United States: Pennsylvania's Long Arm Overreaches The Constitution And Bauman

Last Updated: October 3 2016
Article by Steven Boranian

The U.S. Supreme Court's game-changing Bauman opinion in 2014 has us writing a lot on personal jurisdiction.  A while back we marveled over how quickly lower courts have responded to Bauman.  We had anticipated that it would take the passage of an entire generation of lawyers and judges steeped in International Shoe for Bauman's more disciplined concept of general personal jurisdiction to take root.  The actual results have been better than we expected.  There have, however, been some bumps in the road.  There was the California Supreme Court's aggressive take on specific personal jurisdiction in Bristol-Myers Squibb Co. v. Superior Court, where the court expanded this prong of personal jurisdiction beyond recognition.  The court essentially slapped the "specific jurisdiction" label on concepts of general jurisdiction that the U.S. Supreme Court overruled.  We discussed that case here and here.

Another open battlefield is jurisdiction by consent, and a district court in Pennsylvania recently entered an order favoring consent that again stretches personal jurisdiction beyond Constitutional limits.  The case is Bors v. Johnson & Johnson, No. 16-2866, 2016 U.S. Dist. LEXIS 128259 (E.D. Pa. Sept. 20., 2016), and the district court in Bors held that a foreign corporation consented to general personal jurisdiction in Pennsylvania merely by registering to do business in Pennsylvania. Id. at **1-12.  It was undisputed that the corporation had no other contacts with Pennsylvania and that the plaintiff's action arose from commercial transactions that occurred outside that commonwealth.  In this district court's view, the foreign corporation registration alone justified subjecting the corporation to general personal jurisdiction in Pennsylvania, i.e., personal jurisdiction over any dispute whatsoever, no matter the subject matter.

The district court was not writing on a clean slate. Since Bauman, several courts have considered consent to jurisdiction, and most have decided that registering to do business does not alone constitute consent to personal jurisdiction.  A notable example is Brown v. Lockheed-Martin Corp., 814 F.3d 619 (2d Cir. 2016), where the Second Circuit rejected "jurisdiction by consent" based on business registration and which prompted us to create our post-Bauman jurisdiction scorecard (including all consent cases), which you can find here.  The Second Circuit rejected general personal jurisdiction because allowing jurisdiction though "routine bureaucratic measures" would rob Bauman of any meaning by way of a "back door thief."  814 F.3d at 640. Nice. In another major decision, the Delaware Supreme Court relied on Bauman to reverse its older decisions that had recognized jurisdiction by consent. See Genuine Parts Co. v. Cepec, 137 A.3d 123, 144-48 (Del. 2016).

For the district court in Bors, there was one fact that trumped everything else, including Bauman's due process analysis:  Pennsylvania's statute "specifically advis[ed] the [foreign corporation] registrant of its consent to personal jurisdiction through registration." Id. at *2 (citing Pa. Consol. Stat. Ann. § 5301).  From this manifestation of "consent," the district court found general personal jurisdiction and held that "general and specific jurisdiction principles applying to non-consensual personal jurisdiction do not apply." Id.

We have numerous problems with the district court's somewhat glib disregard for "general and specific jurisdiction principles" based on "consent" language placed in a state statute.

First, the starting point for the court's analysis is that courts "can find personal jurisdiction in three ways: consent to general jurisdiction, general jurisdiction, or specific jurisdiction." Id. at *5. We do not claim to be the world's experts on personal jurisdiction, but this formulation struck us as odd.  A legion of cases speaks of two kinds of personal jurisdiction—general and specific. So we looked at the district court's authority, a single unpublished order from the Eastern District of Pennsylvania dated 1996. That order does not set forth "consent to general jurisdiction" as a separate basis for personal jurisdiction.  It describes general and specific jurisdiction ("Personal Jurisdiction can be either general or specific") and ruled that the defendant's forum contacts were insufficient to support personal jurisdiction. American Fin. Cap. Corp. v. Princeton Elec. Prods., No. Civ. A. 95-4568, 1996 WL 131145, at *3 (E.D. Pa. Mar. 20, 1996).  It is a classic pre-Bauman forum contacts analysis. It may be that there is some case out there identifying the district court's "three ways" to find jurisdiction, but the district court did not cite one, and presumably neither did the plaintiffs. The Supreme Court's recent forays in personal jurisdiction surely have not.

Second, the district overstated the power of consent. There is no doubt that a defendant can consent to jurisdiction. In California, for example, we still have the "general appearance," and if you answer the complaint, you waive objections to personal jurisdiction in that case.  Parties to a contract can consent to personal jurisdiction in a particular forum for disputes arising from the contract.  But those consents are limited, i.e., specific.  We view it as altogether different for a district court to cite a line from a statute and a routine business registration to impose general personal jurisdiction, i.e., jurisdiction over all matters.  In this regard, the district court relied heavily on another district court's order in Acorda Therapeutics, Inc. v. Mylan Pharm. Inc., 78 F. Supp. 3d 572 (D. Del. 2015), which based personal jurisdiction on the defendant's business registration in Delaware. Bors, at *10.  But the district court failed to mention that (1) the Delaware Supreme Court took a look at Bauman after Acorda and eliminated consent to general jurisdiction; (2) another judge in a companion case disagreed that business registration constituted consent to jurisdiction; and (3) the Federal Circuit affirmed the Acorda order not on the basis of business registration, but only because the defendant's forum contacts were sufficient to exercise specific jurisdiction.  (The district court could have learned all about this by reading our post on Acorda.)  In the end, we disagree with the district court's statement that there is no "distinction" between a forum selection clause and finding general personal jurisdiction based on business registration.  We see a big difference:  One is confined to a specific subject matter, the other is not.

Third, and perhaps most importantly, the district court lost sight of the limits on general and specific jurisdiction imposed by due process and the United States Constitution. This is important because the district court is basing personal jurisdiction on a Pennsylvania long-arm statute.  Remember the case that the district court cited for the "three ways" to establish personal jurisdiction?  That case says flat out that "[i]f the long-arm statute confers jurisdiction, it must of course comport with the Due Process Clause of the Constitution." American Fin. Cap. Corp., 1996 WL 131145, at *3 (emphasis added).  This is as about as close to a truism as you ever get in the law.  Yet, the district court in Bors disregarded authorities on general and specific personal jurisdiction because they dealt with "nonconsensual" jurisdiction. Not so fast.  The "consent" here is bestowed by a state statute, and the statute can only operate within the confines of the Constitution and due process. That was the whole point of Bauman. The Constitution does not allow a state to assume general personal jurisdiction over a corporation, no matter how hard it tries, unless the corporation is "at home" in that state, barring "exceptional" circumstances, which did not exist in Bors.  The district court should not have performed an end run on this binding law.

This order is not the last word on "jurisdiction by consent." From our point of view, the fault with the order lies with its elevation of consent to be co-equal with general and specific jurisdiction. Doing so ignores that general and specific jurisdiction have Constitutional dimensions and that any jurisdiction based on consent needs to operate within that structure, not outside of it.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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