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Pennsylvania Superior Court Avoids Clarification of Personal Jurisdiction Law
In an opinion issued by the Pennsylvania Superior Court sitting en banc, the court failed to address the primary issue before it, whether an entity’s registration with the Commonwealth pursuant to 15 Pa. C.S.A. Sec. 411(a) is sufficient to establish general personal jurisdiction, by holding that the issue was never properly raised before the trial court and, therefore, waived.
In Murray v. American LaFrance, 2020 Pa. Super 149, the Superior Court reviewed the trial court’s finding that general jurisdiction over the defendant was not established. In Murray, several plaintiffs from Massachusetts, New York and Florida sued Federal Signal, a Delaware corporation with a principal place of business in Illinois. The appellee defendant filed preliminary objections that challenged jurisdiction in Pennsylvania. In support of its motion, an affidavit detailing the company’s lack of contact with Pennsylvania—specifically that only four of its 633 employees live in the Commonwealth and that in 2015 only 3.5% of its sales were to Pennsylvania buyers—was issued. In response, the plaintiffs opposed the motion by arguing that the defendant’s systematic and regular contacts with the Commonwealth were sufficient to establish general jurisdiction.
The trial court sustained the objections of the defendant and dismissed the case, finding that the alleged contacts failed to satisfy the due process standard as established in Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2015). On appeal, for the first time the appellant plaintiffs argued that, in addition to the systematic and continuous contacts, the appellee defendant’s registration to do business in the Commonwealth established jurisdiction under 42 Pa. C.S.A. Sec. 5301 (a)(2)(i).
After the appeal, the case was originally decided by a three-member panel of the Superior Court, which held that Federal Signal’s registration to do business in Pennsylvania was sufficient to establish jurisdiction because the registration statute prescribes that any entity doing so consents to jurisdiction. The Superior Court agreed to consider the issue en banc and vacated the prior Superior Court ruling by the three-member panel.
The en banc court held that the appellant waived the business registration argument because it was not raised in the trial court and upheld the trial court’s dismissal of the case against Federal Signal. As a result, the issue as to whether business registration alone is sufficient to establish jurisdiction was not considered by the en banc court.
Although the Superior Court did not address the issue of whether a company’s registration with the Commonwealth operates as consent to jurisdiction, the issue is currently set to be considered in another case before the Pennsylvania Superior Court. In Mallory v. Norfolk Southern Railway, No. 1961, 802 EDA 2018, Judge New held that Pennsylvania’s business registration statute, requiring companies who register to do business in the Commonwealth to consent to personal jurisdiction, to be unconstitutional. In reaching this holding, Judge New examined the requirement that corporations register to do business in Pennsylvania and interpreted the statutes to give companies the impossible choice of consenting to personal jurisdiction or of not doing business in Pennsylvania. That inherently coercive choice led Judge New to examine whether the statute violated the Due Process clause of the Fourteenth Amendment of the U.S. Constitution. Citing to the Supreme Court’s opinion in Bristol-Myers Squibb, 137 S. Ct. 1773, the judge acknowledged the role that federalism plays in analyzing the existence of general personal jurisdiction. He further reviewed the Supreme Court’s decisions in Daimler, Goodyear, and BNSF and concluded that Pennsylvania’s statute—which requires foreign corporations to consent to general jurisdiction or to be prohibited from doing business in the Commonwealth—violated Supreme Court precedent. The Mallory case was stayed pending a decision in Murray and is likely to proceed now that Murray has been decided.
With no clear precedent from the Pennsylvania Superior Court on the issue, federal courts that have considered the issue have been split. In Sullivan v. A.W. Chesterton, Inc., 384 F. Supp. 3d (E.D.Pa. 2019), Judge Robreno analyzed the Pennsylvania business registration statute and concluded that it violates the Due Process clause. However, in Kraus v. Alcatel-Lucent, No 18-2119 (E.D.Pa. 2020), Judge Savage concluded that the business registration statute was constitutional and jurisdiction had been established. Until there is clear precedent from the Pennsylvania courts on the issue in Mallory or a subsequent case, the matter will continue to be unsettled.
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