In March, the Pennsylvania Supreme Court heard oral argument in Hangey v. Husqvarna on the standards governing venue in a product liability case.

The court's decision, expected by the end of the year, may provide important guidance on just how much business a corporate defendant must undertake in a plaintiff's chosen forum for venue to attach.

This article will describe the case on appeal, the venue issues it raises and the precedential context in which it finds itself. We will also suggest a few important takeaways as trial courts and litigants await the disposition of the appeal.

Appellate Issues Before the Pennsylvania Supreme Court

A quality-quantity analysis is used by trial courts when deciding a corporate defendant's preliminary objection to improper venue when the venue is based solely on the defendant doing business in the forum.

The Pennsylvania Supreme Court is now considering whether the state's Superior Court, an intermediate appellate court, properly applied the standards for determining whether a defendant's contacts with a Pennsylvania county are sufficient for venue. Also under review is the degree of deference to be accorded to a trial court's venue determination in these circumstances by Pennsylvania appellate courts.

Relevant to this appeal, the Pennsylvania Supreme Court's 1965 decision in Monaco v. Montgomery Cab Co. noted that the quantity of contacts "means those which are so continuous and sufficient to be termed general or habitual."[1]

Sitting en banc in the case currently sub judice and in a 7-2 decision, the Pennsylvania Superior Court concluded that the trial court abused its discretion by finding that 0.005% of a defendant product manufacturer's total sales in the forum county did not satisfy the quantity prong. The Superior Court's majority decision was critical of the trial court's reliance on the small percentage of the manufacturer's national sales within Philadelphia as the lynchpin in changing the case's venue to Bucks County.

The court, also, may not have given appropriate weight to the traditional abuse of discretion standard — which the Pennsylvania Supreme Court articulated in its 1990 decision in Purcell v. Bryn Mawr Hospital and the Pennsylvania Superior court reiterated in its 2003 decision in Krosnowski v. Ward — by which appellate courts defer to trial judges "if there exists any proper basis for the ... decision."[2]

A Snapshot of the Case on Appeal

Plaintiff Ronald Hangey, a resident of Wayne County, Pennsylvania, purchased a Husqvarna brand riding lawnmower from Trumbauer's Lawn and Recreation Inc. in Quakertown, Bucks County, Pennsylvania, in May 2013.

Over three years later, while engaged in lawn maintenance at his home, the plaintiff was severely injured when he fell off of the lawnmower and the blades of the unit, still on, ran over his legs. He and his wife brought suit in Philadelphia County state court alleging negligence, strict liability and loss of consortium.

The plaintiffs' complaint and amended complaint sued various Husqvarna entities and Trumbauer's. None of the operative facts alleged by the plaintiffs occurred in Philadelphia County, and no potential witnesses resided there. Two of the Husqvarna defendants challenged personal jurisdiction, and the two other Husqvarna companies that were sued, along with Trumbaurer's, sought a change of venue in preliminary objections.

After court-allowed discovery on both the jurisdictional and venue issues, and following oral argument, the trial court dismissed two of the Husqvarna defendants for want of personal jurisdiction over them and granted the preliminary objections of the remaining Husqvarna defendants and Trumbauer's, transferring the case to Bucks County, holding that venue was improper in Philadelphia County.

In so doing, the trial court found that Pennsylvania Rule of Civil Procedure 2179(a)(2), which permits venue to attach if a corporate defendant "regularly conducts business" in the forum, was not satisfied because Husqvarna's product sales in Philadelphia constituted only 0.005% of its national business, or a little over $75,000 a year of the company's annual sales of $1.393 billion.

The plaintiffs took an interlocutory appeal to the Pennsylvania Superior Court,[3] asserting that the quantity of sales of Husqvarna's products in Philadelphia County satisfied the venue rule under existing precedents.

A three-judge Superior Court panel reversed the trial judge, with one judge dissenting, finding that the trial court had abused its discretion by discounting and finding insufficient the quantity of business by the product manufacturer as reflected in its Philadelphia sales of less than 1% percent of its national business.

