Supreme Court Allows Unusual Pennsylvania Law on Corporate Suits

The Supreme Court upheld a Pennsylvania law on Tuesday that requires corporations to consent to being sued in its courts — by anyone, for conduct anywhere — as a condition for doing business in the state.

Only Pennsylvania has such a law. But the ruling may pave the way for other states to enact similar ones, giving injured consumers, workers and others more choices of where to sue and subjecting corporations to suits in courts they may view as hostile to business.

The Supreme Court was split 5 to 4, with Justice Neil M. Gorsuch writing for the majority. In ruling against the corporation at the center of the case, Norfolk Southern, Justice Gorsuch rejected its argument that it was entitled “to a more favorable rule, one shielding it from suits even its employees must answer” under the Fourteenth Amendment.

In dissent, Justice Amy Coney Barrett, joined by Chief Justice John G. Roberts Jr. and Justices Elena Kagan and Brett M. Kavanaugh, wrote that Pennsylvania’s law unfairly harmed other states’ rights because it imposed “a blanket claim of authority over controversies with no connection to the commonwealth.”

The case was brought by Robert Mallory, who said he developed cancer after being exposed to toxic chemicals during his nearly two decades as a freight car mechanic in Virginia and Ohio for Norfolk Southern Railway, which was incorporated in Virginia and, at the time, was based there.

Mr. Mallory contended that his job entailed spraying boxcar pipes with asbestos and demolishing car interiors that, he claims, contained carcinogens. The question in the case was whether he could sue in a third state with no concrete connection to the suit: Pennsylvania.

The decision came after the derailment of a Norfolk Southern train carrying toxic chemicals near the Pennsylvania state line, which amplified the stakes of the case. A fire ensued and led to fears of an explosion, prompting the authorities to burn off some of the train’s hazardous cargo and raising worries about harms to public health and the environment.

The derailment loomed over the ruling on Tuesday, with Justice Gorsuch addressing it directly at the start of his opinion. Suppose an Ohio resident sued the train conductor because of an illness from the accident, he wrote. If the resident served the lawsuit on the conductor just over the border in Pennsylvania, the justices would all agree that a court in the state could hear the case. But Norfolk Southern had argued that it would be shielded from that very scenario, Justice Gorsuch wrote.

“Nothing in the due process clause requires such an incongruous result,” Justice Gorsuch added.

The Supreme Court has long said that corporations may be sued where they are incorporated or where their headquarters are. And they may be sued in particular cases if the plaintiff’s claims are related to the defendant’s contacts with the state.

Mr. Mallory relied on none of those bases for jurisdiction. Rather, he pointed to a Pennsylvania law that requires companies that do business in the state to consent to being sued there.

In explaining the historical backdrop of the case, Mallory v. Norfolk Southern Railway, No. 21-1168, Justice Gorsuch explained the ways that corporations have pushed back against where claims against them may be heard.

“Unsurprisingly, corporations did not relish the prospect of being haled into court for any claim anywhere they conducted business,” he wrote.

Norfolk Southern has also promoted its business in Pennsylvania, he wrote. In his opinion, Justice Gorsuch included a fact sheet by the company, which features a graphic chart with a yellow map of Pennsylvania that outlines its “extensive network of track and terminals.”

In her dissent, Justice Barrett wrote that Pennsylvania’s claim to general jurisdiction over all corporations lawfully doing business in the state “flies in the face of our precedent.”

“Pennsylvania’s power grab infringes on more than just the rights of defendants — it upsets the proper role of the states in our federal system,” she added.