Jurisdiction: Where Can a Corporation Be Sued and Why Does It Matter?

One of the determinations to be made before filing a lawsuit is where can each of the parties be sued so as to determine where a lawsuit is best filed.

Recently, the Eastern District of Pennsylvania held that general jurisdiction by consent my be established where a defendant’s only contact with Pennsylvania is the defendant’s registration within the state to do business. In the case of Youse v. Johnson & Johnson, No. 18-3578 (E.D. Pa. Jan. 16, 2019 Baylson, J.), the court denied a Motion to Remand and denied a Motion to Dismiss filed by a defendant on jurisdictional grounds.

Plaintiffs filed a complaint in state court claiming personal injury from the personal use of cosmetic talcum powder products. The case was removed to federal court by one of the defendants. Plaintiffs then amended the complaint adding a claim against Walmart. After adding Walmart, plaintiffs sought remand claiming that diversity was destroyed with the addition of Walmart. Under 28 U.S.C. Section 1332, a federal court has subject matter jurisdiction over civil actions between citizens of different states where the amount at issue exceeds $75,000.00. Complete diversity is required, meaning that  “every plaintiff must be of diverse citizenship from every defendant.” In re Briscoe, 448 F.3d 201, 215 (3d Cir. 2006). A corporate defendant is deemed a citizen of its state of incorporation and the state of its principal place of business. 28 U.S.C. Section 1332(c). Because Walmart was found to be a citizen of Delaware and Arkansas, plaintiffs’ Motion to Remand was denied.

Defendant Imerys then filed a Motion to Dismiss for lack of personal jurisdiction. Imerys argued that it had not consented to jurisdiction because its only contact with Pennsylvania is through its business registration, which it claimed was not a sufficient basis for personal jurisdiction. If a Pennsylvania court lacks personal jurisdiction over a party, it has no ability to require it to defend itself in a Pennsylvania court.

Given Pennsylvania’s jurisdictional statute, and prior court precedent, Bane v. Net link, Inc., 925 F.2d 637, 641 (3d Cir. 1991), Judge Baylson found that business registration constitutes consent to jurisdiction in Pennsylvania and denied Imerys’s Motion to Dismiss. If the court had granted Imerys’s Motion to Dismiss, plaintiffs could have lost the ability to sue Imerys in court. Such a mistake, suing a defendant in the wrong court, could prove fatal to a plaintiff’s claim.

It is important, therefore, to investigate the principal place of business, the state of incorporation and the business structure of any corporate entity before making any decisions regarding where to file a lawsuit.