Hunton Retail Law Resource

Since the United States Supreme Court’s decisions in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) and Daimler AG v. Bauman, 134 S. Ct. 746 (2014)—and particularly in light of the Court’s more recent decisions in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) and BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549 (2017)—courts across the country have applied a more exacting standard for assessing whether defendants can be subject to general personal jurisdiction in a particular forum. Under this standard, a plaintiff must demonstrate that the defendant’s contacts with the forum are so continuous and systematic as to render it “essentially at home” there. In most instances, a company is “essentially at home” only in the state where it is incorporated and the state where it operates its principal place of business. This has been a largely positive result for companies in the retail product industry that may have strategic incentive to avoid becoming subject to “all purpose” general personal jurisdiction in each state in which their products are sold.

Trial courts in Pennsylvania have presented an exception to this trend. Specifically, even after Goodyear and Daimler, Pennsylvania courts have relied on 42 Pa. Cons. Stat. § 5301 to conclude that any out-of-state company that registers to do business in Pennsylvania consents to the exercise of general personal jurisdiction there.

Although other courts across the country have rejected similar consent-based theories (e.g., Aspen Am. Ins. Co. v. Interstate Warehousing, Inc., 2017 IL 121281 and State ex rel. Norfolk S. Ry. Co. v. Dolan, 512 S.W.3d 41, 52–53 Mo. 2017), Pennsylvania trial courts have held that Section 5301 is unique in its operation. Specifically, because the statute expressly provides that registration to do business “shall constitute a sufficient basis” for the exercise of general personal jurisdiction, trial courts have held that the statute adequately notifies defendants of the consequences of registering and thus provides a constitutional basis for general personal jurisdiction through express consent.

Notwithstanding these decisions, Section 5301 is extremely difficult to reconcile with Supreme Court precedent. For example, if all states adopted statutes similar to Section 5301, Goodyear and Daimler—decisions enforcing defendants’ constitutional rights to due process—would be rendered largely irrelevant. To date, however, no post-Daimler opinion analyzing the constitutionality of Section 5301 has been issued from an appellate court.

Until that analysis comes, companies sued in Pennsylvania should remain cognizant of opportunities to explore the limits of Section 5301. A recent example of such an opportunity is the case of Gorton v. Air & Liquid Systems Corp., in the U.S. District Court for the Middle District of Pennsylvania, No. CV 1:17-1110, 2018 WL 1385531. There, the court considered whether several defendants could be subject to general personal jurisdiction in Pennsylvania for the adjudication of the plaintiff’s asbestos exposure claims, based on a theory of consent under Section 5301. At the outset, the court stated that Section 5301 is “subject to temporal limits”:

“[I]f a defendant’s alleged act or omission that exposed Mr. Gorton to asbestos occurred prior to the enactment of section 5301, i.e., prior to 1978, this court would not have general jurisdiction over that defendant based solely upon the defendant's qualification as a foreign corporation in Pennsylvania. Without the express language of section 5301 the court would not have a sufficient basis to conclude that the defendant knowingly and voluntarily consented to the general jurisdiction of Pennsylvania courts.”

Accordingly, the court analyzed (1) whether each defendant was registered to do business in Pennsylvania when the alleged acts or omissions occurred, and (2) whether each defendant’s alleged acts or omissions occurred after the enactment of Section 5301 in 1978. If either question was answered in the negative, the court found no basis to exercise consent-based general personal jurisdiction.

This case is one to watch moving forward. The court signaled an inclination to certify the personal jurisdiction question for interlocutory review, but first gave plaintiffs an opportunity to re-plead. In the meantime, Gorton provides defendants in Pennsylvania litigation that are registered to do business in the state—as many retailers are—a jumping off point for challenging consent-based jurisdiction under Section 5301 on temporal grounds. From a bigger picture perspective, retailers should also be cognizant of the potential litigation risk associated with maintaining a registration to do business in Pennsylvania in circumstances in which they are not actually doing business in the state.