ATLANTA (Legal Newsline) - Every company with even a minimal presence in more than one state should heed a June SCOTUS ruling, Mallory v. Norfolk S. Ry. Co., that exposes them to civil actions in states with “consent to jurisdiction statutes," leading tort expert Victor Schwartz told members of the American Tort Reform Association on Monday at its annual legislative conference in Atlanta.
Schwartz’s talk was entitled: “The Supreme Court’s Mallory Decision: A Path for Litigation Tourism to Judicial Hellholes® – How ATRA Can Block It.”
Schwartz, who co-chairs Shook Hardy & Bacon’s Public Policy Practice Group, said that the 5-4 ruling in Mallory effectively overruled 75 years of precedent that established that states cannot exercise general personal jurisdiction against a company merely because it was doing business in the state. The case originated in Pennsylvania.
The ruling could embolden the plaintiffs’ bar to target states with plaintiff-friendly judges and juries (“Judicial Hellholes,” ATRA has labeled 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 for an earlier story. “SCOTUS essentially ruled that consent by a company to general personal jurisdiction does not violate due process.”
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 U.S. Supreme Court 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.
“If not modified, Mallory provides an open, five-lane highway for jet-set plaintiff lawyers to sue in Judicial Hellholes,” Schwartz said.
He offered ATRA members a list of steps they can take to protect themselves from the potential exposure.
Among them: Work through state business groups for passage of legislation that prohibits consent to jurisdiction statutes. Plus, ATRA can file amicus briefs in cases addressing the issue of consent to jurisdiction.
ATRA “can find subtle ways to exploit what is a split in the plaintiffs’ bar on this topic—the split is between the small business trial lawyers and the much larger ‘jet setting’ lawyers.”