Consent and Personal Jurisdiction: The Mallory Oral Argument

Photo by Gonzalo Facello on Unsplash

On Tuesday November 8, 2022, the U.S. Supreme Court heard oral argument in Mallory v. Norfolk Southern Railway, a case that Reuters called “a sleeper case . . . [that] could be a nightmare for corporations.”  The case involves a railway worker, Robert Mallory, a resident of Virginia, who had worked for Norfolk Southern for almost twenty years in both Virginia and Ohio. Mallory alleged that through the negligence of Norfolk Southern, he was exposed to asbestos and other toxic chemicals during the course of his employment, causing him to develop colon cancer.  Mallory brought suit in Pennsylvania state court, arguing that the court had jurisdiction by virtue of Norfolk Sothern’s act of registering to do business in the state. Norfolk Southern contested jurisdiction, arguing that Pennsylavnia’s assertion of jurisdiction violated the Due Process Clause of the Fourteenth Amendment.  The trial court agreed, holding the Pennsylvania registration scheme unconstitutional.  The Pennsylvania Supreme Court affirmed the decision of the trial court.

Mallory squarely presents an issue that that has bubbled to the surface after the Court’s game-changing decision in Daimler v. Bauman: whether registering to do business under a state registration statute can amount to consent to general personal jurisdiction. The Supreme Court in Daimler drastically reined in general jurisdiction, holding that a corporation was only subject to general jurisdiction in its state of incorporation and in the state of its principal place of business.  Post-Daimler, plaintiffs began to turn to century-old precedent as a work-around, arguing that a corporation’s registration under a state registration statute could amount to consent to general jurisdiction (or, otherwise stated, amounted to a waiver of any due process protections the 14^th Amendment might otherwise afford).  Mallory was the perfect case to consider this issue since, unlike any other state statute, the Pennsylvania statutory scheme at issue expressly states that qualification to do business in the state was sufficient to ground general jurisdiction.

The case has garnered a lot of interest, with a whopping twenty amicus briefs filed in the case (including one that I submitted).  In the briefs, Petitioner (Mallory) focused his arguments on historical precedent and original public meaning: “The decision below cannot be reconciled with the original public meaning of the Fourteenth Amendment or controlling precedent. A mountain of historical evidence demonstrates that consent to jurisdiction required as a condition of doing business in a State constitutes voluntary, valid consent for purposes of the Due Process Clause.”  By contrast, Respondent (Norfolk Southern) has  argued that “Registration-jurisdiction is . . . a relic of a bygone era. It is neither necessary nor doctrinally supportable today.”  Much of the Respondent’s brief focused on the shifting landscape of jurisdiction post-International Shoe (and in particular, post-Daimler) and whether the act of registering can properly be conceived as consent.  (For a detailed synopsis of the Mallory briefs, see Preview of United States Supreme Court Cases).

The oral argument covered a lot of ground, but perhaps not the ground that observers of the case might have expected. First, the Justices did not seem persuaded by the Petitioner’s history, tradition, and original meaning arguments. Most tellingly, the Justices did not ask counsel for the Respondent about original meaning at all. Only at the very end of oral argument did the Justices ask the Respondent’s counsel to distinguish Pennsylvania Fire, the 100-plus-year-old precedent that Petitioner relied on.  Second, Daimler did not figure prominently in the oral argument. Certainly, there were references to Daimler—Justice Kagan, for example, observed that the Petitioner’s position would “gut” the decision—but very few of the other justices waded into Daimler territory.  And when they did, it was to say that consent could exist “alongside” Daimler and International Shoe. Third, the argument was pulled in many different directions by lines of questioning that were, perhaps, idiosyncratic to the individual Justices (e.g., Justice Jackson and Justice Thomas focused on the distinction between “consent” and “waiver”; Justice Gorsuch repeatedly drew parallels to tag jurisdiction over individuals; Justice Barrett tested the limits of the unconstitutional conditions doctrine; and several of the other Justices waded into constitutional issues that had not been briefed).

It’s always difficult (and probably foolish) to try to read the tea leaves.  But insofar as oral argument provides a glimpse into the minds of the Justices,  Chief Justice Roberts and Justices Alito, Kavanaugh, and Kagan seem to be firmly in the Respondent’s camp, while Justices Sotomayor, Jackson and (possibly) Gorsuch seem to be in the Petitioner’s camp.  It was difficult to glean exactly which way Justices Barrett and Thomas were leaning.  Below, I’ve captured some of the main themes of the Mallory oral argument.

