Murray, K. v. American LaFrance,LLC ( 2018 )

J-A22039-17
2018 Pa. Super. 267
KENNETH MURRAY, ROBERT : IN THE SUPERIOR COURT OF
SCHNALL, MICHAEL SCOTT, JOHN : PENNSYLVANIA
SENESE, JOHN SHURINA, JOHN :
SIGNORILE, KEVIN SOKOL, :
ANTHONY TRICARICO, FRANK :
VENTRELLA, JOSPH VITALE, PATRICK :
VOGT, HENRY WHITE, WILLIAM :
WHITE, THOMAS WOSKA AND :
WILLIAM YOUNGSON, : No. 2105 EDA 2016
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Appellants :
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v. :
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AMERICAN LAFRANCE, LLC AND :
FEDERAL SIGNAL CORPORATION :
Appeal from the Order May 25, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): November Term, 2015 No. 02536
ANDREW BURNS, DOUGLAS : IN THE SUPERIOR COURT OF
KALBACHER, MICHAEL KOZAK, : PENNSYLVANIA
KEVIN KUBLER, JAMES LEMONDA, :
JOSEPH LOCHER, PATRICK LYONS, :
JOHN P. MALLEY, JOE :
MASTERSON, BRIAN MCDADE, :
KEVIN MCENERY, WILLIAM :
MONTEVERDE, VINCENT MOSCA, :
GERARD MURTHA, KEITH : No. 2106 EDA 2016
PALUMBO, JOEL PATTI, RICHARD :
PEITLER, DONALD REILLY, MARIO :
ROSATO, ROBERT RYAN AND :
FRANCIS TRAPANI :
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Appellants :
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v. :
:
J-A22039-17
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AMERICAN LAFRANCE, LLC AND :
FEDERAL SIGNAL CORPORATION
Appeal from the Order May 25, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): November Term, 2015 No. 02494
MIGUEL MORENO, NEIL MULLINS, : IN THE SUPERIOR COURT OF
JOHN NEVOLA, ROBERT O'FLAHERTY, : PENNSYLVANIA
JAMES O'ROURKE, MICHAEL :
PAGLIUCA, SAMUEL PANASCI, :
RONALD PATTILIO, JOEL PERECA, :
DANIEL PERITORE, VINCENT PINTO, :
CHRISTOPHER RAMOS, ROBERT :
REICH, ROCCO RINALDI, JAMES :
RUSSO, GREGORY SALONE, JAMES : No. 2107 EDA 2016
SAVARESE, WILLIAM SCHEU, :
KENNETH SMITH, JOHN SULLIVAN :
AND WARREN TERRY :
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Appellants :
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v. :
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AMERICAN LAFRANCE, LLC AND :
FEDERAL SIGNAL CORPORATION :
Appeal from the Order May 25, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): November Term, 2015 No. 02522
MICHAEL FELDMAN, RONALD : IN THE SUPERIOR COURT OF
FERRANTE, CHARLES FEYH, DONALD : PENNSYLVANIA
FLORE, JOHN FORTUNATO, FRANK :
GACCIONE, ROBERT GLEISSNER, :
JAMES HELFRICH, FRANK INGOGLIA, :
ROBERT LABATTO, JOHN LILLIS, :
THOMAS LYONS, EUGENE :
MAHLSTED, JAMES MASONE, :
EDWARD MAURO, SEAN MCCOYD, : No. 2108 EDA 2016
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J-A22039-17
JOHN MCGONIGLE, EUGENE :
MCGOWAN, JR., JOHN MCLAUGHLIN, :
ERIC MICHELSEN AND PAUL MILLER :
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Appellants :
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v. :
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AMERICAN LAFRANCE, LLC AND :
FEDERAL SIGNAL CORP. :
Appeal from the Order May 25, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): November Term, 2015 No. 02514
RICHARD BARBARISE, JAMES : IN THE SUPERIOR COURT OF
BERGHORN, STEVEN BERNIUS, : PENNSYLVANIA
VASILIOS CHRISTODOULOU, :
GAETANO DIMAURO, JOHN FLYNN, :
WILLIAM GRAHAM, PETER :
GUNTHER, THOMAS LORELLO, JAMES :
MANGRACINA, NORMAN MARSTON, :
JOSEPH MAURER, ROBER MCGUIRE, :
ROBERT MOCCIA, JOHN MORABITO : No. 2109 EDA 2016
WILLIAM MUNDY, STANLEY :
PEACOCK, SALVATORE ROSINA, :
DONALD RUDDEN, THOMAS SCALLY, :
ROBERT SCHULTZ, PATRICK :
SCHWEIGER, RICHARD SCOTT, :
FRANK SFORZA, PATRICK SHANNON, :
EDMUND SULLIVAN, FREDERICK :
SUTTON, FRANCIS ULMER, RICHARD :
WALIGOVSKA, PAUL WEIS, JUSTIN :
WERNER AND RUDY WICKLEIN :
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Appellants :
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v. :
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AMERICAN LAFRANCE, LLC AND :
FEDERAL SIGNAL CORPORATION :
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J-A22039-17
Appeal from the Order May 25, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): December Term, 2015 No. 000187
ROOSEVELT ADAMS, ANTHONY : IN THE SUPERIOR COURT OF
