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Is Death By Registration in Pennsylvania Still the Norm?

Pennsylvania
September 12, 2019
August 27, 2019
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With certain jurisdictions within Pennsylvania being considered highly favorable to plaintiffs, claimants and their counsel often go to great lengths to have suit brought in Pennsylvania.  Any long-time litigation practitioner in Pennsylvania will advise clients that the decision to register to do business in Pennsylvania means consenting to be sued in Pennsylvania State and Federal Courts, even if the business is incorporated outside of Pennsylvania and has a principal place of business external to the Commonwealth.  This means registration to conduct business in Pennsylvania, regardless of whether any such business is ever conducted, could translate to allowing Pennsylvania State and Federal Courts to exercise jurisdiction over any such business.  

Even recent rulings from the highest court in the land did not change this dynamic.  In 2014, the United States Supreme Court issued a ruling in the matter of Daimler AG v. Bauman, 571 U.S. 117 (2014), holding that jurisdiction could not be exercised over a corporation in a state where that corporation was not “at home”, which was defined as the corporation having “continuous and systematic affiliations” with the state where the litigation was filed.  Daimler involved suit by residents of Argentina against DaimlerChrysler, a German entity, in California Federal District Court, where it was argued that jurisdiction existed against DaimlerChrysler under California’s long-arm statute, based upon a subsidiary of DaimlerChrysler having contacts within California.  This argument was ultimately defeated because the business entity must have affiliations within the state so continuous and systematic as to render the business entity at home in the forum state.  

Despite this seemingly significant holding from the U.S. Supreme Court, there has been no change from courts in Pennsylvania confronted with the question of jurisdiction over a business entity with tenuous or non-existent connections, but positive business registration within the Commonwealth.  Since Daimler, Pennsylvania Federal District Courts as well as the Pennsylvania Superior Court have continued to uphold registration within Pennsylvania as a sufficient basis for jurisdiction.  In Webb-Benjamin, LLC v. Int’l Rug Grp., LLC, 192 A.3d 1133 (Pa.Super. 2018), the Pennsylvania Superior Court held that Daimler had no impact on the consent provision within Pennsylvania’s long-arm statute, meaning registration within Pennsylvania was synonymous with consent to be sued within Pennsylvania.  The Superior Court rationalized that Daimler makes a “clear distinction between jurisdiction by consent and the method of establishing personal jurisdiction that forms the basis for its analysis and holding.”   Similarly, in Bors v. Johnson & Johnson, 208 F.Supp.3d 648 (E.D. Pa. 2016), the Federal District Court for the Eastern District of Pennsylvania, which sits in Philadelphia, found jurisdiction against Imerys simply by virtue of its registration to do business in the Commonwealth, even without Imerys conducting any business in Pennsylvania.  A different panel from the Superior Court made the same decision employing the identical rationale in Murray v. American LaFrance, 2018 Pa.Super. 267, though the Superior Court en banc has agreed to reconsider Murray.  

A recent ruling from Judge Robreno of the Federal District Court for the Eastern District of Pennsylvania, however, suggests that the landscape may be changing.  On June 6, 2019, Judge Robreno published a 28 page memorandum opinion in In re: Asbestos Products Liability Litigation (Vol. VI), 18-3622, acknowledging the above-discussed precedent and the long-standing jurisdiction by consent issue.  Judge Robreno, however, stated that “while the explicit Pa. statutory scheme may indicate that consent to jurisdiction is knowing, it does not make it voluntary.”  Based upon the 2014 Daimler ruling from the U.S. Supreme Court, Judge Robreno held “This Court departs from these holdings (referring to the prior holdings) as the consent extracted in invalid . . . Contrary to these courts’ views (referring to the prior holdings), the issue was never whether Daimler invalidated consent to personal jurisdiction, but whether a scheme that forces consent can be found valid after Daimler.”  (Parenthetical language supplied).

In issuing his ruling, Judge Robreno definitively answered this question in the negative. “The Pa. statutory scheme presents a foreign corporation with a Hobson’s choice: consent to general personal jurisdiction or be denied the benefits of doing business in Pennsylvania . . . the Pa. statutory scheme conditions the benefit of certain privileges of doing business in Pennsylvania upon the surrender of the constitutional right, recognized in Daimler, to be subject to general personal jurisdiction only where the corporation is ‘at home.’”  Pennsylvania “impermissibly re-opens the door to nation-wide general jurisdiction that Daimler firmly closed.”  

Undoubtedly, further challenges will be made arguing both sides of this issue in the years ahead.  Interestingly, the most recent precedent from the Third Circuit Court of Appeals, which is the appellate court sitting just above the Federal District Court for the Eastern District of Pennsylvania, dates back to 1991 and upheld jurisdiction under consent by registration.  See Bane v. Netlink, 925 F.2d 637 (3d Cir. 1991).  Presumably, Daimler overrules Bane, but only more litigation will determine how the story ends.