Pennsylvania – Going Off The Jurisdictional Deep End?

We've already unloaded on Hammons v. Ethicon, Inc., ___ A.3d ___, 2018 WL 3030754 (Pa. Super. June 19, 2018), where the court made a virtually unprecedented holding that a defendant challenging personal jurisdiction on Due Process grounds had the burden of proof in the course of allowing a litigation tourist from Indiana to stay in Pennsylvania, based on "contacts" that had no causal relationship to that plaintiff's injuries. Hammons involved high profile mass tort litigation, and we're sure the story there is far from over.

Now there's Webb-Benjamin, LLC v. International Rug Group, LLC, ___ A.3d ___, 2018 WL 3153602 (Pa. Super. June 28, 2018), a small commission dispute case involving a single event in Canada. Heck, the non-resident defendant was not even registered in Pennsylvania until after the events in question. Id. at *1. In Webb-Benjamin, another panel of the same court has ruled that a corporation's mere act of registering to do business in Pennsylvania subjected it to general personal jurisdiction, supposedly because registration equals "consent" and consent is a separate basis for personal jurisdiction not subject to the Due Process analysis.

Webb-Benjamin relied almost exclusively on Bors v. Johnson & Johnson, 208 F. Supp.3d 648 (E.D. Pa. 2016) (which we criticized here), and an asbestos case following Bors, Gorton v. Air & Liquid Systems Corp., 303 F. Supp.3d 278 (M.D. Pa. 2018). Webb-Benjamin, 2018 WL 3030754, at *4. Thus,

Guided by the reasoning in Bors and Gorton, we conclude that [Bauman] does not eliminate consent as a method of obtaining personal jurisdiction. Accordingly, pursuant to 42 Pa. C.S.A. §5301, Pennsylvania may exercise general personal jurisdiction over [plaintiff's] claims against [defendant].

Id. at *5.

The analysis in Webb-Benjamin and the two district court cases is fairly simple. First, the aforementioned §5301(a) "qualification as a foreign entity under the laws of this Commonwealth" is a "sufficient basis . . . to exercise general personal jurisdiction over such person." Second, registration is a form of "consent" to personal jurisdiction. Third, "consent" is distinct ground for general personal jurisdiction not subject to the ordinary general jurisdiction tests enunciated in Daimler AG v. Bauman, 571 U.S. 117 (2014). That's simple, but also simply wrong.

First, the statute says what it says. But a state statute cannot trump federal Due Process - that's what the Supremacy Clause is all about. Thus, Judge New recognized that to interpret the state's registration statute in this fashion renders it unconstitutional as applied to a non-resident corporation being sued by a non-resident plaintiff over activities outside the state of Pennsylvania:

Under the current state of Pennsylvania law, the only way foreign corporations such as Defendant can avoid Pennsylvania courts' assertion of general jurisdiction over them is for those corporations to avoid doing business in Pennsylvania. Faced with this Hobson's choice, a foreign corporation's consent to general jurisdiction in Pennsylvania can hardly be characterized as voluntary. In light of the Supreme Court's repeated admonishment that the Due Process Clause prohibits a state from claiming general jurisdiction over every corporation doing business within its borders, it logically follows the Due Process Clause also prohibits a state from forcing every corporation doing business within its borders to consent to general jurisdiction.

Mallory v. Norfolk Southern Railway Co., 2018 WL 3025283, at *5 (Pa. C.P. Phila. Co. May 30, 2018) (citations omitted). The United States Supreme Court has repeatedly stated that a corporate defendant must be "at home" in order to justify general jurisdiction - not merely that it conduct "continuous and substantial" business. E.g., BSNF Railway. v. Tyrrell, 137 S.Ct. 1549 (2017); Daimler AG v. Bauman, 571 U.S. 117 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011).

Personal jurisdiction, "represents a restriction on judicial power . . . as a matter of individual liberty." Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982). A mere state statute cannot change federal constitutional law. "By wrapping general jurisdiction in the cloak of consent, Pennsylvania's mandated corporate registration attempts to do exactly what the...