ASARO, EUGENE BIANCONE, : PENNSYLVANIA
SALVATORE BONGIOVANNI, :
STEPHEN BROWN, MICHAEL CAIN, :
ROBERT CANZONERI, MICHAEL :
CARLIN, RAYMOND CLANCY, CASEY :
COLWELL, ROBERT CONDON, :
CHRISTIAN CORBIN, THOMAS :
COURTENAY, DANIEL COYLE, : No. 2110 EDA 2016
RAYMOND CREEDE, AUSTIN :
CSORNY, FRANK DEANGELO, :
PATRICK DIMICHELE, JOHN :
DRISCOLL AND KENNETH ERB :
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Appellants :
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v. :
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AMERICAN LAFRANCE, LLC AND :
FEDERAL SIGNAL CORPORATION :
Appeal from the Order May 25, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): November Term, 2015 No. 002490
RICHARD ABBOTT, VINCENT : IN THE SUPERIOR COURT OF
ANZELONE, RICHARD BURBAN, : PENNSYLVANIA
DANIEL BUTLER, EDWARD CACHIA, :
VICTOR CARLUCCI, JOSEPH CLERICI, :
DERMOTT CLOWE, FRED CORTESE, :
ANTHONY CUMMO, STEVEN :
FERRARO, ROCCO FERTOLI, DAVID :
FISCHBEIN, CHARLES FORTIN, :
STEVEN GRECO, GARY HOEHING, : No. 2111 EDA 2016
WILLIAM HOPKINS, GREGORY :
HORAN, SCOTT HUMMEL, JOSEPH :
INGRISANI AND RONALD PATTILIO :
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J-A22039-17
Appellants :
:
:
v. :
:
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AMERICAN LAFRANCE, LLC AND :
FEDERAL SIGNAL CORPORATION :
Appeal from the Order May 25, 2016
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): November Term, 2015 No. 002492
BEFORE: BOWES, J., LAZARUS, J., and PLATT*, J.
DISSENTING OPINION BY BOWES, J. FILED SEPTEMBER 25, 2018
I respectfully dissent. This case does not involve Pennsylvania in any
meaningful way. Appellants, who comprise several plaintiffs from
Massachusetts, New York, and Florida, sued Federal Signal Corporation
(“Appellee”), a Delaware company with its principal place of business in
Illinois, for injuries that allegedly occurred in New York. Appellants’ pleading
failed to establish the grounds for Pennsylvania to exercise personal
jurisdiction over the out-of-state Appellee. Therefore, I believe that the trial
court properly sustained Appellee’s preliminary objection to the complaint and
dismissed the claims against it for lack of personal jurisdiction.1
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1Appellants initially sued six different companies; however, the claims against
all of the defendants except Appellee were either dismissed with prejudice or
withdrawn.
* Retired Senior Judge assigned to the Superior Court.
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First, as Appellants neglected to assert in the trial court the particular
ground for personal jurisdiction that it now raises on appeal, the current
argument is waived. Thus, unlike my learned colleagues, I would not address
Appellants’ fresh claim that Pennsylvania has general personal jurisdiction
over Appellee due exclusively to its 1969 registration with the Pennsylvania
Department of State as a foreign corporation pursuant to 15 Pa.C.S. § 411(a).
Second, to the extent that this issue could be construed as being properly
before us notwithstanding Appellants’ defective pleading and failure to raise it
below, for the reasons I explain infra, this claim fails due to the fact that the
section of the long-arm statute2 that is the lynchpin of Appellants’ argument
did not exist when Appellee registered as a foreign corporation. Accordingly,
Appellee cannot be deemed to have consented to general personal jurisdiction.
In addition to expounding upon the foregoing reasons for my dissent, I
write independently to highlight the incompatibility of the jurisdiction-by-
registration construct where, as here, Pennsylvania has absolutely no
connection to either party or the cause of action. I concede that jurisdiction
via registration was affixed to our jurisprudence following this Court’s recent
holding in Webb-Benjamin, LLC v. International Rug Group,__ A.3d __,
2018 Pa. Super. 187 (filed June 28, 2018), which adopted the consent analysis
first proffered by the Third Circuit Court of Appeals in Bane v. Netlink, Inc.,
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2 42 Pa.C.S. § 5301(a)(2)(i), defined infra.
