Amicus Curiae Brief — Robert Mallory, Petitioner v. Norfolk Southern Railway Co.

No. 21-1168

IN THE

Supreme Court of the United States

–––– ♦ ––––

ROBERT MALLORY

Petitioner,

v.

NORFOLK SOUTHERN RAILWAY COMPANY

Respondent.

–––– ♦ ––––

On Writ of Certiorari

to the Pennsylvania Supreme Court

–––– ♦ ––––

BRIEF OF UNITED POLICYHOLDERS

AS AMICUS CURIAE

SUPPORTING NEITHER PARTY

–––– ♦ ––––

Amy R. Bach

Richard B. Oatis

UNITED POLICYHOLDERS

917 Irving Street, Ste. 4

San Francisco, CA 94122

George M. Plews

Peter M. Racher

Kevin M. Toner

Christopher E. Kozak*

*Counsel of Record

PLEWS SHADLEY RACHER

& BRAUN LLP

1346 N. Delaware Street

Indianapolis, IN 46202

(317) 637-0700

ckozak@psrb.com

Counsel for Amicus Curiae

July 12, 2022

ii

TABLE OF CONTENTS

TABLE OF CONTENTS .............................................. ii

TABLE OF AUTHORITIES ........................................ iii

INTEREST OF AMICUS CURIAE .............................. 1

SUMMARY OF THE ARGUMENT .............................. 2

ARGUMENT .................................................................. 4

I. The unique status of insurers in our economy

and federal system ............................................ 4

II. This Court has almost always upheld States’

use of consent-by-registration laws to

supervise insurers ............................................. 9

III.Even if it affirms, the Court should retain

Pennsylvania Fire for insurance cases ........... 14

A. The interests animating this Court’s

general-jurisdiction cases do not apply to

insurers ....................................................... 15

B. Overruling Pennsylvania Fire would expose

States to destructive litigation over their

insurance-regulatory systems ................... 24

CONCLUSION ............................................................. 28

iii

TABLE OF AUTHORITIES

Cases

Ala. Plating Co. v. U.S. Fid. & Guar. Co.,

690 So. 2d 331 (Ala. 1996) ..........................................9

Am. States Ins. Co. v. Kiger,

662 N.E.2d 945 (Ind. 1996) ........................................5

Barnett Bank of Marion Cnty., N.A. v. Nelson,

517 U.S. 25 (1996) ......................................................7

Bristol-Myers Squibb Co. v. Superior Ct. of Cal.,

137 S. Ct. 1773 (2017) ....................................... 15, 17

BSNF Ry. Co. v. Tyrrell,

137 S. Ct. 1549 (2017) ....................................... 23, 24

Burnham v. Superior Ct. of Cal.,

495 U.S. 604 (1990) ..................................................11

Conn. Mut. Life Ins. Co. v. Spratley,

172 U.S. 602 (1899) ........................................... 11, 12

Daimler AG v. Bauman,

571 U.S. 117 (2014) ........................................... 13, 19

Eli Lilly & Co. v. Home Ins. Co.,

794 F.2d 710 (C.A.D.C. 1986) ..................................20

Ex parte Schollenberger,

96 U.S. 369 (1877) ............................................ passim

Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct.,

141 S. Ct. 1017 (2021) ............................... 1, 3, 17, 20

German All. Ins. Co. v. Lewis,

233 U.S. 389 (1914) ................................. 6, 14, 17, 18

Grp. Life & Health Ins. Co. v. Royal Drug Co.,

440 U.S. 205 (1979) ....................................................4

iv

Humana Inc. v. Forsyth,

525 U.S. 299 (1999) ....................................................1

J. McIntyre Mach., Ltd. v. Nicastro,

564 U.S. 873 (2011) ..................................... 16, 21, 23

Lafayette Mut. Ins. Co. v. French,

59 U.S. 404 (1855) ....................................................10

McGee v. Int’l Life Ins. Co.,

355 U.S. 220 (1958) .................................................13

Morton Int’l v. Gen. Acc. Ins. Co.,

629 A.2d 831 (N.J. 1993) ........................................8, 9

Mullane v. Cent. Hanover Bank & Tr. Co.,

339 U.S. 306 (1950) ..................................................19

Old Wayne Mut. Life Ass’n v. McDonough,

204 U.S. 8 (1907).......................................................25

Osborn v. Ozlin,

310 U.S. 63 (1940) ......................................... 6, 22, 23

Pa. Fire Ins. Co. v. Gold Issue Mining & Milling Co.,

243 U.S. 93 (1917) ............................................ passim

Pa. Lumberman’s Mut. Fire Ins. Co. v. Meyer,

197 U.S. 407 (1905) ..................................................12

Paul v. Virginia,

75 U.S. 168 (1868) ......................................................7

Prudential Ins. Co. v. Benjamin,

328 U.S. 408 (1946) ..................................................27

Puerto Rico v. SS Zoe Colocotroni,

628 F.2d 652 (C.A.1 1980) ........................................20

Travelers Health Ass’n v. Virginia,

339 U.S. 643 (1950) ........................................... 13, 26

U.S. Dep’t of Treasury v. Fabe,

508 U.S. 491 (1993) ................................. 7, 17, 18, 19

v

United States v. Se. Underwriters Ass’n,

322 U.S. 533 (1944) ....................................................7

Vallely v. N. Fire & Marine Ins. Co.,

254 U.S. 348 (1920) ....................................................7

Watson v. Empl’rs Liab. Assur. Corp.,

348 U.S. 66 (1954) ....................................... 13, 15, 19

Statutes

11 U.S.C. § 109(b)(2) ......................................................6

31 U.S.C. § 3713 ...........................................................16

Other Authorities

State Insurance Regulation: History, Purpose &

Structure, NAT’L ASS’N OF INS. COMM’RS (last visited

June 29, 2022) ................................................ 3, 5, 6, 7

Susan Randall, Insurance Regulation in the United

States: Regulatory Federalism and the National

Association of Insurance Commissioners, 26 FLA. ST.

