Lesnick v. Hollingsworth & Vose Co.

Decision Date19 September 1994
Docket NumberNo. 93-1820,93-1820
Citation35 F.3d 939
Parties, Prod.Liab.Rep. (CCH) P 14,042 Beverly LESNICK, Individually and as Personal Representative of the Estate of Stanley S. Lesnick, Plaintiff-Appellant, v. HOLLINGSWORTH & VOSE CO., Defendant-Appellee, and Lorillard, Inc., Defendant.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: Howell Kenneth Rosenberg, Brookman, Rosenberg, Brown & Sandler, Philadelphia, PA, for appellant. Andrew James McElaney, Jr., Nutter, McClennen & Fish, Boston, MA, for appellee. ON BRIEF: Steven J. Cooperstein, Brookman, Rosenberg, Brown & Sandler, Philadelphia, PA; Marc S. Rosen, Scanlan & Rosen, P.A., Baltimore, MD, for appellant. Stephen J. Brake, Nutter, McClennen & Fish, Boston, MA, for appellee.

Before MURNAGHAN and NIEMEYER, Circuit Judges, and HILTON, United States District Judge for the Eastern District of Virginia, sitting by designation.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Judge MURNAGHAN and Judge HILTON joined.

OPINION

NIEMEYER, Circuit Judge:

After her husband died from lung cancer, Beverly Lesnick instituted this action in the District of Maryland, alleging that the filters in Kent brand cigarettes manufactured by defendants Lorillard, Inc., and Hollingsworth & Vose Co. were the cause of her husband's death. In particular, she alleged that his death was caused by asbestos incorporated by the defendants into Kent brand cigarettes' "Micronite Filter" between 1952 and 1956. Hollingsworth & Vose, a Massachusetts corporation which manufactured the filter material in Massachusetts and shipped it to Lorillard's plants in Kentucky and New Jersey, filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(2) on the grounds that it did not have sufficient contacts with the state of Maryland for a Maryland court to assert personal jurisdiction over it. The district court granted the motion to dismiss, and we affirm.

I

Stanley Lesnick, a Maryland resident, smoked approximately one and one-half to two packs of cigarettes each day from the 1940's until he quit smoking in the early 1970's, and he smoked Kent brand cigarettes from the time they were introduced on the market in the early 1950's until he quit. Lesnick purchased most of his cigarettes from retail stores in the state of Maryland. In May 1989, Lesnick was diagnosed with mesothelioma, a form of lung cancer. His doctor concluded that the cancer was caused by inhalation, not of the tobacco smoke, but of crocidolite asbestos, which was incorporated in the Kent cigarettes' filters in the early 1950's. Lesnick's condition was diagnosed as fatal, and on November 21, 1989, he died.

Beverly Lesnick, Stanley's wife, filed this diversity action in December 1991 in her individual capacity and as the representative of Stanley Lesnick's estate, naming as defendants Lorillard, Inc., a New York corporation with its principal place of business in New York, and Hollingsworth & Vose Co., a Massachusetts corporation with its principal place of business in Massachusetts. The amended complaint alleged that from March 1952 to May 1956, Lorillard manufactured Kent cigarettes with the "Micronite Filter," which contained crocidolite asbestos. The filter medium was manufactured by Hollingsworth & Vose in Massachusetts and was then shipped to Lorillard's cigarette manufacturing plants in Kentucky and New Jersey where it was incorporated into the cigarettes. Between 1952 and 1956, Hollingsworth & Vose provided Lorillard with material for approximately 10 billion asbestos-containing filters which were incorporated into cigarettes marketed and distributed by Lorillard throughout the nation. In her complaint, Beverly Lesnick alleged that the defendants knew or should have known of the dangers of crocidolite asbestos at the time the cigarettes and filters were manufactured, but that they failed to make improvements in them or to warn the public of these dangers. She based her claims on Maryland theories of negligence, strict liability, fraudulent misrepresentation, negligent misrepresentation, and breach of express warranty, and she demanded $2 million in damages.

