Foreign Corp’s Registration To Do Business In Pennsylvania Does Not Confer General Jurisdiction – Transport – United States – Mondaq News Alerts
A recent Pennsylvania Supreme Court decision falls in alignment
with several other jurisdictions that do not confer general
jurisdiction over a foreign corporation based on its registration
to do business in the state. In Mallory v. Norfolk S. Ry.
Co.,1 the Court affirmed that the
state’s corporate registration statute2 is unconstitutional
to the extent that it confers general jurisdiction over
foreign corporations that are not “at home”3 in
Pennsylvania. The Court further held that the registration statute
does not constitute voluntary consent by a foreign corporation to
general jurisdiction.
Relying on Daimler AG v. Bauman and its
predecessor, Goodyear Dunlop Tires Operations, S.A. v.
Brown,4 the Court held that the state’s
“statutory scheme of conditioning the privilege of doing
business in the Commonwealth on the submission of the foreign
corporation to general jurisdiction in Pennsylvania courts strips
foreign corporations of the due process safeguards guaranteed in
Goodyear and Daimler.”5 In Mallory,
the Virginia plaintiff filed a Federal Employers Liability Act
(FELA) lawsuit against a Virginia railway company that has its
principal place of business in Virginia for injuries sustained in
Ohio and Virginia. The case had no connection to the forum state,
other than general jurisdiction based on Pennsylvania’s
registration statute. The Court found “such broad
jurisdictional authority is incompatible with the Fourteenth
Amendment. Simply stated, a statute may not require what the
Constitution prohibits.”6
The Court recognized that a constitutional analysis was
necessary because Pennsylvania’s registration statute is
peculiar in that it expressly provides that the act of registering
to do business constitutes a basis upon which a court may assert
all-purpose general jurisdiction over claims against a foreign
corporation.7
The Court further recognized the “Hobson’s choice”
that foreign corporations face to either lawfully register to do
business in the state or not do business in Pennsylvania at all.
Clearly, no voluntary consent exists; it is coerced. Moreover, if
the registration statute was upheld, then “every national
corporation [would be] subject to the general jurisdiction of every
state. This reality flies in the face of Goodyear and
Daimler and cannot be condoned.”8
Pennsylvania is in accord with other states on this issue.9 A few
months ago, the New York Court of Appeals addressed this question
and, in a 5-2 opinion, similarly held that a foreign
corporation’s registration to do business and designation of an
agent for service in New York does not constitute consent to
general jurisdiction.10 Rather, the required
registration with New York’s secretary of state and designation
of an in-state agent for service of process constitute consent to
accept service of process, not general jurisdiction. That decision
resolved a split among federal and state courts in New York on the
issue. New York Gov. Kathy Hochul also recently vetoed
legislation11 that would make a foreign
corporation’s registration to do business in the state
constitute consent to the jurisdiction of the New York courts.
The constitutionality of a consent-by-registration statute, such
as the one proposed in New York, is a debated issue among state
courts12 and one that may eventually see
U.S. Supreme Court review.
Footnotes
1. __
A.3d __ , 2021 WL 6067172 (Pa. Dec. 22, 2021).
2. See 42
Pa. C.S. § 5301(a)(2)(i) (qualifying as a foreign corporation
under the laws of the state constitutes a sufficient basis for
Pennsylvania courts to exercise general jurisdiction over the
foreign corporation); 15 Pa. C.S. § 411(a) (requiring foreign
corporation to register with the Department of the State of the
Commonwealth to do business in Pennsylvania).
3. See
Daimler AG v. Bauman, 571 U.S. 117, 127, 138, 139 n.19
(2014) (holding corporation is subject to general jurisdiction only
in states where it is “at home,” with
“paradigm” forums being corporation’s place of
incorporation and its principal place of business and, in an
“exceptional case,” where its activities are “so
substantial and of such a nature as to render the corporation at
home in that State”).
4. 564
U.S. 915 (2011).
5.
Mallory, 2021 WL 6067172 at *21.
6.
Id. at *17.
7.
Id.at *15 (noting that until the U.S. Supreme Court
“speaks on the interplay between consent to jurisdiction by
registration and the due process limits on general jurisdiction, it
is our role to interpret that Court’s governing case law on the
topic and apply it to the facts presented”).
8.
Id. at *20. The Court also observed that “a contrary
result would render application of specific jurisdiction
superfluous as applied to foreign corporations registered to do
business in Pennsylvania, as there would be no need to examine the
affiliations between the forum State and the underlying case to
establish specific jurisdiction over a particular controversy
because general jurisdiction would always lie based merely upon the
foreign corporation’s registration.” Id. at
n.19.
9. States
that similarly hold that corporate registration does not confer
general jurisdiction include Colorado, Delaware, Illinois,
Missouri, Montana, New Mexico, New York, Oregon, and
Wisconsin.
10.
See Aybar v. Aybar, 37 N.Y.3d 274, 280-83 (Oct. 7, 2021).
New York courts had previously interpreted Bagdon v. Phila.
& Reading Coal & Iron Co., 217 N.Y. 432 (N.Y. 1916) as
long-standing precedent that registration under Bus. Corp. Law
§ 1301(a) constituted consent to general jurisdiction in New
York. Aybar held that the lower courts had
“misread” Bagdon, which decided only the narrow
question whether a foreign corporation’s designation of an
in-state agent for service of process “extended to causes of
action unrelated to the business transacted in New York.”
General jurisdiction was not disputed and had existed in
Bagdon because the foreign corporation was concededly
“doing business” in New York, which, at the time, was
sufficient for due process.
11. In
June 2021, the New York legislature had passed A.B. 7769/S.B. 7253,
which would create an express statutory consent-by-registration
rule.
12.
See, e.g., Mallory, 2021 WL 6067172 at *12 n.13
(recognizing disagreement with Georgia Supreme Court decision
holding its courts may exercise general jurisdiction over foreign
corporations authorized to do business in Georgia).
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