Any contract you’ve signed with a company (including the “Terms of Service” most of us don’t read before clicking the box next to “I agree that I have read and agree to the terms”) has included a clause about where you and that company can resolve legal disputes. In some cases, it’s in a certain state, or even a specific county, but increasingly courts have been forcing their customers, vendors, and employees into arbitration.
Arbitration was originally designed as a way for companies to settle legal disputes with other companies outside of court so they wouldn’t flood the court system. But several years ago companies started including arbitration clauses in their contracts with individuals, often without those individuals realizing they were signing away their rights to a fair trial.
As the issue of companies getting out of control when it comes to their arbitration clauses has become more widespread, judges and legislators have started taking measures to curb companies’ use of arbitration agreements with individuals – especially when it comes to their customers and employees.
So far, Pennsylvania is the only state to pass a law requiring all corporations doing business in the state to consent to being sued in Pennsylvania court by anyone, for conduct the corporation engaged in anywhere.
This means Robert Mallory, who developed cancer after two decades as a freight car mechanic for Norfolk Southern Railway in Virginia and Ohio, was able to sue Norfolk Southern Railway in Pennsylvania court. Mallory was allegedly exposed to toxic chemicals on a regular basis as part of his job, which he alleges caused his cancer. Although he did not work in Pennsylvania, he was able to sue Norfolk Southern Railway in Pennsylvania court because the company does business in Pennsylvania.
The railway company tried to force the dispute into arbitration, and the question of whether the Pennsylvania law could be applied to a case involving a plaintiff outside of Pennsylvania worked its way up the court system until it made it all the way to the U.S. Supreme Court, which upheld the Pennsylvania state law.
The Supreme Court was split 5 to 4 in this ruling, with the majority rejecting the company’s argument that it was entitled to a more favorable ruling. The four dissenting judges wrote that a state law should not be able to override other state laws.
The Supreme Court established the precedent long ago that a corporation can be sued in the state where their headquarters are located, or in the state relating to the company’s business within that state. So far, Pennsylvania is the only state to have a law that allows plaintiffs from outside the state to sue a corporation in Pennsylvania court, even when the corporation is not based in Pennsylvania.
This most recent Supreme Court ruling sets a new precedent for where corporations can be held accountable for their actions (or lack thereof). This opens the way for other states to pass (and uphold) similar laws, but whether they will do so remains to be seen.
At Lubin Austermuehle, we’re all business when it comes to offering the highest level of quality service to businesses engaged in complex disputes, whether it’s shareholder oppression, breach of contract, defamation and far more. We’re also class action attorneys who have earned a reputation for victories, including what Crain’s Chicago Business called “the largest class action settlement in Illinois.” From Naperville to the North Side, we are here for you. Call and take advantage of our FREE consultation where we can discuss your specific needs and wishes and our ability to meet them. Contact us here or call us at 630-333-0333.