United States: Hauled From The Deep End? New (And One Old) Developments In Pennsylvania Personal Jurisdiction

Last Updated: July 2 2019
Article by James Beck

First, we apologize to our readers for not publishing this post earlier. It contains new information that we've known about for a couple of weeks, but we felt we had to keep it under wraps temporarily until Bexis filed an amicus curiae brief (last Friday) in one of the cases we discuss. Just as we don't want to do the other side's research for them, we likewise don't want to give them extra time to respond.

Last year, in the wake of two extremely adverse appellate personal jurisdiction decisions, Hammons v. Ethicon, Inc., 190 A.3d 1248 (Pa. Super. 2018), and Webb-Benjamin, LLC v. International Rug Group, LLC, 192 A.3d 1133 (Pa. Super. 2018), we wrote a post bemoaning that, on personal jurisdiction issues – both general jurisdiction and specific jurisdiction – it looked like Pennsylvania law was "going off the deep end" in favor of allowing litigation tourism.

Since then, for a number of reasons, the prospects for Pennsylvania (and, in particular, Philadelphia) becoming a nationwide Mecca for litigation tourism have thankfully eased a bit. First, in Hammons the Pennsylvania Supreme Court granted further appellate review, meaning that the last word regarding Pelvic Mesh litigation tourists in Pennsylvania has yet to be written. Not only that, in the course of preparing the aforesaid amicus brief, we learned that we had been wrong – but in a good way – in our " Simple Question" post about that case. Most of that post was about the singular holding in Hammons to impose the burden of proof on the defendant challenging jurisdiction rather than on the plaintiff asserting it. We pointed out that this result was contrary to multiple prior decisions by the Pennsylvania Superior Court, and diverged as well from universal federal practice in deciding personal jurisdiction issues. In that post we cautioned, however:

[N]either the United States Supreme Court nor the Pennsylvania Supreme Court appears to have decided the burden-of-proof question in the specific context of personal jurisdiction.

On further review....

We were wrong. It turns out that the Pennsylvania Supreme Court has decided who bears the burden of proof when personal jurisdiction is at issue – and that court placed the burden squarely on plaintiffs back in 1966. In Frisch v. Alexson Equipment Corp., 224 A.2d 183, 187 (Pa. 1966), the record lacked any evidence that the cause of action arose from the defendant's activity in Pennsylvania. The Pennsylvania Supreme Court held that the omission required dismissal of the action:

The burden was upon Frisch [the plaintiff], as a prerequisite to the use of the "long arm" provisions of [the statute] to secure In personam jurisdiction, to establish that the action which he instituted arose out of "acts or omissions" of [defendant] within Pennsylvania; neither impliedly nor expressly has such been shown and Frisch [the plaintiff] has not sustained his burden.

Id. at 187 (emphasis added). We missed it the first time around because we only searched for "personal," and not "personam," which is a more common word in older cases. We've also discovered that, in analogous venue situations, the party that "selects the county of trial . . . shall bear the burden of proving venue is proper." Commonwealth v. Gross, 101 A.3d 28, 33 (Pa. 2014).

As for the United States Supreme Court, while there is, indeed, no opinion of the Court expressly placing the burden of proof on plaintiffs, J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873 (2011), comes really close. First Nicastro's the four-justice plurality found that "[r]espondent [plaintiff] has not established that [defendant] engaged in conduct purposefully directed at [the forum]." Id. at 886 (emphasis added). That sure sounds like they thought "establishing" the requisite conduct was the plaintiff's job. Two additional justices explicitly said just that – the "plaintiff bears the burden of establishing jurisdiction." Id. at 890 (Breyer and Alito, JJ. concurring).

So Hammons is further out on a weaker limb than we thought in our initial post.

Further, three subsequent Superior Court decisions have, ignoring Hammons, continued to impose the ultimate burden of proof on plaintiffs in personal jurisdiction cases. See Vaughan v. Olympus America, Inc., ___ A.3d ___, 2019 WL 1549345, at *3 (Pa. Super. April 10, 2019); Seeley v. Caesars Entertainment Corp., 206 A.3d 1129, 1133 (Pa. Super. 2019); Calabro v. Socolofsky, 206 A.3d 501, 505 (Pa. Super. 2019). The inference is unmistakable that the rest of the Superior Court bench has shied away from Hammons' problematic burden of proof holding.