U. L. REV. 625 (1999) ........................................ passim

THE FEDERALIST ...........................................................15

William C. Hoffman, Personal Jurisdiction over Alien

Insurance Companies: The Territory-of-Coverage

Rule, 26 TORT & INS. L.J. 703 (1991) .......................19

Rules

S. Ct. Rule 37................................................................. ii

Treatises

COUCH ON INSURANCE 3D ..................................... passim

STEMPEL ON INSURANCE CONTRACTS (3d ed. 2007).......5

WRIGHT & MILLER, FED. PRAC. & PROC., CIVIL ...........24

1

INTEREST OF AMICUS CURIAE

United Policyholders (“UP”)1 is a nonprofit that advocates for the interests of insurance policyholders.

Public officials, insurance regulators, academics,

and journalists routinely seek UP’s input on insurance

and related legal matters. UP’s executive director, Amy

Bach, has been appointed to twelve consecutive terms

to officially represent consumers at the National Association of Insurance Commissioners (“NAIC”). UP is

also a member of the Federal Advisory Committee on

Insurance to the U.S. Treasury and a regular participant before the National Association of Insurance Legislators. UP routinely files amicus briefs on issues affecting its membership. See, e.g., Humana Inc. v. Forsyth, 525 U.S. 299, 314 (1999).

UP’s interest “isn’t with settling on the right outcome in th[is] case[].” Ford Motor Co. v. Mont. Eighth

Jud. Dist. Ct., 141 S. Ct. 1017, 1039 (2021) (GORSUCH,

J., concurring in the judgment). Rather, it lies in helping the Court “mak[e] sense of [its] personal jurisdiction jurisprudence” and to help “sort out a responsible

way to address [current] challenges . . . in light of the

Constitution’s text and the lessons of history.” Id. The

history of the question presented is, in large part, a history of insurance disputes. Those decisions may not dictate who wins this case, but they should inform the reasons the Court gives for its judgment.

1 The parties have filed blanket consents to amicus briefs in this

case. Rule 37.3(a). No party or their counsel authored this brief,

in whole or in part. Nor has any person besides amicus, its members, or its counsel made any monetary contribution intended to

fund its preparation or submission. Rule 37.6.

2

SUMMARY OF THE ARGUMENT

Consent-by-registration laws prevent disputes in

cases where the minimum-contacts test might ultimately be satisfied. Their validity beyond that context

is the question before the Court.

The Court last addressed those issues over a century ago. Pa. Fire Ins. Co. v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917); Ex parte Schollenberger, 96

U.S. 369 (1877). The decision below read these cases as

conflicting with the Court’s modern general-jurisdiction decisions, and so it held the older ones must be obsolete.

That rationale is erroneous, even if the result was

not. The Pennsylvania Fire rule emerged from a unique

context, and it is viable and valuable in that context. It

involves the States’ interest in supervising insurance

companies. The Court has long recognized insurance

law as the exception to conventional rules of federalism. As a result, it should be neither surprising nor suspicious that insurance disputes yield unique personaljurisdiction rules.

Thus, the Court need not overrule or limit any of its

cases to decide this one. Instead, as it has done many

times before, the Court should simply acknowledge and

affirm the distinct insurance-law interests animating

Pennsylvania Fire. Petitioner does not cover that aspect of the issue. We submit this brief to fill the gap.

The premise of insurance is simple. The policyholder pays a sum certain (the premium) in exchange

for the insurer’s promise to indemnify its customer

against a larger, uncertain loss. By collecting premiums from a large pool of subscribers—not all of whom

3

will suffer loss—the company ensures it will be able to

indemnify those that do.

This service is crucial to modern society, but it carries its own enormous risk. Insurers who collect too little in premiums risk insolvency. They standardize

their forms so that they are identical across the country. This makes risk predictions more accurate—but as

a result, those terms are largely nonnegotiable by customers. That creates an incentive to draft lopsided or

confusing policies so that the insurer can collect substantial premium but avoid the risk.

One key answer to these risks has always been government supervision. Since the Founding, Congress

and this Court have assumed or insisted that the

States perform that task. As a result, State governments and State courts are almost entirely responsible

for licensing and supervising insurers.

Consent-by-registration laws are a critical part of

that framework: they allow policyholders to sue the insurer anywhere it does business, without regard for

suit-based contacts. That, in turn, discourages insurers

from waging procedural wars of attrition against those

who can least afford it. And it keeps insurers from “escap[ing] out the back [door]” when a State court has an

interest in construing the language of a policy, even if

the claim itself arises out of the State. Ford, 141 S. Ct.

at 1039 (GORSUCH, J., concurring in the judgment).

In short, if the statute here is unconstitutional,

then it is because Norfolk Southern is not an insurer—

rather than because Pennsylvania Fire is wrong. That

case does no mischief in the insurance context. If the

Court affirms, it ought to simply distinguish that case.

Otherwise, it risks upsetting centuries-old reliance interests undergirding state insurance law.

4

ARGUMENT

I.

The unique status of insurers in our economy

and federal system.

A. Benjamin Franklin had his hands in everything,

including the founding of our insurance system. State

Insurance Regulation: History, Purpose & Structure at

1, NAT’L ASS’N OF INS. COMM’RS (last visited June 29,

2022) [State Insurance Regulation]. 2 In 1752, he helped

organize the Pennsylvania Contributionship for the Insurance of Houses from Loss by Fire—a company still

in existence today. Id.

Insurance is a transaction by which one party pays

a sum certain (the premium) in exchange for the insurer’s promise to compensate (or indemnify) it for a

loss that may not occur. 1 COUCH ON INSURANCE 3D

§ 1:6. To meet these obligations, the insurer must collect premiums from a wide pool of policyholders, not all

of whom will suffer loss, so that it can “accept each risk

at a slight fraction of the possible liability upon it.” Grp.

Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205,

211 (1979) (quotations omitted).

