On December 22, 2021, a unanimous Pennsylvania Supreme Court held in Robert Mallory v. Norfolk Southern Railway Company that a foreign corporation is not subject to personal jurisdiction in the Commonwealth of Pennsylvania solely because of its registration to do business there. The Mallory decision is an affirmation of the due process rights of non-Pennsylvania corporate defendants and significantly impacts who can permissibly be sued in the Commonwealth. Mallory, a resident of the Commonwealth of Virginia, filed suit in Pennsylvania seeking damages under the Federal Employers’ Liability Act against his former employer, Norfolk Southern, a Virginia corporation, for injuries allegedly sustained in the course of the plaintiff’s work in Virginia and Ohio. The sole basis for the exercise of personal jurisdiction was Norfolk Southern’s registration to do business in the Commonwealth of Pennsylvania. Pennsylvania’s business registration statute is unique in that the statute conditions registration upon a corporation’s “consent” to personal jurisdiction in Pennsylvania courts. Before Mallory, Pennsylvania state courts and many of Pennsylvania’s federal courts generally permitted the exercise of personal jurisdiction over foreign corporations based solely on their registering to do business in Pennsylvania. The appeal in Mallory required the Pennsylvania Supreme Court to consider whether Pennsylvania’s broad exercise of personal jurisdiction through its corporate registration statute comports with the demands of due...
Tagged: Personal Jurisdiction
With the close of the United States Supreme Court’s 2016-17 term, we offer this wrap up of the term’s most important business and commercial cases (excluding patent cases): Kindred Nursing Ctrs, L.P. v. Clark: The Supreme Court continued its full-throated support of arbitration agreements, again rejecting a state supreme court’s effort to apply an ostensibly arbitration-neutral rule of law to invalidate an arbitration agreement. In Kindred, the Kentucky Supreme Court held that an arbitration agreement signed by an attorney-in-fact under a broad power of attorney was invalid because the power of attorney did not expressly give the attorney-in-fact the right to waive the principal’s right to a jury trial. According to the Kentucky Supreme Court, to grant an attorney-in-fact the authority to waive a “fundamental constitutional right,” a power of attorney must grant that authority expressly and unambiguously. Because the right to access the courts and the right to a jury trial are such “fundamental constitutional rights” and because the power of attorney did not expressly and unambiguously waive them, the attorney-in-fact was not authorized to agree to arbitrate the principal’s claims, and no enforceable arbitration agreement was created. The Supreme Court found that the Kentucky Supreme Court’s facially arbitration-neutral rule—that the authority to waive “fundamental constitutional rights” must be expressed unambiguously in a power...
Delaware Supreme Court Clarifies Reach of Personal Jurisdiction Over Nonresident Directors and Officers of Delaware Corporations Under 10 Del. C. § 3114
The Delaware Supreme Court, in Marc Hazout v. Tsang Mun Ting, No. 353, 2015 (Feb. 26, 2016) (Strine, C.J.), held that the reach of personal jurisdiction under 10 Del. C. § 3114 over nonresident officers and directors of Delaware corporations, contrary to Court of Chancery precedent, is not limited to claims by stockholders against such officers and directors for breach of fiduciary duty. Rather, under the plain language of the statute, a nonresident officer or director of a Delaware corporation, by virtue of accepting and holding office, has consented to personal jurisdiction in Delaware, subject to the requirements of due process, in two classes of cases: (i) “all civil actions or proceedings brought in this State, by or on behalf of, or against such corporation, in which such officer [or director] is a necessary or proper party”; or (ii) “any action or proceeding against such officer [or director] in violation of a duty in such capacity.”
With the close of the United States Supreme Court’s 2013-14 term, we offer this wrap-up of the Court’s term, focusing on the Court’s most important business and commercial cases (excluding intellectual property opinions): Halliburton Co. v. Erica P. John Fund: The Court upheld the fraud-on-the-market theory first set forth in Basic Inc. v. Levinson, which allows investors to satisfy the reliance element of a section 10b-5 securities fraud claim by invoking a presumption that the price at which stock is purchased in an efficient market reflects all public, material information — including material misstatements.
U.S. Supreme Court Continues Trend of Narrowing Scope of General Jurisdiction Over Foreign Defendants
A trend is apparent only in hindsight. It is now reasonably clear that the United States Supreme Court has, over the last several years, restricted access to United States courts by litigants seeking to recover from foreign defendants for alleged wrongdoing outside of the United States. Thus, the Court has reinvigorated the presumption against the extraterritorial application of United States law (Morrison v. National Australia Bank); rejected the argument that foreign subsidiaries of a United States parent corporation would be amenable to suit based on general jurisdiction simply because a small percentage of their goods were continuously shipped to the forum state (Goodyear v. Brown); and held that the presumption against extraterritoriality applies to the Alien Tort Statute (Kiobel v. Royal Dutch Petroleum). Each decision had the effect of narrowing access to United States courts for claims against foreign corporations based upon conduct that took place outside of the United States.
The Supreme Court’s decision in Stern v. Marshall has generated renewed focus on what types of cases and claims can be resolved in an adversary proceeding in the bankruptcy courts, and what types of cases will have to be resolved in the federal district courts. The resulting shift should serve as a reminder that, while the Federal Rules of Bankruptcy Procedure governing adversary proceedings are similar to and modeled on the Federal Rules of Civil Procedure, there are significant differences. For example, because the Bankruptcy Rules regarding service of process may result in a shorter time within which a defendant must respond, corporations must remain mindful of these differences and avoid relying upon the more well-known Federal Rules.