By Pamela C. Maloney, J.D.
Shipowners implicitly waived their personal jurisdiction defense by filing answers to products liability lawsuits brought by merchant mariners who were seeking recovery for asbestos-related injuries in an Oho federal district court, and, therefore, a Pennsylvania MDL court abused its discretion when it dismissed the mariners’ claims for lack of jurisdiction.
The U.S. District Court for the Eastern District of Pennsylvania, which was presiding over a nationwide asbestos products multidistrict litigation (MDL), abused its discretion in dismissing thousands of claims filed against shipowners in an Ohio federal district court by merchant mariners who are seeking to recover for injuries allegedly caused by exposure to asbestos onboard the shipowner’s vessels, the U.S. Court of Appeals for the Third Circuit ruled, clearing the way for these 30-year-old cases to proceed to an adjudication on the merits. According to the Third Circuit, the shipowners implicitly had waived their jurisdiction defense by filing answers in the Ohio litigation and had forfeited that defense by failing to pursue it before the Ohio court. The Third Circuit’s holding creates a conflict with a decision by the Sixth Circuit that upheld the MDL’s order dismissing for lack of personal jurisdiction an appeal by merchant mariners who shared the same procedural history (In re: Asbestos Products Liability Litigation (No. VI), April 9, 2019, Smith, D.).
In the 1980s, merchant mariners began filing cases in the Northern District of Ohio against shipowners, manufacturers, and suppliers of products containing asbestos, alleging that they had been injured by exposure to these products. More than 50,000 cases involving millions of claims were filed against hundreds of defendants by 2009. The cases were originally assigned to a maritime docket (MARDOC), but in 1991 they were consolidated and transferred to the Eastern District of Pennsylvania, which has handled this multidistrict litigation since then as part of Docket No. MDL 875. In 1989, defendants filed motions to dismiss for lack of personal jurisdiction, and the federal court in the Northern District of Ohio found that it had no personal jurisdiction over the approximately 100 named shipowner defendants. The court rejected the merchant mariners’ nationwide contacts theory that because maritime law strives for national uniformity, a defendant in a maritime case who was subject to personal jurisdiction in any U.S. court should be subject to personal jurisdiction in any non-maritime case.
Of the 2,671 maritime cases that are part of MDL 875,565 motions to dismiss were filed in the present case, including 418 motions to dismiss for lack of personal jurisdiction and others involving deficient service of process. The merchant mariners contended that the shipowners had waived their personal jurisdiction defense when they filed answers based on the orders of the Northern District of Ohio and continued to participate in these cases both in the Ohio court and in the MDL litigation. The shipowners argued that they had filed answers under protest in which they specifically had asserted the personal jurisdiction defense and had asked for leave to file a motion for interlocutory appeal at that time, but the district court had never ruled on that motion. In 2013 and 2014, the MDL issued two memorandum opinions concluding that the shipowners had not waived their personal jurisdiction defense and that many of the shipowners were not subject to personal jurisdiction in Ohio. Thus, motions to dismissed filed by those shipowners were granted (see Products Liability Reports analyses for August 27, 2013, and March 14, 2014). Three merchant mariners—Munnier, Schroeder, and Williams—appealed.
Waiver of defense. In determining that the MDL court had abused its discretion in finding that the shipowners had not implicitly waived their personal jurisdiction defense through their conduct in the Northern District of Ohio, the Third Circuit cited numerous actions taken by the shipbuilders that indicated a waiver of that defense. First, the shipbuilders had introduced the possibility of a waiver by asking for additional time to allow them to choose between whether to assent to transfer to the MDL or to waive their personal jurisdiction objections and proceed with litigation in Ohio.
Second, the shipowners had objected to transfer, thus constructively opting to waive their personal jurisdiction defense. Third, by filing answers in the Ohio federal court, the shipowners unequivocally waived their personal jurisdiction defense despite the fact that their answers had attempted to preserve that defense. Although generally an answer identifying the lack of personal jurisdiction as a defense would not constitute a waiver, the judge and the parties in this case had agreed that the shipowners could demonstrate a waiver of the defense by filing an answer. Furthermore, to the extent that the shipowners believed that they had a basis for pursuing an interlocutory appeal regarding the court’s order denying dismissal and transferring the cases to the MDL court, their request for a stay pending the outcome of that appeal meant that they were under no obligation to file their answers and that doing so indicated their intent to actively litigate the pending Ohio cases.
Forfeiture of claims. Even if the shipowners had not waived their personal jurisdiction defense by filing answers or through other conduct consistent with a waiver, they forfeited the defense by failing to diligently pursue it in the Ohio federal court. Despite the court’s ruling that it did not have personal jurisdiction over the case, the judge continued to preside over the cases pending before him, indicating his belief that the shipowners had waived the defense. In addition, the judge did not transfer the cases despite the fact that the shipowners clearly were subject to the MDL consolidation order.
Based on the facts of the case, it was clear that the shipowners had waived their personal jurisdiction defense through their affirmative conduct in the Ohio federal court and had forfeited that defense by having failed to pursue the litigation pending before that court. Therefore, the MDL court abused its discretion in dismissing the mariners’ claims based on lack of personal jurisdiction, the Third Circuit found.
Split with Sixth Circuit. Recognizing that its decision created a split with a Sixth Circuit decision affirming the MDL court’s order dismissing claims against shipowners for lack of personal jurisdiction in appeals brought by mariners who shared the same procedural history, the Third Circuit disagreed with its sister circuit’s finding. The Sixth Circuit determined that the Ohio federal court had exceeded its authority under the federal procedural rules by declaring that the filing an answer would result in a waiver of the defense.
According to the Third Circuit, while ordinarily it would be appropriate for a defendant to raise a personal jurisdiction defense in an answer, thereby preserving it, the procedural history in this case was not typical. The Ohio court already had ruled that it did not have personal jurisdiction over the shipowners. Therefore, the shipowners could not continue to participate in the lawsuit and they could not preserve a defense that had been ruled on by simply stating that they were not waiving it. Furthermore, having already ruled that it did not have personal jurisdiction over the shipowners, the court was free to exercise its case management duties by instructing the shipbuilders that by submitting answers, they would be indicating their intent to actively litigate the case before the Ohio court.
The Third Circuit also opined that to the extent its decision created a split with the Sixth Circuit, it was compelled by both Third Circuit precedent and the Third Circuit’s interest in promoting adjudication on the merits and allowing the mariners to have their day in court.
Res judicata. The finalmotion to appeal, which had been filed by Schroeder’s estate, was dismissed as barred by res judicata. After the MDL court dismissed Schroeder’s claims against Marine Transport Lines, Inc., but before a final judgement had been issued, Schroeder’s estate had filed a lawsuit in a South Carolina state court raising the same claims against the shipowner. Those claims were dismissed with prejudice and, therefore, the estate’s appeal was barred by res judicata. Thus, the shipowner’s motion to dismiss was granted.
The case is No. 17-3471.
Attorneys: Alan Kellmand and Timothy A. Swafford (Jaques Admiralty Law Firm and Louis M Bograd (Motley Rice) for William D. Schroeder, Richard G. Williams, and Willard E. Bartel. Harold W. Henderson (Thompson Hine LLP) for Appellees.
Companies: Charles Kurz & Co. Inc; Marine Transport Lines, Inc.
MainStory: TopStory JurisdictionNews ClassActLitigationNews AsbestosNews DelawareNews NewJerseyNews PennsylvaniaNews VirginIslandsNews WestVirginiaNews
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