Legal Updates for Toxic Torts Litigation - June 2019

Federal Judge Concludes that Pennsylvania’s Corporate Registration Is Unconstitutional

By Timothy Rau, Esq.

Judge Eduardo Robreno of the Eastern District of Pennsylvania issued an Order and Memorandum on June 6 in the case of Sullivan v. A.W. Chesteron, No. 18-3622, in which he dismissed defendant Huntington Ingalls because the court lacked jurisdiction over it.

The plaintiff in the case alleged personal injury from exposure to asbestos related to the conduct of Huntington and 47 other defendants. It was alleged that Mr. Sullivan was exposed to asbestos while he served in the U.S. Navy from 1967-1980.

Specific to Huntington, it was alleged that Huntington built the U.S.S. Blakely in Louisiana and that the plaintiff was exposed to asbestos when he was assigned to the Blakely in 1973. The plaintiff claimed that Huntington designed the vessel to contain asbestos and failed to warn of its hazards.

Because Huntington is incorporated and has its principal place of business in Virginia, Huntington moved to dismiss the complaint against it, arguing that the court lacked personal jurisdiction. Citing to Daimler AG v. Bauman, 571 U.S. 117 (2014), Huntington argued that because of its lack of incorporation and principal place of business in Pennsylvania, the plaintiff could not establish general jurisdiction over it.

In order to establish personal jurisdiction over a defendant, a plaintiff must either show that there is specific or general jurisdiction over the defendant. Daimler limited the instances in which general jurisdiction can be established to those where a defendant is either incorporated or has its principal place of business in the jurisdiction. Pennsylvania has a business registration statute which states that by registering to do business in the Commonwealth, a business consents to general personal jurisdiction.

The plaintiff in this case, as plaintiffs have in other cases, argued that because Huntington registered to conduct business in Pennsylvania at various times, it consented to personal jurisdiction pursuant to 42 Pa. C.S. Sec. 5322 (b). In support of the argument, the plaintiff cited to Bane v. Netlink, Inc., 925 F.2d 637 (3d Cir. 1991), which held that by registering to do business in Pennsylvania, the defendant consented to jurisdiction in the Commonwealth.

Judge Robreno analyzed whether the Pennsylvania statute offended the requirements of the Due Process Clause of the Constitution. In doing so, he traced the history of personal jurisdiction under federal law from International Shoe to the “bright-line test” of Daimler. Because Huntington was not incorporated in Pennsylvania and did not have a principal place of business, there was no general jurisdiction over Huntington under Daimler.

Judge Robreno then evaluated whether the Pennsylvania “statutory scheme” elicited knowing and voluntary consent to jurisdiction. He compared the Commonwealth’s “unique” registration statute to other states’ statutes and concluded that Pennsylvania’s scheme violates the Due Process Clause and is unconstitutional. He also rejected the argument that the Bane case required a finding that Huntington consented to jurisdiction because the Daimler case was a newer Supreme Court ruling that supplanted the rule of law under which Bane was decided.

In granting Huntington’s Motion to Dismiss, the court held that “without the presence of: (1) specific jurisdiction; (2) HIC’s voluntary consent; (3) HIC being incorporated in or having its principal place of business in Pennsylvania; or (4) some other extraordinary circumstance, this Court has no personal jurisdiction over HIC.”

We will continue to monitor this case and whether an appeal is taken by the plaintiff to the Third Circuit Court of Appeals. The Pennsylvania Superior Court is considering the same issue in an en banc appeal in the case of Murray v. Am. Lafrance, LLC, 2018 PA Super 267. The Murray case is one where the Pennsylvania Superior Court ruled that business registration was sufficient to establish jurisdiction, but the opinion was de-published pending consideration by the entire Superior Court. Whether the Pennsylvania state courts will be bound or persuaded by the opinion of a US District Court judge is an issue that we will continue to monitor.