The Supreme Court’s latest foray into the constitutional thicket of personal jurisdiction, Mallory v. Norfolk Southern Railway, No. 21-1168 – to decide whether states can force corporations to “consent” to general personal jurisdiction via foreign corporation registration statutes − was orally argued on November 8, 2022. The transcript is available here. Since Bexis has been involved (as amicus curiae) in Mallory since the trial court’s favorable decision (which he made sure was on Westlaw and Lexis) was first appealed in Pennsylvania, we thought we’d review the highlights of the oral argument.
First, a little background – why Mallory matters. For decades, as the modern mass-tort industry developed, plaintiffs had been allowed, in cases involving large corporate defendants (like most of our clients), to sue essentially anywhere on the expansive theory that all general personal jurisdiction required was “continuous and substantial” business conducted in any given state. Since large corporate defendants operate in all 50 states, that meant that any plaintiff, no matter s/he lived, could sue such defendants anywhere they wanted.
This expansive jurisdictional theory allowed for the rise of what many on the right side of the “v.” call “hellhole jurisdictions” all over the country, where plaintiffs from anywhere could swamp the defendants with thousands of cases that would be decided by the plaintiffs’ chosen judges and juries. See Tr. at 46 (referring to “judicial hell holes”).
That began to change with Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), which added the “at home” limiter to the “continuous and substantial business” standard for general personal jurisdiction. We spotted Brown even before the Supreme Court decided it, and have been following personal jurisdiction issues on the Blog ever since. Daimler AG v. Bauman, 571 U.S. 117 (2014), established that the Brown “at home” standard meant what it said and signified the end of expansive general jurisdiction. Then, in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), the Court put an end to similar forum shopping under the guise of specific personal jurisdiction. That left the litigation tourists – plaintiffs from, say Nebraska, who wanted to sue a defendant “at home” in, say, Delaware and Minnesota, in their favorite locale, say the Philadelphia Court of Common Pleas in Pennsylvania, over injuries suffered in Nebraska (or anywhere other than Pennsylvania) – with only one card left to play, the “general jurisdiction by consent” theory now before the Court in Mallory. If defendants win this, then the “hellholes” lose their out-of-state (what the Mallory transcript jargon calls “foreign cubed”) inventory of cases.
That’s what’s at stake in Mallory – it’s the last decent jurisdictional option foreign cubed litigation tourists have to go where they want to go.
So here’s what we gleaned from the Mallory oral argument.
Some justices – Sotomayor (Tr. at 71-72, 86, 113-14), Jackson (Tr. at 20-21, 59-60, 76), and Gorsuch (Tr. at 22-23, 67-68), seemed friendly to arguments that corporations could be required to “consent” to anybody suing them anywhere as a condition of doing business. Justice Gorsuch’s view seems to be that without general jurisdiction by consent corporations would be treated preferentially to individuals (Tr. at 30-31, 64) – even though current law makes corporations subject to general jurisdiction in two locations (incorporation and principal place of business), whereas individuals are similarly exposed only where they are domiciled.
The plaintiff/petitioner in Mallory relied primarily on an originalist (“history, tradition, and precedent,” Tr. at 3) argument as to what “due process” meant when the 14th Amendment was enacted in 1868, thus concentrating on law that was over a century old. We guess they thought that this is the only argument that could possibly get the more conservative members of the Court to buy into a result that would restore rampant forum shopping. Here’s a taste of that argument: “Fidelity to the original public meaning of the Fourteenth Amendment in this case means that the flesh-and-blood little guy wins and the Fortune 500 company loses.” Tr. at 5.
[S]overeigns often thought that they had a very compelling interest in opening the doors to their courthouse for anyone, resident or foreigner, and they would mete out justice if they saw a wrong and attempt to right it. That’s one of the great gifts of the Anglo-American legal system, I think. It’s one of the great gifts of our independent judiciary.
Tr. 43. So, yes, the petitioners here were defending litigation tourism to the Supreme Court. “[O]ne person’s hell hole is another’s nirvana.” Tr. at 46.
That didn’t seem to work very well. Justice Roberts’ question gives a flavor of that, and of the limits to originalistic argument:
[H]istory and tradition move on, and as Justice Scalia said in the Daimler case, you shouldn’t put heavy reliance on precedents from the Pennoyer era.
Doesn’t International Shoe sort of relegate that body of cases to the dust bin of history?
Tr. at 9.
The plaintiff/petitioner answered that International Shoe didn’t touch “consent,” Tr. at 10, but the question itself is the answer that we at the Blog are looking for.
Justice Kavanaugh seemed to share Justice Roberts’ skepticism as to whether a state could even do what this statute indicated Pennsylvania could do:
I thought the Court’s precedents made clear that the state does not have the right any longer to exclude out-of-state businesses from that state’s market.
