Jackie L. Sullivan v. A. W. Chesterton, Inc. (In re Asbestos Products Liability Litigation (No. VI))

• Decision Date: 06 June 2019
• Docket Number: Case No. 18-3622,Consolidated Under MDL DOCKET NO. 875
• Citation: 384 F.Supp.3d 532
• Parties: IN RE: ASBESTOS PRODUCTS LIABILITY LITIGATION (NO. VI) Jackie L. Sullivan, Executrix of The Estate of John L. Sullivan, Deceased, and Widow in Her Own Right v. A. W. Chesterton, Inc., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

384 F.Supp.3d 532

IN RE: ASBESTOS PRODUCTS LIABILITY LITIGATION (NO. VI)Jackie L. Sullivan, Executrix of The Estate of John L. Sullivan, Deceased, and Widow in Her Own Right

v.A. W. Chesterton, Inc., et al.

Consolidated Under MDL DOCKET NO. 875

Case No. 18-3622

United States District Court, E.D. Pennsylvania.

Filed June 6, 2019

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

Before the Court is the motion to dismiss filed by Defendant Huntington Ingalls Incorporated ("HIC"). The Court will grant the motion as it concludes that it lacks personal jurisdiction over HIC.

In 2014, the Supreme Court decided the case of Daimler AG v. Bauman ¹ which brought about a sea change in the jurisprudence of exercising general personal jurisdiction over a foreign corporation. Daimler held that under the Due Process Clause, subjecting a foreign corporation to general jurisdiction in every state in which it "engages in a substantial, continuous, and systematic course of business" was "unacceptably grasping." Under Daimler, the exercise of general jurisdiction over a foreign defendant (except in extraordinary circumstances) was limited to where the corporation was "at home," namely, the forums in which the foreign corporation is incorporated and where it maintains its principal place of business.

Pennsylvania has long had a statute which requires a foreign corporation wishing to do business in Pennsylvania to register in Pennsylvania. Correspondingly, Pennsylvania law provides that such registration constitutes a sufficient basis for the exercise of general personal jurisdiction over the foreign corporation.

Federal and state courts in Pennsylvania have struggled to divine the applicability of Daimler to the Pennsylvania registration scheme with mixed results. Building on that jurisprudence, this Court concludes that: (1) 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.,² 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.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff Jackie Sullivan brought this asbestos personal injury action against 48 Defendants in the Philadelphia Court of Common Pleas on July 25, 2018. She alleges that decedent John Sullivan was exposed to asbestos during his Naval service from October 1967 through January 1980. Plaintiff further alleges that this asbestos exposure caused Sullivan to develop lung cancer

which ultimately led to his death. HIC removed the action on August 22, 2018 pursuant to the Federal Officer Removal Statute, 28 U.S.C § 1442.³

Regarding the allegations against HIC, Plaintiff alleges that in 1973, Sullivan was assigned to the U.S.S. Blakely while serving in the Navy as a machinist mate. Plaintiff further contends that an alleged predecessor of HIC, Avondale Shipyard, built the Blakely in Westwego, Louisiana and "designed its ship to contain asbestos and despite the ability to know of and warn of the hazards of asbestos failed to do so." Am. Compl. 8-9 (ECF No. 100). It is undisputed that Sullivan's alleged asbestos exposure aboard the Blakely did not occur in Pennsylvania.⁴ Most importantly for the purposes of this case, HIC is incorporated and has its principal place of business in Virginia, not in Pennsylvania. Plaintiff is also a citizen of Virginia.

II. LEGAL STANDARD

Under Fed. R. Civ. P. 12(b)(2), in response to a complaint, a defendant may assert as a defense that the court lacks personal jurisdiction over it. When a defendant raises this defense, "the burden falls upon the plaintiff to come forward with sufficient facts to establish that jurisdiction is proper." Mellon Bank (E.) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992) (citing Carteret Sav. Bank v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992) ). However, when reviewing such a motion, the court "must accept all of the plaintiff's allegations as true and construe disputed facts in favor of the plaintiff." Carteret Sav. Bank, 954 F.2d at 142 n.1. "Personal jurisdiction [ ] is ‘an essential element of the jurisdiction of a district ... court,’ without which the court is ‘powerless to proceed to an adjudication.’ " Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (quoting Emp'rs Reinsurance Corp. v. Bryant, 299 U.S. 374, 382, 57 S.Ct. 273, 81 L.Ed. 289 (1937) ).

