Casualty

Key Points:

• A manufacturer and seller of retail goods should seek a transfer of venue if their online sales in the plaintiff’s selected forum generate limited revenue for the company.
• The mere act of online sales in a Commonwealth forum does not give rise to laying venue where these sales occur – the actions of the manufacturer or seller must also be deemed continuous, habitual, and systemic in that venue.
• Where a manufacturer or seller has no physical presence in the forum – such as brick‑and‑mortar locations, in‑state sales representatives, or the licenses and authorizations required to conduct business in Pennsylvania – it may possess a strong basis for arguing that venue is improper.

---

In today’s world of online advertisement and sales, manufacturers and sellers are seemingly serving forums at an increasing level. This trend is here to stay, as consumers across the nation and Commonwealth are adapting to, and addicted to, the ease of online shopping. As discussed below, the capacity to sell goods online has resulted in an ever-evolving, liability concern: forum shopping and unfavorable venues.

While online shopping may be a boon for the consumer, it raises concerns for manufacturers and sellers of goods. Mainly, how does the nature of a manufacturer’s and seller’s online presence impact its prospective liability in forums across the Commonwealth? After all, the reality of serving consumers in Philadelphia County or Lackawanna County creates a range of exposure more dire than, say, Clinton County or Columbia County. The nature of online sales was recently addressed by the Pennsylvania Superior Court in Watson v. Baby Trend, Inc., 308 A.3d 860 (Pa. Super. 2024). While the purchase involved in Watson occurred in a retail store – Babies “R” Us – in Bucks County, Pennsylvania, the nature of the manufacturer’s online sales formed the basis of the plaintiff’s decision to select the Philadelphia Court of Common Pleas as the forum to file suit.

The Watson case was brought as a result of the plaintiffs’ infant daughter dying of asphyxiation while sleeping in a car seat manufactured by the the defendant, Baby Trend. An amended complaint was filed in October of 2021, in the Philadelphia County Court of Common Pleas, bringing products liability/strict liability, negligence, and breach of warranty claims against Baby Trend. Later that month, Baby Trend filed preliminary objections, asserting that the Philadelphia Court of Common Pleas was not the proper venue for suit.

Baby Trend argued Philadelphia was an improper venue as it did not own real estate in Philadelphia County, the car seat was not purchased in Philadelphia County, the tragic incident itself did not occur in Philadelphia County, and, most importantly, Baby Trend did not conduct substantial, continuous, and systemic business activities in Philadelphia County.

In this regard, the Philadelphia Court of Common Pleas analyzed Baby Trend’s sales data under the well-established “quality-quantity” venue test. As noted in previous Superior Court precedent, “[a] business entity must perform acts in a county of sufficient quality and quantity before venue in that county will be established.” Zampana-Barry v. Donaghue, 921 A.2d 500, 503 (Pa. Super. 2007) (emphasis added).

Baby Trend’s business model is largely to sell its goods through big-box retailers, such as Walmart and Target. The Philadelphia Court of Common Pleas determined that roughly 99% of its sales occurred through big-box retailers. While it did have an online presence, this only comprised 1% of its sales revenues. The plaintiffs attempted to use Baby Trend’s online sales in Philadelphia County as proof that their acts were of a sufficient “quality and quantity” to justify their selected venue. The Philadelphia Court of Common Pleas ultimately rejected this argument, sustaining the defendant’s preliminary objections, and transferred suit to Bucks County in August of 2022. As a result of that decision, the plaintiffs appealed to the Superior Court.

The Superior Court narrowed its review of the trial court’s decision by further analyzing Baby Trend’s sales data and its applicability to the “quality-quantity” test. The Superior Court described the 1% of online sales directed to Philadelphia County consumers as incidental and de minimis. Thus, the quality prong was not satisfied. This is a big takeaway as it provides manufacturers with a clear-cut data point as to what kind of impact their online sales will have in relation to the forum they may expect to be haled into.

Further, the Superior Court reasoned that the quality-quantity test was not satisfied because Baby Trend did not own real estate in Philadelphia; did not have a place of business there; did not employ sales representatives there; did not own licenses, authorizations, or registrations from the Commonwealth of Pennsylvania; and was not registered as a foreign corporation for the purpose of doing business in Philadelphia. Thus, the court determined that Baby Trend’s contacts in Philadelphia did not support suit in the forum because the evidence suggested that its contacts with Philadelphia were incidental by nature and would not be seen as continuous, habitual, or regular.

The Honorable Terrence R. Nealon of the Lackawanna Court of Common Pleas relied on Watson in a case currently being handled by our Scranton, PA office. While our preliminary objections to venue were overruled in that matter, Judge Nealon based his decision on the fact that an individual defendant had been properly named – making venue proper under Pa. R.C.P. 1006(a)(1). However, in his decision, Judge Nealon cited Watson as authority on proper venue, ultimately reasoning that the parties would have been directed to engage in venue discovery – as they did in Watson – to properly determine if the defendant’s actions in Lackawanna County were continuous, general, or habitual. See Celli v. Endless Mountains Extended Care, LLC, 2024 WL 4182838 (C.P. Lacka. Sept. 12, 2024).

Thus, Watson serves as a significant Pennsylvania decision for determining proper forum/venue for cases brought against manufacturers and sellers. Plaintiffs often seek to establish venue in plaintiff-friendly forums, aided by tenuous connections to the forum. However, Watson provides the defense bar with a myriad of arguments to combat these efforts, particularly in the context of retail liability.

John works in our Scranton, PA office. He can be reached at (570) 496-4640 or JPKelly@mdwcg.com.