Case Bulletin – PA Superior Court Holds Foreign Corporations who Register to do Business in Pennsylvania can be Subject to General Personal Jurisdiction
The United States Supreme Court has recently authored a number of cases restricting situations in which courts can exercise general personal jurisdiction over an out of state defendant. See e.g. BNSF Ry. Co. v. Tyrrell, 137 S.Ct. 1549, 1558 (2017); Daimler AG v. Bauman, 571 U.S. 117, 137 (2014).
However, the Pennsylvania Superior Court issued an opinion last month, explaining that despite this trend, consent – in the form of registering to do business in Pennsylvania – is a valid method of obtaining personal jurisdiction over a foreign company. Webb-Benjamin, LLC v. Int’l Rug Grp., LLC, ___ A.3d ___, 2018 Pa. Super. 187, * 5 (June 28, 2018). In Webb, the plaintiff (“WB”) contracted with the defendant (“IRG”) for services related to a furniture sale in Calgary, Canada. Id. at *1. IRG agreed to pay WB sales commissions, and this agreement was maintained even when the parties agreed to end their relationship in January of 2017. Id. However, IRG failed to pay WB after the conclusion of the sale in May of 2017. Id.
Subsequently, in February of 2018, IRG registered to do business in Pennsylvania as a foreign corporation. WB then filed a Complaint for this breach of contract. Id. IRG filed preliminary objections, asserting, among other issues, that Pennsylvania lacked personal jurisdiction. Notably, IRG was incorporated in Connecticut. Id. The trial court sustained the preliminary objections, holding that Pennsylvania’s statute “does not provide jurisdiction over claims that are based on events that occurred prior to a foreign association’s registration in Pennsylvania.” Id.
On appeal, the Superior Court first determined that “The plain language of 42 Pa.C.S. § 5301 does not expressly limit jurisdiction to only those events that occur during a foreign association’s registration in Pennsylvania[,]” and thus general personal jurisdiction was proper. Id. at *3. More importantly, the second part of the court’s analysis determined whether such jurisdiction violated the Due Process Clause of the Fourteenth Amendment of the United States Constitution. Id. The court discussed Daimler at length, but determined that it was inapplicable because Pennsylvania’s statute Section 5301 “provides that a non-resident of Pennsylvania consents to general personal jurisdiction in Pennsylvania by registering to do business there.” Id. at *4, n. 4 (emphasis added) (citing Simmers v. Am. Cyanamid Corp., 576 A.2d 376, 382 (Pa. Super. 1990)).
In support of this holding, the court cited to legal authorities from Pennsylvania’s federal courts, who have held that consent remains a viable means of obtaining general jurisdiction over a foreign defendant, even after Daimler. See Gorton v. Air & Liquid Sys. Corp., ___ F. Supp. 3d ___, 2018 WL 1385531 (M.D. Pa. 2018); Bors v. Johnson & Johnson, 208 F. Supp. 3d 648 (E.D. Pa. 2016).
In light of this holding, it appears that foreign corporations who register to do business in Pennsylvania can expect to be subject to general jurisdiction in Pennsylvania courts.