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Both sides get to keep their swords in the court battle between auto giant DaimlerChrysler Corp. and its Philadelphia nemesis, the law firm of Greitzer & Locks, now that a federal judge refused to dismiss the law firm’s counterclaim for defamation against the auto maker’s general counsel. In the suit, DaimlerChrysler claims that Greitzer & Locks violated the Dragonetti Act by filing a frivolous products liability lawsuit. Greitzer & Locks filed counterclaims of defamation and interference with prospective contracts against DaimlerChrysler and its associate general counsel, Lew Goldfarb, alleging that the suit — and the publicity DaimlerChrysler sought when it was filed — was designed to disparage the law firm and discourage others from suing the automaker. The law firm’s lawyers, John H. Lewis Jr. and David D. Langfitt of Montgomery McCracken Walker & Rhoads, argue that the real purpose of the DaimlerChrysler suit was revealed in the publicity campaign, including a press release that said G&L “abuses” the legal system by filing “unwarranted and baseless” claims. Goldfarb was quoted in the press release as saying that G&L uses class action lawsuits as “a form of legalized blackmail” and that the suit it filed against DaimlerChrysler in Philadelphia “belongs in the class action hall of shame.” In a Nov. 11, 1999, article in the Wall Street Journal, Goldfarb was quoted as saying that he hoped DaimlerChrysler’s suit against G&L “will discourage prospective litigants from signing on” to the pending class actions against DaimlerChrysler. G&L had filed a series of class actions against DaimlerChrysler and Ford in Maryland, New Hampshire, New Jersey, New York and Pennsylvania alleging defects in the seats of several makes of cars. But the Pennsylvania suit was dismissed when a Philadelphia Common Pleas judge ruled that the lead plaintiff did not have standing to sue because he owned a GM car. DaimlerChrysler filed suit under the Dragonetti Act against G&L and Maryland attorney William F. Askinazi, as well as the lead plaintiff, Brian Lipscomb, alleging that the suit was frivolous and had harmed DaimlerChrysler’s reputation. When the law firm counterclaimed, it added Goldfarb as a defendant. DaimlerChrysler’s lawyers — Abraham C. Reich and Theodore H. Jobes of Fox Rothschild O’Brien & Frankel in Philadelphia, along with Charles A. Newman, Kathy A. Wisniewski, Jerome H. Block and R. Jeffrey Harris of Bryan Cave in St. Louis — moved to have Goldfarb dismissed for lack of personal jurisdiction. Now, in a 15-page opinion, U.S. District Judge for the Eastern District of Pennsylvania William H. Yohn Jr. ruled that Goldfarb must remain a defendant. SUFFICIENT CONTACTS TO PA. “The court concludes both that Goldfarb’s contacts with Pennsylvania are sufficient to give the court constitutionally proper specific personal jurisdiction over him and that a substantial part of the events giving rise to Greitzer & Locks’s claims occurred in this district,” Yohn wrote. The issue of whether a defendant has sufficient minimum contacts with a forum state “is a fact-based inquiry that will vary from case to case,” Yohn said. But Yohn said courts also have no duty to determine the best or most logical place for personal jurisdiction. Instead, he said, courts must simply ensure that, consistent with the requirements of due process, a defendant is subjected to personal jurisdiction only if the defendant “purposefully directed its activities toward the residents of the forum state” or purposefully “invoked the benefits and protections of the forum state’s laws.” Goldfarb’s lawyers argue that it was improper for the court to consider his corporate contacts with Pennsylvania in deciding whether it has personal jurisdiction over him in his individual capacity. Yohn disagreed, holding instead that the “corporate shield doctrine” provides only “a degree of protection” for officers and directors by limiting the extent to which actions they performed in a corporate capacity may be used to exercise jurisdiction over them individually. The rationale for the doctrine, Yohn said, is the concern over forcing officers and directors to choose either to disassociate themselves from the corporation or defend the propriety of their conduct in a distant forum. But in recent years, Yohn said, judges in the Eastern District of Pennsylvania have held that the protections of the corporate shield doctrine “are not absolute.” As a result, he said, courts have sometimes refused to permit a corporate officer to invoke the shield when the officer was involved in tortious conduct for which he could be held personally liable. THREE-FACTOR TEST In 1987, Yohn said, then-U.S. District Judge Anthony J. Scirica, who is now on the 3rd U.S. Circuit Court of Appeals, crafted a three-factor test for deciding whether it is proper to consider the defendant’s corporate contacts in the jurisdictional inquiry. In Rittenhouse & Lee v. Dollars & Sense Inc., Scirica said courts should consider (1) the defendant’s role in the corporate structure; (2) the nature and quality of the defendant’s forum contacts; and (3) the extent and nature of the defendant’s personal participation in the allegedly wrongful conduct. Yohn said the first factor weighed against considering Goldfarb’s corporate contacts with Pennsylvania, “but only slightly.” As DaimlerChrysler’s associate general counsel, Yohn said Goldfarb had no control over DaimlerChrysler’s preparation or issuance of the press release containing his comments, but that it was unclear whether anyone other than Goldfarb played a role in determining what exactly he would say in his statements. But the second factor, he said, weighed in favor of considering Goldfarb’s corporate contacts with Pennsylvania. “Considering his participation in interviews with reporters representing Reuters, the Wall Street Journal, and the American Lawyer (an affiliate of Law.com), it should have been abundantly clear to Goldfarb that his remarks would be distributed nationwide, including Pennsylvania,” Yohn wrote. “Moreover, Goldfarb’s statements appear to have been made in part to `discourage prospective litigants from signing on’ with Greitzer & Locks to replace the Lipscomb class representative, whose claims were dismissed due to a lack of standing. … Because the principal office of Greitzer & Locks is located in Philadelphia, Pennsylvania, where Lipscomb was brought, any discouragement would necessarily be directed toward Pennsylvania.” Yohn said Goldfarb “should have been aware that the effects of his actions would be felt in Pennsylvania, and there is evidence suggesting that this was his intent.” On the third factor, Yohn found that “Goldfarb’s personal involvement in the allegedly tortious conduct weighs in favor of considering his corporate contacts with Pennsylvania.” After considering all three Ritt enhouse & Lee factors, Yohn concludes that it was proper to consider Goldfarb’s corporate contacts with Pennsylvania in deciding whether it may exercise personal jurisdiction over him. “Goldfarb should have known that his statements would both be reported in Pennsylvania and damage Greitzer & Locks’s reputation there. The court also found that there is evidence to suggest that Goldfarb directed his remarks to Pennsylvania. Therefore, the court concludes that it was reasonably foreseeable that Goldfarb would be haled into court in Pennsylvania as a result of his conduct,” Yohn wrote.

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