Original Meaning and History

Counsel for the Petitioner quite predictably focused his oral argument on “history, tradition and precedent” (some version of this phrase was mentioned no less than a dozen times). The Court—perhaps, surprisingly, given its composition—seemed unimpressed with the history and tradition argument.  Chief Justice Roberts, for instance, observed that “history and tradition move on, and as Justice Scalia [sic. – Ginsburg] 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?”  Counsel replied that no case had overruled Pennsylvania Fire, the leading precedent on registration statutes, to which Roberts replied, “Well, International Shoe [overruled it]. I mean, the fact that they didn’t have a footnote saying all these other cases inconsistent with our approach have been overruled doesn’t mean that they’re any less, no longer good law.”  Justice Kagan expanded on Chief Justice Roberts’ questioning, suggesting that the notion of consent was necessary in a pre-International Shoe world but not necessary today (“So somebody had to make up a fictional, like, here’s an idea, we’ll use fictional consent when they register. Even though they’re not actually consenting to jurisdiction, we will deem it to be consent so that we can assert jurisdiction. Then International Shoe, as the Chief Justice says, comes along and obviates the need for any such doctrines.”).  Later in the oral argument, she once again made the point that “for almost a century, we’ve lived under rules that are entirely different from the ones that you’re suggesting we now adopt.”

Several Justices seemed skeptical that history was firmly on Petitioner’s side.  For instance, Justice Thomas asked, “how would we know when there’s enough history to support your position?” And, later, Justice Alito asked, “Can you prevail on your historical argument without showing a settled practice of upholding jurisdiction by consent in what you called foreign cubed cases?” Both questions suggest that the Justices are not entirely “buying” Petitioner’s reading of historical precedent. The most pointed comment in this respect came from Justice Barrett who stated, “And let’s just say that I might not read all those [appointment of agent for service of process] statutes the same way that you do.”

The Meaning of Consent

Much of the oral argument focused on the meaning of consent: is registration under a state statute “consent” to personal jurisdiction?  During Petitioner’s argument, Justice Kagan observed “All the piece of paper does is comply with a state law requirement that everybody who does business in the state has to make their identities known and say, here I am, I’m doing business in the state. So where—where is the consent to jurisdiction in that?” Counsel largely deflected the consent question, relying on history and tradition—i.e., precedent tells us it is consent, so it is.

The theme of the Respondent’s oral argument was “registration does not equal consent”—referring to such consent as “coerced.”  Counsel tried at multiple junctures to make a comprehensive “this is not consent” argument, but often got sidelined by the Justices’ questions about terminology, the unconstitutional conditions doctrine, and tag jurisdiction. In some instances, the Justices seemed to miss the nuance of Respondent’s argument. For instance, Justice Gorsuch asked, “Consent jurisdiction could exist alongside International Shoe here, just as tag jurisdiction exists alongside personal jurisdiction in individual cases?” After a back-and-forth exchange with Justice Gorsuch, counsel for the Respondent answered, “Of course, consent can, in fact, live in the—in the International Shoe world, but that’s not the circumstance we’re talking about here. I think the first line of defense ought to be this is not consent in the sense that anybody thinks about consent.” Justice Jackson telegraphed her belief that the consent embodied in the registration only applied to intrastate business, to which counsel for the Respondent replied, “No. No. All it talks about is a foreign corporation that’s registered to do business. And under the long arm statute, then you’re subject to [general jurisdiction].”  And Justice Thomas weighed in after the Respondent attempted multiple times to make his consent argument with, “So . .  . is this really about whether or not you are voluntarily consenting or you voluntarily . . . consented?”  In the face of questions like this, counsel for the Respondent attempted as best he could to come back to his primary argument: that “check[ing] that box is simply . . . not the way I think of . . . waiver and consent under any circumstance.”

 Justices Barrett and Thomas pushed Respondent’s counsel on whether filing a document that was more explicit about the so-called consent would have sufficed to confer consent-based jurisdiction.  Respondent’s counsel held firm that no form, no matter how explicit, would make the consent valid because the fact remains that the corporation had no other choice but to register (“It would still put you squarely in the position where it’s consent that’s – that’s extorted by the state in order to . . . litigate issues where the sovereign has no interest . . .”).   Justices Sotomayor and Jackson were not persuaded by the extorted consent argument, with the former asking, “So what logic does it make . . . to say that you cannot consent, because you’re already doing business in Pennsylvania, you have three railroad yards, you have miles and miles of trains and miles and miles of employees, how can I say you were coerced?” and the latter noting, “So it’s not coercive. It’s just a term in the agreement that we’re making with the businesses that come to our state.”

