WASHINGTON (Legal Newsline) - American businesses should be on the lookout for the aftershocks of one of the U.S. Supreme Court's less publicized rulings issued before summer recess, one that could give new life to venue shopping by the plaintiffs’ bar – a practice a leading tort law expert has coined “litigation tourism.”
Victor Schwartz, Co-Chair of Shook Hardy & Bacon’s Public Policy Practice Group, and co-author of one of the country’s most widely used torts casebook, said that the June 27 ruling in Mallory v. Norfolk S. Ry. Co. could embolden the plaintiffs’ bar to target states with plaintiff friendly judges and juries (“Judicial Hellholes” Schwartz has labelled them) to pass laws similar to one that is now unique to Pennsylvania, the law at the center of the Supreme Court ruling.
“The Pennsylvania law requires out-of-state companies that register to do business in Pennsylvania to agree to appear in Pennsylvania courts on any cause of action against them,” Schwartz said. “SCOTUS essentially ruled that consent by a company to general personal jurisdiction does not violate due process.”
U.S. Supreme Court
Schwartz added that “the trial bar could lobby other states with plaintiff friendly judges and juries to approve similar laws where companies must agree to appear in court regarding any cause of action even if the alleged injury did not take place there, the plaintiff did not live there, and the company wasn’t headquartered there.”
The 5-4 majority opinion, by an unusual alliance of liberal and conservative justices, reversed a Pennsylvania Supreme Court ruling.
In the case, Robert Mallory, a former freight car mechanic for Norfolk Southern sued the railroad under a federal workers’ compensation statute, claiming that exposure to carcinogens at the workplace caused his cancer. The railroad is registered to do business in Pennsylvania but is headquartered in Virginia. Mallory was not a Pennsylvania resident, and the exposure that allegedly caused his cancer did not occur in Pennsylvania.
The Pennsylvania Supreme Court ruled that its state law violated due process under the U.S. Supreme Court’s precedents, which allows general jurisdiction only in the state where a company is incorporated or has its principal place of business.
But SCOTUS, with Justice Neil Gorsuch writing the majority opinion, held that a century-old decision in Pennsylvania Fire Ins. Co. of Philadelphia v. Gold Issue Mining & Milling Co., was still sound law, and validated personal jurisdiction in the Pennsylvania law where out-of-state corporations consent to suit in the forum state in order to do business.
One sign of hope for business is that in a concurring opinion Justice Samuel Alito wrote another case, with a separate set of facts, might violate the Dormant Commerce Clause doctrine, which forbids state laws that inhibit interstate commerce.
Still, states adopting Pennsylvania’s law to require registered companies to appear in court regarding any cause of action would reverse a course of SCOTUS rulings that put a damper on litigation tourism.
In the June 2019 issue of the Duke Journal of Constitutional Law and Public Policy law, Schwartz along with Shook colleagues Philip Goldberg and Christopher Appeal wrote that the “Supreme Court of the United States has redefined the landscape of personal jurisdiction and venue over the past several years to limit where civil litigation can be filed against businesses and other defendants with operations in multiple states. In a series of unanimous or nearly unanimous decisions, the Court established new due process standards for general personal jurisdiction, which is where an entity can be sued for any purpose, and specific personal jurisdiction, which is where an entity can be sued because of the jurisdiction’s affiliation with a particular claim.”