Pennsylvania Supreme Court Clarifies What Business Activities In A Given County Render A Company Eligible To Be Sued There
December 8, 2023
By: Carl L. Engel
The Pennsylvania Supreme Court, in the case Hangey v. Husqvarna Professional Products, Inc., has just issued new guidance as to the contacts between a company and a county required to bring a lawsuit against the company there. Generally, companies may be sued in all counties in which they “regularly conduct business.” Until this decision, there was confusion among the courts as to whether a court evaluating venue should consider the portion of revenue generated by a company in the county, with some courts even suggesting that businesses could not be sued in counties in which they generated only a small proportion of their total revenues. The state’s Supreme Court has now plainly rejected this reasoning, holding instead that courts must focus on whether the company performs acts essential to its business in the county continuously enough to be considered habitual. To hold otherwise would invite an absurd result, it reasoned, because a large company that does business in many counties would not be considered to “regularly conduct business” in any one of them, even though it regularly conducts business generally.
On March 10, 2017, Ronald and Rosemary Hangey filed a complaint in the Pennsylvania Court of Common Pleas for Philadelphia County against defendants Husqvarna Professional Products, Inc. (“Husqvarna Products”), Husqvarna Group, and Trumbauer’s Lawn and Recreation, Inc. (“Trumbauer”). The Hangeys brought claims against the defendants sounding in negligence, strict liability, and loss of consortium. They allege that while Mr. Hangey was using a Husqvarna-branded riding lawnmower which he’d purchased from Trumbauer, he was thrown off the mower and onto the ground. The mower then ran over his legs, causing catastrophic injuries. The Hangeys claim that the lawnmower was defective and unreasonably dangerous because it lacked appropriate safety features.
Husqvarna Products and Trumbauer objected to the Hangeys’ lawsuit being brought in Philadelphia, and asked that the court transfer it to the court of common pleas in Wayne County, Pennsylvania, where the Hangeys live and the incident occurred. The Hangeys had filed their complaint in Philadelphia pursuant to Pennsylvania Rule of Civil Procedure 2179(a)(2), which allows a lawsuit to be brought in a county where any of the defendants “regularly conduct business.” Husqvarna Products and Trumbauer argued that neither of them were registered to do business in Philadelphia, they hadn’t used any warehouses or other facilities there, they didn’t own real estate there, they didn’t have employees or officers there, nor had they contracted with the City of Philadelphia. Although they asked that the court transfer the case to Wayne County, they acknowledged that venue could also be proper in Montgomery and Bucks counties, based on their connections to them.
On September 6, 2017, the court transferred the case to Bucks County. In its opinion, the court explained that, in 2016, Husqvarna Products made approximately $1.4 billion in sales revenue throughout the United States, of which $75,310 came from direct sales in Philadelphia County. $69,700 of those sales were made through an authorized dealer called DL Electronics, Inc., and the rest were made at big-box stores. Approximately 0.005% of Husqvarna Products’s domestic sales came from Philadelphia County. The trial court found that this was an insufficient quantity of contacts, observing that if Husqvarna Products had generated its revenue in equal parts from each of the country’s 3,141 counties, the amount of revenue generated in Philadelphia would have been 0.031%, or six times the actual amount.
The Hangeys appealed the transfer of venue. On March 8, 2021, the Superior Court reversed the trial court. The Superior Court explained that its inquiry was focused on whether Husqvarna Products “regularly conducts business” in Philadelphia, and found that “a defendant may perform acts ‘regularly’ even though these acts make up a small part of its total activities.” It acknowledged that “Pennsylvania appellate courts have often considered the percentage of overall business a defendant company conducts in a county,” but observed also that no court has stated that the percentage of a defendant’s business is the sole evidence relevant to the analysis. With respect to Husqvarna Products, it found that its contacts with Philadelphia, including having an authorized dealer there, were “sufficiently continuous so as to be considered habitual” such that venue there was proper. Husqvarna Products and the other defendants appealed to the Pennsylvania Supreme Court.
On November 22, 2023, the Pennsylvania Supreme Court affirmed the Superior Court. It reasoned that when a Pennsylvania court is evaluating whether a company “regularly conducts business” in a county for the purposes of venue, it must assess whether the company’s business in the county is “sufficient in quantity and quality.” Acts in a county are of sufficient quality if they are essential to its business, as opposed to incidental acts such as advertising and employee recruitment.
With respect to the quantity requirement, the Supreme Court agreed with the Superior Court that “regular” business activity in a county could comprise only a small portion of a defendant’s total activities. Therefore, courts must consider instead “whether the acts are ‘continuous and sufficient’ to the extent they could be called ‘general or habitual.’” The court observed that a focus on the proportion of revenue derived in a county is unworkable, because it “would be absurd” for the courts to find that a small business is regularly conducting business while another large company is not regularly conducting business, even if the two companies were conducting the exact same amount of business. Further, a focus on revenues ignores that “a company can ‘regularly conduct business,’ even if it is not making a lot of money from that business.” The Supreme Court concluded that, because Husqvarna Products admitted that it had been making sales in Philadelphia County through DL Electronics since 2014, it regularly conducted business in the county such that venue there was proper.
This decision makes clear the focus of a court’s analysis when evaluating whether a business “regularly conducts business” in a county for the purpose of venue: A company is eligible to be sued in any county in which it performs acts essential to its business continuously enough to be considered habitual. While the proportion of revenue earned by a company in the venue county is not irrelevant, it is simply a data point for the court’s consideration, and not a determining factor like the trial court had held. Therefore, litigants who wish to challenge venue in a particular county must focus their argument on the type and regularity of business activity there, rather than the amount of revenue generated by it.