DOJ, business groups urge SCOTUS to limit where lawsuits can be brought against companies

The U.S. Department of Justice building is pictured in Washington, U.S. on December 15, 2020. REUTERS/Al Drago

Sign up now for free and unlimited access to

(Reuters) – In a series of amicus briefs filed late last week, the case could dramatically expand jurisdiction over litigation against companies, the U.S. Justice Department, eight state attorneys general and a group of business groups, including Including the U.S. Chamber of Commerce warning the U.S. Supreme Court not to abandon modern precedent that limits what plaintiffs can sue companies.

Otherwise, Justice Department Deputy Attorney General Elizabeth Prelogar wrote — who also called for oral arguments when a judge hears the case in November — federalism and even international comity would be subject to attempts to impose sanctions on corporate registration alone. Destruction of the state in which the company exercises general jurisdiction. Do business in the state.

“Allowing states to require foreign companies to submit to their general jurisdiction would unduly violate the sovereignty of sister states and allow larger states to impose their will on smaller ones,” Virginia Attorney General Jason Miares wrote in the AG’s briefing. “Unrestricted general jurisdiction will also lead to widespread forum shopping and litigation travel, undermining the ability of states to enforce their own policies.”

Sign up now for free and unlimited access to

If nothing else, last week’s amicus curiae briefing attested to the potentially huge ramifications of the case, Mallory v. Norfolk Southern Railroad In July, I described the case as a Supreme Court sleeper. Clearly, the American business world has woken up.

The key issue in the case is whether the due process clause of the 14th Amendment prohibits individual states from requiring companies to consent to personal jurisdiction as a condition of doing business in that state. Such statutes of registered consent were once prevalent in the states, but nearly all statutes have been withdrawn or interpreted as conflicting with a series of Supreme Court cases, starting with International Shoe Co v. Washington State in 1945, which focused the jurisdictional analysis. On the company’s ties to the state.

In the Mallory case, Virginia resident and longtime railroad worker Robert Mallory sued the Virginia-based company in Pennsylvania court, claiming he was exposed to asbestos while working for the Ohio and Virginia railroads. (Mallory’s Supreme Court attorney, Ashley Keller of Keller Postman, told me that his client’s trial attorney chose Pennsylvania because that’s where their headquarters are.)

Mallory claimed that the railroad had agreed to Pennsylvania’s jurisdiction when it registered to do business in the state. But the Pennsylvania Supreme Court ruled in December that the state’s registration jurisdiction statute was mandatory, not voluntary, and thus violated the railroad’s constitutional due process rights.

Mallory’s Supreme Court Attorney – Consensus in 2021 Ford Motor Company v. In Montana, Justice Neil Gorsuch asked why U.S. corporations “continue to receive special judicial protection in the name of the Constitution” — telling the Supreme Court in their opening briefing that the 14th Amendment and the High Court’s None of the precedent bars states from requiring companies to submit as a condition of doing business.

According to Mallory, the long history and tradition of such state laws is reflected in a 1917 Supreme Court decision, Pennsylvania Fire Insurance Company v. Philadelphia. Gold Issue Mining and Milling Co, in which a judge upheld Missouri’s exercise of jurisdiction over an Arizona company that, upon registration, agreed to do business in Missouri. Mallory argued that subsequent Supreme Court cases — including two modern milestones in corporate jurisdiction, Goodyear Tire Operating Company v. in 2011. Brown and Daimler AG v. Baumann in 2014 – highlighted the importance of corporate domicile and its connection to the state claiming to exercise jurisdiction. But, according to Mallory, neither Goodyear nor Daimler have explicitly vetoed the Pennsylvania fire, which centered on the company’s agreement to Missouri’s jurisdiction.

The railroad’s Supreme Court attorney, Carter Phillips of Sidley Austin, briefed in Norfolk South’s Aug. 26 briefing that the judge effectively dismissed the Pennsylvania fire in his international shoe ruling and subsequent cases.

“No aspect of the Pennsylvania fire reasoning has survived the international shoe industry,” the railroad said in its briefing. “This includes not only implied consent and existential fiction, but also the notion that a company’s mandatory compliance with state law is ‘voluntary’. In other words, mandatory registration cannot generate consent.”

The railroad’s brief insisted that the process service issues that initially prompted states to create regulations requiring companies to agree to jurisdiction are now outdated. According to Phillips, the Registry Jurisdiction is “thus a relic of a bygone era”. “It is neither necessary nor theoretically supported today.”

If the Supreme Court sided with Mallory, the fallout would be dire: “If Pennsylvania can have jurisdiction over any lawsuit brought against a company doing business there, so can any other state,” the brief said. “The state has no legitimate interest in exercising jurisdiction over claims not linked to the forum, and allowing them to do so invites gaming tricks, forum shopping and unfairness.”

The Justice Department and the U.S. Chamber of Commerce elaborated on the railroad’s insistence that the history of old state registration statutes actually undercut Mallory’s argument. In a Chamber of Commerce Briefing, in particular, Peter (Bo) Rutledge, Dean of the University of Georgia School of Law, offers a paper on the judicial authority of states over corporations that dates back to 1825, when states first began to enforce laws involving non-jurisdictional law. case to exercise jurisdiction. State-owned enterprises operating in its territory.

At that time, a handful of states enacted laws that could be read to grant broad jurisdiction over companies registered to do business in that state, the chamber said. But the breadth of such laws led to heated litigation in the decades before the passage of the 14th Amendment in 1868—state courts almost always interpret the statutes narrowly, according to the brief.

In fact, the Chamber brief said, Mallory failed to find a long-ago case in which a court upheld its jurisdiction over an out-of-state company for a claim unrelated to the company’s in-state conduct.

Mallory’s lead attorney, Keller, said in an email that he was eager to submit a response brief refuting the history-based arguments. “None of my friends refute the common practice in and around 1868 of extracting consent jurisdiction as a condition of authorizing corporations to do business in state territory,” Keller said. “Trying to limit consent based on terms like ‘specific jurisdiction’ is Outdated.”

read more:

This Sleeping Supreme Court Case Could Be a Nightmare for Companies

Sign up now for free and unlimited access to

Our Standard: The Thomson Reuters Trust Principles.

The views expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and impartiality in accordance with the principles of trust.

Alison Frankel

Thomson Reuters

Since 2011, Alison Frankel has been a Reuters columnist covering high-stakes business litigation. A graduate of Dartmouth College, she has been a New York-based journalist covering the legal profession and law for over 30 years. Before joining Reuters, she was a writer and editor for The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin.

Source link