PHILADELPHIA – A federal judge’s recent ruling which said that Pennsylvania’s requirement for out-of-state corporations to both register in and consent to general jurisdiction here was “a statutory scheme” and “unconstitutional” may have lasting effect on a number of prominent cases statewide, both pending and in the future.
On June 6, U.S. District Court for the Eastern District of Pennsylvania Judge Eduardo C. Robreno authored the ruling, which defied decisions reached in Pennsylvania state and federal courts, and aligned with the landmark U.S. Supreme Court decision in Daimler AG v. Bauman from 2014.
In Daimler, the Supreme Court decided, barring extraordinary circumstances, conferral of general jurisdiction over an out-of-state defendant would only apply if the corporation in question was “at home,” meaning where it was incorporated or maintained its principal place of business.
But in Pennsylvania, corporations wanting to do in the business in the state are required to register with the Pennsylvania Department of State, as per state law – and that such registration “constitutes a sufficient basis for the exercise of general personal jurisdiction over the foreign corporation.”
Robreno addressed the apparent contradiction in his ruling on Sullivan v. A.W. Chesterton, Inc. Et.Al.
Plaintiff Jackie Sullivan initiated the asbestos-related products liability action in the Philadelphia County Court of Common Pleas in July 2018, versus 48 defendants. She alleged that decedent John Sullivan was exposed to asbestos during his U.S. Navy service as a machinist mate from October 1967 through January 1980, exposure which caused him to develop fatal lung cancer.
It was unchallenged that the decedent’s alleged exposure aboard the U.S.S. Blakely did not occur in Pennsylvania. Meanwhile, both Sullivan and HIC are based in Virginia, with the defendant also being incorporated there.
Much as in Daimler, HIC argued that Pennsylvania’s business registration leading to general jurisdiction-arrangement violated the Fourteenth Amendment’s Due Process Clause.
Robreno agreed, and stated that the U.S. Supreme Court 2014 ruling in Daimler superseded that of the 1991 ruling in Bane v. Netlink, Inc. from the U.S. Court of Appeals for the Third Circuit.
“The Pennsylvania statutory scheme that requires foreign corporations to register to do business and, therefore, to consent to general personal jurisdiction in Pennsylvania, offends the Due Process Clause and is unconstitutional; and (2) The Third Circuit’s pre-Daimler decision in Bane v. Netlink, Inc. finding that, by registering to do business in Pennsylvania, a foreign corporation consents to general personal jurisdiction, is irretrievably irreconcilable with the teachings of Daimler, and can no longer stand.”
Impact of Judge Robreno’s Decision For Other Jurisdiction-Based Cases
Robreno’s ruling in Sullivan may have direct and major ramifications on other prominent product liability cases being litigated in Pennsylvania.
In Youse Et.Al v. Johnson & Johnson Et.Al, a pending lawsuit in which a plaintiff alleged her exposure to asbestos-laced talcum powder was the factual cause of her mesothelioma, the question of jurisdiction was a central point of conflict between the parties and led to the cases remaining in Pennsylvania.
In November 2017, Imerys Talc America filed preliminary objections in the case, arguing under Daimler that Pennsylvania lacked personal jurisdiction over it, and at the time, Allegheny County Court of Common Pleas Judge Robert Colville agreed.
But subsequent to the Superior Court of Pennsylvania’s July 2018 ruling in Webb-Benjamin, LLC v. International Rug Group, LLC, which held that a company registered for commercial purposes in the state effectively consents to the jurisdiction of its state and federal courts – along with a motion for reconsideration from the plaintiff – Colville overturned his own prior ruling last September and thus, conferred jurisdiction over Imerys.
Imerys appealed Colville’s revised ruling, but then it and two of its affiliates filed for bankruptcy in February before they could re-argue the question of consent jurisdiction under Daimler and prior to Robreno’s June decision.
Proceedings in the case remain ongoing.
In Murray v. American LaFrance, LLC, the Superior Court of Pennsylvania overturned a state court ruling from Philadelphia 2-1, endorsing consent jurisdiction and declaring that the case filed by New York firefighters against an out-of-state corporation that manufactured fire truck sirens that allegedly caused their hearing loss belonged in Pennsylvania as a matter of first impression.
However, after issuing several decisions in recent years which supported the concept, the Superior Court has agreed to re-hear the consent-jurisdiction issue en banc in Murray v. American LaFrance.
“If that court adheres to its previous decisions endorsing consent jurisdiction, the result will be a conflict between Pennsylvania state and federal courts on the amenability of nonresident corporations to suit in Pennsylvania. That would likely induce the U.S. Supreme Court to intercede to resolve the conflict,” said Rich Samp, Chief Counsel, Litigation Division, for the Washington Legal Foundation.
In addition to an amicus brief for Murray v. American LaFrance issued in March, the WLF also recently authored a brief in Hammons v. Ethicon, Inc.
In that case, Indiana-based plaintiff Patricia Hammons brought suit against Ethicon, a subsidiary of Johnson & Johnson that is based in New Jersey.
Hammons suffered a prolapsed bladder in 2009 and to treat her condition, she had a Prolift-brand mesh device surgically implanted. According to the plaintiff, the mesh’s density led to the build-up and movement of scar tissue, causing erosion to Hammons’ bladder, terrible pain and numerous other symptoms.
The mesh device ultimately failed. As a result, surgeries were necessary to remove the device. However, Hammons claimed that pieces of the device attached themselves to what remained of her bladder and were unable to be extracted.
A Philadelphia jury first awarded Hammons $5.5 million in compensatory damages, and later, punitive damages of $7 million against Ethicon in December 2015. Delay damages in the case were later approved through judicial order.
The Superior Court later shot down Ethicon’s appeal and upheld the $12.85 million jury verdict, though the case and the issue of consent jurisdiction will be revisited on further appeal by the Supreme Court of Pennsylvania.
Nicholas Vari of K&L Gates in Pittsburgh, a co-author of the recent amicus brief issued on behalf of the WLF in Hammons, offered further comment.
“In many instances, the existence of personal jurisdiction is a fact-intensive inquiry that examines the relationships among the defendant, the jurisdiction, and the claim. The Sullivan opinion makes it clear that, under existing Supreme Court precedents, registration to do business in Pennsylvania, by itself, will not be sufficient to confer personal jurisdiction over an out-of-state resident corporation,” Vari said.
“However, in any particular case, the question of whether personal jurisdiction may still exist will require a further examination into the facts giving rise to the claims at issue, which may qualify for ‘specific’ personal jurisdiction under the Daimler analysis in some circumstances.”
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com