The dryness of these statements should not mask

their importance. Disasters are a fact of life. The value

of insurance, simply stated, is to prevent those disasters from driving its victims into poverty. See Susan

Randall, Insurance Regulation in the United States:

Regulatory Federalism and the National Association of

Insurance Commissioners, 26 FLA. ST. U. L. REV. 625,

627 (1999). Franklin’s Contributionship illustrates the

enormous benefits of a well-run insurance industry: by

2 https://www.naic.org/documents/consumer_state_reg_brief.pdf

5

promoting aggressive fire-safety standards—and refusing to insure buildings that would not comply—the

company helped Philadelphia avoid the massive fires

that plagued other large cities at the time.

B. The genius of the insurance product comes with

serious public risks. By its nature, “an insurance company’s real costs are not known until an insurance policy matures and all claims are paid.” Randall, 26 FLA.

ST. U.L. REV. at 627. As a result, “the insurance business tends toward extreme competition in pricing,” and

it is almost impossible for ordinary consumers to evaluate an insurer’s solvency. Id. If the insurer fails to collect enough premiums to pay claims when due, the

harm to policyholders—who count on insurers to protect them—is usually “devastating.” Id.

Because so many insurers are massive, highly capitalized creatures, they also enjoy enormous leverage

over counterparties. In the words of one State’s high

court: “[T]he insurer drafts the policy and foists its

terms upon the customer. The insurance companies

write the policies; we buy their forms or we do not buy

insurance.” Am. States Ins. Co. v. Kiger, 662 N.E.2d

945, 947 (Ind. 1996) (quotations omitted). That leverage creates a danger that insurers will draft the policy

in confusing ways, to maximize the cases where the insurer collects the premium but escapes the risk.

Insurers also enjoy great leverage when called upon

to perform their end of the deal. The policyholder performs (i.e., pays the premium) before it receives anything of real value. The insurer, in contrast, receives

the entire value of the contract before it must do anything. Indeed, the very nature of insurance assumes

that, in most cases, the insurer will never do anything

besides deposit a check. Thus, for an insurer, taking a

6

hard line on claims has little downside. It can take advantage of the time value of money and try to settle the

claim at a discount: in general, the most it will ever

have to do is pay the claim.

Because of these hazards, “[g]overnment has always had a special relation to insurance.” Osborn v.

Ozlin, 310 U.S. 53, 65 (1940). Contracts of insurance

“have greater public consequence than contracts . . .

whose effect stops with the individuals.” German All.

Ins. Co. v. Lewis, 233 U.S. 389, 413 (1914). In the

Court’s words, insurance “has come to be considered a

matter of public concern” and must “be controlled by

the public for the public good.” Id. at 413-15 (quotations

omitted). Those are striking propositions for a Lochnerera decision. But they underscore the “definite and old”

tradition of State insurance supervision. Id. at 415.

For the first part of our history, States regulated insurers through a patchwork of corporate and statutory

law through their authority over corporate charters.

1 STEMPEL ON INSURANCE CONTRACTS § 2.07 (3d ed.

2007). After the devastating New York Fire of 1835,

States enacted laws setting mandatory insurance reserves. Lewis, 233 U.S. at 412. In 1851, New Hampshire enacted the first comprehensive insurance-regulatory law and appointed the first State insurance commissioner. State Insurance Regulation, at 1; Randall,

26 FLA. ST. U. L. REV. at 629-30.

The insurance industry challenged these laws as

unconstitutional soon after the Fourteenth Amendment was ratified. Id. at 630-31; 1 COUCH ON INS. 3D

§ 2:4. Fearing the total deregulation of the insurance

market, this Court held that “[i]ssuing a policy of insurance is not a transaction of commerce,” effectively

leaving all insurance regulation where it was before:

7

with the States. Paul v. Virginia, 75 U.S. 168, 183

(1868); 1 COUCH ON INS. 3D § 2:4 & n.2. “For three-quarters of a century” after Paul, “state authority over insurance regulation was unquestioned” and by the

1940s, “was fairly comprehensive.” Randall, 26 FLA. ST.

U. L. REV. at 632.

Since 1910, insurers have also been excluded from

federal bankruptcy. Vallely v. N. Fire & Marine Ins.

Co., 254 U.S. 348, 352 (1920); 11 U.S.C. § 109(b)(2). Instead, State receivership laws govern insurer insolvency. 1 COUCH ON INS. 3D § 5:18. Those laws generally

preempt federal law because they are enacted “for the

purpose of regulating the business of insurance.” U.S.

Dep’t of Treasury v. Fabe, 508 U.S. 491, 499-506 (1993)

(quoting 15 U.S.C. § 1202(b)).

The Court overruled Paul in 1944. United States v.

Se. Underwriters Ass’n, 322 U.S. 533, 539-53 (1944).

Congress, however, preferred things the way they

were. “In reaction to South-Eastern Underwriters, Congress moved quickly, enacting the McCarran–Ferguson Act to restore the supremacy of the States in the

realm of insurance regulation.” Barnett Bank of Marion Cnty., N.A. v. Nelson, 517 U.S. 25, 40 (1996) (quotations omitted). Little has changed since then.

C. In sum, since 1789, insurance has been regulated

almost exclusively by the States. State Insurance Regulation, at 1-2. The NAIC has identified many benefits

of state-centric regulation. Id. “State systems are accessible and accountable to the public and sensitive to

local social and economic conditions.” Id. at 2. “State

regulation has proven that it effectively protects consumers and ensures that promises made by insurers

are kept.” Id. And although insurers originally opposed

8

state regulation, the industry’s “strong and long-standing” preference is now to maintain it. Randall, 26 FLA.

ST. U. L. REV. at 672.

The current structure also provides enormous financial benefits to States. In 2000, States collected

more than $10.4 billion in revenue from insurance

sources. State Insurance Regulation, at 2. Roughly

8.4% of that money went to actual insurance regulation; the other 91.6% (or more than $9.6 billion) was

deposited in State general funds. Id.

