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In re Asbestos Products Liability Litigation (No. VI)

United States Court of Appeals, Third Circuit

April 9, 2019

IN RE: ASBESTOS PRODUCTS LIABILITY LITIGATION (NO. VI) William D. Schroeder; Creighton E. Miller, Administrator of The Estate of William D. Schroeder; Richard G. Williams; Louis Munnier; David C. Peebles, Administrator of the Estate of Louis Munnier; Willard E. Bartel, Administrator of the Estate of Louis Munnier, Appellants

          Argued December 12, 2018

          On Appeal from the United States District Court for the Eastern District of Pennsylvania District Court Nos. 2-11-CV-33527, 2-11-CV-32774, 2-11-CV-33078, 2-02-MD-00875 District Judge: The Honorable Eduardo C. Robreno

          Alan Kellman Timothy A. Swafford Jaques Admiralty Law Firm Louis M. Bograd [ARGUED] Counsel for Appellants.

          Harold W. Henderson[ARGUED] Thompson Hine Counsel for Appellees.

          Before: SMITH, Chief Judge, McKEE, and FISHER, Circuit Judges

          OPINION

          SMITH, CHIEF JUDGE.

         Decades after the filing of maritime asbestos injury cases in the Northern District of Ohio, the District Court for the Eastern District of Pennsylvania-which was by then presiding over a nationwide asbestos products multidistrict litigation (MDL)-dismissed claims against numerous defendants for lack of personal jurisdiction. Unsurprisingly, the MDL Court's opinions regarding personal jurisdiction, which were subsequently applied to thousands of claims, have prompted multiple appeals, including two prior appeals to this Court. Now, for the third time, we address on appeal the MDL Court's personal jurisdiction rulings. Based on the unique history of the three consolidated cases now on appeal, we again conclude that dismissal for lack of personal jurisdiction was inappropriate. We will dismiss in part and reverse in part.

         I.

         A.

         In the mid-1980s, merchant mariners filed thousands of lawsuits in the Northern District of Ohio against shipowners, [1]raising claims that the merchant mariners had been injured due to exposure to asbestos onboard ships. Northern District of Ohio Judge Thomas Lambros[2] initially presided over the massive Ohio maritime asbestos docket (MARDOC) prior to the 1991 consolidation of the cases in an MDL in the Eastern District of Pennsylvania.

         When they filed in the Northern District of Ohio, the merchant mariners relied on a theory of nationwide personal jurisdiction for maritime cases. In 1989, shipowners filed motions to dismiss for lack of personal jurisdiction, arguing that the nationwide theory of jurisdiction was improper and that they did not have sufficient ties to Ohio to justify the exercise of personal jurisdiction over them. In an oral ruling in October of 1989, Judge Lambros rejected the merchant mariners' theory of jurisdiction and ruled that the Northern District of Ohio lacked personal jurisdiction over a number of the shipowners.[3] Judge Lambros indicated, however, that he would be denying the motion to dismiss and issuing an order transferring the cases instead. Following Judge Lambros's ruling, defense counsel requested additional time to consult with his clients and determine whether the shipowners wanted to accept transfer or waive their personal jurisdiction defenses so that they could remain in the Northern District of Ohio. Counsel suggested that his clients may very well want to waive the defense: "It is conceivable, your Honor, in view of the fact that such motions to dismiss have been denied that some of those defendants who filed motions will not care to be transferred and they wish to stay here, I don't know. I have to consult with them." App. 291.

         The Northern District of Ohio followed up the next month with a hearing to address the shipowners' decisions as to whether they would waive the personal jurisdiction defense. Defense counsel advised Judge Lambros that he did not yet have an answer because his clients wanted to know how Judge Lambros would rule on various issues prior to deciding whether they would consent to jurisdiction. See, e.g., App. 362-63. Defense counsel explained that in his view "a lot of these people will stay once they know that information." App. 364. Counsel for the merchant mariners objected to the shipowners' equivocation:

And so [defense counsel] Mr. Murphy is saying well, he can't make a decision. And just like the old expression be careful what you ask for; you might get it. That's really what he has here. He says, 'Oh, Judge, we wanted to get out of here.' Then he says, 'Well, we want you to make a few more preliminary rulings before we decide whether we want to go or not.' I say get them out of here.

App. 373; see also App. 378. At the conclusion of the November hearing, the Northern District of Ohio directed the shipowners to simply file answers by the answer deadline if they intended to waive the personal jurisdiction objection, and, at the time, defense counsel accepted that procedure:

Judge Lambros: "What happens if in the management of these cases if we make the disclosure date the same date as the answer date, but if the position is that they are not leaving, they have to have their answers in on those dates?"
***
Defense Counsel: "I see no problem with that, your Honor. Now that we have the information, we know what we have to do, that's no problem."

App. 401-02.[4]

         Judge Lambros issued MARDOC Orders No. 40 and 41, on November 22, 1989, and December 29, 1989, respectively, reiterating the procedure announced at the November hearing and directing shipowners who wished to waive their personal jurisdiction defenses to file answers by January 5, 1990, in order to demonstrate waiver. See App. 416 (MARDOC 40: "Parties who, upon reconsideration of their motions to dismiss or transfer, wish to remain in this jurisdiction need only file answers to the complaints in accordance with the deadlines established below."); App. 419 (MARDOC 41: "Shipowner defendants, not subject to this transfer order, shall file answers by January 5, 1990."). MARDOC Order 41 expressly ordered transfer of the cases where there was no personal jurisdiction and identified the jurisdiction to which each case would be transferred. On December 29, 1989, shipowners filed a motion for interlocutory appeal and stay to challenge the Northern District of Ohio's authority to transfer the cases rather than dismissing them.

