Before June 27, 2023, a company’s registration to do business in a state had not generally been understood to subject a company to lawsuits in that state. However, yesterday, the U.S. Supreme Court published its decision in Mallory v. Norfolk Southern Railway, holding that personal jurisdiction requirements may be waived by a company’s filing of a registration to transact business in a state.
In Mallory, a Virginia resident sued his former employer, a Virginia corporation, claiming the employer should be held liable for injuries the plaintiff allegedly suffered while working in Virginia and Ohio. Rather than suing in Virginia or Ohio, the plaintiff filed his claims in Pennsylvania state court. Why Pennsylvania? The plaintiff contended that because the company had registered to do business there and Pennsylvania law provided that registration constituted consent to be sued there, the state’s courts had jurisdiction over the company and the dispute.
A majority of the Court agreed that the registration constituted consent to be sued there, making an analysis of whether there was specific or general jurisdiction over the company unnecessary. In other words, depending on each state’s laws, a company may not need to be formed in a state or have any certain level of activities in the state to be subject to lawsuits there.
While some of the Court laid out other potential flaws of such state laws, for now especially, companies should carefully monitor their state registrations to ensure they are in line with their current business activities. As the process of registering to do business in a state or withdrawing from a state is generally seen as a simple matter of corporate housekeeping, the Supreme Court’s recent decision raises the stakes.