The Franchise Memorandum

In another recent dismissal for lack of personal jurisdiction, a federal court has dismissed a negligence lawsuit that a hotel guest brought in Pennsylvania rather than either the state where her claims arose or where the defendants are based. Kurz v. Holiday Hosp. Franchising, LLC, 2019 WL 5068646 (E.D. Pa. Oct. 9, 2019). Shirlyn Kurz filed suit in Pennsylvania against Holiday Hospitality Franchising and its Holiday Inn franchisee, Prammish LLC, alleging that because of their negligence, jewelry was stolen from her guestroom at a franchised hotel in Santee, South Carolina. Holiday Franchising and Prammish filed motions to dismiss, arguing that courts in Pennsylvania lacked specific personal jurisdiction over either defendant, because the alleged negligence occurred in South Carolina, and lacked general jurisdiction over either defendant because neither Holiday Franchising nor the franchisee were incorporated in Pennsylvania or maintained a principal place of business in Pennsylvania.

Ms. Kurz argued that the presence of Holiday Inn hotels in Pennsylvania was enough to establish general jurisdiction. The district court rejected her argument, relying on Daimler AG v. Bauman, 571 U.S. 117 (2014), and its progeny. In Daimler, the United States Supreme Court established that general jurisdiction over a corporate defendant normally exists in the defendant’s place of incorporation and principal place of business. In “exceptional cases,” a defendant’s business operations in another state may be so continuous and substantial that the defendant is “essentially at home” in the other state. But this standard is “incredibly difficult to establish,” and cannot be satisfied merely by showing the out-of-state defendant does business — even substantial business — in the forum state. Under the Daimler standard, the fact that Holiday Franchising does business in Pennsylvania was insufficient to establish jurisdiction. Therefore, the court dismissed Kurz’s lawsuit.