The U.S. Court of Appeals for the Third Circuit has ruled, creating a split among circuits, that a group of shipowners being sued for allegedly exposing sailors to asbestos failed to preserve a 30-year-old jurisdictional challenge.
The ruling, issued Tuesday by a split three-judge panel in In re Asbestos Products Liability Litigation, overruled decisions from the U.S. District Court for the Eastern District of Pennsylvania, and reinstated claims by merchant mariners for an adjudication on the merits decades after they were filed.
According to Chief Judge D. Brooks Smith, who wrote the majority’s 23-page precedential opinion, the dispute stems from orders a federal judge in Ohio made in 1989, which gave the defendant shipowners the option of either agreeing to be transferred to another jurisdiction, or waiving their personal jurisdictional defense and remaining in the Northern District of Ohio.
Although the defendants contended that they never waived their jurisdictional challenge, Smith said the facts of the case, specifically the defendants’ objection to transfer and their continued filings in the litigation, indicated otherwise.
“Behavior that is consistent with waiver, and which indicates an intent to litigate the case on the merits, is sufficient to constitute a waiver, regardless of whether the parties also express an intent to preserve the defense,” Smith said. “By filing pleadings responding to substantive allegations in the merchant mariners’ complaints—after [Ohio federal Judge Thomas] Lambros had unequivocally ruled that he did not have jurisdiction—the shipowners chose to actively litigate their case.”
Motley Rice attorney Louis Bograd, who is representing the sailors, said he was pleased with the ruling.
“We think they got it right, and we’re gratified by their recognition that the only reasonable reading of the record and the course of conduct back in the early days … was that the defendants chose to waive their personal jurisdiction defense,” Bograd said.
Harold Henderson of Thompson Hine, who is representing the shipowners, said in an emailed statement, “We are disappointed with the ruling because we believe the district court correctly found no waiver of the personal jurisdiction defenses. We will be reviewing options with our clients.”
The decision sets up a split with the Sixth Circuit, which, in its 2017 decision in Kalama v. Matson Navigation, determined that Lambros acted outside his authority in the way he handled the personal jurisdiction challenge.
According to Smith, in the 1980s thousands of sailors sued shipowners in the Northern District of Ohio on a theory of nationwide jurisdiction. Lambros presided over the consolidated litigation until it was transferred to the Eastern District of Pennsylvania in 1991. In 1989, the shipowners challenged jurisdiction and Lambros agreed with the defendants. However, instead of granting the defendants’ motion to dismiss, he said he would transfer the cases instead.
According to Smith, counsel for the defendants asked for time to make that decision, saying their clients may instead want to waive their jurisdictional defense. At a hearing the following month, the defendants said that, before making a determination on waiving jurisdiction, their clients wanted to see how Lambros would rule on several other issues. The plaintiffs objected, and Lambros eventually told the shipowners to file an answer by the deadline if they wanted to waive the jurisdiction issue.
Although the defendants appealed the decision and said they would file answers in the litigation “under protest,” Smith said the litigation proceeded for another year under Lambros without any additional motion practice regarding the jurisdictional issue.
The Sixth Circuit determined that Lambros did not have the authority to declare that filing an answer would result in waiver.
Smith, however, said that, while typically a defendant would raise a personal jurisdiction defense in an answer, the case at issue was anything but typical, since Lambros had already ruled on the issue before answers were filed.
“Judge Lambros did not ‘strip a defendant of its right to assert an affirmative defense in an answer,’” Smith said. “Instead, having already ruled that he did not have personal jurisdiction over the shipowners, he ruled that continuing to actively litigate the case by submitting an answer would indicate waiver and an intent to proceed in the Northern District of Ohio.”