Consent to General Jurisdiction
Consenting to jurisdiction—voluntarily waiving one’s due process rights—is an independent basis for jurisdiction. See Pa. Fire Ins. Co. of Phila. v. Gold Issue Mining & Milling Co., 243 U.S. 93, 96, 37 S. Ct. 344, 345, 61 L. Ed. 610 (1917). As Justice Gorsuch, dissenting, pointed out in Ford Motor, several states began requiring out-of-state corporations to incorporate under their laws too, register to do business, or at least designate an agent for service of process in the state. Plaintiffs have increasingly argued that corporate defendants have consented to general jurisdiction based on their compliance with such statutes. Generally, the argument is made, by registering or qualifying to do business in a state or appointing an agent for service of process, a company has expressly or impliedly consented to general jurisdiction.
Defendants’ response has been that it would violate the Due Process Clause to construe a foreign corporation’s compliance with a state’s mandatory registration statute as voluntary consent. Only voluntary consent or affiliations within the state that are so continuous and systematic as to render the foreign corporation essentially at home in the state will suffice. In light of the Supreme Court’s repeated admonishment that due process prohibits a state from claiming general jurisdiction over every corporation doing business within its borders, it logically follows that the Due Process Clause also prohibits a state from forcing every corporation doing business within its borders to consent to general jurisdiction. Most state statutes do not explicitly advise the registrant that signing up to do business in the state may equate to consent to general jurisdiction. But even if a statute did provide that notice, the argument is that “consent” is still not free and voluntary because the corporation lacks alternatives to registration.
Setting the Stage for Supreme Court Guidance
The year 2021 saw several decisions by state supreme courts addressing some aspects of this issue. E.g., Aybar v. Aybar, 2021 N.Y. LEXIS 2134 (N.Y. Oct. 7, 2021); Chavez v. Bridgestone Ams. Tire Operations, LLC, et al., 2021 N.M. LEXIS 74 (N.M. Nov. 15, 2021). Of particular note, the Supreme Court of Georgia held in Cooper Tire & Rubber Co. v. McCall, 312 Ga. 422, 863 S.E.2d 81 (2021), that corporate registration is consent to general jurisdiction and that this does not violate federal due process. The Supreme Court of Pennsylvania addressed the issue in Mallory v. Norfolk Southern Railway Co., No. 3 EAP 2021, 266 A.3d 542 (Pa. 2021), rejecting the conclusion that registering as a foreign corporation invokes general jurisdiction because that conclusion “eviscerates the Supreme Court’s general jurisdiction framework” and violates federal due process. Petitions for a writ of certiorari were filed in both cases. Mallory v. Norfolk S. Ry. Co., No. 21-1168 (U.S. Feb 23, 2022); Cooper Tire & Rubber Co. v. McCall, No. 21-926 (U.S. Dec. 22, 2021). The Supreme Court has granted the petition in the Pennsylvania case. Mallory v. Norfolk S. Ry. Co., No. 21-1168, 2022 WL 1205835 (U.S. Apr. 25, 2022).
In Cooper, the plaintiff, a Florida resident, was a passenger in a car that was involved in a single-car accident in Florida. He brought product liability and negligence claims in Georgia state court against the driver of the car, the used car dealership that sold the car to the driver, and the tire manufacturer, alleging the Florida accident resulted from the failure of a tire manufactured in Arkansas. The tire manufacturer, a Delaware corporation with its principal place of business in Ohio, moved to dismiss for lack of personal jurisdiction, which the trial court granted. The Georgia Court of Appeals reversed. The court acknowledged the argument that treating corporate registration as consent to general jurisdiction may violate the Due Process Clause but deemed itself bound to uphold personal jurisdiction by the Georgia Supreme Court precedent. The Georgia Supreme Court granted discretionary review and upheld the exercise of personal jurisdiction, while recognizing the tension arising from recent U.S. Supreme Court cases holding that a corporation will ordinarily be subject to general jurisdiction in only one or two states: the state where it is incorporated and, if different, the state where its principal place of business is located.
Seeking certiorari, the petitioner argued that the Georgia Supreme Court incorrectly held that an out-of-state corporation is subject to the general jurisdiction of Georgia’s courts merely by registering to do business within the state. The Georgia court discounted the decisions in Daimler and Goodyear, instead relying on the Court’s rarely mentioned, century-old decision in Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917). The Court was urged to grant certiorari not only to clarify the reach and viability of Pennsylvania Fire after a century of due process jurisprudence but also to address this important issue on which some states have split. The asserted need for the Court’s intervention was heightened by constitutional policy considerations: Allowing states to make consent to general jurisdiction the price for registering to do business in that state imposes too heavy a burden on interstate commerce and serves no legitimate state interest. The Georgia court’s ruling also arguably reduces predictability for businesses, impinges on the interests of other sovereign states, and encourages forum shopping by allowing individual states to exercise excessive control over business activities occurring outside their borders.
