it doesn’t create . . . a person that’s entitled to better constitutional rights because they were birthed by filing a piece of paper in Virginia as opposed to . . . being birthed by a mother at a hospital.”
The railroad, of course, had a different view. Tag jurisdiction against natural persons, the railroad contended, was supported by a longstanding historical tradition, while there was only a smattering of statutes and almost no cases indicating that registration could support general jurisdiction. The railroad maintained that the old service of process statutes referenced in Mallory’s brief were simply not enough. And tag jurisdiction was also different since a person can only be in one state at a time, while a corporation might be coerced to consent to jurisdiction simultaneously in each and every state.
The Unconstitutional Conditions Doctrine and State Sovereign Interests
In addition to the argument that its registration was not a form of consent, the railroad pushed the argument that any consent would be an unconstitutional condition. The railroad claimed a right to be free from general jurisdiction when it was not “at home” in the forum, urging that coercing its agreement to jurisdiction to secure its right to conduct business in Pennsylvania would be unconstitutionally coercive. Although its brief was more nuanced, acknowledging the possibility without agreeing that consent through a registration statute might be permissible for claims by state residents, the railroad insisted on a bright line during oral argument that any consent outside the contours of specific jurisdiction was an unconstitutional condition.
Mallory countered that the unconstitutional conditions doctrine did not apply. He said that the history and tradition of these registration statutes removed them from scrutiny as an unconstitutional condition. Also, the greater power of a state to totally shut down a market includes the lesser power to obtain a consent to jurisdiction.
Mallory had immediate pushback from Justices Kavanaugh and Alito on whether a state today could shut down a market under the dormant Commerce Clause. Mallory urged that under the original meaning a state could do so, while recognizing the tension with the Court’s dormant Commerce Clause cases. Here Mallory may have missed an opportunity to distinguish between intrastate and interstate business activities, although it was alluded to by Justice Jackson—while precedent establishes a state cannot bar a nonresident corporate defendant’s interstate activities, it might (at least arguably) have the ability to exclude a corporation for failing to register when it performs a sufficient quantum of intrastate business activities, as we discuss in a prior writing.
And speaking of our writings, Justice Sotomayor asked Mallory about the amicus brief that we co-authored with Robin Effron, Jack Preis, Jeff Rensberger, and Aaron Simowitz. She referred to our position that consent through registration to do business could be constitutional, but only if the state has a sovereign interest in the dispute. And, if our argument was accepted, what would be the sovereign interest in this case? Mallory urged that historically a sovereign interest was not required (which we dispute in our brief). He then continued that even if a sovereign interest was necessary, Pennsylvania had a state interest in opening its courthouse doors to everyone. He pointed to state constitutional right-to-remedy and open-courts provisions, urging they established a foundational understanding that a resident should have a forum, with states also having a sovereign interest in treating residents and nonresidents the same. But the Court’s past cases, as we point out in our brief, have distinguished between a state’s sovereign interests with respect to residents and nonresidents.
In a lengthy follow-up question, Justice Kagan seemed skeptical that Pennsylvania had a sovereign interest. The railroad also pointed out that Pennsylvania had not asserted a sovereign interest in the case by trying to defend the constitutionality of the statute. Yet perhaps there is an interest in the case due to the amount of business that the railroad does in Pennsylvania. Indeed, it appears the reason the suit was filed in Pennsylvania is that the union lawyer soliciting these carcinogenic exposure cases was based in Pennsylvania and then referred Mallory to Pennsylvania counsel, which is not surprising when more of the railroad’s employees work in Pennsylvania than in any other state.
Daimler Revisited?
Justice Sotomayor expressed her continued disagreement with Daimler, using this case as an illustration. Even though it was not in the record, an amicus brief detailed that the railroad operates more track and has more employees in Pennsylvania than it does in any other state in the union. While recognizing the possibility of coercion in registration in cases of smaller companies, there was no injustice here when the railroad was conducting that much business in the state. The only reason it was not “at home” in Pennsylvania was that it had its corporate offices in Virginia and identified Virginia as its corporate headquarters and principal place of business.
It’s not clear, though, that any other Justice desires to revisit Daimler. Justice Jackson appears to favor Mallory on a waiver theory—the railroad waived any ability to assert its due process rights by registering to do business. Justice Gorsuch (perhaps joined by Justice Thomas) seems willing to uphold jurisdiction based on the original meaning of consent-by-registration statutes and a comparison to tag jurisdiction for natural persons, with the unequal treatment “due process Lochnerism for corporations.”
But the remainder of the Court appears disinclined to hold for Mallory. Some Justices discussed our intermediate position of requiring a state sovereign interest, and the United States also recognized that there could be situations where a registration statute might support jurisdictional consent when specific jurisdiction is not present. But historically, the United States continued, these registration statutes were limited to claims either by a forum resident or that had some other relationship to the dispute, echoing the position we took in our amicus brief.
Oral argument showed that the Justices had very different views about the basis for constitutional limits on personal jurisdiction. Justices suggested approaches for resolving the case that ranged from due process to principles flowing from the dormant Commerce Clause to unconstitutional conditions—a set of topics where each one, on its own, has given rise to a thorny doctrinal tangle. Clearing a path to five votes won’t be easy.
Posted by Howard Wasserman on November 9, 2022 at 01:37 PM in Civil Procedure, Judicial Process | Permalink
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