Pa. Supreme Court Rules on Proper Venue Standards

By Alan Klein and Ethan Feldman

In Hangey v. Husqvarna, the Pennsylvania Supreme Court recently ruled that the percentage of a corporate defendant’s total revenue generated from a forum county alone is insufficient to support the proposition that a defendant does not “regularly conduct business” in the county when analyzing whether a lawsuit’s venue is proper. This long awaited decision provides much needed clarity for trial courts that previously wrestled with the question of how much business must a defendant have in the forum for venue to attach. The Hangey Court concluded that proper venue lies in the forum county if “a company maintains a constant physical presence in the forum county.” As the Court noted, quoting prior precedents, “[a] corporation may perform acts ‘regularly’ even though these acts make up a small part of its total activities.” This ruling, focusing on the regularity of a defendant’s business activity in the forum as opposed to the dollar amount of its business in the county, will assist litigants and trial judges in deciding venue motions under this relatively straightforward test.

In dissent, Justice Brobson essentially agreed with the majority that a defendant’s business revenue attributable to its activities in the forum should not be the sole determinant when a plaintiff’s choice of forum is challenged, but expressed concern that the majority ruling may be interpreted that a corporate defendant’s mere presence in a county is enough to establish proper venue. Justice Brobson favored a remand of the appeal to the trial court to reconsider its prior decision transferring venue in light of the guidelines in the majority opinion.

Proper venue in Pennsylvania lies in any county where a corporate defendant “regularly conducts business.” From this, trial courts undertake a quality-quantity analysis when deciding a corporate defendant’s preliminary objection to improper venue when venue is premised on a defendant doing business in the county.

The Pennsylvania Supreme Court’s decision focused on the quantity prong of the analysis.  Before the recent Hangey decision, trial courts often reached differing results, even when examining percentages of sales data as to how much business a corporate defendant had in the forum. Relevant to the underlying circumstances in Hangey, the only tie to the forum, Philadelphia County, was a defendant’s two authorized retailers that generated a mere 0.005% of the defendant’s national revenue. Notwithstanding this infinitesimal amount of business, the Supreme Court held that because the defendant “regularly conducted business in Philadelphia County” the forum was proper.

The upshot of this decision, as noted by both the plaintiff and defense bar, is two-fold. First, Philadelphia County, a notoriously plaintiff-friendly forum, will likely attract additional cases, and, second, if a defendant regularly conducts business in the county the likelihood of a venue transfer will become considerably more difficult for defendants.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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