November 2016

Jury_Box_Purchased_8-13-14_iStock_000010826297SmallSince the United States Supreme Court’s decision in Daimler AG v. Bauman in 2014, general jurisdiction over a corporate defendant has become a hot topic. See 134 S. Ct. 746 (2014). In most jurisdictions, it is no longer sufficient for a plaintiff to establish a corporate defendant was registered to do business in the jurisdiction at issue or that the corporate defendant had sales and/or derived revenue in the jurisdiction at issue. Rather, there is a heightened inquiry and heavier burden placed on a plaintiff.

The Daimler Court held that a corporate defendant is deemed “at home” for purposes of establishing general jurisdiction over it in the forum where it is incorporated and in the forum where it maintains its principal place of business. Outside of those two circumstances, a corporate defendant will be considered at home only in exceptional cases.

One such exceptional case, as noted by the Daimler Court, can be found in the Perkins v. Benguet Consol. Mining Co. case wherein a corporate defendant moved its operations to Ohio out of Japanese occupied Philippines during World War II. See 342 U.S. 437 (1952). In Perkins, the president of the corporate defendant company kept an office, maintained company files, and oversaw the company’s activities in Ohio sufficient to render the defendant essentially at home in Ohio.

Many courts have interpreted the Court’s opinion in Daimler to place a heavy burden on plaintiffs to present such an exceptional case. With such a heavy burden placed on plaintiffs, the question many defendants are asking is: what amount of discovery are plaintiffs entitled to take in order to establish general jurisdiction over a corporate defendant?

The Delaware Superior Court recently faced this very question. In April 2016, the Delaware Supreme Court issued a decision in Genuine Parts Co. v. Cepec limiting the circumstances in which a defendant is deemed to be subject to general jurisdiction in the State of Delaware pursuant to Daimler. 137 A.3d 123 (Del. 2016). Shortly thereafter, Defendant Union Carbide Corporation (“UCC”) filed motions to dismiss for lack of personal jurisdiction pursuant to Daimler and Cepec in 211 cases pending in New Castle County, Delaware. The plaintiff in one of those cases – Charles Kimble – responded by serving written discovery requests and seeking the deposition of UCC’s corporate representative. In addition, plaintiffs in six additional cases[1] (out of the 211 with pending motions to dismiss) sought the deposition of The Dow Chemical Company (“Dow”) alleging Dow, as a Delaware corporation and parent to UCC, held some information relevant to whether the Delaware Superior Court could exercise general jurisdiction over UCC.

UCC responded to written interrogatories and document requests providing its basic corporate information and publicly available documents detailing its limited contacts with Delaware and its relationship with Dow. However, UCC and Dow both filed separate motions to quash the depositions of their corporate representatives (“Motions”). In their Motions, UCC and Dow argued Plaintiffs failed to provide “some indication” of a plausible basis for their assertion that Delaware Superior Court could exercise general personal jurisdiction over UCC and Dow pursuant to Daimler.

Plaintiffs opposed UCC’s and Dow’s Motions and asserted a cross motion seeking to compel UCC to provide full and complete responses to interrogatories and document requests. The basis for Plaintiffs’ opposition was that UCC’s relationship with Delaware presented an exceptional case in that it is registered to do business in Delaware and substantially all of its revenue is derived through sales to its parent company, Dow, which is also a Delaware Corporation. Plaintiffs ignored the fact that UCC is neither incorporated in nor has its principal place of business in Delaware. Instead, it focused solely on the relationship UCC maintains with Dow to attempt to establish personal jurisdiction.

On October 1, 2016, the Special Master in Delaware Superior Court issued an opinion quashing the depositions of UCC’s and Dow’s corporate representatives and denying Plaintiffs’ motion to compel. The Special Master relied on Delaware precedent requiring a plaintiff to establish an articulable, plausible theory by which the Delaware courts could exercise jurisdiction over UCC and determined Plaintiffs had put forth no such theory to entitle them to the discovery they sought.