Subsequently, the Superior Court granted an en banc consideration of the case. In the resulting en banc decision, with two judges dissenting, the Superior Court concluded, as its panel had, that "based on the totality of the evidence, [the manufacturer's] contacts satisfied the quantity prong of the venue test."

The Superior Court reversed the trial court's change of venue of the underlying action to Bucks County and remanded the case. Upon application by the remaining defendants, the Pennsylvania Supreme Court permitted an appeal of these issues.

What Do the Precedents Tell Us About the Issues on Appeal?

Precedential decisions addressing whether a corporate defendant's quantity of business in a given county is enough for venue to attach lack definitive guidance for trial courts.

Indeed, in a prior decision, Pennsylvania Superior Court Judge Richard Klein's concurring opinion in 2007 in Zampana-Barry v. Donaghue emphasized the need for such guidance, requesting an en banc determination in that appeal to furnish a clear standard governing the quantitative aspect of the venue analysis.[4] His request for en banc consideration was not granted, however.[5]

Trial courts considering change of venue applications have wrestled with the quantity analysis for almost a century.

In 1927, the Pennsylvania Supreme Court in Shambe v. Delaware and Hudson Railroad Company recognized that venue issues are case- and fact-specific.[6]

Over the following decades, Pennsylvania trial courts reached varied and conflicting rulings on what constitutes a sufficient quantity of a defendant's business for venue to attach.

For example, in 1965, the Pennsylvania Supreme Court in Monaco v. Montgomery Cab Co. found that 5-10% of a Montgomery County defendant's gross revenue generated by dropping off taxi passengers in Philadelphia was sufficient to satisfy the quantity prong.[7] In Canter v. American Honda Motor Corp.,[8] the Pennsylvania Supreme Court in 1967 determined that the defendant's activities in Philadelphia accounting for 1-2% of its total sales also satisfied the quantity prong.[9]

However, in 1967, the Pennsylvania Superior Court in Masel v. Glassman held that 20% of a defendant's revenue generated from Philadelphia companies was insufficient to satisfy the quantity prong and selection of the Philadelphia forum.[10]

Further to the point, in 1994, the Superior Court in Mathues v. Tim-Bar Corp. approved a trial court's venue transfer based on "isolated and limited" sales in the forum county, without any quantification as to the amount of those sales or their proportion of the defendant's total revenue.[11] This distinction is important because the "isolated and limited" sales could be large enough to account for a significant percentage of a defendant's total revenue, a factor previously considered by Pennsylvania courts, but not in this case.[12]

In Battuello v. Camelback Ski Corp.,[13] the Superior Court in 1991 upheld a trial court's venue transfer based on the percentage of prospective customers referred to Camelback, a ski resort, by Philadelphia-based Eastern Ski Tours — less than 1% — and also analyzed the percentage of Eastern's Philadelphia customers — less than 5% — finding that such business was "far too small to qualify as 'general or habitual.'"[14]

Finally, in Purcell v. Bryn Mawr Hospital,[15] the Pennsylvania Supreme Court in 1990 ruled that "the mere purchase of hospital supplies from Philadelphia merchants cannot form a satisfactory rationale for conferring venue" in Philadelphia and that the defendant's advertising in Philadelphia was not essential or directly tied to the defendant organization's primary purposes.[16]

Regardless of the type of evidence the trial court examined, Pennsylvania's appellate courts are also split in terms of just how much discretion to provide a trial court in making a venue determination.[17]

Takeaways 

It is often difficult to predict with accuracy an appellate court's determination of significant issues on appeal. Here, however, it is clear that the record in the Hangey case suggests that foursquare before the state Supreme Court is the need to clarify and further define the quantity element in determining how much business in the forum a product manufacturer must do for the venue to be proper.

Pennsylvania's appellate courts have adequately defined the quality of contacts necessary to support venue and counseled trial courts to disregard activities that are tangential and incidental to a manufacturer's core business. It now appears appropriate for the state high court to provide trial courts with further guidance in their assessment of a corporation's quantitative contacts when the adequacy of those contacts is challenged.

