The actual words written by Shakespeare and spoken by Antonio in The Tempest are “Whereof what’s past is prologue.”  Antonio is trying to convince Sebastian to murder his father the king and take the crown for himself.  When Shakespeare wrote these words, he intended Antonio to convey to Sebastian that everything that had happened in their lives up to that point was merely prologue; just an introduction to the great things that were to happen next.  In other words, Shakespeare was implying that everything that came before doesn’t matter because there is a new future ahead.  However, like many Shakespearian phrases, the modern interpretation has twisted things around and assigned the exact opposite meaning.  Today, if someone says to you – your past is prologue – chances are they mean to tell you that your past is of great importance because it defines your present and even your future.  And when someone is trying to tell you that perhaps a prior act is “water under the bridge,” they’ll tell you your past is not prologue to them.  Whichever definition you choose to favor, what today’s case tells us is that your past doesn’t matter much when deciding if personal jurisdiction exists.

Plaintiff in Franklin v. Coloplast Corp., 2019 WL 5307085 (N.D.N.Y Oct. 21, 2019) alleges she was injured by defendants’ vaginal and pelvic mesh implant.  In addition to suing the U.S. based subsidiary, plaintiff sued the foreign (Danish) parent company.  As we know, facts are very important to personal jurisdiction inquiries.  So, here are some of the key facts:

  • Foreign parent acquired the product, including the patent, in 2006 and from then until 2012, foreign parent sold and marketed the product including in the United States. at *1.
  • The marketing activities of the parent included a surgical skills workshop in New York in 2011 and the use of New York doctors as speakers at a program held in Cancun, Mexico in 2007. at *5.
  • In 2012, the wholly-owned U.S. subsidiary took over marketing the product in the United States. The subsidiary became responsible for the “testing, development, regulatory clearance, distribution, marketing, sale, and drafting” of the product’s labeling and information.  at *2.
  • The parent licenses the intellectual property to the subsidiary who is the sole manufacturer and distributor of the product in the United States.  
  • The U.S. subsidiary has its own independent management structure and maintains its own separate financials and records.  The subsidiary and parent do not share employees.
  • In 2015, plaintiff underwent surgery during which defendant’s mesh was implanted.

Based on these facts, the court assessed the jurisdictional question under New York law.  For the presence of a subsidiary to confer jurisdiction over the parent, the subsidiary must be either an agent or mere department of the parent.  Id. at *3.  To determine if that was the case, the court employed the Second Circuit’s four-factor test.  The only satisfied factor was common ownership.  The remaining factors have to do with the relationship – financial dependency, control of personnel, and control over marketing and operational policies.  Factors two and three were ruled out by the above-described separate corporate formalities of the two corporations.  As to factor four, that’s where plaintiff first tried to rely on prologue.  Plaintiff pointed to 2008 marketing materials developed by the foreign parent.  However, “[e]ven assuming the same materials were still in use by the subsidiary when plaintiff received her [] implant in 2015, that does not demonstrate general control over the marketing of the subsidiary as a whole.”    Id. at *4.  The subsidiary offered an affidavit from its president that showed it alone was responsible for marketing since 2012 and that no marketing employees reported to any employee of the parent.  Therefore, the subsidiary’s contacts with New York would not be imputed to the parent.

The court then had to assess whether the foreign parent’s own contacts conferred jurisdiction.  Here the court examined three provisions of New York’s long-arm statute.  First, C.P.L.R. §302(a)(1) provides that jurisdiction can be established if the defendant transacted business in the state and the lawsuit arises from that activity.  This is plaintiff’s second attempt to use prologue to establish parent’s contacts with New York.  For example, in 2006 parent announced it had acquired and would be manufacturing the product.   The court found this “heavily attenuated by the passage of time and the intervening change brought about by [subsidiary] assuming responsibility for manufacturing and marketing.”  Id. at *5.  Plaintiff listed six other “contacts,” all of which suffered from the same problem – the most recent was in 2011, a full four years before plaintiff’s surgery and before the change in marketing, manufacturing, and distribution responsibility.  It is undisputed that the foreign parent did at one time manufacture and market the product.  But that is all simply too long ago to matter.

Plaintiffs make only two arguments not premised on prologue. First, that thousands of the mesh products have been sold in New York, which is simply irrelevant given that subsidiary has been responsible for those sales since 2012 and maintains separate profits and losses from the parent.  Id. at *6.  Finally, plaintiff argues that her complaint alleges that the foreign parent conspired with the subsidiary to distribute a defective product.  But that is all it is – an allegation without support:

Although if she could provide any evidence that this was true, it would allow for a finding of personal jurisdiction, her legal conclusion of conspiracy is insufficient to hale a Danish company into court in Utica, New York.

Id.

Plaintiff’s second long-arm statute argument under §302(a)(2) requires both that defendant committed a tortious act with the state and that the defendant be physically present in the state.  The foreign parent demonstrated that it has no U.S. offices, is incorporated in Denmark, maintains its business records there, and does not market the product in the U.S.

The final long-arm statute provision, §302(a)(3) requires a tortious act within the state, that the cause of action arise from that act, that it have caused harm to a person in New York.  In addition, under §302(a)(3)(i), plaintiff must demonstrate that defendant “regularly does or solicits business; engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in the state.”  Id. at *7.  Or, under §302(a)(3)(ii) plaintiff must demonstrate that defendant “expected or reasonably should have expected the act to have consequences in the state; [and] the defendant derives substantial revenue from interstate or international commerce.”  Id.

Under the first section, “persistent” and “ongoing” are the key.  Since the foreign parent has ceded all activity regarding the product in the United States to the subsidiary, it is not engaged in any persistent or ongoing activity in New York.  Id.  Under the second, the “simple likelihood” that defendant’s product would end up in New York is not sufficient.  And that is really all plaintiff has on this point.  There is no “tangible manifestations” showing the parent should have known the product would have reached New York.  Id. at *8.

Plaintiff’s reliance on outdated and irrelevant facts to attempt to obtain jurisdiction were insufficient and the parent company was dismissed.  Whether you consider this an example of the past is prologue (Shakespeare) or the past is not prologue (modern) – clearly intervening changes and current circumstances are more important than history in deciding personal jurisdiction.