Not all personal jurisdiction cases coming out of Pennsylvania are bad. To be sure, an ED Pa judge's recent embrace of the consent theory to get around Bauman was bad news – almost as bad as Philadelphia 76ers soon-to-be superstar Ben Simmons's foot injury. Happily, a much better opinion arrived last week: Baker v. Livanova PLC et al., No. 1:16-cv-00260 (M.D. Pa. Sept. 29, 2016). The author was Judge John E. Jones, the same judge who presided over the intelligent design case a couple of years ago. Judge Jones has a reputation for being smart and trying to get things right, and the Baker decision won't hurt that reputation one bit.
Baker is a putative class action, seeking medical monitoring based on an allegation that a heater-cooler system for regulating blood temperature during open heart surgeries exposed patients to a nasty bacterium. In addition to suing companies that the court calls "Sorin" and "Sorin USA," the plaintiffs also sued the parent company, LivaNova PLC, which is incorporated and headquartered in the United Kingdom. The issue was whether there was personal jurisdiction over LivaNova. (Sorin and Sorin USA did not contest personal jurisdiction.) The plaintiffs said there was specific jurisdiction over LivaNova based on: (1) LivaNova's contacts with Pennsylvania regarding the heater-cooler system, (2) LivaNova functioned as the alter ego of its subsidiaries, and (3) the almost ancient case of Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), placed distributors on the jurisdictional hook. Note that general jurisdiction was not at issue, so the lovely Bauman case does not make even a cameo appearance. Then again, neither does the Walden case, which was decided by SCOTUS around the same time as Bauman and which says very important things about specific jurisdiction. But even without discussing Walden, Judge Jones addresses plaintiffs' argument correctly and coherently. You might even say that the Baker case has an intelligent design.
First, LivaNova's contacts with Pennsylvania were a little too minimal. There were letters and an investor update referring to LivaNova, but the reference was to the brand rather than the parent company and any role it might play. The plaintiffs also pointed to an FDA warning letter that went to the parent company, but a letter from the FDA to the company hardly qualifies as an intentional targeting of the jurisdiction by the company. Opening a letter from the FDA is not quite the same thing as purposeful availment of the privileges of a forum. (We open letters every day from all sorts of entities – Publisher's Clearinghouse, the Bacon-of-the-Month Club, the local water utility that is always trying to sell us insurance against pipe leaks, and election pamphlets, but we swiftly toss them in the garbage and never give them another thought. Well, except maybe that Bacon of the Month Club.) Here's the clincher: "A general marketing strategy towards the United States does not show that LivaNova PLC committed any affirmative act to submit itself to the laws of Pennsylvania." (That reasoning is, by the way, a refutation of the California's Supreme Court hideous ruling in the Bristol Myers case, which, as we discussed here, was a ham-handed effort to expand specific jurisdiction to the point where Bauman's limitation on general jurisdiction becomes a dead letter. But we digress.)
Second, while LivaNova owns all the stock of Sorin and Sorin USA, it does not share officers/directors/executives, and does not exercise a managerial role over day-today business activity. LivaNova is simply a holding company. As the Baker court puts it, the plaintiffs' "alter ego analysis boils down to the ownership of the subsidiaries and the common branding between the parties." That is not enough.
Third, the Baker plaintiffs rather puzzlingly offered three opaque sentences and an enormous block quote from Worldwide Volkswagen to support an argument for personal jurisdiction. Judge Jones thanks the plaintiffs for reminding the court what SCOTUS said, and then wonders how the case might apply to LivaNova in such a way as to create personal jurisdiction. Answer: it doesn't. The plaintiffs "provide no evidence to illustrate that LivaNova PLC is akin to a distributor who has targeted the Pennsylvania market." The court dismissed LivaNova from the Baker case. Goodbye scrapple, hello bangers and mash.
This article is presented for informational purposes only and is not intended to constitute legal advice.
