Once again this week we turn to the aridities of personal jurisdiction. Or is that perhaps a bit … harsh? After all, last week personal jurisdiction had a rare moment in the public spotlight as a result of SCOTUS oral arguments in a case involving the law of Pennsylvania — our usually-fair-but-not-so-much-in-this-case Commonwealth. The issue was whether Pennsylvania could condition a corporation’s right to do business in the Keystone State on that corporation’s consent to personal jurisdiction in our overly exciting court system. We’ve written about this consent theory before, and we previewed the SCOTUS case here. If Pennsylvania and other jurisdictions can get away with it, then the Bauman and BMS SCOTUS personal jurisdiction decisions become something very near to dead letters. It seems that several of the Justices last week thought as much, as their questions evinced deep skepticism about this bogus jurisdiction-via-consent scheme. You’ve heard of long-arm jurisdiction statutes, right? These are strong-arm jurisdiction statutes.
But predicting SCOTUS rulings is a sucker’s game.
Meanwhile, press coverage of the SCOTUS arguments was predictably daft. Some commentators bemoaned how rejection by SCOTUS of jurisdictional consent via coercive business registration statutes might make it harder to sue corporations. That is utterly wrong. One can sue the corporation where it is incorporated or headquartered, or where the the events at issue happened. What is unfair about that? The only real losers would be plaintiff lawyers who apparently think there is a need and a right to sue companies where the plaintiff lawyers are located. Nothing propinks like propinquity. But no one should shed any tears for lazy and/or cynical forum shopping.
Today’s case, Armstrong v. Atrium Med. Corp., 2022 U.S. Dist. LEXIS 195231 (E.D. Wash. Oct. 26, 2022), involves a more quotidian personal jurisdiction issue: can a product liability plaintiff drag a foreign parent company into court? We’ve written about this issue before (here, for example). Including a corporate parent in a lawsuit can be a nice bit of leverage for a plaintiff. It is an annoyance. It is unnecessary. Fortunately, courts usually do not smile upon it.
In Armstrong, the plaintiff filed a lawsuit in Washington state alleging injuries from a hernia mesh medical device. The complaint included several causes of action under Washington law against several related corporate entities. One of those corporate entities was the parent corporation, which was based in Sweden. Despite the company’s foreign status, the plaintiff argued for both general and specific jurisdiction over the Swedish parent. The plaintiff did not succeed. Why? We’ll take a short tour through the Armstrong court’s opinion. We’ll make no promises, but it is possible we’ll enlist the help of the iconic Swedish band ABBA.
Like the court, we’ll begin with general jurisdiction. The plaintiff contended that the corporate parent was at home in Washington. But that argument was devoid of any facts as to the parent’s operations in Washington or its “economic impact, physical presence, and integration into Washington’s regulatory or economic markets.” This Swedish company did not hawk worryingly flat boxes of furniture in Seattle, nor did it sling Swedish meatballs to hungry customers in Spokane. In short, there was nothing to support general personal jurisdiction in Washington. The plaintiff dithered over whether the parent had a business address in New Jersey, but the Washington court rightly ruled that such an address in the Garden State was “irrelevant to whether this Court, sitting in Washington, may exercise personal jurisdiction over … a Swedish corporation with its principal place of business in Sweden.”
Can you hear the drums, Fernando? They pound a percussive exit to general jurisdiction.
The plaintiff’s specific jurisdiction argument was only slightly less ridiculous. The plaintiff asserted that the Swedish parent was doing business in the United States. Fine, but there was no hint of any activities or “purposeful availment” in Washington. The name of the game was whether the parent purposefully directed its conduct toward Washington. True, there was a bare allegation of that, but nary a fact to support it. There was no evidence that the parent played any role in distributing any product in Washington, much less the medical product at issue.
So much for specific jurisdiction. Do we hear the Judge say, “So I’ve made up my mind/it must come to an end”?
Not quite yet. The plaintiff argued that the Swedish parent should be held responsible for the device manufacturer’s conduct and that the manufacturer’s contacts with Washington should be imputed to the parent. Why? The plaintiff asked the court to pierce the corporate veil. But whether Washington or Delaware law applies, the Armstrong court held that there was no evidence that the parent and subsidiary corporations were “intrinsically bound.” The defendant submitted an uncontradicted declaration that the parent and subsidiary had separate boards of directors, separate bylaws, and separate “money, money, money” records, that the parent was removed from the sub’s daily activities, and that the sub was responsible for the “research, development, design, testing, manufacturing, producing, packing, warnings, instructions, and labeling” of the medical device. The plaintiff could muster no basis to believe that the parent company disregarded the form of the sub’s corporate entity. There was simply no fraud that might conceivably support piercing of the corporate veil.
So has the plaintiff finally met his jurisdictional Waterloo? There was still the inevitable request for jurisdictional discovery. But such discovery is not granted on a plaintiff’s mere “hunch that discovery might yield jurisdictionally relevant facts.” The parent-sub relationship was not, by itself, “enough to allow the Plaintiff to go a fact-finding mission to establish personal jurisdiction,” especially in the face of the uncontradicted declaration that thoroughly undermined jurisdiction over the parent. Some might call such a ”fact-finding mission” a fishing expedition. Here, it would be a Swedish fishing expedition. “Take a chance on me”? No thanks. The Armstrong court denied the request for discovery, and sent the parent company back to the land of fjords and ultra-safe automobiles. “The winner takes it all/the loser standing small/beside the victory/that’s [the defendant’s] destiny.”
(Yes, that’s a rotten use of brackets. But we’re defense hacks, not songwriters.)
Now it’s time to end this disco salute to personal jurisdiction and the greatest Eurovision winner of all time:
“We just have to face it, this time we’re through
(This time we’re through, this time we’re through
This time we’re through, we’re really through)
Breaking up is never easy, I know but I have to go
(I have to go this time
I have to go, this time I know)
Knowing me, knowing you
It’s the best I can do.”