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Illinois Analysis of General Personal Jurisdiction Following Mallory v. Norfolk Southern

09/05/2023Joseph Panaterra

ILLINOIS ANALYSIS OF GENERAL PERSONAL JURISDICTION FOLLOWING MALLORY v. NORFOLK SOUTHERN

On June 27, 2023, the U.S. Supreme Court rendered its decision in Mallory. [i] This decision reaffirmed the U.S. Supreme Court’s decision in Pennsylvania Fire from 1917.[ii] In Pennsylvania Fire, the U.S. Supreme Court held that a Missouri statute did not violate the Due Process Clause. The Missouri statute required an insurance company seeking to do business in the state of Missouri to submit a power of attorney consenting that service of process upon the Superintendent of Insurance in the state could be deemed personal service upon the insurance company. By so consenting, the Court found the insurance company had voluntarily “executed a power of attorney that made service on the superintendent the equivalent of personal service.” This allowed the Pennsylvania Court to exercise personal jurisdiction over the Defendant Insurance Company.

In Mallory, plaintiff alleged that he was exposed to asbestos and other carcinogens when he worked for Norfolk Southern as a freight-car mechanic for 20 years in Ohio and Virginia. The plaintiff filed suit against Norfolk Southern in Pennsylvania. At that time, the plaintiff resided in Virginia and Norfolk Southern was incorporated in Virginia and had its principal place of business in Virginia. Norfolk Southern contested personal jurisdiction in Pennsylvania. The plaintiff argued that Pennsylvania statutorily requires out of state companies that register to do business in [Pennsylvania] to agree to appear in its courts on “any cause of action” against them. By registering to do business, the plaintiff contended that Norfolk Southern consented to suit in Pennsylvania on any claims.

The Pennsylvania Supreme Court in Mallory stated that “… the precise issue presented in this appeal may be peculiar to Pennsylvania. While all states require foreign corporations to register to do business within their boundaries, most states do not provide expressly that the act of registering to do business constitutes a specific basis upon which a court may assert general jurisdiction over all claims against a foreign corporation.” [iii] The Pennsylvania Supreme Court cited the Illinois Supreme Court’s Aspen decision in a footnote. The footnote states, “[i]t is for this reason that we do not rely extensively on case law of our sister states which have held that registering to do business does not constitute valid consent to general jurisdiction. [iv]The Pennsylvania Supreme Court went on to hold that the Pennsylvania statute violated the Due Process Clause and sided with Norfolk Southern.

The U.S. Supreme Court disagreed with the Pennsylvania Supreme Court and reversed. The U.S. Supreme Court analyzed whether the Due Process Clause of the Fourteenth Amendment prohibits a State from requiring an out of state corporation to consent to personal jurisdiction to do business there.The Court held that laws like Pennsylvania’s comport with the Due Process Clause, as previously explained in the Pennsylvania Fire case.

The U.S. Supreme Court went on to analyze the Pennsylvania statute at issue in Mallory. The Pennsylvania statute provides that an out of state corporation “may not do business in this Commonwealth until it registers with” the Department of State. As part of the registration process, a corporation must identify an “office” it will “continuously maintain” in the Commonwealth. Upon completing these requirements, the corporation “shall enjoy the same rights and privileges as a domestic entity and shall be subject to the same liability, restrictions, duties and penalties … imposed on domestic entities.” [v] Among other things, Pennsylvania law is explicit that “qualification as a foreign corporation” shall permit state courts to “exercise general personal jurisdiction” over a registered foreign corporation, just as they can over domestic corporations.

The U.S. Supreme Court held that as the result of this statute and Norfolk Southern’s compliance with it, Norfolk Southern agreed to be found in Pennsylvania and understood it would be amenable to suit on any claim. Notably, the U.S. Supreme Court went on to state, “to decide this case, we need not speculate whether any other statutory scheme and set of facts would suffice to establish consent to suit. It is enough to acknowledge that the state law and facts before us fall squarely within Pennsylvania Fire’s rule.” [vi]

The issue raised in Mallory has been specifically addressed by the Illinois Supreme Court in Aspen. The Illinois Supreme Court addressed whether a foreign corporation registered to do business in Illinois under the Business Corporation Act of 1983 (Act) (805 ILCS 5/1.01 et seq. (West 2012) which has a registered agent in Illinois for purposes of service of process is subject to personal jurisdiction in Illinois courts. The Illinois Supreme Court held that none of the Illinois statutory provisions require foreign corporations to consent to general personal jurisdiction as a condition of doing business in Illinois. In addition, the statutes do not indicate that by registering in Illinois or appointing a registered agent, a corporation waives any due process limitations on Illinois’ exercise of personal jurisdiction. Indeed, the Business Corporation Act makes no mention of personal jurisdiction at all.The Illinois Supreme Court stated “[u]nder the Act, a foreign corporation must register with the Secretary of State and appoint an agent to accept service of process in order to conduct business in Illinois.” The Illinois Supreme Court held, “the fact that a foreign corporation has registered to do business under the Act does not mean that the corporation has thereby consented to general jurisdiction over all causes of action, including those that are completely unrelated to the corporation’s activities in Illinois.”

The controlling law in Illinois is still Aspen. The Mallory decision does not alter the analysis in Aspen. In addition, the Mallory decision does not alter the analysis of personal jurisdiction based on the U.S. Supreme Court’s decisions in Daimler and Goodyear.[vii] [viii]Specifically, the U.S. Supreme Court in Mallory stated, “… our precedents applying International Shoe have long spoken of the decision as asking whether a state court may exercise jurisdiction over a corporate defendant ‘“that has not consented to suit in the forum.’” In all of these cases, there is no statute requiring Defendants to consent to personal jurisdiction when registering to do business in the State.

Based on these cases, the analysis of general personal jurisdiction over a foreign or non-resident corporation in Illinois should be based on the Aspen, Daimler, and Goodyear decisions. A plaintiff must establish that the foreign or non-resident corporation with its principal place of business outside of Illinois must be “at home” in Illinois to establish general personal jurisdiction. This remains a very difficult burden to meet.