Relatedly, the state Supreme Court's decision may furnish litigants with an articulation of the deference to be accorded trial judges making venue decisions when venue is claimed not to exist in the forum pursuant to Pennsylvania Rule of Civil Procedure 2179(a)(2).

The dissenting opinions in the Superior Court in the case under consideration raise concerns that Pennsylvania's appellate courts may not be providing sufficient weight to venue decisions by trial judges, who are vested with discretion to decide such matters. Hopefully, the Pennsylvania Supreme Court's decision may serve to clarify this issue as well.

References

[1] Monaco v. Montgomery Cab Co. , 208 A. 2d 252, 256 (quoting Shambe v. Delaware and Hudson Railroad Company , 135 A. 755, 757).
[2] Krosnowski v. Ward , 836 A.2d 143, 146 (Pa. Super. 2003) (en banc); see also Purcell v. Bryn Mawr Hosp. , 579 A.2d 1282 (Pa. 1990).
[3] The Pennsylvania Rules of Appellate Procedure permit the taking of an interlocutory appeal on venue issues. See Pa. R. App. P. 311(c).
[4] 921 A.2d 500, 506 (Pa. Super. 2007).
[5] Judge Klein and the author are not related.
[6] 135 A. 755 (Pa. 1927).
[7] 208 A.2d 252 (Pa. 1965). The Monaco court relied on two decisions, Lallone v. Philadelphia Suburban Transportation Co. , 61 Pa. D. & C. 248 (C.P. Philadelphia 1947) and Ianetti v. Philadelphia Suburban Transportation Co. , 61 Pa. D. & C. 276 (C.P. Philadelphia 1947). In both cases, defendant objected to venue in Philadelphia county because it did not conduct a substantial portion of business there. The Court found, however, that defendant regularly operates bus routes in Philadelphia to further its public service operations, thus constituting regular business in the county. Lallone, 61 Pa. D. & C. at 250; Ianetti, 61 Pa. D. & C. at 278.
[8] 231 A.2d 140 (Pa. 1967)
[9] Id. at 143.
[10] 689 A.2d 314 (Pa. Super. 1997).
[11] 652 A.2d 349, 351 (Pa. Super. 1994).
[12] See, e.g., Battuello v. Camelback Ski Corp. , 598 A.2d 1027 (Pa. Super. 1991) (affirming venue transfer and finding less than 1% of Camelback's actual customers came from Eastern Ski Tours). 
[13] Id., 598 A.2d at 1030.
[14] Id. (quoting Purcell, 579 A.2d at 1285) (quoting Shambe, 135 A. at 757). 
[15] 579 A.2d 1282 (Pa. 1990).
[16] Id. at 1288.
[17] See Mathues, 652 A.2d at 351; see also Zampana-Barry, 921 A.2d at 506 ("In view of the facts herein, we cannot conclude that the trial court committed an abuse of discretion in determining that Appellants' contacts with Philadelphia were of sufficient quality and quantity to find that they regularly conducted business in that county."); Schultz v. MMI Products Inc. , 30 A.3d 1224 (Pa. Super. 2011) (upholding a trial court's venue determination based on trial court's use of sales percentage as a basis for transfer); Singley v. Flier, 851 A.2d 200 (Pa. Super. 2004) (upholding trial court's venue transfer based on defendant's conduct that was a proportionally small amount of activity in the forum county); Battuello, 598 A.2d 1027 (affirming venue transfer based on small percentage of revenue generated from the forum county); but see Monaco, 208 A.2d at 252 (reversing trial court's venue transfer finding that 5-10% of total revenue from chosen forum is sufficient for venue); Canter, 231 A.2d at 140 (reversing venue transfer finding 1-2% of total revenue from a county is sufficient for venue); Purcell, 579 A.2d at 1282 (reversing lower court's transfer determination based on quantity of solely incidental acts that occurred in the forum county).

Reprinted with permission of Law360.