Superior Court Declines to Expand Personal Jurisdiction over Foreign Corporations (PA)
In Fulano v. Fanjul Corp., the Pennsylvania Superior Court recently considered whether forty-one foreign plaintiffs could establish personal jurisdiction over four corporate defendants all located in different states or countries. Plaintiffs were forty-one Dominican agricultural workers who alleged they became sick after exposure to toxic chemicals while working in the Dominican Republic. Plaintiffs sued the corporate parents of their employers, Fanjul Corp. and Inicia Ltd, who were both large sugar producers and distributors based in Florida and the British Virgin Islands, as well as the pesticide manufacturers, Drexel Chemical Company and UPL Limited, who were based in Tennessee and India, respectively. Plaintiffs asserted various theories attempting to establish personal jurisdiction over each of the Defendants and Defendants filed preliminary objections for lack of personal jurisdiction. The trial court sustained the Defendants’ objections and dismissed the claims with prejudice. Plaintiffs appealed. The Superior Court affirmed the trial court’s decision.
Regarding the sugar producers, the Superior Court determined that plaintiffs could not assert a “stream of commerce” theory. Although the producers’ products made its way to Pennsylvania, Plaintiffs did not allege they were injured from those products. Plaintiffs failure to show injury from these products proved fatal to their personal jurisdiction claim. As the Superior Court noted, such a theory would subject a foreign corporation to any forum in which their products entered, regardless of their connection to a claim.
Regarding Drexel, Plaintiffs attempted to show that Drexel contacts with Pennsylvania were “so substantial as to render it at home in Pennsylvania.” The Superior Court rejected this argument, noting that approximately 5% of Drexel revenue came from the Pennsylvania market, Drexel sole presence in Pennsylvania was a leased warehouse in Bucks County, and Drexel did not directly advertise or market its products in Pennsylvania. Plaintiffs also alleged that personal jurisdiction existed over Drexel because Drexel registered its products under Pennsylvania’s Pesticide Control Act. The Superior Court rejected this argument, as well, noting that the Pesticide Control Act does not notify its registrants of their consent to jurisdiction by registering.
Finally, the Superior Court declined to follow Plaintiffs’ argument that UPL had an “alter-ego” subsidiary based in Pennsylvania. Under the “alter-ego” theory, jurisdiction is granted if the degree of control exercised by the parent is greater than normally associated with common ownership and control. The Superior Court agreed with UPL, noting that such control over UPL’s subsidiary did not exist. Specifically, UPL did not own any of the subsidiary’s stock, there were no common officers, directors, or employees, no interchange of managerial personnel, and did not share financial accounts. As a result, the Superior Court found that Plaintiffs were unable to show personal jurisdiction through this theory. Although Plaintiffs’ personal jurisdiction attempts were unsuccessful, this opinion serves as an illustration of the various theories of personal jurisdiction the defense attorney may face.
Thanks to Benjamin G. Ferrell for this post. Please contact Vincent Terrasi if you have any questions or comments.