In determining no additional discovery was warranted, the Special Master focused on the lack of exceptional circumstances present. It was undisputed that UCC’s state of incorporation and principal place of business are outside of Delaware, UCC has no office or manufacturing facility in Delaware, and it does not own, operate or lease any real property in Delaware. The Special Master observed that Plaintiffs underestimated the rigorous test set forth in Daimler as Plaintiffs asserted only that UCC conducts business in Delaware through transactions with its parent company and Delaware corporation, Dow. Notably, the Special Master re-iterated the fact that Daimler essentially changed the landscape of the jurisdictional analysis by requiring more evidence than that necessary to simply establish a defendant conducted business in the forum state.

The Special Master’s decision will hopefully help to pave the path in asbestos litigation. Despite a clear test to determine when a court may exercise general jurisdiction over a corporate defendant, plaintiffs continue to serve overbroad jurisdictional discovery seeking much of the information they already possess in an effort to seemingly conduct a fishing expedition into areas irrelevant to the personal jurisdiction analysis. The Daimler Court itself stated “it is hard to see why much in the way of discovery would be needed to determine where a corporation is at home.” 134 S. Ct. at 762 n. 20. Not only are plaintiffs’ inquiries often irrelevant, but defendants are forced to expend significant costs engaging in such discovery in jurisdictions in which they do not legally belong.

[1]  Plaintiffs James Bailey, Francis Classon, James Davis, Susan Domino, Frank Dudley, and Kathleen Gloyne filed one consolidated request to depose Dow’s corporate representative on issues relating to whether Delaware courts could exercise personal jurisdiction over UCC.

Inland_cat_sailboatThe rules of civil procedure are thrust, like harpoons, upon young lawyers during their first year of law school, and for good reason.  Failing to abide by any number of a jurisdiction’s various rules sections, subsections, and clauses can result in instant death to your client’s cause of action or defense.  For example, we know that under Rule 12(b) of the Federal Rules of Civil Procedure, motions asserting the defense of personal jurisdiction must be made before filing a responsive pleading, and can be deemed waived if not raised in such a motion or the responsive pleading itself.

Though there are various exceptions to the time-to-plead rules, the importance of getting a personal jurisdiction challenge front and center before the court early on in the litigation process applies to most jurisdictions, and a failure to do so can undermine the defense altogether.  A defendant learned this lesson the hard way in a recent case before the Rhode Island State Supreme Court.

In Pullar v. Cappelli, No. 2015-303 (R.I. 2016), the plaintiff (and former Rhode Island resident) met the defendant (a New York resident) in New York to negotiate a contract for employment, in which the plaintiff was to serve as captain of the defendant’s sailboat for a term of three years, with an annual salary and promise of bonus amounting to one year’s salary at the conclusion of the contract.  One month before the contract was set to expire, the defendant terminated the plaintiff’s employment without cause, denying the skipper his bonus.  The plaintiff subsequently filed suit for breach of contract to recover the money owed him.

In his initial answer, the defendant asserted that the subject venue, Rhode Island, did not have personal jurisdiction over him.  Nevertheless, the case proceeded for the next three years, through virtually all stages of litigation.  The defendant served written discovery, took the plaintiff’s deposition, filed discovery motions with the court, participated in court-annexed arbitration, rejected the arbitration award, and requested a trial assignment.  After the case was assigned for trial, and more than one year after the conclusion of arbitration, the defendant moved for summary judgment, asserting a lack of in personam jurisdiction.

On appeal after the trial court granted the defendant’s motion, the Rhode Island Supreme Court did not waste any breathe analyzing whether the defendant had minimum contacts with the state to satisfy the jurisdictional requirements of the long arm statute.  Recognizing that the defendant properly preserved the jurisdictional defense by raising it in his answer, the Court rejected the notion “that preservation of the defense is inviolable simply because it was raised in the answer.”  Relying on the analogous Rule 12 of the Federal Rules of Civil Procedure and interpretive case law, the Court concluded that simply asserting a jurisdictional defect in an answer does not preserve the right to raise the defense indefinitely.  Adopting the forfeiture doctrine developed by the federal court, the Supreme Court held that the defendant’s conduct prior to asserting his jurisdictional defense gave the plaintiff the reasonable expectation that he would defend the case on the merits.  By conducting three and one half years of active litigation, submitting to the jurisdiction of the arbitration panel, and requesting  a trial date, the defendant was found to have forfeited his personal jurisdiction defense.  The case was remanded for further proceedings.