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925 F.2d 637 (3d Cir. 1991), and reiterated by a Pennsylvania district court
in Bors v. Johnson & Johnson, 208 F. Supp. 3d 648 (E.D. Pa. 2016).
However, I believe that the present case underscores the conceptual flaw in
perpetuating a legal fiction that blindly equates the administrative act of
registration as a foreign corporation with express consent to general personal
jurisdiction.
Stated plainly, I believe that the federal jurisprudence underpinning the
Webb-Benjamin Court’s decision is flawed. The core principle therein, that
registration is tantamount to consent to personal jurisdiction, is incongruous
with the fundamental aspect of due process that our Supreme Court first
highlighted in International Shoe Co. v. Washington, 326 U.S. 310, 319
(1945), i.e., protecting an individual’s liberty interest against being subjected
to binding judgments in a foreign forum with no meaningful relationship. In
my view, our current jurisprudence, which founds general personal jurisdiction
upon a foreign corporation’s compliance with a mandatory registration
requirement, falls short of this constitutional threshold.
Principally, I believe that Appellants’ current argument is waived
pursuant to Pa.R.A.P. 302(a) (“Issues not raised in the lower court are waived
and cannot be raised for the first time on appeal”). I reject the majority’s
explanation for excusing Appellants’ failure to assert this novel basis for
personal jurisdiction at any point before the trial court dismissed their
complaint. In overlooking Appellants’ omission below, the majority elected to
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frame the issue in relation to Appellee’s preliminary objections. Essentially, it
reasoned that since Appellee was the moving party, Appellants were not
required to proffer any response to Appellee’s preliminary objections. See
Majority Opinion at 7-8 (citing Dixon v. Northwestern Mutual, 146 A.3d
780 (Pa.Super. 2016)) (regarding a nonmoving party’s ability to challenge on
appeal the basis for sustaining a preliminary objections in the nature of a
demurrer). The majority’s statement of the law is accurate as it relates to the
parties’ respective burdens during preliminary objections. However, its
abridged analysis is incomplete insofar as that rationale ignores the controlling
question regarding Appellants’ obligation to plead a proper basis for
Pennsylvania to exercise personal jurisdiction over the foreign corporation,
which they inarguably failed to do.
Significantly, neither Dixon nor the case that this Court cited in support
of its holding therein, Uniontown Newspapers, Inc. v. Roberts, 839 A.2d
185, 190 (Pa. 2003) (overruling the Commonwealth Court order entered in
original jurisdiction action that sustained preliminary objection in the nature
of a demurrer), addressed Rule 302(a) waiver in relation to personal
jurisdiction. Dixon concerned the waiver of an argument challenging a
demurrer to potentially incompatible causes of action in a civil complaint.
Therein, we reiterated our High Court’s ensconced holding in Uniontown
Newspapers that the non-moving party to preliminary objections is not
required to defend the legal sufficiency of the claims actually raised in the
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complaint. We continued, “as long as a plaintiff asserts in a complaint a cause
of action, the plaintiff may assert any legal basis on appeal why sustaining
preliminary objections in the nature of a demurrer was improper.” Id. at 784.
I believe that the above-cited principle is inapplicable where, as here, the
issues relate to a trial court’s fundamental authority to enter judgment against
a defendant, as opposed to a demurrer or the legal sufficiency of a pleading
that is at least facially compliant.
As we explained in Sulkava v. Glaston Finland Oy, 54 A.3d 884 (Pa.
Super. 2012), when addressing a challenge to personal jurisdiction, the trial
court considers the evidence in the light most favorable to the non-moving
party. However, “[o]nce the moving party supports its objections to personal
jurisdiction, the burden of proving personal jurisdiction is upon the
party asserting it.” Id. at 889 (emphasis added); see also Webb-
Benjamin, supra at *2 (same). Thus, the non-waiver principles discussed
in Dixon and Uniontown Newspapers are inapposite. Stated another way,
regardless of whether Appellants were compelled to respond to Appellee’s
preliminary objection, once Appellee supported its objection to the
Pennsylvania court’s personal jurisdiction over it as an out-of-state defendant,
the burden shifted to Appellants to prove otherwise. The consequence of
Appellants’ failure to satisfy their burden of proving this Commonwealth’s
personal jurisdiction was the dismissal of their claim. Hence, in this context,
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the majority’s invocation of Dixon and Uniontown Newspapers is
unavailing.
Presently, Appellants’ pleadings asserted jurisdiction based upon
Appellee’s alleged continuous and systematic contacts with Pennsylvania.
