PA General Personal Jurisdiction Over Foreign Corporations

On December 7, the Superior Court of Pennsylvania granted en banc reargument for Murray v. Am. LaFrance, LLC, No. 2105 EDA 2016, 2018 Pa. Super. LEXIS 1064. In September, a 2-1 majority ruled in Murray that registering as a foreign corporation in Pennsylvania equals consent to the state court’s general personal jurisdiction. In granting reargument, the court has withdrawn its previous decision, affecting all of the consolidated cases that were considered in the appeal. The court ordered the case listed for the next available en banc panel.

The Murray case has no factual connection to Pennsylvania: The plaintiffs alleged fire engine sirens caused them hearing loss while working in New York. They sued Federal Signal Corporation, a Delaware company whose principal place of business is in Illinois.

The original Murray opinion followed two other Pennsylvania state court decisions on the same issue. The Murray court aligned itself with another Superior Court decision in Webb-Benjamin, LLC v. International Rug Group, 2018 Pa. Super. LEXIS 742, in which the Superior Court accepted at face value that registering to do business in the state equals consent to general jurisdiction. But the Murray opinion contradicted the Philadelphia Court of Common Pleas’ decision in Mallory v. Norfolk Southern Railway Co., No. 1961 802 EDA 2018. In Mallory, Judge New found that a Pennsylvania court cannot exercise jurisdiction over a company merely because it registered to do business there. Mallory is on appeal, but it is likely to be overturned if the Webb-Benjamin and Murray decisions are any guide.

The original Murray majority opinion, which has now been withdrawn, runs counter to recent U.S. Supreme Court precedent limiting states’ general jurisdiction over foreign corporations. The Murray majority opinion distinguished the consolidated cases on appeal from the U.S. Supreme Court’s decision in Daimler AG v. Bauman, 571 U.S. 117 (2014), because Daimler did not concern consent to a state court’s general jurisdiction based on business registration. Daimler held that a foreign corporation must ordinarily be “at home” in a state for the state court to exercise general personal jurisdiction over it. A corporation is “at home” in its place of incorporation and its principal place of business, as well as in “exceptional” circumstances when a corporation’s operations in a state are “so substantial . . . as to render [it] at home” there. BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1558 (2017) (citing Daimler, 571 U.S. at 117).

Instead, the September Murray majority, relying on a 2016 federal district court decision, found that “consent remains a valid form of establishing personal jurisdiction under the Pennsylvania registration statute after Daimler.” Murray, 2018 Pa. Super. LEXIS 1064 (citing Bors v. Johnson & Johnson, 208 F. Supp. 3d 648 (E.D. Pa. 2016)). The September Murray court reasoned that a foreign corporation that has registered to do business in Pennsylvania does not have to be “at home” for the state’s courts to have power over it.

The Superior Court’s personal jurisdiction decisions have already had an impact on trial court dockets. On October 1, Judge Fox of the Philadelphia Court of Common Pleas explicitly relied on Webb-Benjamin and Bors to hold that the court had general personal jurisdiction over a foreign corporation where the claims involved events occurring entirely outside the Commonwealth. See Kleiner v. Rite Aid Corp., No. 2505 (Ct. Com. Pl. Phila. Oct. 1, 2018).

Remaining Constitutional Questions

Questions remain as to the soundness of the Murray majority’s reasoning in its September opinion. Judge Bowes acknowledged in her dissent that the U.S. Supreme Court cases allow for personal jurisdiction by consent. But Judge Bowes contended that mandatory business registration is not voluntary, and, without voluntariness, registration cannot amount to consent. In particular, mandatory business registration is not consent for general personal jurisdiction, which gives Pennsylvania courts power over a defendant for cases having nothing to do with its business in the state. Judge Bowes instead argued that a corporation’s decision to register to do business in Pennsylvania should only be consent for Pennsylvania courts to exercise specific personal jurisdiction.

Judge Bowes’s line of reasoning (and the reasoning of Judge New in the Philadelphia Court of Common Pleas) seems to be consistent with the recent trend of U.S. Supreme Court cases limiting state courts’ exercise of general personal jurisdiction over foreign corporations. See, e.g., Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011). These cases emphasize that a state court cannot have general personal jurisdiction over every corporation doing business within its borders, relying on Fourteenth Amendment due process constraints.

How a Further Appeal Could Be Analyzed

The implications of the court’s decision upon hearing reargument could be widespread. The en banc panel could come to a different conclusion on the jurisdictional issue. Similarly, the panel could overrule the Webb-Benjamin decision, which also found that foreign corporations consent to general jurisdiction under the Pennsylvania Long Arm Statute by registering to do business in the Commonwealth. Until the court does so, however, Webb-Benjamin remains good law.

While there exists a threshold legal issue of whether the Murray plaintiffs waived their right to argue on appeal that registration equals consent to jurisdiction, it seems unlikely that the court would address that argument en banc. Even if the court decided on the waiver issue alone, the general personal jurisdiction question remains ripe for final resolution by the state’s highest court, either on appeal in Murray or in other personal jurisdiction cases winding their way through the Pennsylvania appellate system. No matter the vehicle, the justices are likely to finally resolve whether registration to do business in Pennsylvania is enough of a voluntary act to constitute consent to the general personal jurisdiction of Pennsylvania courts.

A. Christopher Young is a partner in the Philadelphia office of Pepper Hamilton LLP and chairman of the Franchise, Distribution, and Marketing Section of the Trial and Dispute Resolution Practice Group. His trial practice, in federal and state courts, involves many substantive areas, including antitrust, admiralty, franchise disputes, commercial disputes, insurance, and products liability.

Rosemary T. Cochrane is an associate in the Trial and Dispute Resolution Practice Group of Pepper Hamilton LLP, resident in the Philadelphia office.

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