A Full On No: Pennsylvania Superior Court Says Fulano v. Fanjol Corporation Is Not a Daimler “Exceptional Case”

In Fulano v. Fanjul Corp., 2020 WL 3886029 (Pa. Super. July 10, 2020), the plaintiffs, who consist of 41 Dominican residents, appealed the trial court’s orders sustaining the preliminary objections filed by the defendants, all foreign corporations, for lack of personal jurisdiction. The plaintiffs are agricultural workers who filed a civil action in the Philadelphia County Court of Common Pleas, alleging that they suffered adverse health effects through exposure to toxic pesticides while working as fumigators in the sugar cane industry in the Dominican Republic. At the time of the alleged exposure, the plaintiffs were working for subsidiaries of Fanjul Corp. (a Florida corporation) and Inicia (a British Virgin Islands corporation), and they allege that the pesticides were produced by Drexel (a Tennessee corporation) and UPL (an Indian corporation).

The Superior Court’s Fulano opinion, affirming the trial court’s orders sustaining the defendants’ preliminary objections for lack of personal jurisdiction, deals with a wide range of issues, from attempts at quashing the appeal for violations of the Rules of Appellate Procedure to an unsuccessful argument that a nonresident corporation consented to general personal jurisdiction by registering its products under Pennsylvania’s Pesticide Control Act. However, the focus of this article is the court’s analysis of the plaintiffs’ attempt to establish personal jurisdiction over Drexel as being a Daimler “exceptional case.”

As there was no basis for asserting specific personal jurisdiction over Drexel and because Drexel is incorporated in Tennessee and maintains its principal place of business in Memphis, the plaintiffs’ only avenue for establishing personal jurisdiction over Drexel was the challenging route of arguing that the Commonwealth has general personal jurisdiction over Drexel as one of the “exceptional case[s]” mentioned in the seminal case on general personal jurisdiction over corporations, Daimler AG v. Bauman, 571 U.S. 117, 139 n.19 (2014). As stated in a footnote in Daimler, there may be exceptional cases where “a corporation’s operations in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render the corporation at home in that State.”

It was alleged that Drexel produced some of the pesticides that caused the plaintiffs’ injuries while working in the Dominican Republic. Drexel is a chemical manufacturer of agricultural products, which are developed in Memphis and manufactured in Tennessee, Mississippi and Georgia. Drexel sells its products to distributors, who then sell them to customers. Drexel has 100 customer distributors. Less than 20 are licensed to do business in Pennsylvania, and only one is located in the Commonwealth. Out of its total sales, Drexel’s revenue for products shipped directly to Pennsylvania were 2.26% in 2016 and 2.89% in 2017. Although these figures do not include shipments outside of the Commonwealth that are later shipped into the state, Drexel’s corporate designee testified that, accounting for that additional revenue, the total percent of Drexel’s sales coming from products shipped to Pennsylvania would be 5% at most. Further, Drexel’s physical presence in Pennsylvania is limited to a leased warehouse in Bucks County, and its closest employee is its northeast sales representative based in New Jersey. The court also notes that Drexel does not directly advertise or market its products in Pennsylvania.

Based on Drexel’s limited contacts and operations in Pennsylvania, the Superior Court found that these circumstances did not render it an “exceptional case” where general personal jurisdiction is proper in Pennsylvania. In its analysis, the court relied on the United States Supreme Court’s holding in BNSF Railway Co. v. Tyrell, 137 S. Ct. 1549 (2017), where the court also rejected a plaintiffs’ argument that general personal jurisdiction was proper over a nonresident corporation outside its place of incorporation and principal place of business.

In BNSF Railway Co., the plaintiffs tried to establish general personal jurisdiction in Montana over BNSF Railway Co., a Delaware-incorporated railway company with its principal place of business in Texas. BNSF maintained over 2,000 miles of railroad track in Montana (amounting to 6% of its total track mileage), employed 2,100 people in Montana (less than 5% of its work force), had one of its 24 automotive facilities in the state, and generated less than 10% of its total revenue in the state. Even with these Montana contacts, the Supreme Court found BNSF not “so heavily engaged in activity in Montana to render it essentially at home in that State.” The Supreme Court noted that, as “observed in Daimler, the general jurisdiction inquiry does not focus solely on the magnitude of the defendant’s in-state contacts. Rather, the inquiry calls for an appraisal of a corporation’s activities in their entirety; a corporation that operates in many places can scarcely be deemed at home in all of them.”

Because Drexel’s contacts with Pennsylvania “pale in comparison with those that the BNSF Railway Co. court found to be insufficient to qualify as a Daimler ‘exceptional case’ allowing general jurisdiction over a nonresident corporation,” the Superior Court of Pennsylvania found that the trial court properly found that there was no general personal jurisdiction in Pennsylvania over Drexel. The court noted that the plaintiff failed to cite to any Pennsylvania court that has ever applied the Daimler “exceptional case” exception, and the court, likewise, did not offer one.

The court’s opinion in Fulano is another case further cementing the framework laid out in Daimler that a corporation is considered “at home” where it is incorporated and has its principal place of business. Although the Daimler court carved out an exception to that rule, a nonresident corporation’s contacts with the forum state must amount to a significant portion of the corporation’s total business operations and revenue, so it seems (at least more than 5% of a corporation’s work force and 10% of total revenue generated in the forum state, according to BNSF Railway Co., supra). The Pennsylvania Superior Court’s message is simple: a nonresident corporation’s activities in the Commonwealth must be at least more extensive than that of BNSF in Montana for the court to seriously consider whether general personal jurisdiction is proper pursuant to the Daimler “exceptional case” avenue. Without further direction from the courts, this remains a case-by-case, fact-intensive analysis. It will continue to be a difficult way for plaintiffs to establish general personal jurisdiction over nonresident corporations.

*Ben is an associate in our Philadelphia, Pennsylvania office. He can be reached at 215.575.2701 or bslevine@mdwcg.com.

_{Defense Digest, Vol. 26, No. 3, October 2020 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2020 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}