Sunday, June 9, 2019

Dramatic Shift in Law of Jurisdiction in Pennsylvania Over Foreign Corporations

The case of In re Asbestos Products Liability Litigation (No. IV), No. 18-3622 (E.D. Pa. June 6, 2019 Robreno, J.), which was handed down on Friday, alters the course of personal jurisdiction law in Pennsylvania relative to corporations.

In reviewing the history of the law on this issue, the court noted that, in 2014, the United States Supreme Court decided the case of Daimler AG v. Bauman, 571 U.S. 117 (2014) which brought about “a sea change” in the jurisprudence of exercising general personal jurisdiction over a foreign corporation.

In Daimler, the United States Supreme Court held that under the Due Process Clause, subjecting a foreign corporation to general jurisdiction in every state in which it “engages in a substantial, continuous, and systematic course of business” was “unacceptably grasping.”

In this Asbestos Products Liabilty Litigation case, Judge Robreno noted that, under Daimler, the exercise of general jurisdiction over a foreign defendant (except in extraordinary circumstances) was limited to where the corporation was “at home,” namely, to those jurisdictions in which the foreign corporation was incorporated and where it maintained its principal place of business.  

Judge Robreno noted that, in contrast, Pennsylvania has long had a statute which requires a foreign corporation wishing to do business in Pennsylvania to register in Pennsylvania. Correspondingly, Pennsylvania law provides that such registration constitutes a sufficient basis for the exercise of general personal jurisdiction over the foreign corporation. 

As such, the courts in Pennsylvania had previously struggled with how to apply the law of Daimler in Pennsylvania.  Judge Robreno boldly laid that struggle to rest with his decision in the Asbestos Litigation case.

Judge Robreno concluded that: “(1) the Pennsylvania statutory scheme that requires foreign corporations to register to do business and, therefore, to consent to general personal jurisdiction in Pennsylvania, offends the Due Process Clause and is unconstitutional; and (2) the Third Circuit’s pre-Daimler decision in Bane v. Netlink, Inc., 925 F.2d 637 (3d Cir. 1991),  finding that, by registering to do business in Pennsylvania, a foreign corporation consents to general personal jurisdiction, is irretrievably irreconcilable with the teachings of Daimler, and can no longer stand.  

As such, it appears that the only way jurisdiction over foreign corporations can now exist in Pennsylvania is when the corporate defendant is “at home” here in Pennsylvania.  Stated otherwise, the Asbestos Products Liability Litigation case appears to lay down a bright line test that limits jurisdiction in Pennsylvania to those corporations who have a principal place of business in Pennsylvania or which are incorporated in the state of Pennsylvania.

Anyone wishing to review this In re Asbestos Products Liability Litigation (No. IV) decision may click this LINK.

UPDATE:  In an Order dated June 25, 2019, Judge Robreno certified the issue to the Third Circuit Court of Appeals for a decision as an interlocutory appeal. 

I send thanks to Attorneys James M. Beck of the Philadelphia office of the Reed Smith law firm for bringing this notable decision to my attention.

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