Except as specifically preempted by federal laws

such as ERISA, State insurance regulation is comprehensive. Generally, an insurer may only sell insurance

within a State if it secures a license to do so. 1 COUCH

ON INS. 3D §§ 2:22, 3:21. To secure that license, the insurer must consent to the State’s regulation of everything from the insurer’s name and capitalization to its

handling of realized profits. Id. §§ 2:20-37. States set

insurance rates, enforce solvency and reserve requirements, impose licenses, supervise commissions paid to

brokers, and monitor claims handling. Randall, 26 FLA.

ST. U. L. REV. at 629.

States also have the general power to “approve or

disapprove” policy forms, insist on the inclusion (or exclusion) of terms, and require a certain level of readability. 1 COUCH ON INS. 3D § 2:26. Regulators will often

inquire about why insurers are changing their forms

and decline to approve them unless the insurer provides a satisfactory explanation. These inquiries are often directed to rating issues—if the insurer is providing less coverage, then it must accept less in premium.

E.g., Morton Int’l v. Gen. Acc. Ins. Co., 629 A.2d 831,

875-76 (N.J. 1993).

9

An insurer’s failure to provide “full disclosure” to

State regulators—even another State’s regulators—

can lead State courts to disregard those provisions in

litigation brought by policyholders. Id. In this process,

too, the States rely on each other. Id. at 853 (surveying

statements to regulators in Georgia, Kansas, Virginia,

and Puerto Rico and considering amicus briefs from

Delaware, Pennsylvania, West Virginia, and Indiana

on the same issues). The determination of those issues

in one State has powerful ramifications in other States.

Ala. Plating Co. v. U.S. Fid. & Guar. Co., 690 So. 2d

331, 334 & n.2 (Ala. 1996) (overruling a prior case enforcing an exclusion, in part, because of Morton).

II. This Court has almost always upheld States’

use of consent-by-registration laws to supervise insurers.

Petitioner’s statutory appendix is rife with insurance-specific laws for a good reason. 3 Consent-by-registration laws are some of the oldest methods of American insurance regulation. In many cases, States imposed these rules on insurers before they did so for

other corporations. See Pet’r Br. 14, 16-18, 38-39. The

insurance-law aspects of those cases explain how the

Pennsylvania Fire rule came to be.

Searching Petitioner’s 274-page statutory appendix for the

word “insurer” or its derivatives yields about three hundred results. The Court should look closely at the differences—in timing,

wording, and detail—between the insurance statutes and the

regular ones.

3

10

A. Nearly 200 years ago, an Indiana insurer refused to pay a judgment rendered against it in Ohio, on

a policy insuring property in Cincinnati. Lafayette Mut.

Ins. Co. v. French, 59 U.S. 404, 405-06 (1855). In response, the policyholder pointed to an Ohio law requiring all foreign insurers to agree that “service of process

on [a] resident agent . . . shall be ‘as effectual as though

the same were served on the principal.’” Id. at 406. The

insurer argued that “it could have no existence out of

[Indiana], and, consequently, could not be sued in

Ohio.” Id. at 405. As a “person[] not amenable to the

jurisdiction rendering the judgment[],” the insurer

claimed that the Ohio judgment was not subject to full

faith and credit. Id. at 406.

The Court disagreed. Although the insurer could

not “pass personally beyond the limits of [Indiana],” it

also could not do business in Ohio without “the consent,

express or implied, of the latter State.” Id. at 407. “This

consent may be accompanied by such conditions as

Ohio may think fit to impose” subject to any restrictions imposed by federal law. Id. The Court found

nothing “unreasonable in itself” about forcing an insurer “transacting this business of insurance within

the State, for their benefit and profit, to answer there

for the breach of their contracts of insurance there

made and to be performed.” Id. at 407.

Schollenberger is similar. 96 U.S. at 370, 376-77.

Confronting an insurance-specific Pennsylvania law,

the Court issued a writ of mandamus ordering the trial

court to exercise jurisdiction over such insurers. Id.

The Court explained the law in terms of a bargain: The

insurers had, “in express terms, in consideration of a

grant to the privilege of doing business within the

State, agreed that they may be sued there.” Id. at 376.

11

The Court reached these issues under the Fourteenth Amendment over a century ago. Conn. Mut. Life

Ins. Co. v. Spratley, 172 U.S. 602, 604-05 (1899). Like

the State laws in French and Schollenberger, Tennessee required insurers, specifically, to appoint an agent

for the purpose of accepting service of process—and by

extension, to agree to be sued there. Id. at 605. The insurer in Spratley had ceased writing new life-insurance

policies in Tennessee but had continued collecting premiums on old ones. Id. at 607. It received a claim under

once such policy and sent its adjustor from Connecticut

to investigate. Id. at 608.

The adjustor apparently tried to strong-arm Mrs.

Spratley into accepting a discount, because she sued

almost immediately. Id. Her process server tagged the

adjuster with the summons before he got on a train

back to Connecticut. Id. The insurer ignored the suit,

took a default judgment, and resisted collection. Id.

The Court found that enforcing the judgment

“would not be taking the property of the company without due process of law.” Id. at 609. Without deciding

whether the law would be enforceable where service

was made on “any agent . . . no matter what character

of agent the person might be,” the Court pointed out

that this case involved an insurance adjustor authorized to investigate and settle a claim. Id. at 610. “Entering the State with this authority, and acting in this

capacity . . . we think it a proper case in which the law

would imply . . . the power to receive service of process

in the case which he was attending to.” Id. at 612. That,

itself, constituted due process of law. Id. at 610. Cf.

Burnham v. Superior Ct. of Cal., 495 U.S. 604, 622-23

(1990) (plurality opinion of Scalia, J.) (recognizing this

as one of the “enduring traditional notions of fair play

and substantial justice”) (quotations omitted).