Hollingsworth & Vose filed a motion to dismiss for lack of personal jurisdiction. It recognized that Maryland authorizes long-arm jurisdiction to the full extent allowed under the Due Process Clause of the Fourteenth Amendment, Mohamed v. Michael, 279 Md. 653, 370 A.2d 551 (1977), but it argued that under the reasoning of the Supreme Court plurality in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), jurisdiction may not be asserted over an out-of-state manufacturer of products placed into the stream of commerce, where the manufacturer's only connection with the forum state is its knowledge that the products will eventually be sold there. Hollingsworth & Vose acknowledged that, when it sold the material for cigarette filters to Lorillard, it placed the material in commerce knowing that it would eventually be sold in Maryland as a component of Kent cigarettes however, it argued that under Asahi, mere knowledge is not enough to establish personal jurisdiction, and its activity must have been purposefully directed toward Maryland.

In support of her argument that Hollingsworth & Vose should be subject to Maryland's long-arm jurisdiction, Beverly Lesnick argued first that language in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980), which appears to require only that a defendant place a product "into the stream of commerce with the expectation that [it] will be purchased by consumers in the forum State," should control, and based on admissions from Hollingsworth & Vose, Maryland's jurisdiction over Hollingsworth & Vose is properly asserted. Even assuming that Asahi is read to make the standard more demanding, Lesnick argued, jurisdiction would nevertheless be proper because Hollingsworth & Vose was "no mere supplier of component parts." Rather, it "bound itself to work in virtual partnership with Lorillard to develop a filter for general distribution through integration into Lorillard's cigarettes." Lesnick contended that Hollingsworth & Vose should be imputed with Lorillard's clearly adequate contacts with Maryland because it "purposefully availed itself of the privilege of conducting business, through Lorillard's sales, in the entire United States."

The district court rejected the argument that Hollingsworth & Vose's ties to Lorillard were sufficient to establish jurisdiction, though it acknowledged that Hollingsworth & Vose was an important, perhaps even vital, supplier to Lorillard. The court stated, "Hollingsworth & Vose Company is not engaged directly, as is Lorillard, in bringing the alleged offending product into Maryland, or doing anything with respect to Maryland, other than supplying its product to defendant Lorillard in a state other than Maryland." The court granted Hollingsworth & Vose's motion to dismiss under Federal Rule of Civil Procedure 12(b)(2) and entered final judgment in its favor under Federal Rule of Civil Procedure 54(b). This appeal followed.

II

While the jurisprudence of personal jurisdiction has focused on fixing the minimum measurement of a person's contact with a state necessary to substitute for the person's presence in the state and thus to justify that state's imposing an in personam judgment over the person, the immediate concept of "presence" is no longer part of the language. Nevertheless, the establishment of a surrogate for presence has been the core task in defining the due process boundaries of a state's legitimate exercise of sovereignty over a person beyond its borders. A historical review of the scope of a state's jurisdictional power thus provides an insight into the Supreme Court's efforts in articulating a standard for long-arm jurisdiction.

It remains well-established that a state's sovereignty over persons, property and activities extends only within the state's geographical borders and that therefore its laws have no operation in another state except as allowed by the other state or by comity. See Pennoyer v. Neff, 95 U.S. 714, 720-22, 24 L.Ed. 565 (1878). This root principle is inherent in our system of federalism. As the Court in Pennoyer stated:

The several States are of equal dignity and authority, and the independence of one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal established by it can extend its process beyond that territory so as to subject either persons or property to its decisions.

Id. at 722. The Court noted that the assertion by one state of jurisdictional power in violation of these principles would be "an illegitimate assumption of power," id. at 720, and would not constitute due process of law in violation of the Fourteenth Amendment. Id. at 733.

Preserving the notion that only a person present in a state can be subjected to an in personam judgment there, the Court later concluded that corporations, even though previously thought to be present only where incorporated, were present in states where their authorized agents conducted the corporations' activities. St. Clair v. Cox, 106 U.S. 350, 1 S.Ct. 354, 27 L.Ed. 222 (1882). In St. Clair, the Court upheld a Michigan statute that permitted a foreign corporation to be sued in the state as a condition of that corporation's doing business in the state. The Court reasoned that the corporation's presence, through its agents, constituted implied consent to be sued there in accordance with the state's statute. See also Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710 (1917) (holding that out-of-state corporation's in-state business...

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