Pennoyer v. Neff has a bad rap. As an original matter, Pennoyer is legally correct. Compared to current doctrine, it offers a more coherent and attractive way to think about personal jurisdiction and interstate relations generally.
To wit: The Constitution imposes no direct limits on personal jurisdiction. Jurisdiction isn't a matter of federal law, but of general law -- that unwritten law, including much of the English common law and the customary law of nations, that formed the basis of the American legal system. Founding-era states were free to override that law and to exercise more expansive jurisdiction. But if they did, their judgments wouldn't be recognized elsewhere, in other states or in federal courts -- any more than if they'd tried to redraw their borders.
As Pennoyer saw, the Fourteenth Amendment changed things by enabling direct federal review of state judgments, rather than making parties wait to challenge them at the recognition stage. It created a federal question of what had been a general one: whether a judgment was issued with jurisdiction, full stop, such that the deprivation of property or liberty it ordered would be done with due process of law.
Reviving Pennoyer would make modern doctrine make more sense. Courts applying the Due Process Clause should avoid pitched battles between "sovereignty" and "liberty," looking instead to current conventions of general and international law. International law may not be much, but it's something: the conventional settlement of the problems of political authority that personal jurisdiction so obviously raises.
Pennoyer's reasoning can be right without International Shoe's outcome being wrong. International law and American practice might be different now than in 1878, or even in 1945. But if not, or if the rules need improvement anyway, Congress has power to improve them -- providing federal rules to govern a federal system.
Stephen E. Sachs, Pennoyer was Right: Jurisdiction and General Law, Texas Law Review (forthcoming)