The United States, in support of the respondent, raised concerns about the impact that consent-by-registration statutes could have on business interests.
The U.S. Supreme Court heard oral arguments on November 8, 2022, in Mallory v. Norfolk Southern Railway Co., to consider whether a “consent by registration” statute violates the due process clause of the 14th Amendment. Such statutes require that any corporation registering to do business in a state also consent to general jurisdiction in that state’s courts. The Pennsylvania Supreme Court previously held that the commonwealth’s consent-by-registration statute violated the 14th Amendment’s due process clause. The U.S. Supreme Court will now decide whether to affirm the Pennsylvania Supreme Court’s ruling or whether it agrees with the petitioner’s argument that consent-by-registration statutes are constitutional, and therefore that any company doing business in Pennsylvania may be sued in Pennsylvania courts—regardless of where the cause of action arose.
The oral argument involved three main themes, each of which is discussed in more detail below: (1) whether consent-by-registration statutes are consistent with the 14th Amendment due process clause; (2) whether consent-by-registration laws create valid consent to jurisdiction or are unconstitutional conditions on doing business in a state; and (3) the negative implications and consequences that consent-by-registration statutes create for business interests.
Consent-by-Registration Statutes’ Consistency with the 14th Amendment Due Process Clause
The petitioner focused mostly on originalist arguments that the historical prevalence of consent-by-registration statutes—with every state having at least one consent-by-registration statute by the time the 14th Amendment was ratified in 1868 or shortly thereafter—establishes that these statutes are consistent with the original meaning of the 14th Amendment’s due process clause.
Some justices, including Chief Justice Roberts and Justice Kagan, seemed doubtful of this argument, noting that “history and tradition move on.” Chief Justice Roberts asked whether the Court’s precedent since 1868, including International Shoe Co. v. Washington, had “relegate[d]” the historical regime of securing personal jurisdiction through consent “to the dustbin of history.” Justice Kagan also countered the petitioner’s historical narrative, pointing out that, prior to International Shoe, no mechanism existed that allowed courts to assert jurisdiction over out-of-state corporations. In her view, International Shoe and its progeny obviated the need for the historical consent-to-jurisdiction regime because it created a mechanism for states to assert jurisdiction over out-of-state corporations based on their in-state contacts.
The petitioner responded to these concerns in Chief Justice Roberts’ and Justice Kagan’s questions by arguing that International Shoe is compatible with the historical consent-by-registration regime because International Shoe only dealt with specific jurisdiction when there was no consent—an argument later echoed by Justice Jackson. Justice Gorsuch also seemingly agreed, noting that “[c]onsent jurisdiction could exist alongside International Shoe… just as tag jurisdiction exists alongside personal jurisdiction in individual cases.”
Whether Consent-by-Registration Laws Create Valid Consent to Jurisdiction
The respondent argued that subjecting corporations to the jurisdiction of Pennsylvania courts based on consent-by-registration should not be permissible because it is not true consent. The consent created by Pennsylvania’s registration statute is coerced, not voluntary, because the statute puts a “gun to the head” of corporations by requiring them to submit to jurisdiction if they wish to operate their business in the state. Justice Kagan expressed a similar concern that Pennsylvania’s consent-by-registration law is an unconstitutional condition on doing business in the state, pressing the petitioner about whether there is “a right not to be hauled into court for things that are entirely unrelated to the state” and emphasizing that consent-by-registration statutes are “conditioning access to [a state’s] markets on the waiver of the right” not be subject to the jurisdiction of a state’s courts.
However, Justice Gorsuch questioned why it was “any less fair to treat corporations as subject to consenting” under these laws when individuals can be “tagged” with jurisdiction simply by being served in the state, even if they are only temporarily passing through the jurisdiction. Additionally, Justice Jackson asked why valid consent is not created when a corporation “knowingly file[s] the registration and it’s clear from the law that when [a corporation] choose[s] to file the registration” it is “thereby consenting.” Justice Sotomayor also questioned the respondent regarding the validity of the consent, noting an inability to follow the logic of how a corporation that has “miles and miles of trains and miles and miles of employees” in Pennsylvania was coerced into consenting to the jurisdiction of Pennsylvania’s courts.
The Negative Consequences Consent-by-Registration Statutes Create for Business Interests
The United States, in support of the respondent, raised concerns about the impact that consent-by-registration statutes could have on business interests. The deputy solicitor general arguing on behalf of the United States urged the Supreme Court to reject the “jurisdictional free-for-all” that a proliferation of consent-by-registration statutes would create, explaining that the “excessive availability of general jurisdiction could cause international concerns for trade with the United States and our commercial interests.”
Justices Alito and Kavanaugh seemed receptive to these policy issues, expressing similar concerns about the implication of holding that consent-by-registration statutes are constitutional. Justice Alito seemed bothered by the “practical consequences” that consent-by-registration statutes could have on small businesses. Justice Kavanaugh worried that, if the statute is constitutional, every state could have a statute like Pennsylvania’s, which would mean “that every business would be at home… throughout the country.” These policy concerns may underlie at least a few justices’ votes on the ultimate outcome of the case.
What This Means for Businesses
As always, it is difficult to predict from the oral argument what the Court’s determination will be. Regardless of the outcome, however, the Mallory decision will be important for all corporations doing business in Pennsylvania, as it will determine whether those corporations are subject to Pennsylvania courts’ general jurisdiction. Moreover, if the U.S. Supreme Court upholds consent-by-registration statutes, the decision may also have national repercussions if other states follow Pennsylvania’s lead in enacting similar measures.
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