Tr. at 28. The petitioner’s response was rather chilling, agreeing that a state can “exclude businesses from certain states, from its market, or from certain kinds of businesses from its market.” Tr. at 29. So that would allow, say, Florida, to exclude any corporation it considers “woke” from doing business there. Justice Kavanaugh also commented:
If you win, every state could have a statute like this, which would mean, I assume, that every business would be at home . . . throughout the country?
Tr. at 47. Later in the argument he indicated that the petitioner’s view of state power to require “consent” was “not my reading of the Constitution or the history.” Tr. at 91
Justice Kagan wasn’t very convinced by the idea of “consent” in the corporate registration context either, asking “where is the consent to jurisdiction in” “filing a piece of paper” that “doesn’t say I agree to be subject to jurisdiction based on my general activities”? Tr. at 12. Justice Kagan “suggested” that “this whole idea of consent-by-registration came about because it was, you know, necessary in a pre-International Shoe world and was now an anachronism.” Tr. at 13. Later, she was more blunt: “[T]he clear effect of a ruling in your favor would be to gut Daimler and Goodyear and you might even say effectively overrule them.” Tr. at 44.
Justice Alito, likewise, did not seem impressed, doubting that these forum shoppers can “prevail on your historical argument without showing a settled practice of upholding jurisdiction by consent in what you called foreign cubed cases.” Tr. at 15. The petitioner responded by equating hostility to forum shopping with “discriminat[ion] against out-of-state residents.” Tr. at 16. That’s one we haven’t heard before. When asked if there were any limits at all on a state’s ability to condition doing business, petitioner rejected any restrictions on forum shopping, limiting his response to “depriving someone of their equal protection rights or their rights to private property or their rights to the First Amendment.” Tr. at 17. Whew! Well, it’s nice to know that Florida can’t ban “woke” foreign corporations after all, but not very relevant to personal jurisdiction.
Even Justices who expressed some sympathy for the petitioner seemed put off by unbridled forum-shopping. Justice Sotomayor finally reached her limit:
[Y]ou just gave it away. Certainly, the constitutional scholars talk about the fact that if a jurisdiction wants to give its residents a forum, that makes eminent sense. But he’s not a resident of Pennsylvania, and this cause of action had no contact with Pennsylvania. . . . [W]here’s the sovereign interest in opening up your forum to an out-of-state plaintiff whose cause of action has no connection to the forum?
Tr. at 43.
The same was true of Justice Jackson:
I would think [it] would be . . . unfair, problematic, potentially unconstitutional reaching out to grab corporations, but, to the extent that the corporation . . . is agreeing voluntarily, knowingly, to do business in the state, I would think the state would have a very significant interest in making sure that its residents have a forum to bring their lawsuits.
Tr. at 51-52.
There was also discussion of the “unconstitutional conditions” doctrine, meaning that the government cannot condition a benefit on the abandonment of a constitutional right. Interestingly, the petitioner conceded the existence of the underlying right:
JUSTICE KAGAN: . . . [T]here’s a corporation that does business in the state. Is there a right not to be haled into court for things that are entirely unrelated to the state?
MR. KELLER: If the corporation did not consent, yes, there is.
Tr. at 24-25.
Petitioner’s pitch here – or was it Justice Gorsuch’s, since there was a lot of back and forth − was that general jurisdiction by consent did nothing more than put individuals and corporations “on the same footing” – or maybe it was supposed to put “foreign” and “domestic” corporations on a supposedly equal footing? The transcript thoroughly mixes the two together. Tr. at 30-32.
The oral argument also included some discussion of the dormant Commerce Clause, although only Justice Alito seemed really to want to go there. Tr. at 32-35.
The respondent made all the arguments we would expect, and that the blog has already discussed at length. But one case-specific argument in particularly stood out – that the petitioners lacked the support one would otherwise expect in a case such as this, as neither Pennsylvania, which had enacted the statute declared unconstitutional, nor any other state, supported the petitioners. “[T]he only effect of that will be to end a statute that the State of Pennsylvania doesn’t care about and that no other state has come here to defend. Tr. at 56.
I don’t see any reason . . . to continue the debate at this stage. I mean, all of the states have lined up saying we don’t need consent as a mechanism for properly taking care of the interests that we need to take care of. And so the better course for the Court to follow is to say this is not worth the candle.
Tr. at 95. Id. at 77 (“the State of Pennsylvania . . . doesn’t defend this statutory scheme here today”).
Another of our bloggers said just the other day that predicting what the Supreme Court will do is a “sucker’s game.” Agreed, but right now we’d rather be where our side is than where the other side is.