         Before the Northern District of Ohio had ruled on the motion for interlocutory appeal and stay, all shipowners relevant to this consolidated appeal filed answers on January 5, 1990, in compliance with Judge Lambros's deadline. Yet shipowners asserted in those answers that they were filing under protest and continued to assert personal jurisdiction defenses. App. 1131; App. 1133-34; App. 1136. Other defendants did not file answers and were transferred out of the Northern District of Ohio.

         After the shipowners filed their answers, the Northern District of Ohio proceeded as if they had waived their personal jurisdiction defenses. MARDOC Order 41, directing transfer of those cases where personal jurisdiction was lacking, was never effectuated as to these shipowners.[5] Nor did the Northern District of Ohio rule on the motion for interlocutory appeal. Indeed, the cases progressed before Judge Lambros for over a year, with no additional motion practice challenging the Northern District of Ohio's jurisdiction or seeking transfer.[6]

         B.

         In 1991, authority over the maritime asbestos cases was transferred to the asbestos MDL in the Eastern District of Pennsylvania. Defendants opposed transfer to the MDL Court but did not raise a personal jurisdiction defense in their opposition papers. After the creation of the MDL, the MARDOC cases were stayed. There is no dispute, however, that the shipowners consistently attempted to raise personal jurisdiction defenses in compliance with the MDL timelines.

         In 2011, the cases at issue here were reactivated by Judge Robreno, who by then was presiding over the MDL in the Eastern District of Pennsylvania. In 2013 and 2014, the MDL Court issued two memorandum opinions concluding that a number of shipowners were not subject to personal jurisdiction in Ohio and that the shipowners had not waived the defense. The MDL Court explained that the shipowners had preserved the defense by raising lack of personal jurisdiction before the Northern District of Ohio and again before the MDL Court on multiple occasions. Although shipowners filed answers in the Northern District of Ohio-a procedure Judge Lambros had ordered would indicate waiver-the MDL Court concluded that this did not result in waiver because "defendants did not intend to waive the defense." App. 53. The MDL Court noted that "defendants faced a Hobson's choice: they could either have agreed to a transfer of the cases to another jurisdiction (and thus lost the ability to assert cross-claims against manufacturer defendants), or they could have chosen to remain in the Northern District of Ohio and lost the defense of lack of personal jurisdiction." App. 54. Accordingly, the MDL Court held that "[b]y filing answers which clearly identified the defense, while at the same time seeking interlocutory review of Judge Lambros'[s] order, defendants preserved and did not waive the defense." App. 54 (internal citation omitted). The MDL Court subsequently applied its prior memorandum opinions to the three merchant mariners relevant to this appeal and dismissed their claims against the shipowners for lack of personal jurisdiction. Merchant mariners Munnier, Schroeder, and Williams filed a timely notice of appeal.

         II.

         The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1333. We have appellate jurisdiction under 28 U.S.C. § 1291.[7] See Brown Shoe Co. v. United States, 370 U.S. 294, 308-09 (1962).

         We must, nonetheless, dismiss Mr. Schroeder's appeal against Marine Transport Lines, Inc., because it is barred by res judicata. After the MDL Court dismissed Mr. Schroeder's claims, but before a final judgment had issued, Mr. Schroeder filed suit in South Carolina state court raising the same claims against Marine Transport Lines. After the state court dismissed similar cases brought by other plaintiffs because they were filed outside of the statute of limitations, Mr. Schroeder, apparently anticipating the state court's ruling, filed a motion to voluntarily dismiss his claims. The state court entered an order dismissing Mr. Schroeder's claims with prejudice.

         This Court gives a judgment of a state court the same preclusive effect as would another court of that state. Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 141 (3d Cir. 1999). In South Carolina, "[a] dismissal with prejudice acts as an adjudication on the merits and therefore precludes subsequent litigation just as if the action had been tried to a final adjudication." Laughon v. O'Braitis, 602 S.E.2d 108, 111 (S.C. Ct. App. 2004). Accordingly, the South Carolina dismissal with prejudice precludes Mr. Schroeder and his estate from pursuing claims against Marine Transport Lines. We will therefore grant the motion to dismiss Mr. Schroeder's appeal as to Marine Transport Lines.

         III.

         We review a District Court's decision as to the waiver of an affirmative defense for abuse of discretion. Sharp v. Johnson, 669 F.3d 144, 158 (3d Cir. 2012). "A court abuses its discretion when its decision rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application of law to fact." Id. at 158 n.19 (internal quotation marks omitted). Here, the fundamental facts are not in dispute. Instead, the primary question at issue is whether the defendants' conduct amounted to waiver of the personal jurisdiction defense as a matter of law. We hold that the District Court's conclusion that there was no waiver was an improper application of law to fact that constitutes an abuse of discretion under this Court's precedent.

         A.

         Under Federal Rule of Civil Procedure 12(b)(2), defendants have the right to move for dismissal for lack of personal jurisdiction, but that right is not unlimited. Rule 12(h) clarifies that the defense of lack of personal jurisdiction can be waived if a defendant fails to raise it in a timely fashion. Fed.R.Civ.P. 12(h). Precedent of the Supreme Court and this Court further holds that the right to assert a personal jurisdiction defense can be affirmatively and implicitly waived through conduct. See, e.g., Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982) ("Because the requirement of personal jurisdiction represents first of all an individual right, it can, like other such rights, be waived."); Zelson v. Thomforde, 412 F.2d 56, 59 (3d ...


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