12

The Court reached a similar conclusion a few years

later. Pa. Lumberman’s Mut. Fire Ins. Co. v. Meyer, 197

U.S. 407, 414-16 (1905). The insurer had sold a fire policy on the subject building in New York, but it insisted

that it could only be sued in Pennsylvania, where it was

incorporated. Id. The policyholder countered that the

insurer had a director residing in New York and that

personal service on him was sufficient. Id. at 417-18.

The Court agreed with the policyholder, pointing out

that the director’s residence would “add to the confidence of possible insure[d]s with the company in that

state, and in that way to secure more business therein

than would otherwise be the case.” Id. at 418. The

Court also assumed that service on the director “would

certainly result in notice to the company itself.” Id.

The upshot of Spratley and Meyer is that the Fourteenth Amendment did not alter the States’ preexisting

rights “to impose such terms as [they] may see fit upon

a corporation of this kind, [i.e., an insurer],” as part of

the bargain by which the State “will permit the [insurer] to do business within its borders.” Spratley, 172

U.S. at 621; Schollenberger, 96 U.S. at 376. A State has

a significant interest in “secur[ing] to its citizens a remedy in the domestic forum upon this very important

class of contracts.” Meyer, 197 U.S. at 418.

B. The Court decided Pennsylvania Fire against

this backdrop. There, a policyholder sued an Arizona

insurer in Missouri over a policy insuring property in

Colorado. 243 U.S. at 94-95. Missouri law required

every insurer to name the “Superintendent of the Insurance Department” as the insurer’s agent for service

of process “so long as [the insurer] should have any liabilities outstanding in the state.” Id. at 94. The insurer complained that applying the statute to a policy

13

with no connection to Missouri violated the Fourteenth

Amendment. Id.

Again, the Court disagreed. Id. at 95. Despite the

absence of suit-related contacts in Missouri, the application of the statute “did not deprive the defendant of

due process of law even if it took the defendant by surprise.” Id. The insurer had agreed, with the State, that

its policyholders could sue it there. Id. “[W]hen a power

actually is conferred by a document, the party executing it takes the risk of the interpretation that may be

put upon it by the courts.” Id. at 96.

The decision below reasoned that this logic was abrogated by International Shoe and by the Court’s recent general-jurisdiction decisions. Pet. App. 6a-11a,

48a-52a (citing, among other things, Daimler AG v.

Bauman, 571 U.S. 117 (2014)). But even after International Shoe, the Court twice upheld State laws compelling out-of-state insurers to provide similar consent.

Travelers Health Ass’n v. Virginia, 339 U.S. 643, 652

(1950); Watson v. Empl’rs Liab. Assur. Corp., 348 U.S.

66, 72-74 (1954). And it later rebuffed an insurer’s argument that it could not be sued in a State where it

had no contacts, pointing out that its predecessor-ininterest had sold the policy to a resident of the forum.

McGee v. Int’l Life Ins. Co., 355 U.S. 220, 221-22 (1958).

An intricate and highly effective system of stateby-state insurance regulation has flourished under the

law as it now stands. The system has been so fair that

the Court has not needed to hear an insurer’s challenge

to those statutes since the 1950s. But if the Court affirms without retaining the Pennsylvania Fire rule for

insurance disputes, it will call this system into ques-

14

tion, risk fracturing the States’ ability to supervise insurers, and likely impair policyholders’ ability to protect themselves.

III. Even if it affirms, the Court should retain

Pennsylvania Fire for insurance cases.

The nagging concern in general-jurisdiction cases

is over-inclusiveness. This case is an example. Mr. Mallory lives in Virginia. Pet. App. 2a. Norfolk Southern is

a Virginia corporation. Id. The injuries occurred in

Ohio and Virginia. Id. What is this case doing in Pennsylvania? And if the Court ratifies Pennsylvania Fire

here, what will come next?

Those questions are weighty. But there is at least

one easy solution here. Decades ago, at a time when the

sixty-hour workweek violated employees’ liberty to

contract, the Court still affirmed the States’ ability to

fix insurance rates. German All. Ins. Co. v. Lewis, 233

U.S. 389, 414-16 (1914). Even the Lochner-era Court

was not concerned this would “subjec[t] to regulation

every act of human endeavor and the price of every article of human use.” Id. at 415. The Court was satisfied

that it had “confine[d] [its] decision to the regulation of

the business of insurance,” referencing the “definite

and old” principles recognizing insurance as “essentially different from ordinary commercial transactions.” Id. at 414-15.

That reasoning should give the Court comfort here.

Pennsylvania Fire is an insurance case. It deals with

relationships that are “essentially different” than those

presented by this Court’s modern general-jurisdiction

cases. The Court can ratify Pennsylvania Fire for insurance companies without worrying that it will undermine due process in other contexts.

15

A. The interests animating this Court’s general-jurisdiction cases do not apply to insurers.

Important interests—including federalism, notice,

tradition, and reasonableness—may point toward a

victory for Norfolk Southern here. However, all four interests support retaining Pennsylvania Fire for insurance disputes.

1. In specific-jurisdiction cases, the Court has

described the Due Process Clause as an “instrument of

interstate federalism,” under which “the sovereignty of

each state . . . implies a limitation on the sovereignty

of all its sister States.” Bristol-Myers Squibb Co. v.

Superior Ct. of Cal., 137 S. Ct. 1773, 1780-81 (2017)

(cleaned up). In Bristol-Myers, that principle stopped

California from usurping another State’s right to hear

particular disputes. Id. In a general-jurisdiction case,

the logic goes, federalism might stop Pennsylvania

from seizing total control over a defendant who is really

Virginia’s responsibility. Pet. App. 47a-49a.

However compelling that logic might be on these

facts, it loses all force in Pennsylvania Fire’s original

context: insurance law. The federalism dynamics in

those disputes—how the States relate to each other

and how they relate to the defendant—are fundamentally different. For two reasons, they are not “a mere

intermeddling in affairs beyond [a State’s] boundaries

which are no concern of hers.” Watson, 348 U.S. at 72.

a. First, the States have long regulated insurance,

without federal oversight, through mutual respect and

cooperative federalism. This distinguishes it from most

areas of interstate relations and explains why Pennsylvania Fire came out the way it did.

