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Commercial Litigation

U.S. Supreme Court Decides Major Personal Jurisdiction Case: Impact in Florida Remains to Be Seen

U.S. Supreme Court Decides Major Personal Jurisdiction Case: Impact in Florida Remains to Be Seen

A recent United States Supreme Court decision on the scope of personal jurisdiction, i.e., a court’s authority to exercise jurisdiction over a particular party, could potentially have lasting impacts on the way states decide to legislate long-arm jurisdiction over out-of-state corporate entities. In Mallory v. Norfolk Southern Railway Co.,the Supreme Court held that Pennsylvania’s long-arm statute, which requires foreign corporations to consent to the jurisdiction of Pennsylvania courts as a condition of registering to do business in the state, does not violate the Due Process Clause of the Fourteenth Amendment. While the Court’s majority decision was itself narrow, it remains an open question how broadly the ruling will apply in other states, including Florida.

The Arguments on Jurisdiction

The case involved Robert Mallory, who previously worked for the defendant railway company, Norfolk Southern. He sued his former employer for alleged exposure to toxic chemicals during his employment that he claimed caused him to develop cancer. Mr. Mallory was a Virginia resident at the time he sued, and alleged that the work that exposed him to these chemicals occurred in Ohio and Virginia. He nonetheless sued Norfolk Southern in Pennsylvania, arguing that because the company had registered to do business there, the state’s long-arm statute brought out-of-state corporations, such as Norfolk Southern, within the jurisdiction of Pennsylvania courts.

Norfolk Southern argued it should not be subject to suit in Pennsylvania since it was incorporated in and (at the time) was headquartered in Virginia. Additionally, Norfolk Southern argued that because none of the activities that formed the basis of Mr. Mallory’s suit occurred in Pennsylvania, there were no actions or activities related to the case that allowed the state to exercise jurisdiction over it. Norfolk Southern also argued that Pennsylvania’s statute, which requires foreign corporations to consent to general personal jurisdiction of Pennsylvania courts as a condition of registering with the state, violated the Due Process Clause of the Fourteenth Amendment. The Pennsylvania courts, including the Supreme Court of Pennsylvania, sided with Norfolk Southern. Mr. Mallory then sought review in the U.S. Supreme Court. Since the Supreme Court of Georgia recently upheld that state’s consent-by-registration legislative scheme, in contrast to the outcome in Pennsylvania, the U.S. Supreme Court agreed to hear Mr. Mallory’s case to resolve this split in authority.

Court Sides with Mr. Mallory

The U.S. Supreme Court disagreed with Norfolk Southern. Writing for a narrow five-justice majority, Justice Gorsuch found that Pennsylvania’s statute did not deprive Norfolk Southern of any constitutionally-owed due process, relying on a 1917 Supreme Court decision that upheld a Missouri statute similar to Pennsylvania’s. Rejecting Norfolk Southern’s claim that the Court’s landmark 1945 decision in International Shoe Co. v. Washington had implicitly overruled the 1917 case, Justice Gorsuch instead concluded that these precedents were complimentary in nature.

It remains to be seen how broadly this decision will be applied in future cases. At first blush, Mallory appears a major coup for plaintiffs seeking to hale out-of-state corporate defendants into a local court. Indeed, Justice Jackson, in her concurring opinion, seemed to suggest that because personal jurisdiction is waivable, the fact that Norfolk Southern willingly registered to do business in Pennsylvania was enough to surrender this right, without violating due process. Such a reading of Mallory would arguably result in a broader application of personal jurisdiction over out-of-state entities, with little to no room for invoking due process concerns.

A closer reading of the majority opinion shows that the case’s holding is cabined to whether Pennsylvania’s long-arm statute violates the Due Process Clause. By a one-vote majority, the Court found that it did not; that is, a state can legislatively mandate that an out-of-state business consent to jurisdiction by way of registering to do business there. Crucially though, the swing vote for the majority, Justice Alito, wrote a lengthy concurrence implying that while Pennsylvania’s statute may not violate the Due Process Clause, in his view, it likely violates the U.S. Constitution’s dormant Commerce Clause, which prohibits state laws that unduly restrict interstate commerce. Because the Supreme Court of Pennsylvania had not considered whether the statute violated this latter constitutional principle, the Court left that question for another day, although Justice Alito noted that Norfolk Southern could raise this argument on remand to the Pennsylvania courts. Whether Norfolk Southern will prevail on this alternative ground is unknown.

What This Means for Florida

What is known is that Pennsylvania’s statute is an anachronism, something Justice Barrett noted in her dissent (in which three other justices joined), observing that courts in many other states have rejected such a consent-by-registration interpretation. For foreign corporations operating in Florida, the question thus becomes whether Mallory’s jurisdictional hook will take root in the Sunshine State. Given the newness of the decision, the impact of the decision in Florida is uncertain, but at present anyway Mallory may not greatly alter the jurisdictional analysis for out-of-state corporations seeking to avoid litigating in Florida.

For one, Florida’s long-arm statute does not compel a business to consent to jurisdiction like Pennsylvania’s. And the Florida statute that covers foreign corporate registration explicitly disclaims any applicability registration to do business may have in “determining the contacts or activities that may subject a foreign corporation to service of process, taxation, or regulation.” Second, there is no judicial precedent that plaintiffs could argue interprets Florida’s long-arm statute broadly enough to invoke such general jurisdiction simply as a result of registering to do business in the state. In contrast, the Supreme Court of Georgia—relying on its own precedent and not the state’s long-arm statute—recently found that foreign corporate registration was adequate to support general jurisdiction. Again, the opposite would seem to be true for Florida.

In the seminal Florida case, Venetian Salami Co. v. Parthenais, the Supreme Court of Florida established a two-part test for determining personal jurisdiction over non-residents under Florida’s long-arm statute. First, the court must determine whether the complaint sufficiently alleges facts to bring it within the ambit of the long-arm statute. If so, the court must then determine whether sufficient minimum contacts exist between Florida and the defendant to satisfy due process concerns, i.e., whether the defendant could reasonably have anticipated being haled into court. The degree to which Mallory will alter the Venetian Salami inquiry is unclear: if nothing else, Florida case law seems to support that due process must still be satisfied given the nature of Florida’s long-arm statute; contrast this with Pennsylvania’s statute which by its own terms requires foreign companies to consent to jurisdiction, regardless of whether the entity has the requisite minimum contacts with the forum.

Looking Ahead

In the end, only time will tell what Mallory’s impact will ultimately be. Norfolk Southern likely can (and almost certainly will) raise a dormant Commerce Clause defense on remand, and it is very possible that the case returns to the U.S. Supreme Court on that issue. In the interim, state legislatures may seek to change their long-arm statutes: either to bring them in line with Pennsylvania’s in order to compel corporate entities’ consent to jurisdiction as the cost of doing business there—Justice Barrett warns of this dire forecast in her dissent—or they may take an opposite approach by removing or refuting any consent-by-registration requirement in order to make their states appear more business friendly. For now, foreign corporations registered to do business in Florida can take some solace knowing it is unlikely—although not impossible—that Mallory will alter the analysis under Florida’s long-arm statute. However, because each case will depend upon the specific relevant facts, it is always best to consult legal counsel with any concerns as to whether a given matter will subject a foreign entity to suit in Florida.