III. DISCUSSION

A. The Pennsylvania Business Registration Statutory Scheme and Federal Due Process Guarantees

Plaintiff contends that this Court has general personal jurisdiction over HIC pursuant to 15 Pa.C.S. § 411 and 42 Pa.C.S. § 5301 because HIC and its alleged predecessors registered to do business in Pennsylvania at various points of time.⁵

Section 411 provides in relevant part that a foreign corporation "may not do business in this Commonwealth until it registers with the department." 15 Pa.C.S. § 411(a). If a foreign corporation does business in the state without registering, as a penalty, it "may not maintain an action or proceeding in" the state. 15 Pa.C.S. § 411(b). Section 5301 provides in relevant part that registration as a foreign corporation in Pennsylvania "shall constitute a sufficient basis of jurisdiction to enable the tribunals of this Commonwealth to exercise general personal jurisdiction over such" entities. 42 Pa.C.S. § 5301(a)(2)(i). Read together, these two statutes provide that, the state will only permit a foreign corporation to "do business" in Pennsylvania if it registers and, thus, subjects itself to general personal jurisdiction. The Court will refer to the interplay of these two statutes as the "Pa. Statutory Scheme."

The concept of due process is deeply rooted in our judicial system, having been imported from England as an essential bulwark against arbitrary deprivations by the crown. See, e.g., Davidson v. City of New Orleans, 96 U.S. 97, 101, 24 L.Ed. 616 (1877). Under the Fifth and Fourteenth Amendments, the government, whether federal or state, may not deprive individuals of "life, liberty, or property" without "due process of law." U.S. Const. amend. V & amend. XIV. It has long been recognized that corporations have juridical personalities and are entitled to due process protections. See Missouri Pac. Ry. Co. v. Mackey, 127 U.S. 205, 209, 8 S.Ct. 1161, 32 L.Ed. 107 (1888) (citing Santa Clara Cty. v. S. Pac. R. Co., 118 U.S. 394, 6 S.Ct. 1132, 30 L.Ed. 118 (1886) ).

The Pa. Statutory Scheme has serious due process implications and its continued implementation raises two questions that this Court must address: (1) is the Pa. Statutory Scheme constitutional after Daimler, 571 U.S. 117, 134 S.Ct. 746 ; and, if not, (2) must this Court follow the Third Circuit's holding in Bane, 925 F.2d 637, that a foreign corporation consents to jurisdiction by registering under the Pa. Statutory Scheme?

B. The Applicable Law

In order to determine whether this Court may exercise personal jurisdiction over HIC, it must first analyze two questions: (1) whether Pennsylvania's long-arm statute provides for the exercise of long-arm jurisdiction, and, if so; (2) whether the exercise of long-arm jurisdiction in this case satisfies the requirements of the Due Process Clause of the Constitution. IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 258-59 (3d Cir. 1998). Pennsylvania's long-arm statute first lists discrete actions performed in-state that create personal jurisdiction including transacting various types of business, entering into contracts, causing harm, owning real property, taking various appointments, applying for licences, and violating laws. 42 Pa.C.S § 5322(a).

In addition to these specific instances, the statute also provides that "the jurisdiction of the tribunals of this Commonwealth shall extend ... to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." 42 Pa.C.S § 5322(b). It is with this second section of the long-arm statute that the Court is concerned as the specific acts listed in Section 5322(a) are not implicated.

Because Section 5322(b) of Pennsylvania's long-arm statute is coextensive with the Due Process Clause, the Court need only analyze whether jurisdiction is proper under federal Fourteenth Amendment jurisprudence. See Daimler, 571 U.S. at 125, 134 S.Ct. 746 (providing that "[f]ederal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons" but that when a state long-arm statute is co-extensive with the Constitution, the court should inquire whether finding personal jurisdiction "comports with the limits imposed by federal due process"); Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir. 1996) (providing that because the reach of Section 5322(b) "is coextensive with the limits placed on the states by the federal Constitution," courts "look to federal constitutional doctrine to determine [a defendant's] susceptibility to personal jurisdiction in Pennsylvania").

In Daimler, the Supreme Court reiterated that exercising general personal jurisdiction over a foreign corporation comports with due process only "when the corporation's affiliations with the State in which suit is brought are so constant and pervasive ‘as to render [it] essentially at home in the forum State.’ " 571 U.S. at 122, 134 S.Ct. 746 (quoting Goodyear, 564 U.S. at 919, 131 S.Ct. 2846 ). Daimler clarified that, absent exceptional circumstances, a corporation is only "at home" where it is incorporated and where it has its principal place of business. Id. at 137 & 139 n.19, 134 S.Ct. 746. The Court...