Companies in PA Face More Lawsuits: US Supreme Court Decision

In a surprising 5-4 decision, the United States Supreme Court held that a Pennsylvania law is constitutional. The law stipulates that any out-of-state company that registers to conduct business in Pennsylvania implicitly agrees to be susceptible to lawsuits in Pennsylvania for any reason. 

Let’s take a look at what the decision means for personal injury victims across the United States.

What is personal jurisdiction?

Personal jurisdiction refers to the legal authority a court has to make a decision regarding the party being sued in a case. To put it another way, you can’t sue a party in a particular court unless the court has personal jurisdiction over the party and the case. 

In most cases involving individuals, a court has jurisdiction if:

• The defendant resides in the state where the court is located, or
• The accident giving rise to the lawsuit occurred in the state where the court is located

Let’s look at an example:

Things get a little more complicated when a corporation is being sued.  

If you’re injured by a corporation, you can typically sue the corporation in the state where it’s headquartered or in the state where the corporation does significant business.  

However, a recent United States Supreme Court decision could potentially broaden the jurisdictions where a corporation could face a lawsuit.

Mallory vs. Norfolk Southern Railway Company

Robert Mallory, a Virginia resident, sued Norfolk Southern, a Virginia-based company, alleging that the company was liable for negligently exposing him to cancer-causing toxins while he worked for the company in both Virginia and Ohio.

Here’s the rub: Robert filed the lawsuit in Pennsylvania even though there was no relationship between the case and Pennsylvania at all. 

Robert argued that he was justified in filing the lawsuit in Pennsylvania because Norfolk Southern had to register with the state in order to conduct any business there. He contended that, under Pennsylvania law, when a business registers in the state, it tacitly grants the Pennsylvania courts the right to exert jurisdiction over it, regardless of the nature of the case. 

A Pennsylvania trial court dismissed Robert’s lawsuit, and the Pennsylvania Supreme Court affirmed the decision, noting that the consent-by-registration scheme “clearly, palpably, and plainly violates the United States Constitution.”

The case went before the United States Supreme Court.

United States Supreme Court decision

On June 27, 2023, the United States Supreme Court narrowly upheld Pennsylvania’s consent-by-registration scheme. 

Justice Neil Gorsuch wrote the opinion for a five-justice majority that included Justices Clarence Thomas, Samuel Alito, Sonia Sotomayor, and Kentanji Brown Jackson.

“Before today’s ruling, it was understood that general personal jurisdiction over a corporation could be found in only two very distinct places: the state of the company’s headquarters and the state of the company’s incorporation. However, the holding of Mallory now allows a corporation to be hauled into court in any state in which it has consented to jurisdiction,” said attorney Saxon Guerriere.

What does the United States Supreme Court decision mean for future personal injury lawsuits?

For the moment, the United States Supreme Court decision only impacts a narrow group of people. Namely, people who want to sue a Pennsylvania-registered company in Pennsylvania.

However, the Court’s ruling creates the possibility that, if other states pass similar laws, businesses may be sued in all of the states where they are registered to do business, regardless of whether the corporation does business there or has any other ties to the state.  

Plaintiffs could potentially take advantage of such laws by choosing to file their lawsuit in a jurisdiction that would provide them with the best chance to win (a strategy known as “forum shopping”).