Yves here. Once in a while, even our Supreme Court decides in favor of the little guy. But I’m surprised that the objection to the Pennsylvania “consent by registration” requirement went this far, and that the Supreme Court decision was as close as 5-4.
By Kenny Stancil, a staff writer at Common Dreams. Originally published at Common Dreams
The U.S. Supreme Court rejected Norfolk Southern’s attempt to limit where companies can be sued.
In a 5-4 opinion written by Justice Neil Gorsuch and joined by Justices Clarence Thomas, Samuel Alito, Sonja Sotomayor, and Ketanji Brown Jackson, the high court ruled that Pennsylvania’s “consent-by-registration” law “requiring an out-of-state firm to answer in the commonwealth any suits against it in exchange for status as a registered foreign corporation and the benefits that entails” does not violate the due process clause of the 14th Amendment.
The decision vacates an earlier judgment by the Pennsylvania Supreme Court and remands the case.
“This is really big,” Slate‘s Mark Joseph Stern tweeted. Big business lawyers are “going to be furious with this decision.”
“This is big—and, in my view, good—because it allows states to exercise personal jurisdiction over corporations that do business within the state but are incorporated elsewhere, often in a jurisdiction that they deem more favorable to their interests,” Stern continued.
“Pennsylvania requires out-of-state corporations to file paperwork consenting to appear in Pennsylvania courts as a condition of doing business within the state,” Stern added. “Gorsuch says: Nothing about that scheme violates due process.”
Matt Stoller, director of research at the American Economic Liberties Project, also applauded the decision.
A very important decision on corporate power. The Supreme Court says out-of-state 'foreign' corporations can be sued in states where they do business. 5-4, with Thomas, Alito, Gorsuch, Sotomayor and KBJ in favor. https://t.co/YevChF7qbC
— Matt Stoller (@matthewstoller) June 27, 2023
In 2017, months after being diagnosed with colon cancer, former Norfolk Southern worker Robert Mallory filed a lawsuit alleging that his illness stemmed from workplace exposure to asbestos and other hazardous materials and that the rail carrier failed to provide safety equipment and other resources to ensure he was sufficiently protected on the job.
Although he had never worked in Pennsylvania, Mallory filed his lawsuit in the Philadelphia County Court of Common Pleas because his attorneys were from the state and “he thought he would get the fairest access to justice there,” Ashley Keller, the lawyer representing him before the U.S. Supreme Court, toldThe Lever in February.
As Rebecca Burns and Julia Rock, two of the investigative outlet’s reporters, explained at the time:
Norfolk Southern asserts that being forced to defend the case in Pennsylvania would pose an undue burden, thereby violating its constitutional right to due process.
Even though Norfolk Southern owns thousands of miles of track in the Keystone State, the Philadelphia county court sided with the railroad and dismissed the case. Mallory appealed, and the case wound its way through state and federal courts before landing at the U.S. Supreme Court last year.
Norfolk Southern asked the U.S. Supreme Court “to uphold the lower court ruling, overturn Pennsylvania’s law, and restrict where corporations can be sued, upending centuries of precedent,” the journalists noted.
The American Association of Railroads (AAR), the rail industry’s largest lobby, filed a brief last September on behalf of Norfolk Southern. AAR and other powerful corporate lobbying groups such as the U.S. Chamber of Commerce, the National Association of Manufacturers, and the American Trucking Association sought to undermine the ability of workers and consumers to file lawsuits in the venue of their choosing.
President Joe Biden’s administration, meanwhile, came under fire earlier this year when The Lever revealed that the U.S. Department of Justice had also filed a brief siding with the railroad giant behind the toxic derailment in East Palestine, Ohio.
If Norfolk Southern had prevailed, it could have been easier for the profitable rail carrier to thwart pending and future lawsuits “on the grounds that they’re filed in the wrong venue,” The Lever reported, citing Scott Nelson, an attorney with the Public Citizen Litigation Group, which filed a brief backing Mallory. At particular risk would have been “lawsuits filed by residents exposed to hazardous chemicals as the result of accidents in other states,” including victims of air or water pollution stemming from the disaster in East Palestine, five miles west of the Pennsylvania state border.
“[Norfolk Southern] might say, ‘You can only sue us in Ohio or Virginia [where Norfolk Southern is headquartered],’ even if you were injured at your home in Pennsylvania from an accident that took place five miles away in Ohio,” Nelson warned.
A ruling in the rail giant’s favor could have also established “a national precedent limiting where workers and consumers can bring cases against corporations,” Burns and Rock pointed out.
However, workers and consumers are not out of the woods yet. AsBloomberg Lawreported Tuesday, “Alito seemed to invite a future challenge against the [Pennsylvania] law in his concurrence,” where he suggested that “Norfolk Southern could win when the case goes back to the lower court.”
“In my view, there is a good prospect that Pennsylvania’s assertion of jurisdiction here—over an out-of-state company in a suit brought by an out-of-state plaintiff on claims wholly unrelated to Pennsylvania—violates the commerce clause,” Alito argued.
Sean Marotta, a partner at Hogan Lovells, which filed a brief on behalf of a law professor in support of Norfolk Southern, “is telling his clients not to panic but to ‘stay on guard,'” according to Bloomberg Law. “Under this ruling, he said state legislatures could amend their registration statutes to impose consent-by-registration. They could basically copy and paste the Pennsylvania law because the court is saying it’s okay under the Constitution’s due process clause, he said.”
“There’s still a dormant commerce clause fight to have,” Marotta told the outlet.