The lesson of Pullar is not hard to extract.  A properly preserved jurisdictional defense, like a pickled herring in the belly of a galleon, will still spoil if is not timely utilized.

Lady JusticeIn asbestos litigation, often times a plaintiff’s sole evidence of product identification takes the form of an affidavit created shortly before the claimant passes away.  Typically called a “dying-declaration” affidavit, the document preserves the plaintiff’s written testimony for trial, thereby preserving his cause of action against the individuals and entities he believes were responsible for causing his illness.

Such affidavits are problematic for defendants for a variety of reasons, principally because the affidavits are frequently created in the short window between a litigant’s diagnosis and his death, which may pre-date the filing of suit.  Under these circumstances, there is patent prejudice inflicted on defendants whose products are identified in the affidavits.  The defendants are denied the right to place the written identification testimony through the crucible of cross-examination, a fundamental right that is generally afforded to defendants in all litigation.

The prejudice inflicted on the decedent-plaintiff, however, is equally patent, if the affidavits are excluded from evidence.  The plaintiff may be the only source of product identification evidence available to his estate, and to deny the admission of a dying declaration affidavit may deny the plaintiff a viable cause of action.

Courts facing the dilemma posed by a dying declaration affidavit recognize the competing rights and interests of the litigants, and often look to the circumstances under which the document was created.  A recent decision in the Rhode Island Superior Court, Pisano v. Alfa Laval, Inc., C.A. No. PC-13-5868 (November 2, 2016) (Gibney, J.), weighed the competing interests with the language of the operative rule of evidence, and came down on the side of the plaintiff, admitting three affidavits executed less than two months prior to the plaintiff’s death, and before he could be deposed, for the purposes of defeating a defendant’s summary judgment motion.

In Pisano, a defendant moved for summary judgment asserting, among other things, insufficient product identification, where the evidence was limited to the plaintiff’s three affidavits.  The plaintiff had been diagnosed with mesothelioma on September 27, 2013, and executed the three affidavits in two separate bunches, one on October 25, 2013, and the other two on November 1, 2013.  The plaintiff passed away on December 16, 2013, one month after suit had been filed, and before he could be deposed by the defendants.  In the first October 25, 2013 affidavit, the plaintiff stated that he cut and installed asbestos-containing flooring tiles with his neighbor in the basement of his home in 1964; he described the tiles as being 10” x 10” and speckled black and white.  In the second affidavit, executed November 1, 2013, the plaintiff reiterated the events in the first affidavit, and further stated that the tiles were in fact 9” x 9”, black and white in color, and of the type he had circled in defendant’s catalog, which was attached as an exhibit to the affidavit.  In the third affidavit, dated November 1, 2013, the plaintiff stated that he installed ceiling tiles in his home sold by the defendant, and again attached a section of the defendant’s catalog in which he circled the alleged product.  Both the floor and ceiling tiles purportedly contained asbestos, to which the plaintiff was exposed.

The defendant challenged the admissibility of the affidavits for the purposes of product identification, arguing, in part, that the affidavits did not satisfy the “dying declaration” exception to the rule against hearsay because they were executed more than a month before the plaintiff  passed away and therefore were not made under the belief of impending death.  The trial court, Gibney, J., disagreed.  Recognizing that in order to be relied on at the summary judgment stage, affidavits must contain information that would be deemed admissible at trial, the court turned to Rhode Island Rules of Evidence 804(b) [1] to analyze the affidavits.

