Personal Jurisdiction Can Be a Complex Concept

/in /by

By: Jarrad Wright

Deceptively simple, personal jurisdiction is one of the first concepts lawyers are taught in law school. At its most basic level, courts cannot hear civil cases against individuals or companies unless they have a connection to the state. It would be unfair for someone to be sued in a foreign state court if they have never visited the state or have any nexus to the state.

However, what seems simple in concept becomes difficult in practice, especially in an interconnected world-wide economy in which parties routinely communicate through the internet. As such, the courts are constantly re-evaluating the complex rules of personal jurisdiction, and over the decades various legal doctrines have developed over how much of a connection to a state one must have in order to be sued in that state.

The U.S. Supreme Court’s seminal decision in International Shoe v. Washington, 326 U.S. 310 (1945) set forth the minimum contacts test for personal jurisdiction in which courts examine the extent and nature of a litigant’s contacts with a foreign jurisdiction. Now the Court is considering to what extent and under what circumstances companies can be deemed to have consented to the jurisdiction of states in which they do business.

On November 8, 2022, the United States Supreme Court heard oral argument in Mallory v. Norfolk Southern Railway Co., Case No. 21-1168. In that case, a Virginia resident sued his Virginia based employer in Pennsylvania for violations of the Federal Employers’ Liability Act for occupational exposure to carcinogens. The plaintiff argued that Pennsylvania’s registration statute for foreign businesses provides that companies that register to do business in Pennsylvania also consent to personal jurisdiction for cases in Pennsylvania. This consent-by-registration scheme has been rejected by some states but not all states, and the issue was actively litigated in Pennsylvania. In December 2021, the Pennsylvania Supreme Court struck down the statute after finding that the statute violated the 14th Amendment’s Due Process Clause by coercing consent to jurisdiction, among other reasons.

Before the Supreme Court, attorneys for the Virginia employee argued that there was a long constitutional history of consent-by-registration in the United States and argued that such consent-by-registration statutes were not superseded by International Shoe but could co-exist with the minimum contacts doctrine. Norfolk Southern’s lawyers argued that the Pennsylvania law did not amount to voluntary consent as the company was forced to register to continue doing business in Pennsylvania. The Solicitor General’s Office supported Norfolk Southern’s concerns.

While it is always difficult and dangerous to read too much into the justices’ questions, particularly in non-political legal issues such as this, the questions raised by the justices indicate that members of the Court may be splitting but not along the usual ideological lines. Chief Justice Roberts’ and Justice Kagan’s questions pushed back upon the premise that International Shoe and such consent statutes could legally co-exist. In addition, Justice Alito and Justice Kavanaugh seemed concerned about the practical effects on businesses if states implement such statutes. On the other side, Justice Jackson Brown’s, Justice Sotomayor’s, and Justice Gorsuch’s questions indicated that they were more comfortable with the concept of such statutes. The case will be decided in 2023.

These types of civil business cases do not receive the publicity of many cases that make the news, but issues such as when and where a company can be sued have a tremendous impact. Venue shopping for favorable judges and jurisdictions has long existed and has impacted many types of legal cases over the years. The Court’s decision could keep the status quo or open the floodgates for more forum shopping. Either way, jurisdictional issues will continue to arise and be litigated because of the overlay of the modern interconnected world onto our historical system of federal courts and sovereign states.

DiMuroGinsberg, P.C. has decades of experience in handling civil disputes, including jurisdictional disputes. If you would like more information on this subject, contact Jarrad Wright at jwright@dimuro.com.

DGRead 22.12.15

/in /by

ADA Accommodations for At-Risk Employees; Personal Jurisdiction Can Be a Complex Concept; Practical Guidance Podcast with Kevin Hylton of LexisNexis Starring Jonathan Mook

DGRead 22.12.01

/in /by

Employment Law Challenges in the New Normal; The Pitfalls of Lawyer Ads; Alcoholism at Work—A Legal Minefield

The Pitfalls of Lawyer Advertising

/in /by

By: Jarrad Wright

When the U.S. Supreme Court decided the seminal case of Bates v. State Bar of Arizona, 430 U.S. 350 (1977), that held that lawyer advertisements were protected by the First Amendment, it would have been hard to imagine our modern world where television, print and online advertisements from lawyers inundate audiences. Today, audiences routinely are exposed to lawyer advertisements in topics that range from taxes to personal injury to mass tort litigation, and everything else in between. The exponential growth of lawyer advertisements have also caused an equally expanding and changing array of restrictions on those advertisements from state legislatures, bar associations, and courts. This field is every changing and lawyers must tread carefully to ensure that they do not overstep their bounds.

Recently, in Recht v. Morrissey, 32 F.4th 398 (4th Cir. 2022), the Fourth Circuit Court of Appeals reversed the district court and upheld West Virginia’s new law restricting what can be said in lawyer advertisements involving pharmaceutical products. West Virginia and other states, including Texas and Tennessee have enacted various limitations on what can be and cannot be included when a lawyer advertises in cases involving prescription drugs. In the case of the West Virginia statute, advertisements were restricted from using the phrases “consumer alert” or “health alert”. In addition, the state statute limited the use of the word “recall”. Specifically, the statute only permits the use of the word “recall” in the pharmaceutical context when a product had actually been ordered recalled by a government agency or was being recalled by agreement between a manufacturer and a government agency. As such, the term cannot be used when addressing voluntary recalls. The purpose of the statute is to prevent consumer confusion as the average consumer may not be aware of such distinctions. Similarly, the statute prohibits lawyer advertisements to include the logo of a government agency to prevent consumers from believing that the law firm is endorsed by such an agency. Finally, the statute requires advertisements to contain a warning that people should not discontinue using prescribed medications without first consulting with a doctor.

While the district court granted summary judgment on the grounds that such consumer protections violate an attorney’s free speech rights under the First Amendment, the unanimous Fourth Circuit disagreed. The Fourth Circuit explained that the Supreme Court’s strict scrutiny standard is “improper when reviewing laws that regulate commercial speech” and that instead intermediate scrutiny applies to such commercial speech.  Intermediate scrutiny requires a determination that the expression is generally protected by the First Amendment, but “for commercial speech to come within that provision, it at least must concern lawful activity and not be misleading.”  Recht, 32 F.4th at 408 (quoting Central Hudson Gas & Elec. Corp. v. Public Ser. Comm’n of N.Y., 447 U.S. 557, 566 (1980)). Next, the court will look to whether a governmental interest is substantial.  If so, the question becomes “whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.” Id. Importantly, the government is not required to use the least restrictive means possible, but a court will consider their reasonableness. In Recht, the Fourth Circuit found that the restrictions were not unreasonable and that they advanced a significant government interest. As such, the restrictions on commercial speech where allowed.

Similar regulations in other jurisdictions are likely to spread in the pharmaceutical context and perhaps to other issues of public interest in which lawyers advertise. The historical trust the public has had in lawyers means that bar associations and legislatures will for the foreseeable future impose regulations and rules on lawyer’s commercial speech whenever there is a perception that the public’s trust could be compromised. Accordingly, it is important for firms to regularly check the current status of such regulations, statutes, and ethics opinions concerning each industry and in each jurisdiction that they operate. The rules concerning lawyer advertising have continued to evolve with communications.

The professionals at DiMuroGinsberg, P.C. have decades of experience advising clients about the changing legal ethics environment, including advertising issues. If you’d like to know more about this subject, contact Jarrad Wright at jwright@dimuro.com.