However, as the trial court accurately determined, those contacts simply do
not exist. As Appellants failed to assert any valid grounds for Pennsylvania to
exercise personal jurisdiction over Appellee, including the grounds Appellants
seek to assert for the first time on appeal, the trial court properly dismissed
the claims against Appellee. Having failed to establish personal jurisdiction
below, I believe that Rule 302(a) prohibits Appellants from attempting to
assert for the first time on appeal an alternative basis for the court to invoke
jurisdiction.
Moreover, assuming arguendo that Dixon did somehow shield
Appellants from waiver, I believe that it is improper to manufacture general
personal jurisdiction over an out-of-state corporation from a single, statutorily
mandated, organizational document that was filed with the Commonwealth
approximately forty-seven years ago. As I outlined supra, the exercise of
general jurisdiction based solely on the mandatory registration to conduct
business in a state treads perilously close to violating the Due Process Clause
of the Fourteenth Amendment to the United States Constitution. Thus, rather
than the wholesale adoption of the federal court’s jurisprudence outlined in
Bors and Bane, unquestioningly and without critical analysis, I would require
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Appellants to adduce some evidence of contacts with Pennsylvania that
comport with the due process requirements that the United States Supreme
Court highlighted in Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).
In Burger King, the High Court explained that the Due Process Clause
restricted a state’s authority to exercise personal jurisdiction over non-
resident defendants. Id. at 471-72. The Court emphasized that a state’s
personal jurisdiction over a foreign defendant is dependent upon “the nature
and quality of the defendant’s contacts with the forum state.” Id. at 474.
Accordingly, in the absence of some “meaningful contacts, ties or relations,”
the forum state cannot exercise general personal jurisdiction over a foreign
defendant. Id. The High Court explained,
By requiring that individuals have ‘fair warning that a
particular activity may subject them to the jurisdiction of a foreign
sovereign,’ the Due Process Clause gives a degree of predictability
to the legal system that allows potential defendants to structure
their primary conduct with some minimum assurance as to where
that conduct will and will not render them liable to suit.
Id. at 472-73.
Thus, pursuant to those constitutional principles, a foreign company
situated similarly to Appellee cannot be subjected to the personal jurisdiction
of a forum state unless it has “fair warning that a particular activity” will
expose it to jurisdiction. Id. at 473. In my view, the Pennsylvania registration
requirement, which we now treat as now synonymous with “consent,” fails to
provide the requisite warning that our High Court envisioned as satisfying due
process in Burger King.
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I begin with a primer on the relevant statutory framework. Section
411(a) of the Pennsylvania Associations Code (“Associations Code”), 15
Pa.C.S. §§ 101-419, requires a foreign corporation or limited liability company
to register with the Pennsylvania Department of State prior to conducting
business in the Commonwealth. Section 411 of the Associations Code
provides, in pertinent part, as follows:
(a) Registration required.--Except as provided in section 401
(relating to application of chapter) or subsection (g), a foreign
filing association or foreign limited liability partnership may not do
business in this Commonwealth until it registers with the
department under this chapter.
....
(e) Governing law not affected.--Section 402 (relating to
governing law) applies even if a foreign association fails to register
under this chapter.
15 Pa.C.S. § 411(a) and (e).
Notwithstanding the conclusions of our federal courts in Bors, and
Bane, which I examine infra, foreign businesses do not expressly consent to
personal jurisdiction in Pennsylvania during the registration process. Indeed,
as referenced above, the pertinent sections of the Associations Code does not
broach the subject of jurisdiction at all. At most, the Associations Code
provides that a foreign corporation “shall enjoy the same rights and privileges
as a domestic entity and shall be subject to the same liabilities, restrictions,
duties and penalties now in force or hereafter imposed on domestic entities,
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to the same extent as if it had been formed under this title.”3 15 Pa.C.S. §
402. Clearly, that is not an expression of consent to the general personal
jurisdiction by the Commonwealth for all cases regardless of the remoteness
of that forum to any aspect of the lawsuit.
While the Associations Code does not impose personal jurisdiction upon
foreign corporations as a consequence of registration, our version of a long-
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3 Section 402(d) of the Associations Code governs the rights and
responsibilities of foreign associations. That proviso states:
(d) Equal rights and privileges of registered foreign
associations.--Except as otherwise provided by law, a registered
foreign association, so long as its registration to do business is not
terminated or canceled, shall enjoy the same rights and privileges
as a domestic entity and shall be subject to the same liabilities,
restrictions, duties and penalties now in force or hereafter
imposed on domestic entities, to the same extent as if it had been
formed under this title. A foreign insurance corporation shall be
deemed a registered foreign association except as provided in
subsection (e).