So on the specific jurisdiction front, developments have made us more optimistic than we were before that Hammons will not stand.

We can say the same about the Webb-Benjamin jurisdictional issue − whether Pennsylvania may statutorily impose "general" jurisdiction on any foreign corporation that registers to do business in the Commonwealth. See 42 Pa. C.S. §5301(a)(2)(i). Since our " deep end" post last year: (1) the Superior Court granted en banc review, not in Webb-Benjamin itself, but in another case presenting the identical issue, captioned Murray v. Federal Signal Corp., Nos. 2105-11, EDA 2016. The en banc court can overrule panel decisions like Webb-Benjamin. (2) A more recent Superior Court decision, Seeley, cited above, reached the opposite result from Webb-Benjamin. One of the defendants in Seeley was "a registered business in Pennsylvania," but the court nonetheless rejected any per se consent rule. "Defendants have clearly not consented to being sued in Pennsylvania, as is evident from their filing of preliminary objections on the basis of lack of personal jurisdiction." 206 A.3d at 1133 n.9. So, just as with the burden of proof issue in Hammons, a split of authority now exists in Pennsylvania Superior Court binding precedent on jurisdiction by consent.

But there's more. What caused us to write this post at all is the recent decision in In re Asbestos Products Liability Litigation (No. VI), ___ F. Supp.3d ___, 2019 WL 23997381 (E.D. Pa. June 6, 2019) ("Sullivan"), declaring §5301(a)(2)(i) unconstitutional to the extent it imposes "general" jurisdiction as a condition of foreign corporate registration, and generally disagreeing with just about everything that Webb-Benjamin held. Plainly, we were also too pessimistic in our " Youse Guys" post when we declared, "Forget about convincing a district court; nothing's going to happen on the federal front until the Third Circuit reconsiders and overrules Bane [v. Netlink, Inc., 925 F.2d 637 (3d Cir. 1991)]."

Judge Robreno, in his role as the supervising judge for the long-running (#4) Asbestos MDL in the Eastern District of Pennsylvania, wasn't inclined to act, as we described it, like a "lemming[] over the cliff," and to follow the doomed Bane decision – unlike the Superior Court in Webb-Benjamin and the half-dozen Pennsylvania federal district court decisions we mentioned in Youse Guys.

Instead, Sullivan held, first, that Bauman "brought about a sea change in the jurisprudence of exercising general personal jurisdiction over a foreign corporation." 2019 WL 23997381, at *1. Bauman enforced "a fairly straight forward bright-line test" for general jurisdiction in this situation, limited to a maximum of two jurisdictions, a corporation's state of incorporation and its principal place of business. Id. at *4. Because "a foreign corporation's 'substantial, continuous, and systematic' course of business in a state cannot be the basis for general personal jurisdiction," the question to be decided was:

[D]oes a foreign corporation knowingly and voluntarily consent to general jurisdiction in a state by registering to do business under a statutory regime that conditions the right to do business on the waiver of general jurisdiction?

Id. at *5.

Sullivan's answer: After Bauman, absolutely not.

Sullivan first acknowledged what our post-BMS jurisdictional " cheat sheet" demonstrates, that after (and, indeed, before) Bauman, the overwhelming majority of precedent nationwide refuses to permit general jurisdiction by consent:

Most courts that have confronted the issue have determined that their state registration statutes do not imply consent to general jurisdiction because, inter alia, the language of the statutes are not explicit in this regard. These courts hold that, at a minimum, any consent to general personal jurisdiction cannot be implied from the mere act of registration, and therefore, the purported consent is not knowingly given.

Id. at *5. But, Pennsylvania was "unique." Its statute is the only one in the country to codify a "general" jurisdiction waiver requirement.

A state statute, however, cannot prevail over federal Due Process principles enshrined in the Fifth and Fourteenth Amendments to the federal constitution. If it were otherwise, "other states would only need to add language to their registration statutes spelling out the jurisdictional consequences of registering to do business, while at the same time giving no real alternative to registration." Id. at *6. That can't happen. "[A] mandatory statutory regime purporting to confer consent to general jurisdiction in exchange for the ability to legally do business in a state is contrary to the rule in [Bauman] and, therefore, can no longer stand." Id. at *7 (footnote omitted).

