Court Opinion

ID: 4315061
Source: CourtListenerOpinion
Date Created: 2018-09-25 16:29:00.206164+00
Date Added: 2024-06-11T14:44:34.591596
License: Public Domain

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
                                        :
                    Appellants          :
                                        :
                                        :
              v.                        :
                                        :
                                        :
 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                     :
                                       :
                     Appellants        :
                                       :
                                       :
               v.                      :
                                       :
J-A22039-17

                                         :
   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                        :
                                         :
                   Appellants            :
                                         :
                                         :
              v.                         :
                                         :
                                         :
 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

                                   -2-
J-A22039-17

 JOHN MCGONIGLE, EUGENE                  :
 MCGOWAN, JR., JOHN MCLAUGHLIN,          :
 ERIC MICHELSEN AND PAUL MILLER          :
                                         :
                   Appellants            :
                                         :
                                         :
              v.                         :
                                         :
                                         :
 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                :
                                         :
                   Appellants            :
                                         :
                                         :
              v.                         :
                                         :
                                         :
 AMERICAN LAFRANCE, LLC AND              :
 FEDERAL SIGNAL CORPORATION              :

                                   -3-
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                :
                                         :
                   Appellants            :
                                         :
                                         :
              v.                         :
                                         :
                                         :
 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           :
                                         :

                                   -4-
J-A22039-17

                       Appellants                :
                                                 :
                                                 :
                v.                               :
                                                 :
                                                 :
    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

____________________________________________

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.

                                           -5-
J-A22039-17

        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.,

____________________________________________

2   42 Pa.C.S. § 5301(a)(2)(i), defined infra.

                                           -6-
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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

                                      -7-
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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

                                      -8-
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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,

                                       -9-
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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

                                     - 10 -
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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.

                                     - 11 -
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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,

                                     - 12 -
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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-

____________________________________________

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.

                                          - 13 -
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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).

                                       - 14 -
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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.

____________________________________________

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.

                                          - 15 -
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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

                                      - 16 -
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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

                                     - 17 -
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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

                                     - 18 -
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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

                                     - 23 -
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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

                                    - 24 -
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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

____________________________________________

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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