We previously written on how, under the Georgia Supreme Court’s decision in Cooper Tire & Rubber Co. v. McCall, 863 SE2d 81 (Ga. 2021), the mere fact of registering to do business with the Georgia Secretary of State confers general personal jurisdiction in Georgia over a foreign business. Georgia is currently among the minority of states allowing a general registration-based finding of personal jurisdiction to do business in a state, known as “consent by registration.”
Now, the United States Supreme Court has agreed to hear a similar case in Pennsylvania, where that state’s Supreme Court recently struck down a law that allowed consent by recording as violating due process. Mallory v. Norfolk S.Ry. Co., — S.Ct. —, no. 21-1168, 2022 WL 1205835, at *1 (April 25, 2022) (grant of certiorari).
If the U.S. Supreme Court overturns the Pennsylvania Supreme Court and recognizes the “consent by jurisdiction” doctrine, it could dramatically expand the jurisdictions where corporations can be sued and potentially deter corporations from registering to do business. in other states.
Context of business “consent by registration”
For your information, in 1917 the United States Supreme Court ruled that a state law notifying a foreign corporation that it consents to general personal jurisdiction in that state by registering to do business in the state did not violate due process. Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling243 US 93, 95 (1917).
Since then, without expressly overriding Pennsylvania firethe United States Supreme Court has limited the scope of general personal jurisdiction by repeatedly stating that general jurisdiction can only be exercised in states where a corporation is essentially “home” – that’s to say., its state of incorporation and the state of its principal establishment. See Goodyear Dunlop Tires Operations, SA v. Brown, 564 US 915, 919 (2011); Daimler AG v Bauman, 571 US 117, 137 (2014); Ford Motor Co. v. Montana Eighth Judgment. Dist. CT., –U.S.–, 141 S. Ct. 1017, 1024 (2021).
States divided on the doctrine of “consent by registration”
As detailed in our first post, Georgia is currently among a minority of jurisdictions that recognize consent by registration. In Cooper tire, plaintiff sued a Delaware-incorporated tire manufacturer with its principal place of business in Ohio in a court in the State of Georgia. 863 SE2d at 83. Cooper Tire sought termination on grounds of personal jurisdiction, but plaintiff argued that Cooper Tire consented to general personal jurisdiction in Georgia by obtaining permission to do business in the state. ID. at 83-84. The trial court granted Cooper Tire’s motion to dismiss, but the Court of Appeal overturned it.
The Georgia Supreme Court upheld the Court of Appeals reversal, relying on the 1917 decision of the United States Supreme Court Pennsylvania fire decision as well as its earlier decision in Allstate Insurance Co. v. Klein262 Ga. 599, 601 (1992), where he previously held that any corporation registered to do business in Georgia is considered a resident of Georgia for personal jurisdiction purposes.
Since the Supreme Court of Georgia rendered its opinion in Cooper tire in September 2021, however, at least three state supreme courts (in Pennsylvania, New York, and New Mexico) struck down or refused to recognize a “consent by registration” approach to general personal jurisdiction. Mallory v. Norfolk S.Ry. Co., 266 A.3d 542, 567 (Pa. 2021), cert. granted21-1168, 2022 WL 1205835 (United States 25 April 2022); Aybar vs. Aybar37 NY3d 274, 283, 177 NE3d 1257, 1261, 156 NYS3d 104, 107 (2021) (“Accordingly, the registration of a foreign company to do business and the appointment of an agent for service of proceedings in New York do not constitute consent to jurisdiction under the clear terms of the Corporations Act.”); Chavez vs. Bridgestone Americas Tire Operations, LLC503 P.3d 332, # S-1-SC-37489, 2021 WL 5294978, at *9 (NM 15 Nov 2021).
U.S. Supreme Court launches fight against ‘consent by registration’
The United States Supreme Court has now agreed to hear an appeal of the Pennsylvania ruling, which involves a claim filed by a former railroad worker under the federal Employers Liability Act against Norfolk Southern Railway alleging he developed colon cancer as a result of exposure to chemicals during her decades. work for Norfolk Southern. Mallory266 A.3d at 551.
The railroad worker filed the suit in Pennsylvania state court under Pennsylvania’s Long Arm Act and under a state law that requires an out-of-state business to s to register with the Pennsylvania Department of State in order to do business in the state – the so-called ‘mandatory registration requirement’. Although not set forth in the mandatory registration requirement itself, Pennsylvania’s long-arm statute provides that “qualification as a foreign corporation under the laws of this Commonwealth” constitutes a sufficient basis to allow the courts of Pennsylvania to exercise general personal jurisdiction over the foreign company. 42 Pa.CS § 5301(a)(2)(i).
The trial court dismissed the action for lack of personal jurisdiction, finding that Norfolk Southern had not consented to personal jurisdiction by registering to do business in Pennsylvania. Mallory v Norfolk Southern Ry. Co., no. 1961, 2018 WL 3025283, at *2 (Pa. Com. Pl. 30 May 2018). On appeal, the Pennsylvania Supreme Court found the provision of the Pennsylvania Long Arm Act at issue unconstitutional “to the extent that it grants the courts of Pennsylvania general jurisdiction over foreign corporations that are not ‘home’ in Pennsylvania”. Mallory v. Norfolk S.Ry. Co., 266 A.3d at 567.
At the end of the line: The US Supreme Court’s decision to rule on this issue should hopefully clarify whether a business can be subject to general personal jurisdiction in another state simply by registering to do business in that state. State. If the answer is yes, companies will need to reassess the states in which they register to do business to minimize the risk of being dragged into those states on general grounds of personal jurisdiction.