Where to File a Lawsuit in Pennsylvania

Where to file a lawsuit?  It is one of the first questions a trial attorney asks when representing a new client.  And it is one of the most important questions.  The county in which a lawsuit is brought can have a major impact on both the value of the claim and how quickly it can be resolved. For instance, some counties are known for higher verdicts, which can drive up the settlement value of a claim.  Also, civil litigation moves at a different pace depending on which county you find yourself in.  Some counties, like Philadelphia, move cases quickly and a plaintiff usually gets a trial date within 1 or 2 years of filing suit.  But, in other counties, it can be 4 or 5 years before there is a trial date and thus take half a decade (or longer) before a claim can be resolved.  Because the venue of litigation is so important and directly impacts the value of a claim and how quickly it can be resolved, it is important for trial lawyers to identify the best viable venue before filing a Complaint.

Naturally, corporate defendants have the opposite incentive as plaintiffs.  If possible, corporate defendants want to make sure a lawsuit is filed in a jurisdiction known for small jury verdicts and a slow docket.  Because venue is so important, the Pennsylvania Rules of Civil Procedure set out specific rules controlling where a corporate defendant can be sued.  Under Rule 2179, a corporation can be sued:

• in any county where its principal place of business is located;
• in any “county where it regularly conducts business”; or
• in the county where the accident occurred.

In cases where a plaintiff files suit in the defendant’s home county, or where the accident or incident giving rise to the claim took place, there is nothing really to fight over.  In these cases, venue is proper and the corporate defendant cannot object.  The area of contention is when a plaintiff files a claim in a county where the incident didn’t happen and where the defendant does not have a principal place of business, but where the plaintiff alleges that the defendant “regularly conducts business.”

“Regularly Conducting Business”

What does it mean to “regularly conduct business” in a county?  Over the years courts in Pennsylvania have issued rulings clarifying what that means and increasing the burden on a plaintiff to prove that a defendant “regularly conducts business” in the chosen jurisdiction. To this end, the Pennsylvania Superior Court has adopted a two prong “Quality and Quantity” test.  In determining whether a corporate defendant “regularly conducts business” in a specific county, courts must consider both the quantity or business conducted in the county, and the quality of the defendants contacts with the forum.  The Superior Court explained this test in Zampana-Barry v. Donaghue:

In determining whether a corporation or partnership regularly conducts business in a county, we employ a quality-quantity analysis. A business entity must perform acts in a county of sufficient quality and quantity before venue in that county will be established. Quality of acts will be found if an entity performs acts in a county that directly further or are essential to the entity’s business objective; incidental acts in the county are not sufficient to meet the quality aspect of the test. Acts that aid a main purpose are collateral and incidental while those necessary to an entity’s existence are direct.

An issue that has arisen over the years involves cases where a defendant “solicits” business in a specific county, but does not actually conduct business “directly” in that county. This sort of “indirect” contact often becomes an issue where a car manufacturer is a defendant.  Car manufacturers, with limited exceptions, do not sell automobiles directly to customers.  Rather, they sell cars to consumers through independent automobile dealerships. And although these manufactures extensively advertise and get the economic benefit of sales to customers in various counties, they have successfully managed to get cases removed from the plaintiff’s chosen forum because they do not have “direct” contact with that county. To this end, the Pennsylvania Supreme Court has specifically ruled that “mere solicitation” in a particular county does not amount to conducting business. Purcell v, Bryn Mawr Hospital.

Faust v. BMW

Recently, the Superior Court of Pennsylvania had an opportunity to consider proper venue in a case involving a car manufacturer. In Faust v. Bayerische Werke AG and BMW of North America, the plaintiff brought a claim for a faulty airbag against BMW in Philadelphia.  BMW filed a preliminary objection arguing that venue in Philadelphia was not proper because, under existing Pennsylvania law, it does not regularly conduct business in the City. The plaintiff responded with record evidence showing that BMW regularly advertises its cars in Philadelphia and, through independent licensed dealerships, sells and leases a significant amount of cars to Philadelphia citizens.

Despite an obvious argument as to fairness (i.e. BMW makes a lot of money selling and leasing cars to Philadelphia citizens, and intentionally markets in Philadelphia, why can’t they be sued there?), 2 of the 3 judges on the appellate panel upheld the trial court’s ruling transferring the case to Lancaster County.  The majority opinion cited BMW’s primary business purpose as follows:  “to sell or lease vehicles to individual consumers, which is facilitated by a national distribution network of authorized, affiliated, and independently-owned BMW dealership.”  According to the majority, because BMW does not “directly” sell or lease cars to Philadelphia residents, but instead does so through independent dealerships, it cannot be said that it conducts business in Philadelphia.  Further, the majority held that although BMW regularly markets in Philadelphia, that sort of conduct is mere “solicitation” insufficient to allow for proper venue.

Time to Reconsider the Law?

The majority opinion in Faust is not wrong from a legal perspective. The majority followed prior precedent set by the Supreme Court.  But it is unfortunate because it is expanding a legal rule that is unprincipled and at odds with the realities of modern economics.  BMW makes a tremendous amount of money from customers in Philadelphia. Why should it matter if that money comes directly from Philadelphia citizens via direct sales, or passes through a dealership acting as a middle man?  If the company is going to receive the bottom line economic benefit of doing business with Philadelphians, and intentionally market its goods in Philadelphia, why is it unfair to hold the company to account in Philadelphia?

James Goslee is a trial attorney in Philadelphia and can be reached at https://jamiegoslee.com/about/