A 2023 U.S. Supreme Court decision has become a flashpoint in the State of Texas’ litigation against the manufacturer of Tylenol. That decision, which held that a Pennsylvania statute requiring a foreign entity to consent to the general jurisdiction of Pennsylvania courts as a condition to doing business in Pennsylvania, is inapposite because Texas law has no such requirement.
Mallory v. Norfolk Southern Railway Co., 600 U.S. 122 (2023) arose from a Federal Employers Liability Act (FELA) claim filed by a former railway worker against Norfolk Southern cancer allegedly caused by exposure to asbestos and other carcinogens in Virginia. During 20 years with the railroad, Plaintiff worked in Virginia and Pennsylvania and resided for a time in both states. He brought suit in Pennsylvania state court. Norfolk challenged the court’s jurisdiction, alleging that both parties were domiciled in Virginia. Plaintiff countered that Pennsylvania law required out-of-state entities to consent to the jurisdiction of Pennsylvania courts in exchange for the privilege of doing business. The case went up to the Pennsylvania Supreme Court, which reluctantly ruled in favor of Norfolk. Plaintiff appealed.
In an opinion by Justice Gorsuch, a 5-4 court reversed and remanded. The plurality rested its decision on Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917). That case affirmed the old common law principle governing “transitory” actions that followed an individual and could be brought in any jurisdiction where “the defendant may be found” (aka the “tag rule”). With the expansion of corporate entities in the nineteenth century, “both before and after the Fourteenth Amendment’s ratification, [some states] adopted statutes requiring out-of-state corporations to consent to in-state suits in exchange for the rights to exploit the local market and to receive the full range of benefits enjoyed by in-state corporations.” Pennsylvania Fire involved a challenge to a Missouri statute that required an out-of-state insurance company “desiring to transact any 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. The Missouri Supreme Court, applying the transitory action rule, upheld the exercise of jurisdiction over the company because the company could be found in Missouri, “no matter where the underlying cause of action happened to arise” (in this case, Arizona, Colorado, or Pennsylvania). On appeal, SCOTUS agreed.
In this case, Pennsylvania law provides that an out-of-state corporation “may not do business in this Commonwealth until it registers with” the Department of State. The foreign entity’s registration permits state courts to “exercise general personal jurisdiction” over it in the same manner as domestic corporations. Norfolk had long maintained registration in Pennsylvania and knew that registration made it amenable to suit there. The Pennsylvania Supreme Court, however, decided for Norfolk on the mistaken belief that SCOTUS had implicitly overruled Pennsylvania Fire in its decision in International Shoe Co. v. Washington, 326 U.S. 310 (1945). But, as Justice Gorsuch pointed out, in International Shoethe company had not registered to do business in Washington and did not agree to be present and accept service of process there. Nevertheless, that court held that the Fourteenth Amendment permitted suits against a corporate defendant even if the defendant didn’t agree to be present in the state, as long as “it was reasonable and just” to maintain suit there based on “the quality and nature of the [company’s] activity.” International Shoe, rather than limiting jurisdiction over foreign entities, “stake[d] out an additional road to jurisdiction ….” In other words, International Shoe allowed state courts to exercise specific personal jurisdiction over foreign entities based on a “flexible approach” focused on the entity’s activities in the state and their relation to the lawsuit. And, even under the International Shoe standard (fair play and substantial justice), the plurality reasoned, Plaintiff’s suit could still be maintained in Pennsylvania, where it maintained a substantial presence.
Justice Alito concurred but expressed doubt “that the Constitution permits a State to impose such a submission-to-jurisdiction requirement. A State’s assertion of jurisdiction over lawsuits with no real connection to the State may violate fundamental principles that are protected by one or more constitutional provisions or by the very structure of the federal system that the Constitution created.” Pointing to the dormant Commerce Clause, Justice Alito noted that the Pennsylvania Supreme Court did not address Norfolk’s Commerce Clause but may do so on remand. He pointed to SCOTUS’s decision in Davis v. Farmers Co-operative Equity Co., 262 U.S. 312 (1923), in which the court overturned a Minnesota Supreme Court ruling that Minnesota courts had jurisdiction over a Kansas railroad in a suit brought by a Kansas resident. Minnesota had a submission-to-jurisdiction statute, but SCOTUS held that the statute “impos[ed] upon interstate commerce a serious and unreasonable burden, which renders the statute obnoxious to the Commerce Clause” because it “unreasonably obstruct[ed], and unduly burden[ed] interstate commerce.” Justice Alito concluded that “there is a good prospect that Pennsylvania’s assertion of jurisdiction here—over an out-of-state company in a suit brought by an out-of-state plaintiff on claims wholly unrelated to Pennsylvania-violates the Commerce Clause.”
