Philadelphia County has long been a preferred forum for plaintiffs’ bar in Pennsylvania. Until last week, a motion to dismiss for improper venue under Pa. R. Civ. P. 1028(a)(1) was a tool at the disposal of any corporate defendant improperly entangled into Philadelphia County litigation. However, the Pennsylvania Supreme Court’s decision in Hangey v. Husqvarna, 14 EAP 2022 (Pa. Nov. 22, 2023, Dougherty, J.) may have effectively foreclosed improper venue dismissal except for those defendants who conduct no business in Philadelphia County whatsoever.
Under Pennsylvania venue rules, actions against corporations and similar entities “may be brought in and only in the counties designated by . . . Rule 2179.” Pa. R. Civ. P. 1006(b). Rule 2179(a), in turn, states that venue is proper in: (1) the county where a company’s registered office or principal place of business is located; (2) a county where the company regularly conducts business; (3) the county where the cause of action arose; (4) the county where a transaction or occurrence took place out of which the cause of action arose; or (5) the county where the property or a part of the property which is the subject matter of the action is located provided that equitable relief is sought with respect to the property. Pa. R. Civ. P. 2179(a). The second prong of Rule 2179(a) has been the subject of substantial litigation, with venue discovery diving into what exactly constitutes business regular enough to defeat a motion to dismiss.
As a rule of thumb, sales or business operations in a particular venue exceeding 1% of a company’s business have been held sufficient to satisfy the “regular conduct of business” prong, while sales below that threshold supported dismissal. Compare Lugo v. Farmers Pride, Inc., 967 A.2d 963, 971 (Pa. Super. 2009) (venue proper where company generated 3% to 5% of revenue in county); Zampana-Barry v. Donaghue, 921 A.2d 500, 506 (Pa. Super. 2007) (same where law firm earned 3% of revenue from representations in county); Monaco v. Montgomery Cab Co., 208 A.2d 252, 256 (Pa. 1965) (same where 5% to 10% of revenue was from customers in county), with Rosenberg v. N. Penn Pediatric Dental Assocs, LLC, 2021 WL 1627162, at *6 (Pa. Super. Ct. Apr. 27, 2021) (venue improper where less than 1% of patients were from county); Jackson v. Cops Monitoring, 2017 WL 3929086 at *4 (Pa. Super. Ct. Sept. 8, 2017) (same where defendant generated less than 1% of total revenue in county); Banaszewski v. Corbo Landscaping Corp., 2013 WL 11253448 at *5 (Pa. Super. Ct. Sept. 27, 2013) (same where defendant generated less than 1% of its total revenue in county); Battuello v. Camelback Ski Corp., 598 A.2d 1027, 1029–30 (Pa. Super. Ct. 1991) (same where ski resort earned less than 1% of its business from its connection with tour company based in county); Lawson v. Pa. Coll. of Tech., No. 201000698, Slip Op. at 9 (Phila. Ct. Com. Pl. Oct. 6, 2021) (same where “less than 1% of [defendant’s] students hail from Philadelphia County”).
This changed on November 22, 2023, when the Pennsylvania Supreme Court held that venue was proper in Philadelphia County in a case where the defendant drew only 0.005% of its national revenue from that county. The Commonwealth’s highest Court noted that the trial court erred in focusing solely on the percentage of national revenue in its venue analysis. The Court explained that the percentage of revenue was just one “data point” in a broader assessment of how “regular” any defendant’s business activities were in a particular venue. The Court held that venue was proper in Philadelphia County because the defendant maintained “a constant physical presence” there. This “constant physical presence” consisted of “uninterrupted” sales to two authorized dealers. In fact, according to the Court, venue would have been proper even if the defendant was not succeeding, but merely “trying[,] to make sales in Philadelphia, regularly and continuously.”
Justice Brobson wrote a dissenting opinion wondering whether, under the majority’s analysis, a company’s “mere presence” would suffice to establish proper venue. While this remains to be seen, one thing is certain – corporate defendants seeking dismissal or transfer of venue face an even more steep up-hill battle in Pennsylvania. Affidavits which previously established that a defendant’s revenue derived from the selected venue is less than 1% of that defendant’s national revenue will no longer be sufficient; in fact, affidavits establishing revenue lower than 0.005% may also be insufficient. The courts may consider a myriad of facts and/or factors when determining if a defendant’s presence in the selected venue is “uninterrupted” or “constant,” requiring a detailed defense assessment at the onset of the case. As such, any entity facing litigation in Philadelphia County should carefully evaluate its business presence there to determine whether dismissal or transfer of venue is still a viable strategy.
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