Justice Neil Gorsuch
A deeply divided U.S. Supreme Court has ruled that a Pennsylvania statute requiring a foreign entity to subject itself to general jurisdiction in state courts as a condition to transacting business applies to a lawsuit brought by a Virginia resident in Pennsylvania state court against a Virginia-based railroad company for an injury that may have occurred in either Ohio or Virginia.
Robert Mallory v. Norfolk Southern Railway Co. (No. 21-1168; delivered July 27, 2023) arose from an action under the Federal Employer’s Liability Act (FELA) brought by a former Norfolk Southern Railway employee against the company. The company is incorporated in Virginia and has its headquarters there. The employee worked for the company for nearly 20 years in Ohio and Virginia. After leaving the company, he moved to Pennsylvania and then back to Virginia. When he was diagnosed with cancer, he filed suit against the company in Pennsylvania state court asserting negligence and seeking damages under FELA. The company sought to dismiss for lack of personal jurisdiction, noting that the alleged injury did not occur in Pennsylvania, neither did plaintiff reside there. Plaintiff countered that the railroad manages 2,000 miles of track in Pennsylvania, operates 11 railyards and 3 repair shops, and has registered to do business in that state, by which it has agreed to appear in Pennsylvania courts on “any cause of action” against it. The Pennylvania Supreme Court sided with Norfolk Southern, disagreeing with the Georgia Supreme Court on similar facts. Because of this split in authority, SCOTUS granted review.
The issue before the Court was “whether the Due Process Clause of the Fourteenth Amendment prohibits a State from requiring an out-of-state corporation to consent to personal jurisdiction to do business there.” Justice Gorsuch, writing for the plurality, commenced the analysis with the Court’s century-old precedent in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (2017). In that case, an Arizona mining company sued a Pennsylvania insurance company in Missouri state court on a policy covering a loss that occurred in Colorado. The Missouri Supreme Court upheld jurisdiction based on a statute that that required out-of-state insurers desiring to do business in Missouri to appoint a state official to serve as the company’s agent for service of process and to accept service on that official as valid in any suit. SCOTUS agreed, holding that the Missouri statute and the insurance company’s registration to do business in the state conferred personal jurisdiction in Missouri courts. Applying this precedent, SCOTUS held that the Pennsylvania statute subjected Norfolk Southern to personal jurisdiction in a state court.
Justice Jackson wrote a concurring opinion emphasizing another SCOTUS precedent, Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982), which held that a defendant may waive the due process requirement of personal jurisdiction. In this case Norfolk Southern did just that be “explicitly or implicitly consenting to litigate” in Pennsylvania. Justice Alito likewise concurred in the judgment but cautioned that he was not convinced that “the Constitution permits a State to impose such a submission-to-jurisdiction requirement.” He suggested that Norfolk Southern take up the issue on remand under the dormant Commerce Clause. He also reminded everyone that “we have never held that the Due Process Clause protects against forum shopping,” which certainly appears to have occurred in this case.
Justice Barrett, joined by Chief Justice Roberts, Justice Kagan, and Justice Kavanaugh, dissented. Observing that “[f]or 75 years we have held that the Due Process Clause does not allow state courts to assert general jurisdiction over foreign defendants merely because they do business in the state” [citing International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)], she argues that the plurality decision bases general jurisdiction “on implied ‘consent’—not contacts,” and that “[b]y relabeling their long-arm statutes, States may now manufacture ‘consent’ to personal jurisdiction.” She would further hold that International Shoe and its progeny have undermined Pennsylvania Fire’s validity as good precedent.
This case reflects a deep division on the status and future of SCOTUS’s jurisprudence on the constitutionality of state law registration laws that require foreign corporations to submit to general jurisdiction in state courts even if the dispute in question has no contacts with the forum. Texas law (§ 9.001, Business Organizations Code) requires a foreign entity seeking to transact business in the state to register with the Secretary of State and maintain registration while transacting business here. The registration application must, among other things, provide the address of the initial registered office and the name and address of the initial registered agent for service of process. § 9.004, BOC. The secretary of state may also be appointed as agent for registration under § 5.251 (failure to designate a registered agent).
The Texas Long-Arm statute (§ 17.042, CPRC) provides that a nonresident does business in Texas if the nonresident: (1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in Texas; (2) commits a tort in whole or in party in Texas; or (3) recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside the state. As you know, Texas courts apply a minimum contacts/purposeful availment analysis in cases not falling squarely under the statute.
Does SCOTUS’s recent decision have any impact on Texas jurisprudence? While we can never be sure, our registration statute is narrower than the Pennsylvania state at issue in Mallory. We do not require foreign entities to submit to general jurisdiction in Texas courts as a condition to transacting business here, merely to register and appoint a registered agent for service of process. As long as the Legislature doesn’t expand the registration requirements or the long-arm statute itself, the status quo should prevail. We’ll see if anybody has the bright idea to try to do that. In the current political environment, we wouldn’t bet against it.
