U.S. Supreme Court Allows Personal Jurisdiction Based on Corporate Registration

On June 27, 2023, the U.S. Supreme Court held in Mallory v. Norfolk Southern Railway Co. that the Due Process Clause does not prohibit a state from requiring a corporation to consent to general personal jurisdiction—i.e., jurisdiction over any claim arising anywhere—as a condition of doing business in that state. This decision was contrary to those of most appellate courts since the Supreme Court held in Daimler AG v. Bauman, 571 U.S. 117 (2014), that general personal jurisdiction over corporations is typically limited to their states of incorporation or principal place of business. Many of those decisions had reasoned that allowing states to require consent to general personal jurisdiction as a condition of doing business in the state would permit states to improperly evade Daimler's limits. The Supreme Court held in Mallory, however, that Daimler's limits apply only in cases where the defendant does not consent to jurisdiction, and that the Due Process Clause does not prevent a state from treating corporate registration as such consent where the state registration statute's express terms or a prior authoritative judicial construction establish that consequence. Although this decision raises new risks of broadly expanded forum-shopping opportunities, the extent of those risks remains unclear for multiple reasons.

Most significantly, the Court split 4-1-4, and Justice Alito's swing opinion flagged a substantial undecided question. Specifically, Justice Alito indicated his view that attempts to secure general personal jurisdiction through registration statutes likely violate the Dormant Commerce Clause doctrine by discriminating against out-of-state corporations and exposing them to undue burdens. Because the decision below did not address this argument, Justice Alito agreed that a remand was proper for the Pennsylvania Supreme Court to consider it in the first instance. Such an argument may succeed on remand or in other cases. But the Dormant Commerce Clause doctrine is unsettled, so the outcome of such challenges remains difficult to predict, both in the lower courts and when the issue reaches the Supreme Court. Among other reasons, it is not clear if four other Justices would agree with Justice Alito's Dormant Commerce Clause concerns.

There is also uncertainty in how states will respond to Mallory. Although every state has a corporate registration statute, prior to Mallory, only a few, including Pennsylvania, Georgia, and Minnesota, had interpreted them to treat registration as consent to general personal jurisdiction. In recent years, some state courts construed their statutes narrowly to avoid constitutional doubts. Now that Mallory has resolved those doubts under the Due Process Clause (though not the Commerce Clause) in favor of constitutionality, state courts—especially those that have not previously considered the issue—may be more likely to interpret corporate registration as consent to general personal jurisdiction. State legislatures may also be emboldened by Mallory to amend registration statutes to expressly require such consent as a condition of registration—or, as is already the case in approximately a dozen states, to expressly provide that registration does not have jurisdictional consequences.  

Much remains uncertain about the degree to which Mallory will increase forum shopping. But going forward, defendants should continue to assert personal jurisdiction challenges when sued in unfavorable forums that do not meet the ordinary standards for general or specific personal jurisdiction—including federal law arguments under the Dormant Commerce Clause and state law arguments that a particular registration statute has not been and should not be interpreted as consent to general jurisdiction. Conversely, as state legislation evolves to clarify the jurisdictional effect of registration statutes, plaintiffs in inter-corporate disputes should also be alert to the possibility that consent-by-registration may make a wider variety of forums available.