15 Pa.C.S. § 402(d).
While § 402(d) indicates that foreign corporation will be subject to the
same liabilities, restrictions, duties and penalties as domestic corporations,
these general references to corporate responsibilities do not spell out the
jurisdictional consequences of registration. To the extent that the reasoning
underlying Bors and Bane would extrapolate notice of consent to jurisdiction
from the list of responsibilities enumerated in § 402(d), I highlight that § 402
purports to apply to foreign corporations regardless of actual registration. See
15 Pa.C.S. § 411(e). Thus, notwithstanding the express application of §
402(d) to non-registered foreign corporations, it would be illogical to purport
to impute personal jurisdiction over a non-registered foreign corporation with
no contacts to the Commonwealth. In my view, it is equally untenable to
implicitly broaden the responsibilities in § 402(d) in relation to a foreign
corporation with no contacts simply because it filed the state-mandated
paperwork.
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arm statute does. The long-arm statute, 42 Pa.C.S. §§ 5321-5329, which
authorizes the exercise of personal jurisdiction to the fullest extent permitted
under the Due Process Clause, is designed to further the Commonwealth’s
interest in providing its residents a forum to sue nonresidents for injuries
caused by nonresidents. See § 5322(b) (“Exercise of full constitutional power
over nonresidents”); Leonardo Da Vinci's Horse, Inc. v. O'Brien, 761
F. Supp. 1222 (E.D. Pa. 1991). As it relates to the case at bar, § 5301(a)(2)(i)
extends the Commonwealth’s general personal jurisdiction over, inter alia,
entities that “[qualify] as a foreign corporation under the laws of this
Commonwealth.” 42 Pa.C.S. § 5301(a)(2)(i). Specifically, that statute
provides,
(a) General rule.--The existence of any of the following
relationships between a person and this Commonwealth shall
constitute a sufficient basis of jurisdiction to enable the tribunals
of this Commonwealth to exercise general personal jurisdiction
over such person, or his personal representative in the case of an
individual, and to enable such tribunals to render personal orders
against such person or representative:
....
(2) Corporations.—
(i) Incorporation under or qualification as a foreign
corporation under the laws of this Commonwealth.
(ii) Consent, to the extent authorized by the consent.
(iii) The carrying on of a continuous and systematic part of
its general business within this Commonwealth.
42 Pa.C.S. § 5301(a)(2)(i)-(iii) (emphasis added).
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The Webb-Benjamin Court relied upon the foregoing legislative
structure, by way of the federal courts’ analysis in Bors, to conclude that the
foreign defendant consented to the trial court’s exercise of personal
jurisdiction simply by registering as a foreign business in compliance with §
411(a).4 The flaw with that rationale is that it is founded on an ipso facto
formulation that equates mandatory registration with consent. From my
perspective, classifying something as consent does not make it so. Indeed,
as I previously highlighted, the Association Code does not address jurisdiction
or consent at all. Thus, I disagree with my esteemed colleagues on the basic
principle that complying with a mandated registration requirement in the
Associations Act is tantamount to a statement of consent under an unrelated
statute, which the registrant may not be aware exists because it is not
referenced in the registration statute explicitly. I believe the High Court’s
articulation of due process in this context demands more.
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4 Notwithstanding my reasoned objections to the Webb-Benjamin Court’s
indiscriminate endorsement of Bors, I agree that we are unquestionably
bound by stare decisis to follow that precedent when applicable. Nevertheless,
as noted in the body of my dissent, consent-by-registration does not apply to
this case because the statutory predicate for that construct did not exist in
1969, when Appellee registered as a foreign corporation. I also highlight that
the facts underlying Webb-Benjamin are distinguishable from the facts of
the case at bar insofar as the plaintiff therein, Webb-Benjamin, was a
Pennsylvania company who filed suit against a Connecticut company based
upon breach of contract. Thus, in contrast to the instant scenario, that case
validates the purpose of the long arm statute’s extension of personal
jurisdiction to a foreign corporation that is alleged to have injured a
Pennsylvania company. That key dynamic is missing herein.
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Read in para materia, the registration requirement in the Associations
Code and the extension of personal jurisdiction over foreign registrants in the
long-arm statute effectively snare foreign corporations and draw them into
the Commonwealth’s jurisdiction, presumably for the benefit of its residents.
However, in a situation like the current case, where no nexus exists between
the lawsuit and Commonwealth or its residents, the reason for extending
jurisdiction remains unmet. In fact, rather than benefit a Pennsylvania
resident, the present application of the jurisdiction-by-registration paradigm
diverts the Commonwealth’s resources to non-resident litigants and hinders
the resolution of civil actions over which the Commonwealth has a legitimate
interest in exercising jurisdiction. This result is indefensible.
Thus, rather than invoke the long-arm statute to subject foreign
corporations with no connections with Pennsylvania to general jurisdiction
based exclusively upon an administrative action, I would construe a foreign
corporation’s decision to register pursuant to § 411(a) as its acknowledgment
that the Commonwealth may exercise personal jurisdiction over lawsuits that
stem from the corporation’s suit-related activities within the Commonwealth.
