Quality-Quantity Analysis for Venue; Abuse of Discretion
Hangey v. Husqvarna Professional Products, Inc., 247 A.3d 1136 (Pa. Super. 2021) (en banc), allocatur granted May 10, 2022, appeal docket 14 EAP 2022
Ronald Scott Hangey (Hangey) appeals the decision of the Court of Common Pleas of Philadelphia County (trial court) sustaining preliminary objections to venue and transferring the case to Bucks County. The relevant factual and procedural history is as follows:
[ Hangey] commenced this action on March 13, 2017 by filing a Complaint. The Amended Complaint, filed April 10, 2017 alleges that in May 2013, Plaintiff Ronald Hangey purchased a Husqvarna riding lawnmower from Defendant Trumbauer’s Lawn and Recreation, Inc. in Quakertown, Bucks County. On August 5, 2016, Ronald Hangey was maimed when he fell off his lawnmower and the lawnmower ran over his legs while the blades were still engaged; the accident occurred at [the Hangeys’] property in Wayne County. The Amended Complaint named five defendants—Husqvarna Professional Products, Inc. [“HPP”}, Husqvarna Group, Husqvarna U.S. Holding[s], Inc., Husqvarna AB, and Trumbauer’s Lawn and Recreation, Inc.—and sounds in negligence, strict liability, and loss of consortium.
All Defendants filed Preliminary Objections. Defendants Husqvarna U.S. Holdings, Inc., and Husqvarna AB filed Preliminary Objections which, inter alia, challenged personal jurisdiction. Defendants [HPP], Husqvarna Group, and Trumbauer’s Lawn and Recreation, Inc., filed Preliminary Objections arguing, inter alia, improper venue. [The trial court] permitted the parties to take discovery relevant to the issues of personal jurisdiction and venue.
[The Hangeys’] venue-related discovery revealed the following. Husqvarna Group is a nonexistent entity that acts as a marketing device for a number of Husqvarna-branded corporate entities, including [HPP]. . . . John Trumbauer, sole shareholder of Defendant Trumbauer’s Lawn and Recreation, Inc., produced an affidavit in which he averred Defendant Trumbauer’s Lawn and Recreation, Inc.’s principal place of business was in Quakertown, PA, that Philadelphia did not fall within their target market area, and they did not regularly conduct business in Philadelphia. . . . [HPP] is a Delaware corporation with a principal place of business located in Charlotte, North Carolina. . . . In 2016, [HPP] had approximately $1.4 billion in sakes revenue in the United States, of which $75,310.00 came from direct sales in Philadelphia County. . . . Of the $75,000 in sales made in Philadelphia in 2016, roughly $69,700 came from a single Husqvarna authorized dealer, DL Electronics, Inc. []. Approximately 0.005% of [HPP’s] 2016 United States sales revenue resulted from direct sales in Philadelphia County. . . . These sales figures do not include the revenue generated by selling Husqvarna products at “big box” retailers such as Home Depot, Lowe’s, or Sears. In the case of “big box” retailers, John Stanfield, the corporate representative for [HPP] testified that [HPP] delivers its products to the retailers’ distribution centers, none of which are located in Philadelphia County. . . . Once the Husqvarna products are delivered to the retailers’ distribution centers, the retailers retain sole discretion as to where the products will be offered for sale, including stores located in Philadelphia County. . . .
Following oral argument, [the trial court] dismissed Defendants Husqvarna U.S. Holdings, Inc. and Husqvarna AB due to want of personal jurisdiction and transferred the case against Defendants [HPP], Husqvarna Group, and Trumbauer’s Lawn and Recreation, Inc. to Buck’s County because venue was improper in Philadelphia County.
Slip op. at 2-3 (internal citations omitted). In finding venue in Philadelphia County improper, the trial court first concluded that HPP’s contacts satisfied the quality prong of the venue analysis, however, it found that because only 0.005% of HPP’s national revenue came from Philadelphia County, HPP’s contacts did not satisfy the quality prong.
A panel of Superior Court reversed the trial court’s order. Thereafter, it granted Husqvarna’s petition for re-argument and ordered the parties to brief an additional issue “whether the en banc Panel should specifically adopt or overrule prior appellate decisions involving the quantity prong of the venue analysis.” Slip op. at 4 (internal quotations omitted).
Rule 2179 of the Pennsylvania Rules of Civil Procedure provides that venue is proper against a corporation or similar entity in a county where it “‘regularly conducts business.’” Slip op. at 5 (quoting Pa.R.Civ.P. 2179(a)(2). When conducting a venue analysis, each case is to be decided on its own set of facts. The question to be addressed is whether the acts are performed regularly within the context of a particular business. Courts have come to determine that “regularly” does not mean “principally” and a defendant may perform acts regularly even if these acts make up a small portion of its total activities.
When performing a venue analysis, courts employ the quality-quantity analysis. “The term ‘quality of acts’ means those directly, furthering, or essential to, corporate objects; they do not include incidental acts.” Slip op. at 6 (quoting Monaco v. Montgomery Cab Co., 208 A.2d 252, 256 (Pa. 1965)) (internal quotations omitted). “To satisfy the quantity prong of this analysis, acts must be ‘sufficiently continuous so as to be considered habitual.’” Sip op. at 6 (quoting Zampana-Barry v. Donaghue, 921 A.2d 500, 504 (Pa. Super. 2007).