16

The Founders knew from experience that the

States were inclined towards economic warfare. THE

FEDERALIST, NOS. 6-8, 11, 22 (Hamilton). The Reconstruction Congress lived through a much darker version of interstate conflict. They proposed and preserved

the national government to constrain that impulse.

Those principles drive this Court’s efforts to police “unlawful intrusion” by one State into the sovereign interests of another in ways that threaten to “upset the federal balance.” J. McIntyre Mach., Ltd. v. Nicastro, 564

U.S. 873, 884 (2011) (plurality opinion).

But insurance is the exception that proves this

rule. Since 1789, either common practice, this Court, or

Congress have insisted that States exercise plenary

control over insurance companies. 1 COUCH ON INS. 3D

§ 2:4. Thus, modern insurance law looks like something the Articles of Confederation would have imagined: individual States, in cordial consultation with one

another, setting rules for a major sector of the national

economy.

The system coheres because the States have never

treated it like a suicide pact. They work hard to promote uniformity and to minimize faction. Randall, 26

FLA. ST. U. L. REV. at 627-28. The possibility of Congressional intervention curbs the worst forms of state

self-interest. This system, a product of “the premises

and unique genius of our Constitution,” Nicastro, 564

U.S. at 884 (plurality opinion), means that the standard language of an insurance policy sold in Virginia is

materially identical to language sold by the same company in Pennsylvania.

17

Thus, in the insurance context where Pennsylvania Fire was decided, the Due Process Clause has little

role as an “instrument of interstate federalism.” Bristol-Myers, 137 S. Ct. at 1781. The States’ relationship

with each other is inherently cooperative, not competitive, and it is nearing its second century of success.

b. Second, the States care about the behavior of insurers whom they choose to license, regardless of

where the conduct occurs. To be sure, Pennsylvania

might care about the general behavior of Norfolk

Southern, but only in the limited sense that, “as many

a curbstone philosopher has observed, everything is related to everything else.” Ford, 141 S. Ct. at 1033

(ALITO, J., concurring in the judgment) (cleaned up).

But States’ interest in foreign insurers is far more concrete and intimate.

Consider the details of the Missouri statute in

Pennsylvania Fire. It required the insurer to submit to

suit in Missouri on any insurance claim “so long as it

should have any liabilities outstanding in the state.”

243 U.S. at 94 (emphasis added). The statute’s premise

goes to the heart of why we regulate insurers: they collect premiums nationwide in order to spread risk. Because losses are by their nature contingent and unknown, one State’s residents may be hit harder than

others. A “manifest” state concern is ensuring that the

company’s assets are fairly assembled, allocated, and

sufficient to pay in a disaster. German Alliance Ins. Co.

v. Lewis, 233 U.S. 389, 414 (1914).

This Court’s decision in Fabe, 508 U.S. 491, illustrates the strength of that interest. There, the Treasury asserted first priority to an insolvent insurer’s assets, invoking 31 U.S.C. § 3713. Id. at 493. Ohio, whose

law governed the insurer’s liquidation, assigned those

18

claims fifth priority, behind policyholders’ claims—

meaning that the United States was unlikely to be paid

at all. Id. The Court held that the Ohio statute controlled because it regulated the “business of insurance,” specifically because “it serves to ensure that, if

possible, policyholders ultimately will receive payment

on their claims.” Id. at 505-06.

Or consider what the Court said in Lewis. There,

Connecticut fixed the rates an insurer could charge for

its policies. 233 U.S. at 405. The insurer complained

that such an act “is a taking of private property for a

public use.” Id. The Court disagreed, reasoning that

“contracts of insurance may be said to be interdependent.” Id. at 414. “They cannot be regarded singly, or isolatedly, and the effect of their relation is to create a

fund of assurance or credit, the companies becoming

the depositories of the money of the insured.” Id. Insurers possess “great power” and thus are “charged with

great responsibility.” Id. In short, insurance policies

are different from ordinary contracts “whose effect

stops with the individuals.” Id. at 413. Their effect necessarily reaches outside the State where any particular

dispute arises. See id.

Thus, to the extent an Arizona insurer had liabilities outstanding in Missouri, that State and its courts

cared deeply about what the insurer is doing in other

States, including Colorado. Pennsylvania Fire, 243

U.S. at 94-95. The contracts are standardized; if the insurer is breaching them in Colorado, then it will probably do the same in Missouri. Losses paid in Colorado

mean less money for losses in Missouri. Insurancecompany misbehavior in one State directly and immediately affects the rights of citizens in every State

where the insurer is licensed and does business. It is a

19

risk inherent in the product they sell, and it is the very

reason the States regulate them.

That interest is more oblique in the context of defendants like Norfolk Southern. Certainly, Pennsylvania might be frustrated if tort judgments in Virginia

reduced assets available for its own tort plaintiffs. But

Norfolk Southern’s business is to run trains, not pay

tort judgments. In contrast, “the primary purpose of

the insurance company itself” is “the payment of claims

made against policies.” Fabe, 508 U.S. at 506; Watson,

348 U.S. at 72 (“[Louisiana] has a similar interest in

policies of insurance which are designed to assure ultimate payment of [tort] damages.”). That additional degree of relatedness is why the unusual facts of Pennsylvania Fire did not raise any federalism concerns in

1917. They should not create similar concerns today.

2. Setting federalism aside, the main basis for

Daimler’s general-jurisdiction rule was predictability

and clarity. 571 U.S. at 137. They give defendants the

ability “to structure their primary conduct with some

minimum assurance as to where that conduct will and

will not render them liable to suit” on any claim. Id. at

139 (cleaned up). “A corporation that operates in many

places can scarcely be deemed at home in all of them,”

and in such a universe, prediction and planning becomes difficult. Id. at 133-39 & n.20.

In other words, Daimler was concerned about notice, one “[f]undamental requirement of due process.”

Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S.