Stated another way, the act of registration should be interpreted as conferring
specific, as opposed to general, jurisdiction over a corporation in relation to
its in-state activities. This narrow view of consent by registration corresponds
with the rationale for exercising jurisdiction under the minimum contacts
standard the High Court discussed in Daimler AG v. Bauman, 134 S. Ct. 746
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(2015), and it avoids the due process concerns that I believe proliferate in the
federal courts’ analyses in Bane and Bors.
Next, I summarize the development of the salient case law in order to
explain my view that the absence of express notice in the Associations Code
and the lack of a viable alternative for a foreign business to avoid “consent”
undercut the notion that jurisdiction by registration satisfies the “fair warning”
standard that our High Court articulated in Burger King, supra at 472-73
(“Due Process Clause gives a degree of predictability to the legal system that
allows potential defendants to structure their primary conduct with some
minimum assurance as to where that conduct will and will not render them
liable to suit”) or the constitutional protections outline in International Shoe,
supra at 319 (protection of liberty interest against being subjected to binding
judgments in foreign forum with no meaningful relationship).
In Bane, the Third Circuit Court of Appeals confronted an issue similar
to the case at bar and reversed the federal district court’s order dismissing an
age discrimination complaint filed in the Eastern District of Pennsylvania due
to the lack of personal jurisdiction over the foreign defendant, Netlink, Inc. In
rejecting the district court’s analysis, the Bane Court held that under
§ 5301(a)(2)(i), the mere act of registration “carries with it consent to be sued
in Pennsylvania courts.” Id. at 640. The court reasoned that, by registering
to do business in Pennsylvania, Netlink “purposefully availed itself of the
privilege of conducting activities within the forum State, thus invoking the
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benefits and protections of its laws.” Id. (quoting Burger King Corp., supra
at 475). Significantly, the Bane Court neglected to reference the actual
registration requirements under the Associations Code—as that statute does
not inform foreign corporations of the consequences of compliance. Instead,
referencing only § 5301(a)(2)(i) of the long-arm statute, it concluded that
Pennsylvania had general personal jurisdiction over Netlink. Id.
Subsequently, in Daimler, the U.S. Supreme Court honed its due
process jurisprudence in the determination of whether a state has general
personal jurisdiction based upon a non-resident’s contact with that forum. As
the High Court framed the issue, “the inquiry . . . is not whether a foreign
corporation’s in-forum contacts can be said to be in some sense continuous
and systematic, it is whether that corporation’s affiliations with the State are
so continuous and systematic as to render it essentially at home in the forum
State.” Id. at 139 (quotation marks omitted) (quoting Goodyear Dunlop
Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).
Thereafter, in Bors, a Pennsylvania federal district court invoked the
Bane Court’s rationale in order to conclude that exercising jurisdiction over a
registrant pursuant to § 5301(a)(2)(i) was not constitutionally infirm. Again,
equating the registration requirement with consent, the Bors Court reasoned
that, since consent remained a valid basis to invoke personal jurisdiction after
Daimler, a foreign corporation cedes to jurisdiction “by registering to do
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business under a statute which specifically advise the registrant of its consent
by registration.” Id. at 655.
In Gorton v. Air & Liquid Systems Corp., 303 F. Supp. 3d 278 (M.D.
Pa. 2018), the federal district court drafted a comprehensive, in-depth
analysis of the nuanced effect that Daimler has upon Pennsylvania
jurisprudence. The Gorton Court highlighted that the majority of jurisdictions
have interpreted the Daimler Court’s holding as a statement that mere
compliance with a registration statute is not a sufficient basis to exercise
personal jurisdiction over a foreign corporation. Id. at 296-97 (collecting
cases). However, the Gorton Court acknowledged that, where the
registration statute provides express notice of the consequences of
registration, a foreign registrant consents to general jurisdiction. Id. Thus,
imputing knowledge of § 5301 of Pennsylvania’s long-arm statute upon a
registrant under the Associations Code, the Gorton Court concluded that the
long-arm statute establishes consent. It stated, “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.” Id.
Most recently, in Webb-Benjamin, this Court cited Bors and Gorton
approvingly in a similarly-succinct adoption of the principle first articulated in
Bane, i.e., that consent by registration is a valid basis to exercise personal
jurisdiction. See Webb-Benjamin, supra at *4,*5. Specifically, the Webb-
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Benjamin Court concluded that the Daimler Court’s holding did not
eviscerate consent as a mechanism to obtain general personal jurisdiction.
