An important upcoming decision in Mallory v. Norfolk Southern Railway Co. may clarify an interesting loophole to general personal jurisdiction. The case asks whether a state can require a foreign corporation to consent to personal jurisdiction merely because it registered to do business in the state. The Pennsylvania statute at issue in the case does just that. Norfolk Southern Railway argued this statutory scheme is unconstitutional under the Fourteenth Amendment’s Due Process Clause. The trial court agreed, and its decision was affirmed by the Pennsylvania Supreme Court. The U.S. Supreme Court heard argument on this in November 2022—a decision has yet to be published.
Many states require “foreign”—i.e., any entity not incorporated under the laws of that state—corporations to register with the secretary of state in order to do business in that jurisdiction. See, e.g., O.C.G.A. § 14-2-1501 (“A foreign corporation may not transact business in this state until it obtains a certificate of authority from the Secretary of State.”); Cal. Corp. Code § 2015 (“A foreign corporation shall not transact intrastate business without having first obtained from the Secretary of State a certificate of qualification.”). Some such statutes further require that the secretary of state be designated as an agent for receiving service of process. O.C.G.A. § 14-2-1507; Cal. Corp. Code § 2015(a)(4). However, while the failure to register may run afoul of requirements and provoke some action from local regulators, there is scant caselaw on how the failure to register, by itself, would be viewed in connection with attempts to exercise personal jurisdiction over a foreign corporation. Moreover, designation of the secretary of state as an agent for service of process has routinely been found insufficient by itself to establish personal jurisdiction over a corporate entity.
The apparent conflict between the Pennsylvania statute and the Supreme Court’s limitation on general jurisdiction set forth in Daimler AG v. Bauman, 571 U.S. 117 (2014), suggests the Court will likely affirm the Pennsylvania Supreme Court’s decision. Statutes like the one at issue would vitiate the logic behind recent decisions limiting the application of general personal jurisdiction. Assuming the statutory scheme were permissible, corporations with nationwide reach could conceivably be required to register and thus be subject to personal jurisdiction in every U.S. state, flipping the (now) traditional personal jurisdiction analysis on its head and rendering corporations “at home” in every jurisdiction. That outcome seems unlikely, and we will have to wait and see if the Mallory decision closes the door on general jurisdiction by registration fully or leaves open room for new creative legislation to bring corporations in front of far-off courts.