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  • Writer's pictureJennie Tannenbaum

New Ruling Any Business can be Sued in any State Now

ALERT! The SCOTUS just released a ruling that will impact all businesses. Any business can be sued in any states where they have merely registered to do business, but have not in actuality conducted any business in. Any out-of-state company may be subjected to that state's jurisdiction regardless of how much business the company actually does there.

This is a registration by consent law that is being upheld by the recent case Norfolk Southern Corp. which affirmed the opinion of the case, Pennsylvania Fire Insurance Co. v. Gold Issue Mining & Milling Co. This case rejected the argument in International Shoe v. Washington which concerned specific jurisdiction tied to a company's activities in a state, and general jurisdiction in states that a company had its principal place of business.

Instead it allows any out-of-state company to be subjected to any state's jurisdiction regardless of how much business the company actually does there as long as it is registered there.

A former employee, Robert Mallory, who is a Virginia resident sued his former employer, Norfolk Southern. He alleged that he was exposed to toxic chemicals on the job in Virginia and Ohio. He wanted to bring the case in Pennsylvania. His theory was that the railroad had registered to do business in PA, therefore, by doing so it gave those state courts jurisdiction.

The PA supreme court tossed out the case, striking down the state’s long-arm statute, which gives PA state courts jurisdiction over any out-of-state corporation that had registered there. It said that this statute violates a defendant's rights of due process.

Subsequently, the SCOTUS has heard the case and this is where we are now.

The majority opinion said "All International Shoe did was stake out an additional road to jurisdiction over out-of-state corporations. Pennsylvania Fire held that an out-of-state corporation that has consented to in-state suits in order to do business in the forum is susceptible to suit there. International Shoe held that an out-of-state corporation that has not consented to in-state suits may also be susceptible to claims in the forum state based on 'the quality and nature of its activity' in the forum."

What’s the important takeaway for businesses?

Be prepared to defend lawsuits in states that the business is registered in to do business regardless if any business was actually conducted there.

Here's the link to the case.

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