306, 314 (1950). In that sense, it finds the exercise of

jurisdiction unconstitutional precisely because of, not

in spite of, its tendency to “ca[tch] the defendant by surprise.” Pennsylvania Fire, 243 U.S. at 95.

20

Here, again, insurers are different. As Schollenberger and Pennsylvania Fire demonstrate, insurers

have long been subject to these registration statutes.

Courts have also construed them, for decades, as the

insurer’s consent to be sued by their policyholders in

that State on any insurance claim. Given that insurers

can choose exactly where they sell policies, this is neither surprising nor unfair to them. In any event, despite these registration statutes, insurers generally retain the ability to easily “lessen or avoid exposure to a

given State’s courts” on a case-by-case basis. Ford, 141

S. Ct. at 1025.

As a matter of commercial self-interest, insurers

vet their policyholders’ operations, including the locations where the risk may travel. William C. Hoffman,

Personal Jurisdiction over Alien Insurance Companies:

The Territory-of-Coverage Rule, 26 TORT & INS. L.J. 703

(1991). They can, and frequently do, limit the geographic areas where they will provide coverage for underwriting or business reasons. Id.

“In other words, an insurer is not at the mercy of

the insured owner’s unilateral choice of destination in

the same way a seller of chattels is at the mercy of the

buyer.” Puerto Rico v. SS Zoe Colocotroni, 628 F.2d

652, 670 (C.A.1 1980). “The commercial interest of the

insurer in knowing the contacts of its insured” generally means that “an insurer should foresee being sued

in a jurisdiction where its insured has substantial contacts.” Eli Lilly & Co. v. Home Ins. Co., 794 F.2d 710,

721 (C.A.D.C. 1986) (Edwards, Scalia & Wright, JJ.).

If the insurer wishes to avoid a certain State’s

courts, then it can eliminate it from the coverage territory. To the extent the insurer feels compelled to offer

coverage in a State because of customer demands or

21

other business reasons, that is not the kind of compulsion or surprise that offends due process. In short, the

unique power of insurers to unilaterally avoid any

given State diminishes any notice concerns arising

from insurance-specific consent-by-registration laws.

3. At other points, the Court has relied on the traditional effects of certain corporate acts. Nicastro, 564

U.S. at 880 (plurality opinion of Kennedy, J., joined by

THE CHIEF JUSTICE, Justice Scalia, and Justice

THOMAS). “Citizenship or domicile—or, by analogy, incorporation or principal place of business for corporations—[] indicates general submission to a state’s powers,” and thus supports general jurisdiction. Id.

This inference obtains regardless of whether a

statute spells out the consequences of the corporate act.

By virtue of longstanding “traditional practice” and

common law, the act itself makes it “proper to infer an

intention to benefit from and thus an intention to submit to the laws of the forum State.” Id. at 881. Insurance licensing supports an even stronger inference.

a. Obtaining an insurance license involves a significant concession of liberty to the State. Supra, § I.C.

The insurer must submit to controls over its reserves,

prices, profits, and solvency. Id.; 1 COUCH ON INS. 3D

§§ 2:22 & n.2, 2:24, 2:27-29. It must file its financial

statements and consent to the periodic inspection of its

books and records. Id. § 2:25. It generally must obtain

preapproval to sell each of its products in each State.

Id. § 2:26. And it can be barred from giving discounts

or rebates to its customers. Id. § 2:32. The refusal to

consent to these conditions—or the violation of them—

is almost universally recognized as a basis to deny or

revoke a license. Id. §§ 2:23, 3:23.

22

These concessions are knowing and voluntary in a

way Norfolk Southern’s was not. An insurer can be licensed in one State, all of them, or any combination it

chooses. Their business is unrestricted by geography—

unlike Norfolk Southern, who would be put through

great cost if its trains had to avoid Pennsylvania. For

an insurer, the only consequence of refusing licensure

is a smaller territory and lower revenue, not additional

expense. Thus, unlike Norfolk Southern’s consent

(which was tepid at best), an insurer’s consent “is actual and real, since it has in fact assented to be so sued”

in exchange for the privilege of selling insurance in the

forum. 1 COUCH ON INS. 3D § 3:33.

b. This voluntary surrender of liberty is incompatible with a due process objection. The Court made this

observation in pointed terms in Osborn, 310 U.S. at 6566. “Government has always had a special relation to

insurance.” Id. at 65. “The state may fix insurance

rates, it may regulate the compensation of agents, it

may curtail drastically the area of free contract” and

may “control[] the expenses of insurance companies.”

Id. at 65-66 (citations omitted).

“In light of all these exertions of state power it does

not seem possible to doubt that the state could, if it

chose, go into the insurance business” or “take the

whole business . . . under its control.” Id. at 66 (quotations omitted). “If the state, as to local risks, could thus

preempt the field of insurance for itself,” the Court concluded, the State “may stay its intervention short of

such a drastic step by insisting that its own residents

shall have a share in devising and safeguarding protection against its local hazards.” Id.

23

For the same reasons discussed above, that interest cannot “be judged by abstracting an isolated contract . . . from the organic whole of the insurance business, the effect of that business on [the State], and [the

State’s] regulation of it.” Id. at 63. Like States of incorporation or principal place of business, an insurer’s registration and licensure with a State “indicates general

submission to a State’s powers” on insurance issues

and has always been a “traditional” basis for exercising

general jurisdiction. Nicastro, 564 U.S. at 880.

4. Finally, some Justices have indicated they

would stick to a “holistic, nuanced contacts analysis

backed by considerations of fairness and reasonableness.” E.g., BSNF Ry. Co. v. Tyrrell, 137 S. Ct. 1549,

1560 (2017) (SOTOMAYOR, J., concurring in part and dissenting in part). That test avoids the “serious inequities” of forcing plaintiffs “to sue in distant jurisdictions”

even where the company has a pervasive presence in

the forum State. Id. at 1560-61.

a. These insurance statutes easily pass muster under a holistic reasonableness test. Insurers who seek

licensure by a State and do extensive business there

cannot reasonably complain about being sued there, regardless of the cause of action. The basic structure of

the insurance business mitigates any unfairness.