Under Rule 804(b), an unavailable declarant’s statements are admissible if made under belief of impending death, and relate to the declarant’s perceived cause or circumstances of his death.  The declarant’s state of mind can be proven by direct or circumstantial evidence, including through statements made to the declarant about his medical condition.  The dying declaration exception to hearsay is justified by the belief that the declarant’s impending death likely removes any motivation to make false claims.  In analyzing the Pisano affidavits, the court noted that, under existing case law, no time limit applies to terminal illness cases when defining the phrase “impending death” under 804.  In fact, the court referred to a previous decision in which it considered the fact that statements made by a declarant after being told that his condition was incurable and inoperable constituted a dying declaration for purposes of the rule.   The Pisano plaintiff represented, in his second affidavit, that he provided his statements “with the understanding that [he] may not be well enough to survive through the time of a deposition or trial.”  The court was therefore satisfied that the plaintiff sufficiently established his belief of impending death through his express statements, and deemed the affidavits admissible for product identification purposes under Rule 804.

Pisano follows the universal policy courts favor throughout the nation of resolving issues, evidentiary or otherwise, in a manner that permits the plaintiff a decision on the merits of his case.  Defendants must be vigilant in exploring not only the content of dying declaration affidavits, but the circumstances of their creation in order to posture for their exclusion from evidence both at the summary judgment stage and at trial.

[1] Rule 804 of the Rhode Island Rules of Evidence is functionally identical to Rule 804 of the Federal Rules of Evidence; both address the dying declaration exception to the rule against hearsay, among others.

Artboard 1You get served with a citation in a new products suit. The facts do not look good. The airbag system didn’t deploy. Maybe a tire exploded. Perhaps the steering assembly failed. A call is made to the plaintiff’s attorney – you want an expert to use an onboard diagnostic tool to test for what went wrong. Expecting to reach an amenable date for an inspection, you get a response that you were not quite expecting – the vehicle (or tire or steering assembly) has been salvaged and is no longer available for inspection. What happens next, and the legal theories involved, undoubtedly vary from state to state. Here we take a brief look at Louisiana law on the “case of the missing product.”

Adverse Presumption

In Williams v. General Motors Corp., 639 So. 2d 275, 276 (La. App. 4 Cir. 1994), the plaintiff was driving as 1985 Buick manufactured by GM when his steering failed and his vehicle veered into a guardrail. After the accident, the Williams’ damaged vehicle was taken to Jackie Rowan’s Automotive Repair where “[a]n employee of the repair shop discarded the rack and pinion steering assembly. Mr. Williams, therefore, could not produce those parts at the trial in support of his claim that they were defective.” Id. at 278. General Motors asserted that the failure to produce those parts in court “creates a presumption that the evidence would have been unfavorable to his cause.” Id. The court held that “[w]here a litigant fails to produce evidence available to him and gives no reasonable explanation, the presumption is that the evidence would have been unfavorable to him….the record supports Mr. Williams’ contention that the part was inadvertently discarded when it was mistaken for scrap metal by an employee of Jackie Rowan’s Automotive Repair Shop.” Id. The court held that Mr. Williams therefore provided a reasonable explanation for his failure to produce the evidence in court and no such unfavorable presumption applied. Id.

While in the Williams case the plaintiff was able to provide a ‘reasonable explanation’ for his failure to produce the allegedly defect part, such a determination is fact intensive and varies from case to case. Depending on the plaintiff’s response to the inquiry requesting an inspection of the product, there may be an opportunity to seek an adverse presumption prior to trial.

 

The Firestone Case & Summary Judgment

firestoneAlternatively, if the facts so align, a more cost effective approach may be a motion for summary judgment. In a very recent case, Gladney v. Milam, 39, 982 (La. App. 2 Cir. 9/21/15); 911 So. 2d 366, the plaintiff was driving a leased van equipped with Firestone tires when the van’s right front tire failed and the plaintiff lost control of his vehicle. Firestone filed a motion for summary judgment on the grounds that plaintiff could not prove a defective condition without producing the tire at issue, which had gone missing for reasons unknown. Id. at 368. The plaintiff had “photographs of the damaged tire, a copy of the state police accident report listing tire failure as the cause of the accident, [and] the affidavit of Sidney Youngblood, a manager of a tire store who had reviewed photographs of the tire, and correspondence concerning the location of the tire.” Id. The court ultimately held as follows:

