U.S. District Court for the Southern District of Mississippi, Southern Division, October 23, 2020
The plaintiff alleged that he developed mesothelioma after exposure to asbestos from various products he worked with throughout his career. Of note in this matter, the plaintiff alleged that defendant Trinity Marine Products is liable for his injury after he worked with asbestos-containing brake pads incorporated in Nabrico winches. The defendant did not manufacture the brake pads or winches. Instead, the defendant purchased the assets from the winch manufacturer New Nabrico, and the “Purchase and Sale Agreement provides that it ‘shall be construed in accordance with and governed by the laws of the State of Tennessee.’” The defendant was incorporated under the laws of Delaware.
This matter was removed to the District Court for the Southern District of Mississippi under the federal officer removal statute of 28 U.S.C. § 1442(a)(1). As such, the District Court evaluated the successor liability issue by applying Mississippi’s choice of law rules. First, the court analyzed whether there was a true conflict of laws between the states regarding the product line exception to the general rule against successor liability. The plaintiff contends that Mississippi adopted the product line theory to successor liability, which should apply to this matter. However, the defendant argued that either Delaware law (state of incorporation) or Tennessee law (state law invoked in the Purchase and Sale Agreement) should apply. The court analyzed each state’s laws and found that a true conflict of laws existed, as Delaware has not adopted the product line exception, Tennessee “retain[s] the narrower rules of successor liability,” and Mississippi expressly adopted the product line exception.
Thereafter, the court conducted a choice of law analysis under Mississippi’s three part choice of law test:
(1) Determine whether the laws at issue are substantive or procedural. If they are procedural, the inquiry ends, and Mississippi law applies. (2) If substantive, classify the laws as either tort, property, or contract; and (3) look to the relevant section of the Restatement (Second) of Conflict of Laws. With regard to the last step, Mississippi resolves conflict-of-laws questions using the “significant relationship” test found in the Restatement (Second) of Conflict of Laws (1971).
The court found that the laws at issue were substantive rather than procedural, and classified the product line exception as being a matter of tort law. With regard to the third prong, the court relied on the Fifth Circuit case of Webb v. Rodgers Machinery Mfg. Co., which analyzed whether that defendant could be held liable for the torts of the preceding partnership. The Webb court held that California had the most significant relationship to the matter as “”[a]ll the contacts with respect to that issue occurred in California,” because “[t]he corporations and proprietorships involved in these transactions were all Californian.” As such, the court set forth that Delaware and Tennessee have the most significant relationship as “the contacts relevant to the successor liability issue in the present case occurred in Delaware and Tennessee Trinity is a Delawarean corporation, and its purchase agreement with New Nabrico invoked Tennessee law.” Therefore, the court found that the law of either Delaware or Tennessee govern the successor liability issue in this matter, rather than Mississippi law.
The District Court found that either Delaware or Tennessee law applies to this matter under Section 145 of the Restatement (Second) of the Conflict of Laws. Since Tennessee and Delaware do not recognize the product line exception to the general rule against successor liability, the court granted the defendant’s motion for summary judgment.