Appellate Division Holds That Just Registering to Do Business Equates to Consenting to Be Sued in Pennsylvania

In late June, the Pennsylvania Appellate Division decided Webb-Benjamin, LLC v. Int’l Rug Grp., LLC, 2018 Pa. Super. Lexis 742.  The petition for re-hearing was denied in late August, and no Petition for Allowance to Appeal has been filed before the Pennsylvania Supreme Court.

The most interesting aspect of this decision is insight it gives as to the court’s feeling about general jurisdiction.  This matter involves a Pennsylvania corporation (Plaintiff) and a Connecticut corporation (Defendant) that entered into a failed contractual relationship.  Defendant subsequently registered to do business in Pennsylvania, before the law suit was filed. The Defendant moved to dismiss for lack of general jurisdiction, which was granted by the trial court.  Specifically, the trial court decided that there is no general jurisdiction over a Connecticut corporation and that the Commonwealth could not retroactively obtain general jurisdiction, even though the Defendant was now registered to do business in PA. 

The appellate division reversed. The court first ruled that registering to do business in Pennsylvania equates consenting to general jurisdiction. This is significant in light of the recent US Supreme Court’s ruling in Daimler, in which the court said that a defendant can generally only be subject to general jurisdiction in its state of incorporation or primary place of business. However, in that case, the Court did note an exception whenever a defendant “consented” to jurisdiction. Since Pennsylvania’s long arm statute states that a company registered to do business in the Commonwealth is subject to jurisdiction, the Appellate Division ruled that Defendant consented. Thus, the court reconciled its ruling with Daimler, in way which will likely subject a large number of defendants to jurisdiction in Pennsylvania.

Second, the Appellate court held that defendant’s consent to jurisdiction was retroactive because the statute does not preclude it.

Although the Appellate Division decision in Webb-Benjamin is unpublished, the court had held in a published opinion issued over 20 years prior to the US Supreme Court’s decision in Daimler, that a foreign corporation that registered to conduct business in the Commonwealth consented to general jurisdiction there.

If you have any questions, please do not hesitate to contact Jason Boudwin at jboudwin@hoaglandlongo.com  or Daniel Kuszmerski at dkuszmerski@hoaglandlongo.com or call 732.545.4717.