Personal Jurisdiction of Foreign Corporations Marketing Their Products

The commonwealth of Pennsylvania is the target of the marketing and sale of millions of products every year. A large segment these products are designed and fabricated by corporations residing in other states or other countries. Ranging from motor vehicles to children’s toys to pharmaceutical products, these foreign companies enjoy our marketplace without ever having to “step foot” in the commonwealth. Ordinarily, the marketing of foreign made (foreign equals another state or country) products in the commonwealth is the result of non-Pennsylvania corporations setting up a distribution system in one of the following ways: registering to do business in Pennsylvania but only selling products to companies headquartered outside the commonwealth and having no responsibility for these products once sold to the initial distributor; contracting and selling to a national retailer with Pennsylvania outlets (think of a Target store located in Philadelphia); contracting with a national distributor that is a wholly owned subsidiary of the manufacturer, who delivers the manufacturer’s products to the distributors authorized statewide outlets (think of a motor vehicle dealerships); contracting with and selling to an online marketing company which advertises and then upon purchase ships the product to a consumer in Pennsylvania (think of Amazon). These distribution methods are established by foreign companies for a host of reasons including tax avoidance/mitigation, financial profit and loss accounting practices, and the avoidance of personal liability if injury occurs. Very recently, the Pennsylvania Supreme Court closed one door consumers had available to them to obtain jurisdiction over foreign corporations based upon its construct that due process was not met via the foreign company’s mere registration to do business in the commonwealth. See Mallory v. Norfolk Southern Railway Company, (Pa.). While this decision may be disappointing to some, it was both predictable and in the scheme of most product distribution systems, it is not a threat to access to our civil justice system.

To exercise jurisdiction, the defendant must have “minimum contacts” with the forum state such that the exercise of jurisdiction does not “offend traditional notions of fair play and substantial justice.” See International Shoe v. State of Washington Office of Unemployment Compensation and Placement, 326 US. 310, 323 (1945). The defendant’s contacts are such when it is foreseeable that it could “reasonably anticipate being hailed into court there.” World-Wide Volkswagen, supra, 444 US 286, 297. Jurisdiction will lie once the court concludes that the defendant has either purposefully availed itself of the privilege of activities in the forum, or purposefully directed its activities toward the forum. Tying together the defendant’s activities with Pennsylvania and the harm that arose from that activity is not very difficult. Ford Motor v. Montana, 141 S. Ct. 1017 (2021). A few cases demonstrate the appropriate considerations courts must follow in deciding the question of jurisdiction. In Pegasus Helicopters v. General Motors, 954 F. Supp. 218, 220-21 (D. Colo. 1997), the court found jurisdiction over a foreign helicopter component part maker, noting that due process concerns are “minimized where the defendant is a national manufacturer or distributor, and personal jurisdiction over such defendant turns on whether they have attempted to serve a given market and can expect their products to be used in a given forum.”

Leave a Comment