Superior Court then reviewed caselaw in which courts have considered the percentage of overall business a defendant company conducts in a county to determine whether the quantity prong was met. In Canter v. American Honda Motor Copr., 231 A.2d 142 (Pa. 1967), the Pennsylvania Supreme Court found that “a company whose employees drove cars into Philadelphia to demonstrate cars and to consummate sales met the quality test for venue, and that the contacts also met the quantity test where one to two percent of the company’s gross sales occurred in Philadelphia.” Slip op. at 6 (internal quotations omitted). In Monaco, the Supreme Court found that a taxicab company based in Montgomery County “conducted regular business in Philadelphia where five to ten percent of its business was from passengers it took into Philadelphia.” Slip op. at. 6. In Zampana-Barry, Superior Court found that Philadelphia County was the proper venue “where a law firm based in Delaware County derived three to five percent of its income from cases litigated in Philadelphia.” As a result of these cases, Superior Court concluded that courts often consider whether the percentage of a defendant’s conduct is sufficient to constitute habitual contact. However, Superior Court cautioned that:
no court has stated that the percentage of a defendant’s business is the sole evidence relevant to the ‘quantity’ analysis. Rather, courts must determine whether all the evidence presented, including the scope of the defendant’s business, viewed in the context of the facts of the case, establish that a defendant’s contacts with the venue satisfy the quantity prong.
Slip op. at 7. Superior Court then reviewed cases finding that the quantity prong of the venue analysis was not satisfied, concluding that “the Court’s core finding was that the contacts failed the quality prong of the venue test and the cases often addressed defendants who were small and/or local companies, not multi-billion dollar corporations.” Slip op. at 7.
Having reviewed all the precedent surrounding venue and the quantity-quality analysis, Superior Court concluded that:
[t]he percentage of a company’s overall business that it conducts in a given county, standing alone, is not meaningful and is not determinative of the ‘quantity’ prong. Each case turns on its own facts, and we must evaluate evidence of the extent of a defendant’s business against the nature of the business at issue.”
Slip op. at 9. Turning to the present matter, Superior Court concluded that venue in Philadelphia county was proper because HPP is a multi-billion dollar corporation, it had $75,310 in sales in 2016, and HPP has an authorized dealer in Philadelphia to sell its products. Thus, Superior Court held that the trial court erred “in relying almost exclusively on evidence of the percentage of defendant’s business that occurred in Philadelphia when addressing the quantity prong.” Slip op. at 10. In so concluding, Superior Court found it unnecessary to approve or disapprove of its prior decisions, concluding that this decision “is based on the prior precedents of the Pennsylvania Supreme Court and consistent with those of our Court.” Slip op. at 10. However, Superior Court clarified that “the percentage of sales of a corporation in a venue is but one factor to consider when determining whether the quantity prong of the venue analysis is satisfied, and such evidence must be viewed within the context of the business at issue in each case.” Slip op. at 10. Accordingly, Superior Court reversed and remanded the case back to the trial court.
Judge Stabile dissented, reasoning that “the trial court’s conclusion was reasonable, in accord with applicable law, and therefore not an abuse of discretion.” Dissent slip op. at 3. Judge Stabile based this conclusion on the fact that only 0.005% of HPP’s sales came from Philadelphia County, none of the products it delivers to distribution centers is in Philadelphia County, and the fact that HPP does not regularly conduct business in Philadelphia County. Reviewing cases where venue was transferred due to quantity lacking, Judge Stabile explained, “[g]ranting the trial court considerable discretion, as we must, and considering the authority of Singley [v. Flier, 851 A.2d 200 (Pa. Super. 2005)], PECO Energy [Co. v. Philadelphia Suburban Water Co., 802 A.2d 666 (Pa. Super. 2002)], and Battuello [ v. Camelback Ski Corp., 595 A.2d 1027 (Pa. Super. 1991)], I do not believe we can conclude the trial court’s decision was unreasonable. Those cases teach that quantity is lacking where a defendant’s activity in a county is insignificant in relation to its overall activity.” Dissent slip op. at 5. In addressing the majority’s reliance on cases that found venue proper in a county where a business conducts a small amount of its business, Judge Stabile stated that those cases do not support the majority’s decision to reverse the trial court’s determination. As he stated: Superior Court’s “standard of review—which requires us to afford the trial courts considerable discretion and directs us not to overturn any reasonable result—is a product of the inherent difficulty in articulating precise standards governing a quality and quantity analysis.” Dissent Slip op. at 6. Further, Judge Stabile explained that an abuse of discretion does not arise simply because an appellate court would reach a contrary result: “‘[w]here the record adequately supports the trial court’s reasons and factual basis, the court did not abuse its discretion.’” Dissent slip op. at 6-7 (quoting Harman ex rel. Harman v. Borah, 756 A.2d 1116, 1124 (Pa. 2000)). Accordingly, Judge Stabile concluded that he would affirm the trial court noting that “faithful application of the quantity analysis under existing jurisprudence will not leave plaintiffs without a forum in which to pursue their claims against large companies. Rather, it will simply restrict the choice of forum according to the well-established criteria of our Rules of Civil Procedure.” Dissent slip op. at 8. Accordingly, Judge Stabile would not overturn the trial court’s decision to transfer venue from Philadelphia County to Bucks County.
The Supreme Court granted allocatur to consider the following issues:
(1) Whether the Superior Court committed legal error when it held that a trial court employing the quality-quantity test for venue abuses its discretion by weighing the totality of the evidence presented and, in the absence of other evidence relevant to the analysis, finding that 0.005 percent of a defendant’s total sales occurring in the forum county is de minimis and alone insufficient to render venue proper[.]
(2) Whether the Superior Court failed to faithfully apply the [abuse of discretion] standard of review when it reversed the trial court’s decision sustaining Petitioners’ preliminary objections for improper venue, in the absence of a finding that the trial court’s decision was manifestly unreasonable, that the trial court failed to apply the law, or that the trial court was motivated by partiality, prejudice, bias, or ill-will[.]
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