Nor can the "archaic" "fiction" of "consent" defeat the Due Process limitations on general jurisdiction. Id. at *5-6. The oxymoron of coerced consent, premised on a statute demanding waiver of defenses to general jurisdiction or else being considered an outlaw in the jurisdiction, creates a "Hobson's choice" that cannot be "consent." Id. at *7.

[T]he Pa. Statutory Scheme conditions the benefit of certain privileges of doing business in Pennsylvania upon the surrender of the constitutional right, recognized in [Bauman], to be subject to general personal jurisdiction only where the corporation is "at home."

Id. That is the very definition of an unconstitutional condition. A "state cannot condition a benefit generally available to others in the state on the surrender of a constitutional right." Id. at *8 (citations omitted). "[T]he logical foundation of the unconstitutional conditions doctrine applies with equal force in any case in which the enjoyment of a government-sponsored benefit is conditioned upon a person's nonassertion of any constitutional right." Id. (citations and quotation marks omitted).

[O]ut-of-state corporations seeking to exercise their right to engage in commerce in Pennsylvania have only two unsatisfactory choices: (1) register and therefore consent to general personal jurisdiction in all cases; or (2) not register and be denied the opportunity to "do business" in the state. Given the fundamental importance of the ability to engage in interstate commerce, this Court concludes that the mandatory nature of the statutory consent extracted by [§5301(a)(2)(i)] is, in fact, functionally involuntary. As a result, it is not true consent at all.

Sullivan, 2019 WL 2399738, at *8 (citation omitted). Modern "consent" in personal jurisdiction cases is limited to case-specific actions by defendants. Id. at *9 ("limited to the parties to the transaction or discrete disputes").

Thus, the Pennsylvania legislature could not create "general" jurisdiction in Pennsylvania on lesser facts than Bauman's "at home" standard:

[T]he Pa. Statutory Scheme allows Pennsylvania to impermissibly extract consent at a cost of the surrender of a constitutional right. Absent voluntary consent, [Bauman] teaches that a corporation is only subject to general jurisdiction where it is "at home." The Pa. Statutory Scheme impermissibly re-opens the door to nation-wide general jurisdiction that [Bauman] firmly closed. Therefore, the Court concludes that the Pa. Statutory Scheme violates the Due Process Clause and is unconstitutional.


Finally, Webb-Benjamin and all of the adverse federal district court precedent, relied on the pre-Bauman Third Circuit decision in Bane. The Third Circuit itself has recognized that, "[w]hen a constitutional standard is replaced by newer Supreme Court law contrary to the law of the circuit, 'the old standard [is] not binding' on lower courts." Sullivan, 2019 WL 2399738, at *10 (quoting Planned Parenthood of Southeastern Pennsylvania v. Casey, 947 F.2d 682, 697-98 (3d Cir. 1991), aff'd in part, rev'd in part on other grounds, 505 U.S. 833 (1992)).

Bye-bye Bane. Bauman "effectively disassembled the legal scaffolding upon which Bane was based." Sullivan, 2019 WL 2399738, at *9.

[T]he result obtained under Bane (general personal jurisdiction over a foreign corporation by statutory consent) cannot stand under the new constitutional standard adopted in [Bauman] (general personal jurisdiction only where the foreign corporation is at home). Thus, this Court is bound to apply the new [Bauman] standard not withstanding previous circuit law.

Id. at *10.

We've discussed before why expansive general jurisdiction is absolutely critical to litigation tourism in asbestos cases – since asbestos plaintiffs' litigation model depends on indiscriminately naming scores of defendants. Unless asbestos plaintiffs sue in their own home states (a perfectly reasonable requirement, in our opinion), only a small percentage of those defendants will be "at home" in any other jurisdiction. Thus, it is not surprising that a tour de force decision like Sullivan would arise from the Asbestos MDL. For the same reasons, it is a certainty that Sullivan will be appealed to the Third Circuit, and as we hoped in our Youse Guys post, that court will finally get the chance to reconsider Bane in light of Bauman. Even better, such reconsideration will be on the basis of the powerful Sullivan rationale. Thus, as we said above, we are feeling more optimistic about this aspect of the Pennsylvania personal jurisdiction wars as well. Maybe we can help haul Pennsylvania out of the jurisdictional deep end after all.

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

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