 

At trial, the plaintiffs would have the burden of proving by a preponderance of evidence that a characteristic of the tire made it unreasonably dangerous, or that the tire was negligently maintained, thereby causing the accident. However, the plaintiffs’ experts did not know the air pressure at the time of the accident or when the pressure was last checked, and could only speculate that the tire was defective given the visible damage to the tire depicted in the photographs. Thus, although the circumstantial evidence offered by plaintiffs raised several plausible explanations for the cause of the tire’s failure, the record does not contain sufficient evidence from which a reasonable juror could conclude that more probably than not the accident was caused by either a defective condition of the tire or negligent maintenance.

Consequently, we cannot say the district court erred in granting summary judgment in favor of Firestone . . . . Id. at 372.

 

While the above brief discussion only serves a cursory analysis of the ‘Case of The Missing Product,’ it shows that when you have a products liability case with no product, there are substantively powerful and potentially cost effective procedural paths to go down that can advantageously position a manufacturer’s defenses. Proper discovery inquiries also undoubtedly go a long way toward setting the framework for these defenses and, as in any case, require attention to detail so as to garner the right information.

craft beer 2Following a five-week trial, a Providence jury found Twin River Casino, a Providence liquor store, and a teenage drunk driver liable in a dram shop case where the plaintiff, Alissa Moulton, sustained serious spinal injuries following an April 24, 2010 motor vehicle accident. Specifically, Moulton was paralyzed from the chest down when she and her friend, Cristina Sianpi, were ejected from the back seat of a 1997 Toyota Camry.  The car’s driver, 18 year-old defendant Alexander Arango, was Moulton’s boyfriend and the father of their child. According to reports, Arango lost control of the Camry, which struck a median barrier, crossed the two right lanes of the highway, rolled over, and collided—rear end first—with a tree on the highway’s grass shoulder.

Although historically known as “conservative” in terms of verdict awards, it took this particular jury less than two days of deliberation before awarding Moulton $23 million in damages, plus interest. Additionally, the jury assigned 70 percent responsibility to the underage driver, 20 percent to Twin River Casino, and 10 percent to Royal Liquors, a Providence liquor store that allegedly sold alcohol to Arango. Under Rhode Island law, each defendant is jointly and severally liable for the entire amount of damages regardless of the percentage of responsibility. (R.I.G.L. § 10-6-2.)  The defendants against whom a money judgment is entered are also, however, entitled to a set-off in the amount of either: (1) the total amount paid by each settled defendant; or (2) the percentage of fault assigned to each of those settled defendants by the trier of fact, whichever is greater.  (R.I.G.L. § 10-6-7.)

At trial, Moulton, who is now confined to a wheelchair, was represented by Providence personal injury firm of Mandell Schwartz & Boisclair.  Her lawyers argued before Judge William E. Carnes, Jr., that Twin River was negligent in serving alcohol to a visibly intoxicated Arango, and that Twin River violated the Rhode Island Liquor Liability Act (R.I.G.L § 3-14-1 et. seq.) by negligently serving the underage driver.

For his part, Arango, was sentenced to two years in prison after pleading guilty in June 2010 to two counts of driving to endanger resulting in serious bodily injury, and one count of driving under the influence.

A spokesperson for Twin River has suggested that the casino may seek to appeal the decision, as it is “inconsistent” with evidence put on by the defense.

 

About the Authors

Kenneth R. Costa is a partner with Manion Gaynor & Manning. He is a member of the multi-state Products Liability Litigation Team, with a primary focus in insurance defense, products liability, asbestos-related and toxic torts cases in Rhode Island, Massachusetts, and Connecticut.

Matthew Giardina is an associate in Manion Gaynor & Manning’s Providence office, and a member of the firm’s Products Liability and Complex Tort Litigation Group. He focuses his practice in the areas of products liability defense, mass torts, and other complex tort litigation.