Much of the reaction to Mallory has been to portray the ruling as a setback for corporations that permits them to be hailed into plaintiff-friendly venues throughout the country. To start, this misses what the Supreme Court justices agreed on: the statutory scheme in Pennsylvania is not one that exists in most states.
But even assuming laws like Pennsylvania’s sweep the nation and are upheld against future constitutional challenges, the impact of the ruling can be mitigated in the realm of stockholder and derivative corporate litigation, given the ability to adopt exclusive forum provisions for internal corporate claims. Admittedly, Mallory did not involve an internal corporate dispute. But assuming the plaintiff was a stockholder rather than an injured employee, it should play out as follows. The stockholder files suit in Pennsylvania state court. The corporation moves to dismiss based on the exclusive forum provision in its charter or bylaws. The stockholder’s argument would need to be that the corporation’s registration to do business in Pennsylvania, and agreement to be subject to suit there for “any cause of action,” would trump the corporation’s exclusive forum provision. But they have a problem. As a stockholder, they too are committed to litigate in the designated forum. Existing precedent does not elevate general jurisdiction above the parties’ agreed-upon forum, as courts enforce exclusive forum provisions even if the corporation is unquestionably subject to general jurisdiction in that state’s courts. The result should thus be the corporation prevailing on its motion to dismiss, and the stockholder refiling in the designated forum.
All of this is to say that Mallory should not impact where stockholder and derivative litigation occurs. Mallory simply highlights the need for corporations to adopt exclusive forum provisions to ensure consistency and predictability in the forum for any internal corporate disputes.