Supreme Court Confirms Power of State Courts Over Corporate Defendants

This week the Supreme Court ruled that companies can be hailed into court in states where the companies have registered to do business. The ruling is significant because it will give plaintiffs a wide choice of venues for filing suits against corporate defendants. Since the 19th century, nearly every state has adopted laws that require out-of-state companies seeking to do business within the state to register and appoint an agent for service of process. Thus, companies routinely register in many states.
The case before the Supreme Court involved a suit by a former employee that had worked for Norfolk Southern Railway Co. in Ohio and Virginia. The employee filed suit in Pennsylvania for exposure to carcinogens in Ohio and Virginia. While Norfolk was incorporated and headquartered in Virginia, it was registered to do business in Pennsylvania and maintained extensive operations there. The Court ruled that since Norfolk had registered to do business under Pennsylvania’s law requiring foreign corporations to submit to personal jurisdiction in the state, it would not violate Due Process for Pennsylvania’s courts to assert jurisdiction over Norfolk.
When filing lawsuits, parties will often look for jurisdictions that they believe are favorable to their side of the dispute, a concept known as forum shopping. For example, a plaintiff may seek out a jurisdiction that is known for awarding large damages or where state law provides exceptional remedies. A defendant may seek to transfer a suit to a conservative jurisdiction, or more often, contractually pick a jurisdiction for many kinds of disputes. The Court’s ruling effectively gives plaintiffs more places to shop for a favorable forum.