One example suffices. Suppose a national insurer,

(ACME Insurance Company) is licensed in Pennsylvania sells liability insurance to thousands of Keystone

State residents and businesses. To do so, it generally

will negotiate retainers with locally admitted attorneys

(at steep discounts on their normal hourly rates) so

that it is ready to provide the promised defense. It also

needs to be ready to litigate the coverage disputes that

24

arise from those cases, and so it establishes relationships with those attorneys too.

Then suppose ACME is sued in Pennsylvania on

an insurance claim that arises outside the State. It

may be annoyed by that—but it is not prejudiced. It has

Pennsylvania lawyers on speed dial. Though it might

be cheaper or more convenient to defend elsewhere,

that marginal burden is not the stuff of a due process

violation.

b. To the extent particular facts render litigation

actually unfair or unreasonable for a particular insurer, the lower courts can be trusted to sort that out.

That is the purpose of a holistic reasonableness standard—to let courts decide, on a case-by-case basis,

whether or not a company’s contacts are extensive

enough to justify general jurisdiction. Tyrrell, 137

S. Ct. at 1560 (SOTOMAYOR, J., concurring in part and

dissenting in part).

B. Overruling Pennsylvania Fire would expose States to destructive litigation over

their insurance-regulatory systems.

The lesson from all of this is simple. If the statute

here is unconstitutional, then it is because Norfolk

Southern is not an insurer—rather than because Pennsylvania Fire got it wrong. In the context where it was

decided, that case is consistent with both International

Shoe and due process, given the unique and longstanding relationship between States and insurers. The

Court should not disrupt that relationship in this case

by overruling Pennsylvania Fire. That course could expose state regulatory and judicial systems to serious

and unnecessary disruptions.

25

1. Nearly every State has some version of the statutes reviewed in Pennsylvania Fire and Schollenberger. That is, most States command insurers to appoint a private agent or the Commissioner of Insurance

(or her equivalent) “as an agent upon whom process

may be served.” 1 COUCH ON INS. 3D §§ 2:21, 3:26. As a

result of Pennsylvania Fire, these statutes are widely

understood as permitting the exercise of jurisdiction

over the insurer in the State “although the cause of action or the transaction forming its basis originated in

another state.” Id. § 3:33 & n.2.

These regimes are distinct from those “general

statutes that pertain to all foreign corporations.” Id.

§ 3:26. They also do not “necessarily apply outside the

context of ‘insurance,’ such as to an action for negligence against an insurer.” Id. § 3:32. The Court has

recognized that these statutes have constitutional limits too: where the insurer has not actually complied

with the statute and appointed an agent within the

State, it can only be sued on policies actually sold there.

Id. § 3:33 & nn.3-4 (citing Old Wayne Mut. Life Ass’n v.

McDonough, 204 U.S. 8 (1907)).

2. The statutes serve a valuable purpose. As Pennsylvania Fire and similar cases illustrate, private policyholders are the ones most often enforcing and relying

on States’ insurance law. If personal-jurisdiction principles might allow insurers an escape from a particular

sovereign they dislike, then insurers have the means

and motive to litigate jurisdiction in every case. The

lower courts have interpreted this Court’s decisions as

requiring the plaintiff to provide “affirmative proof beyond the pleadings.” 4 WRIGHT & MILLER, FED. PRAC. &

PROC., CIVIL § 1067.6 (4th ed., Apr. 2022 update). That

proof often requires substantial and expensive discovery. Id.

26

Policyholders, even sophisticated ones, can ill afford such wars of attrition—particularly not after suffering a loss which the policy was purchased to cover.

Insurers are almost invariably better funded than

their adversaries. And as we explained above, the insurance claims relationship is asymmetrical: the policyholder performs before it receives any benefit, and

the insurer receives the entire benefit of the contract

before it performs. The insurer has every reason to use

its superior resources to increase litigation costs anywhere it can, because doing so allows it to settle claims

at a discount.

Worse, procedural litigation too often makes it impractical for policyholders to enforce certain policies at

all. After all, what good is a $50,000 life insurance policy if the insurer can use personal jurisdiction to increase litigation costs from $30,000 to $60,000? Even if

the claim is valid, resisting the denial makes no economic sense. So the policyholder says “forget it”—and

the insurer keeps the premium.

Thus, the value of these statutes is identical to that

behind most insurance law: preventing insurers from

abusing their massive scale and financial power to

avoid accountability. See Travelers Health Ass’n v. Virginia, 339 U.S. 643, 648-49 (1950). By taking jurisdiction off the table entirely, the States incentivize the

prompt payment of meritorious claims.

3. The wiser course is to simply leave Pennsylvania

Fire as the Court finds it—as an insurance case involving unique state interests. Whether those interests are

similar enough to warrant reversal here is a difficult

question. But in ruling on that question, the Court

should be careful to avoid unsettling our insurance-law

principles. They are an essential pillars of the States’

27

cooperative federalism, providing “support to the existing and future state systems for regulating and taxing

the business of insurance.” Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 429 (1946).

28

CONCLUSION

If Norfolk Southern prevails in this case, the Court

should distinguish, not overrule, Pennsylvania Fire.

That case is correct and valuable in the insurance context where it was originally decided. To the extent it is

unpersuasive here, it is because the context is different, not because Pennsylvania Fire was wrong.

Respectfully Submitted,

Amy R. Bach

Richard B. Oatis

UNITED POLICYHOLDERS

917 Irving Street, Ste. 4

San Francisco, CA 94122

George M. Plews

Peter M. Racher

Kevin M. Toner

Christopher E. Kozak*

*Counsel of Record

PLEWS SHADLEY RACHER

& BRAUN LLP

1346 N. Delaware Street

Indianapolis, IN 46202

(317) 637-0700

ckozak@psrb.com

Counsel for Amicus Curiae

July 12, 2022