DOJ, business groups urge SCOTUS to limit scope of lawsuits against corporations.


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The U.S. Department of Justice building is seen in Washington, U.S., in this Dec. 15, 2020, photo. REUTERS/Al Drago

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(Reuters) – In a friend-of-the-court brief filed late last week, it could dramatically expand the power to bring lawsuits by corporations, the U.S. Justice Department, eight state attorneys general and business groups. The U.S. Chamber of Commerce has warned the U.S. Supreme Court against imposing a modern rule that limits how long plaintiffs can sue businesses.

Otherwise, wrote DOJ Solicitor General Elizabeth Preloger — who asked the justices to submit oral arguments when they heard the case in November — federalism and international commissions would fail in states trying to exercise blanket jurisdiction over corporations based solely on corporate registration. To conduct business in the state.

“Allowing states to require foreign corporations to submit to their general jurisdiction abuses the sovereignty of sister states, and allows large states to impose their interests on smaller states,” Virginia Attorney General Jason Myares said in a brief for the AGs. “Unfettered general jurisdiction leads to widespread forum shopping and litigation tourism, which undermines governments’ ability to enforce their own policies.”

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If nothing else, last week’s amicus briefs confirm the far-reaching consequences of the case, Mallory v. Clearly, the American business community is awake.

The key question in the case is that the Due Process Clause of the 14th Amendment prohibits individual states from requiring a corporation to consent to personal jurisdiction as a condition of doing business in the state. Such consent-by-registration laws were once common among states, but nearly all have been overturned or interpreted contrary to the line of Supreme Court cases. RELATIONS OF THE CORPORATION WITH THE STATE.

In the Mallory case, Robert Mallory, a Virginia resident, sued a Virginia-based corporation in Pennsylvania state court for exposure to asbestos while working on the Ohio & Virginia Railroad. (Mallory’s Supreme Court counsel, Ashley Keller of Keller Postman, told me that her client’s trial lawyers chose Pennsylvania because it was there.)

Mallory said the railroad was granted a Pennsylvania jurisdiction when it registered to do business in the state. But the Pennsylvania Supreme Court ruled last December that the state’s adjudication-by-registration law is mandatory, not voluntary, and thus violates railroads’ constitutional due process rights.

Mallory Supreme Court Justices – In 2021 Ford Motor Co. v. Justice Neil Gorsuch, co-ruling in Montana, told the Supreme Court in his opening remarks why US corporations “continue to enjoy special legal protections in the name of the Constitution.” Neither the 14th Amendment nor Supreme Court precedent requires corporations to submit to their jurisdiction as a condition of conducting business.

The long history and tradition of such state laws, according to Mallory, is reflected in the 1917 Supreme Court decision, Pennsylvania Fire Insurance Company v. Philadelphia v. Gold Matter Mining and Milling Company. A corporation incorporated when registering to conduct business in Missouri. Mallory cited subsequent Supreme Court cases—the two modern markers of corporate power, 2011’s Goodyear Tires Operations SA v. Brown and 2014’s Daimler AG v. Bauman – Emphasizes the importance of a corporation’s domicile and its relationship with the government to exercise territorial power. . But, according to Mallory, neither Goodyear nor Daimler Corp. has openly stymied the Pennsylvania fire focused on its deal for Missouri jurisdiction.

The railroad’s Supreme Court counsel, Sidley’s Austin Carter Phillips, briefed Norfolk Southern on Aug. 26 that the jury successfully overruled Pennsylvania Fire in its Global Shoe decision and subsequent cases.

“No aspect of the Pennsylvania fire was spared from the global footprint,” the railroad said in its brief. “This includes not only the fictions of implied consent and presence, but the idea that a corporation’s compliance with mandatory government law is ‘voluntary.’ In other words, compulsory registration cannot confer consent.”

The railroad’s brief emphasized that the process service problems that prompted states to enact regulations requiring corporations to grant jurisdiction in the first place are outdated. The state-by-registration regime, argued Philip, “is therefore a relic of the past.” “It is neither relevant nor doctrinally supported today.”

If the Supreme Court sided with Mallory, the consequences would be dire: “If Pennsylvania can take jurisdiction over any suit against a corporation doing that business, so can any other state,” he said. “States have no legitimate interest in asserting jurisdiction over claims that have no forum nexus, and allowing them to do so would invite unfairness, forum shopping, and unfairness.”

The Justice Department and the U.S. Chamber of Deputies have made extensive comments that the history of old state registration laws on railroads undermine Mallory’s arguments. In a chamber brief, Peter (Bo) Rutledge, dean of the University of Georgia School of Law, presented a document dealing with states’ jurisdiction in 1825 when they began asserting their jurisdiction over extraterritorial cases. Government corporations operating within their borders.

At that time, the council said, few states had enacted statutes that could be read as broad statutory powers over corporations registered to do business in the state. But the scope of these laws, in short, was hotly debated in the decades before the 14th Amendment was ratified in 1868—and state courts have always interpreted the laws narrowly.

Indeed, according to the Chamber’s brief, Mallory has long been unable to find a single case in which a court upheld claims against an out-of-state corporation unrelated to the company’s in-state actions.

Keller, Mallory’s lead counsel, said in an email that he is seeking to file a response brief that refutes these anecdotal arguments. “There is no denying the universal practice in and around 1868 of the condition of allowing a corporation to do business in a state territory,” Keller said. “Attempts to limit consent based on words such as “limited jurisdiction” are unobjectionable.”

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This sleepy Supreme Court case could be a nightmare for corporations.

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

Alison Frankel

Thomson Reuters

Alison Frankel has covered high-profile trade disputes as a columnist for Reuters since 2011. A graduate of Dartmouth College, she has worked in the legal industry and law as a journalist in New York for more than three decades. Before joining Reuters, she was a writer and editor at The American Advocate. Frankel is the author of Double Eagle: The History of the World’s Most Valuable Coin.


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