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In re Asbestos Litigation

Superior Court of Delaware, New Castle

January 30, 2015

IN RE: ASBESTOS LITIGATION,
v.
DANA COMPANIES, LLC, Defendant. THOMAS ANDERSON, et al., Plaintiffs,

Submitted: November 3, 2014

A. Dale Bowers, Esquire, Kenneth L. Wan, Esquire, Law Office of A. Dale Bowers, P.A., Wilmington, Delaware, Attorneys for Plaintiffs.

Joseph Naylor, Esquire, Beth Valocchi, Esquire, Swartz Campbell, LLC, Wilmington, Delaware, Attorneys for Defendant Dana Companies LLC.

Eric M. Davis Judge

I. INTRODUCTION AND PROCEDURAL HISTORY

This is a multi-case asbestos litigation involving numerous Plaintiffs and Defendant Dana Companies, LLC ("Dana Companies").[1]

On August 8, 2014, Dana Companies filed the Dana Companies LLC's Motion to Dismiss Based on Lack of Personal Jurisdiction (the "Motion"). Dana Companies moved under Delaware Superior Court Civil Rule 12(b)(2), arguing that the Plaintiffs' claims against Dana Companies must be dismissed for lack of personal jurisdiction. On August 11, 2014, Plaintiffs filed Plaintiffs' Opposition to Defendant Dana Companies LLC's Motion to Dismiss Based on Personal Jurisdiction Grounds. On August 18, 2014, Dana Companies filed a Reply in Support of its Motion to Dismiss Based on Lack of Personal Jurisdiction.

A hearing was held on October 6, 2014. At the hearing, the Court ordered Dana Companies to provide supplemental briefing, and redacted and unredacted financial statements. Dana Companies provided such briefing on October 20, 2014. On November 3, 2014, Plaintiffs filed a Supplemental Memorandum in Opposition to Defendant Dana Companies LLC's Motion to Dismiss for Lack of Personal Jurisdiction. The Court has now examined in camera the unredacted financial documents. After hearing argument, the Court reserved decision.

For the reasons set forth in this opinion, Defendant Dana Companies LLC's Motion to Dismiss Based on Lack of Personal Jurisdiction is GRANTED.

II. FACTUAL BACKGROUND

Dana Companies' predecessor was Dana Corporation, an auto-parts manufacturer incorporated under the laws of Virginia, [2] which entered Chapter 11 bankruptcy in 2006.[3] Dana Corporation was an original equipment manufacturer and supplier, which meant that their products would be sold directly to vehicle manufacturers such as Ford, Chrysler, and John Deere.[4] Dana Corporation had no facilities or employees in Delaware.[5] During a deposition of Dana Companies' corporate representative, the corporate representative stated that she was not aware of any direct sales of Dana Corporation products into the State of Delaware.[6] The corporate representative could not speculate on where the Dana Corporation products were distributed after being sold to vehicle manufacturers, or whether Dana Corporation products ended up in Delaware.[7]

Although Dana Corporation produced some automobile parts containing asbestos, the bankruptcy was not caused by pending asbestos claims or asbestos litigation in general.[8] The asbestos claims were not discharged in bankruptcy, and were instead passed through unimpaired.[9] Liabilities related to asbestos claims were not transferred or assigned to any other debtor or entity, and the reorganized debtor intended to continue to defend, settle, and/or resolve pending and future actions relating to asbestos claims in the ordinary course of their business and consistent with past practices.[10] The United States Bankruptcy Court for the Southern District of New York determined that the reorganized entity would have sufficient insurance policies and assets to cover its asbestos liabilities, [11] and that Dana Corporation had implemented a successful defense and settlement strategy which would be carried over to the new entity.[12] Under the reorganization plan, Dana Holding Corporation ("Dana Holding"), was the newly created entity, which acquired the operating assets of Dana Corporation out of bankruptcy.[13] Dana Holding was incorporated in Delaware.

Dana Companies was incorporated in Virginia, has its principal place of business in Ohio, and became a wholly owned subsidiary of Dana Holding.[14] At the October 6, 2014 hearing, Plaintiffs presented a February 1, 2008 Director's Action document which referred to Dana Companies as a Delaware corporation. In the supplemental briefing, Dana Companies filed with the Court each annual Director's Action document from 2008 to 2013. In these documents, Dana Companies is consistently referred to as a Virginia Corporation.[15]Additionally, the Delaware Secretary of State has certified that Dana Companies is not the name of a Delaware Corporation, and that no corporation or company has ever filed a certificate of formation or registered as a foreign limited liability company in Delaware.

The Court is satisfied that the statement in the February 1, 2008 Director's Action document was an error. Accordingly, the Court does not find that there is a genuine issue of fact as to whether Dana Companies is a Delaware corporation or a Virginia Corporation -- Dana Companies is indeed incorporated in Virginia.

Dana Companies commenced activities on January 31, 2008.[16] Since that date, Dana Companies has been independently managed.[17] Dana Companies' only significant activity has been to manage its assets, its liabilities associated with asbestos claims, and certain other liabilities.[18] Dana Companies has no offices or employees in Delaware, conducts no business in Delaware, and is not registered to do business in Delaware.[19] Dana Companies has never manufactured, distributed, or sold any goods, products or services.[20] At the October 6, 2014 hearing, counsel for Dana Companies stated that the sole purpose of Dana Companies is to defend claims that were passed through the bankruptcy of Dana Corporation. Dana Companies defends claims in all 50 states. Counsel thereafter submitted a breakdown of the claims involving Dana Companies. This information provides that only 1% of Dana Companies' claims are defended in Delaware, and less than 1% of the active claims are defended in Delaware.

III. PARTIES' CONTENTIONS

A. Contentions of Dana Companies

In the Motion, Dana Companies raises several arguments for dismissal. First, Dana Companies contends that Delaware does not have specific jurisdiction over it because Dana Companies is an out of state resident whose claims do not arise from or relate to any conduct in Delaware by Dana Companies.

Second, Dana Companies contends that Delaware does not have general jurisdiction over it because Dana Companies is not incorporated in Delaware, does not have its principal place of business in Delaware, does not regularly do or solicit business in the State, nor engage in any persistent course of conduct or derive substantial revenue from the State.

B. Contentions of Plaintiffs

In response, Plaintiffs first contend that Dana Companies' Motion must fail because it ...


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