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Registration Equals Consent to General Personal Jurisdiction Says Pa. Court - But Should It?

Client Alert

Author: A. Christopher Young

10/11/2018
Registration Equals Consent to General Personal Jurisdiction Says Pa. Court - But Should It?

In a September 25 decision, a panel of the Superior Court of Pennsylvania, by a 2-1 majority, found that registering as a foreign corporation in Pennsylvania equals consent to the state court’s general personal jurisdiction. Murray v. Am. LaFrance, LLC, No. 2105 EDA 2016, 2018 Pa. Super. LEXIS 1064. 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.

Murray follows two recent Pennsylvania state court decisions we discussed in a July Client Alert, aligning with another Superior Court decision in Webb-Benjamin, but contradicting the Philadelphia Court of Common Pleas’ decision in Mallory. 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. See Webb-Benjamin, LLC v. Int’l Rug Grp., 2018 Pa. Super. LEXIS 742; Mallory v. Norfolk S. Ry. Co., No. 1961 802 EDA 2018.

The Murray majority 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 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 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 are already having 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. 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

Given the dissenting opinion in Murray and recent U.S. Supreme Court decisions, Murray, Webb-Benjamin and Mallory (assuming the Superior Court overturns it) are likely to be appealed to the Pennsylvania Supreme Court, where the justices will decide whether registration to do business in Pennsylvania is enough of a voluntary act to constitute consent to general personal jurisdiction under the Fourteenth Amendment.

Until Pennsylvania’s highest court weighs in on this question, Murray controls in Pennsylvania, and consent by registration is a valid means for Pennsylvania courts to exercise general personal jurisdiction over foreign companies.

A. Christopher Young is a partner in the firm’s Trial and Dispute Resolution Practice Group, a seasoned and trial-ready team of advocates who help clients analyze and solve their most emergent and complex problems through negotiation, arbitration and litigation. Rosemary T. Cochrane is a law clerk in the Trial and Dispute Resolution Practice Group. She is not admitted to practice law.

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

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