Id. at *5. Fundamentally, that statement is an accurate reiteration of
established law. Importantly, however, the issue is not whether Daimler
precludes jurisdiction by consent; clearly it does not. Rather, the problem
posed by the application of § 5301(a)(2)(i) in the case at bar is whether
consent that is coerced as a consequence of registration under a separate
statute satisfies the due process concerns the United States Supreme Court
highlighted in International Shoe. In my view, it does not. Stated more
eloquently, “[c]oerced consent [is] an oxymoron [that] cannot legitimately
form the basis . . . of general jurisdiction over a corporation.” Tanya J.
Monestier, Registration Statutes, General Jurisdiction, and the Fallacy of
Consent, 36 Cardozo L. Rev. 1343, 1348 (2015).
Reduced to its irreducible minimum, jurisdiction-by-registration likens
compliance with the § 411(a) registration mandate to an express waiver of
due process. The calculus of the analysis is linear: “registration equals
consent equals personal jurisdiction.” Monestier, supra at 1379. As it is
beyond cavil that a person may consent to personal jurisdiction, that side of
the equation is unassailable. However, the foundational assumption of the
opposing side of formula is that compulsory registration is a valid form of
consent. It is not.
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The fundamental fallacy with the principle of registration by consent is
the idea that consent is traditionally considered volitional and deliberate, i.e.,
it involves a choice to submit. Pursuant to the majority’s view, as supported
by our recent holding in Webb-Benjamin, the mere act of complying with
the mandated registration under § 411(a) of the Associations Code is
tantamount to consent. However, as I have repeatedly highlighted, the
Associations Code does not inform the registrant of the jurisdictional
consequences of registration. Without providing notice of the consequences
of completing the government issued form, the “consent” that the
Commonwealth purportedly garners under § 411 is utterly devoid of the
deliberate volition that is the hallmark of consent. In this scenario, the
registrant blindly relinquishes its fundamental due process rights and is
mechanically subjected to the general jurisdiction of a forum with which it has
no specific relationship.
In my view, to satisfy the rigors of due process, a consent-through-
registration scheme must demonstrate that a registrant understands, or at
least has notice of, the jurisdictional consequences of registration. As one
commenter framed this issue,
[The] absence of minimum contacts cannot be palliated by
employing a consent theory. While the Supreme Court has
pronounced that certain legal arrangements may actually
constitute a consent to jurisdiction without regard to minimum
contacts, the Court has also held that such consent is ineffective
in the absence of notice. Thus, even assuming the somewhat
doubtful proposition that a state may constitutionally exact
consent from a nonresident corporation to suit for any and all
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causes of action as a condition to registering to do business in the
state, the nonresident would, at a constitutional minimum, have
to be aware that its registration would result in its amenability to
the state’s plenary authority.
Charles W. Rhodes, The Predictability Principle in Personal Jurisdiction
Doctrine: A Case Study on the Effects of a “Generally” Too Broad, But
“Specifically” Too Narrow Approach to Minimum Contacts, 57 Baylor L. Rev.
135, 235 (2005) (footnotes omitted). Another author observed, “The idea
that a corporation can fill out certain state-mandated forms that a court may
deem to constitute consent to all-purpose jurisdiction, without the corporation
knowing about that consequence in advance, is repugnant to any basic
understanding of consent.” Monestier, supra at 1388.
I agree that § 5301(a)(2)(i) of Pennsylvania’s long-arm-statute states
that it extends the Commonwealth’s general personal jurisdiction over a
registered foreign corporation. However, even presuming a foreign company’s
awareness of the long-arm statute at the time of registration, I would not
manufacture consent from the Commonwealth’s unilateral exertion of general
personal jurisdiction. Short of the notice and deliberate volition that I
discussed above, jurisdiction under § 5301(a)(2)(ii) is founded on no more
than the prevailing legal fiction that registration equates to consent. Again,
while registration may form the basis of personal jurisdiction in some
circumstances where the registrant has a connection to the jurisdiction, a
foreign corporation’s registration under Pennsylvania’s statutory rubric is not
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grounded in the traditional idea of consent. Instead, it is founded upon
coerced consent insofar as no viable alternative to registration exists.
Even if we interpret the collective legislation as clearly articulating the
jurisdictional consequences of complying with the registration requirement,
and therefore putting the registrant on notice, the assertion of general
personal jurisdiction would still violate due process because it presents a
foreign corporation with the Hobson’s choice of either (1) submitting to
general personal jurisdiction in cases where, as here, neither party nor the
cause of action has any relationship with the forum; (2) violating the
Association Code’s registration requirements and subjecting itself to the
sanction outlined in § 411(b); or (3) avoiding the state entirely. However, as
Professor Monestier pointed out, even these options are inadequate when one
considers that every state can assert the prevailing legal fiction that
registration-based consent satisfies the dictates of due process and
constitutionally compel a corporation to consent to personal jurisdiction in that
forum. See Monestier, supra at 1390 (“If consent is a legitimate rational for
registration-based general jurisdiction, then all fifty states could
constitutionally exercise it.”). Thus, the only real options are to comply with
the registration requirement and be deemed to have consented to general
personal jurisdiction or flout the various registration requirements and risk the
consequences of disobedience. Stated another way, “a corporation’s choices-
-other than consenting to general jurisdiction--are limited. It can simply not
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do business in the United States or it can deliberately break the law.” Id.
