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Legislative updates

House Bill 2057, generally effective January 3, 2023, extensively amends the entity laws including, but not limited to, authorization for ratification of defective entity actions; authorization for forum selection clauses in charters; various amendments concerning director and officer standards of care; LLC members and managers standard of conduct; officer and director meetings; shareholder consents to action; nonstock corporations; statutory close corporations; registered foreign corporations; benefit corporations and nonprofit corporations; repeal of the Decennial Report and nonprofit Annual Report requirements; and, effective one year after the effective date of the bill, enactment of a new Annual Report requirement for all entities.

Case summaries

Consent to Personal Jurisdiction
Mallory v. Norfolk Southern Railway Co., No. 21-1168, decided June 27, 2023. The U.S. Supreme Court, in a 5-4 decision, held that a Pennsylvania statutory provision that requires foreign corporations that register to do business in Pennsylvania to agree to appear in its courts on any cause of action against them, does not violate the Due Process Clause of the Fourteenth Amendment.

Foreign Registration is Not Consent to General Jurisdiction
Mallory v. Norfolk Southern Railway Company, No. 3 EAP 2021, decided December 22, 2021. The Pennsylvania Supreme Court affirmed the trial court’s holding striking down a section of the long arm statute that provides that foreign registration constitutes consent to the general jurisdiction of Pennsylvania courts. The court noted that the requirement of personal jurisdiction may be waived. Accordingly, consent to jurisdiction by waiving one's due process rights is an independent basis for jurisdiction, assuming that the consent is given voluntarily. Thus, to find that the defendant foreign corporation consented to the general jurisdiction of Pennsylvania courts when it registered to do business here, the court must conclude that it voluntarily, knowingly, and intelligently waived its due process liberty interest in not being subject to the binding judgments of a forum with which it has no meaningful "contacts, ties, or relations." Although the long arm statute does provide notice that qualification constitutes consent, that notice does not render the consent voluntary. The court also noted that the US Supreme Court has made clear that foreign corporations cannot be subject to general jurisdiction in every state in which they conduct business, as they could not possibly be at home in all of them.

Pennsylvania Supreme Court Upholds Executive Order Closing Non-Life Sustaining Businesses Due to COVID-19
Friends of D. Devito, et al v. Wolf, No. 68 MM 2020, decided April 13, 2020. The Pennsylvania Supreme Court upheld the Governor’s executive order compelling closure of the physical operations of all non-life sustaining businesses. Four businesses and one individual contended that the Governor lacked any statutory authority to order the closures and even if he had authority, the closures violated their Constitutional rights. The court held that the Governor had authority to order the closures under the Emergency Code, which grants expansive powers when there is a disaster. The court rejected the petitioners’ argument that the Emergency Code did not apply to COVID-19 because it was not included in the statute’s list of disasters. The court noted that the Code applies to other catastrophes that result in suffering and potential loss of life. The court also rejected the argument that the Governor only has authority to act in disaster areas and that there was no disaster in the areas where their businesses are located. The court noted that there were COVID-19 cases in every county of the state and the petitioners ignored the nature of the virus and how it is transmitted. The court also rejected the petitioners’ claims that the order violated the separation of powers, constituted a taking without just compensation, violated their procedural due process and equal protection rights, and their first amendment right of free speech and assembly.

Other notices

There are no new notices at this time.
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