Unconstitutional Conditions

The Justices asked a number of questions about the unconstitutional conditions doctrine.  Justice Kagan asked counsel for the Petitioner whether there is “a right of a corporation not to be subject to general jurisdiction just because it does business in a state.” After some clarification, counsel responded, “If the corporation did not consent, yes, there is [such a right].” Justice Kagan then stated that this put you squarely in “unconstitutional conditions land because here’s the state saying, . . . we’re going to demand that you give up this right to have access to our markets. So it’s conditioning access to its markets on the waiver of the right, which you’ve just conceded not to be subject to general jurisdiction for doing business.”  After a candid admission that he found the Court’s constitutional conditions doctrine “very difficult,” counsel for the Petitioner ultimately answered the question by agreeing with Justice Gorsuch that “it passes unconstitutional conditions doctrine because it treats corporations historically both like persons and domestic corporations.”  Counsel for the Respondent was also asked about the unconstitutional conditions doctrine and emphasized that since Norfolk Southern had the right not to be sued in Pennsylvania on actions that have nothing to do with that state, insisting that the corporation waive that right as a precursor to entry would violate the unconstitutional conditions doctrine.

Tag Jurisdiction Over Individuals

 Justice Gorsuch seemed singularly preoccupied with the interplay between tag jurisdiction over individuals and consent-based jurisdiction over corporations.  He returned to this question time and again, suggesting that corporations are getting “special treatment” vis-à-vis individuals. Counsel for the Respondent started down the right path when he said, “you’re comparing apples and oranges.”  But he never fully fleshed out why the comparison was apples to oranges (because tag jurisdiction over individuals is based on presence and registration jurisdiction is based on consent).  Ultimately, it was clear that Justice Gorsuch was looking for a way to reconcile these two divergent strains of case law.  Notably, in his questioning of the Solicitor General, Justice Gorsuch did not ask about tag jurisdiction.  Instead, his questions almost read like a “how to” guide in ruling for the Respondent (noting that he would need to deal with Pennsylvania Fire precedent, consider what benefits states could offer corporations in exchange for true consent, and decide whether consent plays out differently with respect to forum residents).

Foreign-Cubed v. Foreign-Squared Cases

 There were a number of references in oral argument to the distinction between foreign-squared cases (foreign defendant, foreign cause of action) and foreign-cubed cases (foreign plaintiff, foreign defendant, foreign cause of action).  Malloryitself is a foreign-cubed case.  But several of the Justices wondered about consent in the foreign-squared context:  If a state statute deemed a corporation’s registration to do business as consent to general jurisdiction with respect to any claims brought by a forum resident, would that be legitimate consent?  The Respondent initially seemed to suggest that the answer was “no” but hedged his bets, saying you would need to look to historical precedent and that it was “possible” that consent could be found in a foreign-squared cases under his theory.  Counsel for the Solicitor General also echoed the sentiment that perhaps consent would need to be analyzed differently when dealing with a foreign-squared case compared to a foreign-cubed case.

Policy Arguments

There was a smattering of policy arguments throughout oral argument.  For instance, Justice Alito expressed concern about the small business that registers pursuant to a state statute and then finds itself in a faraway court with no connection to the underlying claim.  Counsel for the Petitioner’s response—“I recognize the policy implications of that, but sovereigns have this prerogative, and it hasn’t changed since 1868”— probably wasn’t entirely satisfactory to Justice Alito.

Justice Kavanaugh asked counsel for the Petitioner whether “every state could have a statute like this, which would mean, I assume, that every business would be at home . . . throughout the country?”  After clarifying the “at home” nuance, counsel admitted that yes, every state in the country could enact a registration statute. Other justices did not seem concerned by this prospect.  Justice Sotomayor noted, “I suspect today that very crowded courts are not going to want foreign cubed cases to come to them and will continue having their laws as they are. And we have other doctrines like forum non conveniens and choice of law that will . . . present guardrails…”  Counsel for the Respondent conceded that it was “improbable” that all 50 states would interpret their registration statutes to confer consent to general jurisdiction.  However, he noted that the “more concerning” issue was that “those few states” that are “popular . . . from the plaintiffs’ perspective” would open their courthouse doors in this way.

* * *

Ultimately, I believe the Court will rule in the Respondent’s favor—but it is not clear on what grounds.  I’m not sure that the Respondent’s “registration is not consent” argument was compelling to the Court (which is unfortunate, since it’s the argument I also made in my Cardozo Law Review article and my amicus brief). But a number of the Justices did seem to be concerned about imposing an unconstitutional condition on a corporation looking to do business in a state.  Whatever the Court does, let’s hope it embraces a bright-line rule—the last thing we need is more confusion in the personal jurisdiction jurisprudence.