In the case of Mallory v. Norfork Southern Railway Co., the Supreme Court has agreed to review whether as a condition of doing business in the state Pennsylvania can validly require an out-of-state corporation to consent to general jurisdiction broadly opening it to future lawsuits arising from its dealings outside the state. It’s the latest of what by one count is eight cases the high court has taken over the last eleven years on personal jurisdiction, through which the Justices have substantially reined in a phenomenon I deplored in The Litigation Explosion thirty years ago, that of states’ seeking to grab power for their courts to resolve disputes arising elsewhere.
Ever desirous of maximal opportunities for forum-shopping, plaintiff’s lawyers have turned to an old idea: jurisdiction by consent by way of business registration. They have persuaded more states to adopt laws treating registration to do business in the state as constituting consent for the state to hear lawsuits based on activity elsewhere. (Jurisdiction over disputes arising from in-state activity is less controversial.) Cato adjunct scholar Mark Moller wrote against the idea in 2016, describing it as an end run around the Supreme Court’s reasoning in 2004’s Daimler AG v. Bauman. At Prawfsblawg, law professors Rocky Rhodes and Cassandra Robertson comment on the Mallory case in a pair of posts.
Here’s what I wrote in this space a while back:
Many of the problems with litigation under our federal system, as I’ve noted before, arise when state courts can reach out to project their power onto litigants and disputes outside their borders. Public choice economics suggests that when courts are answerable to the political and legal classes of a single state only–say, California or Montana–they might not be ideally responsive to the interests and due process rights of out‐of‐state parties who have been compelled by force to show up and defend a lawsuit. Even if state judges and juries manage to avoid the temptation of “home cooking”–dishing out tastier outcomes to down‐home litigants and lawyers than to outsiders–there remains the wider problem of forum‐shopping, in which–even if no forum intends to act other than impartially–lawyers can bring an action in whichever of multiple available forums is most gainful for their side and unwelcome for their opponent.
A great deal, therefore, hangs on when state courts can compel absent parties to show up and defend a lawsuit. When may a state assert jurisdiction over a distant party even though it lacks one of the relatively uncontroversial grounds for doing so, such as that the events being sued over happened within its borders?
And here there has been good news to report in recent years. Our system relies largely on the federal judiciary to police overreaching by state courts in their jurisdictional claims, and after decades of irresolution, the U.S. Supreme Court has lately been getting much more serious and confident about drawing the right sorts of lines. Importantly, it has done so with support from both liberal and conservative wings of the Court. In the most significant recent case, Daimler AG v. Bauman (2014), Justice Ruth Bader Ginsburg wrote for a unanimous Court, with only Justice Sotomayor writing a separate concurrence. (The case dealt with an international as distinct from interstate claim of jurisdiction, but made precedent for both).
But some states have pushed back against Daimler…
Now the story again resumes where we left it.