In Mallory, a Virginia resident filed an action against Norfolk Southern Railway, alleging toxic chemical exposure in Virginia and Ohio. The defendant was incorporated in Virginia and maintained its principal place of business there; however, the plaintiff filed suit in the
Philadelphia Court of Common Pleas. The defendant sought dismissal for lack jurisdiction, as the case did not arise in Pennsylvania and the company was not “at home” in Pennsylvania. The plaintiff asserted that the defendant had consented to personal jurisdiction by registering to do business in Pennsylvania. The trial court dismissed the action for lack of personal jurisdiction, finding the state’s business registration statute unconstitutional to the extent it purported to provide general jurisdiction over registered foreign corporations. The appeal of this decision was ultimately transferred to the Pennsylvania Supreme Court, which reversed.
The cert petitioner in Mallory then asserted that high court review is warranted because the Pennsylvania Supreme Court’s decision “directly conflicts” with the Georgia Supreme Court’s decision in Cooper and further cements a well-entrenched split. The petition notes that almost every federal court of appeals has considered the constitutionality of a statute requiring corporations to consent to personal jurisdiction in order to do business. Those courts are sharply divided. Finally, the petitioner argued for the continuing viability of Pennsylvania Fire, which is asserted to recognize that a state may require a corporation to consent to its courts’ personal jurisdiction as a condition of doing business in the state.
Both sides in the Pennsylvania appeal seemed to agree that Mallory presents a cleaner look at the issues than Cooper. Pennsylvania’s registration statute “more plainly advise[s] the registrant that enrolling in the state as a foreign corporation and transacting business will vest the local courts with general jurisdiction over the corporation.” Brown v. Lockheed Martin Corp., 814 F.3d 619, 640 (2d Cir. 2016). The Pennsylvania Supreme Court took note of the tension between its decision and the Georgia Supreme Court’s analysis in Cooper and explained why it was “unpersuaded” by Cooper’s reasoning. Many observers have suggested that Cooper turns on an unusual feature of Georgia law under which an out-of-state corporation is either a “nonresident,” subject only to specific personal jurisdiction, or a “resident,” subject to general personal jurisdiction, with the dividing line as registration to do business. Rejecting consent by registration under this atypical scheme risked creating a loophole under which there would be no jurisdiction over many out-of-state corporations. The Georgia court candidly acknowledged the tension between its ruling and the recent U.S. Supreme Court precedent and also urged the Georgia General Assembly to address this issue by modifying the governing statutes to enable Georgia courts to exercise specific personal jurisdiction over out-of-state corporations, whether they are authorized to do business in the state or not.
Mallory clearly raises the issue of voluntary consent. The Pennsylvania long-arm statute gives notice that a foreign corporation voluntarily registering to do business in Pennsylvania is “consenting” to general jurisdiction. The plaintiff thus argued that Pennsylvania merely gives corporations a choice: to avail themselves of the privilege of doing business in Pennsylvania by submitting to jurisdiction or to not conduct business in Pennsylvania. But because Pennsylvania requires all foreign corporations to register, the defendant argued that compliance with mandatory registration provisions cannot be seen as a voluntary relinquishment of due process rights. A choice between relinquishing due process rights or forgoing the privilege of doing business (in the sixth largest economy in the U.S.) implicated, said the Mallory court, the doctrine of “unconstitutional conditions,” which holds a state may not impose conditions that require the relinquishment of constitutional rights. 266 A.3d at 569. See also Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595, 604 (2013). The defendant also alleged that jurisdiction through registration infringed on the notion of federalism because a state long-arm statute cannot override the sovereignty of the individual states, nor can it alter the Constitution’s deliberate framework of interstate federalism, recently reaffirmed in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017).
The stage is thus set for an answer to the question of whether “consent” to jurisdiction through registering to do business violates International Shoe’s “traditional conception of fair play and substantial justice.” 326 U.S. at 320. Also in play is the question of whether it would run afoul of the Court’s recent directives that a court cannot subject a foreign corporation to general all-purpose jurisdiction based exclusively on the fact that it conducts business in the forum state. Daimler, 571 U.S. at 138. Finally, the Court may have an opportunity to explicate the unconstitutional conditions doctrine, if a foreign corporation’s registration to do business in a state does not constitute a voluntary consent to jurisdiction but, rather, compelled submission to general jurisdiction by legislative command.
Conclusion
There has been some thought that the Court’s next personal jurisdiction decision would be a foray into the musing in Ford Motor, 141 S. Ct. at 1032 (Alito, J., concurring), “whether the case law we have developed since [International Shoe] is well suited for the way in which business is now conducted.” Given, however, the Supreme Court’s continued resistance to “litigation tourism,” the attempt by some plaintiffs to rely on business registration to establish jurisdiction in their preferred forum now appears to be the next crucial battleground that the Court will address.