Supreme Court Allows Lawsuits Anywhere Companies Are Registered

WASHINGTON — The Supreme Court ruled Tuesday that corporations can be sued in any state where they do business instead of only the place where an injury or damages occur.

The ruling was issued in the lawsuit of a Virginia man employed by Norfolk Southern Railway. He contracted cancer from exposure to toxic chemicals while working as a freight car mechanic in Virginia and Ohio but sued in Pennsylvania, where a state court dismissed his claim.

The Supreme Court overruled the Pennsylvania court, saying that by registering to do business in Pennsylvania, the railroad assumed the risk it might be sued there.

“In fact, Norfolk Southern has registered to do business in Pennsylvania in light of its ‘regular, systematic, [and] extensive’ operations there,” says the ruling written by Justice Neil Gorsuch. “And Pennsylvania requires out-of-state companies that register to do business in the Commonwealth to agree to appear in its courts on ‘any cause of action’ against them.”

The 5-to-4 ruling overrides objections by the U.S. solicitor general, who argued in an amicus curiae brief that potential liability spread throughout multiple jurisdictions would inhibit international trade by companies concerned about increased legal risks.

“Although this case involves a domestic defendant and domestic conduct, the theory of jurisdiction asserted here would apply equally to suits against foreign defendants based on foreign conduct,” says the brief submitted by Solicitor General Elizabeth Prelogar. “Theories of personal jurisdiction that would allow U.S. courts to exercise general jurisdiction over foreign defendants can have a significant effect on the United States’ diplomatic relations and foreign trade.”

It also could lead to forum shopping, which refers to plaintiffs searching around for the court most likely to rule in their favor, according to critics of the expanded legal authority.

The Pennsylvania Supreme Court largely agreed with the solicitor general. It said a ruling in favor of railroad worker Robert Mallory would extend the state’s “long-arm statute” too far.

Long-arm statutes refer to laws that allow a state court to exercise jurisdiction over out-of-state defendants if they committed acts within the state or have some other significant connection with the state.

Although Mallory never said he was exposed to toxins in Pennsylvania, the railroad manages more than 2,000 miles of track and operates 11 rail yards in the Keystone State.

His attorneys argued that as a matter of constitutional due process, the long-arm statutes and the railroad’s consent to do business in Pennsylvania should give him a right to sue there.

Norfolk Southern argued its “consent” should not be a justification for the lawsuit because it was coerced. Pennsylvania — like other states — gives corporations no choice but to register to do business there if they want to do anything more than pass through.

In ruling against the railroad, the U.S. Supreme Court upheld its 1917 ruling in the case of Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling Co.

The court in 1917 allowed states to have “registration by consent” laws. The laws mean registered out-of-state companies can be subjected to a state’s jurisdiction regardless of how much business they do there.

“Norfolk Southern applied for a ‘Certificate of Authority’ from the Commonwealth which, once approved, conferred on Norfolk Southern both the benefits and burdens shared by domestic corporations, including amenability to suit in state court on any claim,” the Supreme Court ruling this week said.

Norfolk Southern declined to comment when contacted by The Well News.

The case is Mallory v. Norfolk Southern Railway Co., case number 21-1168, in the Supreme Court of the United States.

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