Norfolk Southern loses bid to protect itself from state-court action; Supreme Court justice alludes to recent derailment

A Norfolk Southern employee sued in Pennsylvania but claims
exposure in two other states. (Photo by Nate Smallwood, WSJ)

In a loss for Norfolk Southern Corp., the Supreme Court ruled "that states can require companies to submit to their courts' jurisdiction as a condition of doing business within their borders," reports Jess Bravin of The Washington Post. "Norfolk Southern had sought to limit its state-court liability in states where it does relatively little business. . . . At issue was a Pennsylvania law requiring that companies operating within the state consent to lawsuits filed in Pennsylvania courts—even if the allegations involve conduct that took place elsewhere. Norfolk Southern argued that imposing such liability on the railroad. . . violated the Constitution's due-process clause."

Justice Neil Gorsuch wrote for the majority, "Its cargo? Hazardous chemicals." That suggested "that under the railroad's argument, the Constitution could, in theory, shield the company from some state-court lawsuits while leaving its employees exposed to liability," the Journal reports. "Norfolk Southern's safety practices came under new scrutiny after the February derailment in East Palestine, Ohio, released more than 1 million gallons of hazardous chemicals into the environment. The company is facing multiple lawsuits from the incident."

The case at issue was "a workplace lawsuit filed by a retired railway employee from Virginia, Robert Mallory. . . who alleged he developed colon cancer from workplace exposure to carcinogens. . . while working in Ohio and Virginia but filed suit in Pennsylvania state court in 2017," Bravin reports. "The Mallory case was of interest to businesses nationwide for its potential to limit a practice called forum-shopping, in which litigants try to steer cases into courts they hope will be more sympathetic to their claim. . . . Pennsylvania law authorizes lawsuits against any company registered to do business within the state."

Norfolk Southern "argued it was unconstitutional to give Pennsylvania state courts blanket jurisdiction over any potential claim against the company," Bravin reports. "Not so, Gorsuch wrote. . . . The court had resolved the matter in a 1917 case when it upheld a lawsuit that an Arizona mining company filed in Missouri against its Pennsylvania-based insurance company for fire damage to a smelter near Cripple Creek, Colo. . . . States began adopting such laws, in response to the explosive growth of corporations in the 19th century. States required consent to liability 'in exchange for the rights to exploit the local market and to receive the full range of benefits enjoyed by in-state corporations.'. . . Norfolk Southern, Gorsuch said, had complied with the Pennsylvania requirement for decades."