This dilemma begs the question—if the essential component of consent is a
genuine choice to withhold it, where a party has no alternative but to
acquiesce to a forum’s exertion of personal jurisdiction, how can that consent
be deemed voluntary? In my view, it cannot. If the foreign corporation wishes
to avoid sanctions, it has no choice but to comply with the registration
requirement and the concomitant submission to personal jurisdiction in that
forum. In this scenario, the “consent” amounts to little more than a coerced
waiver of due process.
A sister jurisdiction in Texas reached the same conclusion while
addressing the issue of coerced consent:
The idea that a foreign corporation consents to jurisdiction . . . by
completing a state-required form, without having contact with
[the forum], is entirely fictional. Due process is central to consent;
it is not waived lightly. A waiver through consent must be willful,
thoughtful, and fair. “Extorted actual consent” and “equally
unwilling implied consent” are not the stuff of due process.
Leonard v. USA Petroleum Corp., 829 F. Supp. 882, 889 (S.D. Tex. 1993).
Identical concerns permeate the consent-by-registration construct that this
Court validated in Webb-Benjamin.
Finally, as I referenced at the outset of this dissent, Appellants’ claim
fails under the facts of this case. We cannot impute Appellee’s consent to
general jurisdiction under the consent-by-registration construct herein
because the predicate statute that extends general personal jurisdiction over
a registrant, § 5301, did not exist during 1969, when Appellant registered as
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a foreign corporation. Under these facts, notice, whether express or implied,
is absent.
The Gorton Court addressed a similar issue and concluded that
“[b]ecause the explicit general-jurisdiction language in section 5301 did not
exist prior to 1978, a [foreign] defendant qualified to do business in
Pennsylvania prior to that time . . . would not be subject to the personal
jurisdiction of courts located in Pennsylvania based only upon that defendant’s
qualification as a foreign corporation in the state.” Gorton, supra at 298. I
agree with this legal proposition and would apply it in the present case. In
addition, while I observe that the Gorton Court ultimately concluded that two
of the foreign defendants who registered prior to the statute’s effective date
consented to general personal jurisdiction retroactively because the plaintiff
demonstrated that the foreign defendants “continued to make filings in
Pennsylvania” after the statute’s effective date, that did not occur in this case.
Id. at 300, 301-02.
Instantly, Appellee did not consent to general jurisdiction because its
registration as a foreign corporation predated the § 5301 consent requirement
by nine years. Moreover, unlike the plaintiffs in Gorton, Appellants failed to
aver, much less document, that Appellee updated its registration status after
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1978, or that it otherwise adopted the consent requirement retroactively.5
Thus, contrary to the majority’s perspective herein, Pennsylvania law did not
expressly impose the consent requirement upon foreign registrants when
Appellee registered. Hence, there is no basis to conclude that Appellee
knowingly and voluntarily consented to the Pennsylvania court’s exercise of
general personal jurisdiction.
In conclusion, I believe that Appellants’ consent-by-registration argument is
waived, and the majority improperly reversed the trial court’s order dismissing
the case based upon an argument that was not leveled below. Moreover, in
my view, the mechanical application of consent-by-registration employs an
unsound perspective of “consent” that ignores both the lack of notice in the
Associations Code and the Supreme Court’s due process concern that a foreign
defendant has “fair warning” that it is exposed to a forum’s jurisdiction. To
remedy this situation, I would equate registration under § 411 with the
necessary “fair warning” that in-forum activities would subject it to personal
jurisdiction. Finally, even though we are bound by our recent holding in
Webb-Benjamin, Appellants’ claim fails because the long-arm statute that
forms the foundation for that legal construct postdates Appellee’s 1969
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5 While the Gorton Court seemingly placed the burden on the defendant to
disprove its retroactive consent to jurisdiction, it is unquestionably plaintiff’s
burden to overcome the defendant’s initial challenge and establish the
Commonwealth’s authority to impose personal jurisdiction. See Sulkava,
supra at 889 (“Once the moving party supports its objections to personal
jurisdiction, the burden of proving personal jurisdiction is upon the party
asserting it.”).
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registration under the Associations Code and Appellants neglected to
demonstrate that Appellees took any action to endorse the 1978 provision
after the fact. For of the all of forgoing reasons, I respectfully dissent.
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