Justice Barrett, joined by Chief Justice Roberts, Justice Kagan, and Justice Kavanaugh, dissented. The dissenters took the position that, according to the court’s precedents (particularly International Shoe and Daimler AG v. Bauman, 571 U.S. 117 (2014)), specific jurisdiction was a matter of contacts, not “consent.” Instead, the plurality conflated “tag jurisdiction (based on physical presence) and registration jurisdiction (based on deemed consent)” without explaining why they are the same thing. In so doing, Justice Barrett argued, “[a] State could defeat the Due Process Clause by adopting a law at odds with the Due Process Clause.”
Has Texas adopted such a law? The answer is no. Chapter 9, Business Organizations Code, governs the registration of foreign entities. In order to transact business in Texas, a foreign entity must, under most circumstances, register with the Secretary of State and maintain the entity’s registration while transacting business in the state. § 9.001. The entity’s application for registration, among other things, must include the address of the principal office of the entity, as well as the initial registered office and name and address of the initial registered agent for service of process, and state that the secretary of state is appointed the agent of the entity for service of process under certain circumstances. § 9.007(b)(9), (10), and (11). If an foreign entity doing business in Texas fails to register or maintain registration, the attorney general may apply to a court to enjoin the entity from doing business and for a civil penalty in the amount of fees and taxes that would the entity should have paid, plus penalties and interest on unpaid amounts. § 9.051. The secretary of state may also revoke a registration if the entity fails to file required reports, maintain a registered agent and office, amend its registration when required by law, or correct the entity’s failure to pay a required fee. § 9.101. There are also various grounds under which a court may revoke a registration. § 9.151.
Chapter 5, Business Organizations Code, governs certain aspects of foreign entity registration as well. It restates the obligation of the foreign registrant to maintain a registered agent and office and specifies that a registered agent may be an individual or an organization that has consented to serve as the registered agent. § 5.201. The statute also governs changes to a registered agent or office designation, resignation of registered agents, and rejection of appoint as a registered agent. §§ 5.203, .04, and .05. It further limits the duties of a registered agent to receiving or accepting service of process and forwarding it to the represented entity and to providing required notices to the represented entity. § 5.206. Finally, the statute provides that the secretary of state shall serve as agent for service of process if the entity fails to appoint or maintain a registered agent in Texas or the agent cannot with reasonable diligence be found. § 5.251.
Unlike the Pennsylvania law at issue in Mallory, nowhere in this statutory scheme is a foreign entity required to consent to the personal jurisdiction of Texas courts as a condition to doing business in Texas. While the statute requires the appointment of a registered agent and maintenace of a registered office, it stops there. Consequently, the Mallorydecision is irrelevant to Texas, as long as current law remains in effect. We should note that the Nevada Supreme Court recently came to the same conclusion, rejecting plaintiff’s argument that a registration statute without the additional consent requirement conferred general jurisdiction over foreign registrants in Nevada. Goldstein v. Bank of America, N.A., as Trustee of the Richard H. Goldstein Irrevocable Trust, et al., No. 87684, August 28, 2025. Legislation proposing to adopt the Pennsylvania language failed during the 2025 session of the Nevada legislature.
Even if Texas had a submission-to-jurisdiction statute such as Pennsylvania’s, it looks to us that a majority of the court has serious problems with consent statutes, up to and including whether they are constitutional under the dormant Commerce Clause. Justice Alito’s concurring opinion suggests as much, and his analysis of the adverse effects of submission-to-jurisdiction statues on interstate commerce and, more generally, federalist principles, are irrefutable. There is also no question that permitting state courts to exercise personal jurisdiction where the parties and the subject of the action have nothing to do with those states will unleash forum shopping, impairing interstate commerce even further. In light of Justice Alito’s invitation to bring constitutional challenges to these statutes, we expect to see another case make its way to the top in the foreseeable future.
