Louisiana Court Maintains Personal Jurisdiction over Foreign Successor Corporation

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Court of Appeal of Louisiana, Second Circuit, August 11, 2021

From 1953 to 1954, the decedent, Charles Hayes, was employed as a laborer and assistant operator at a variety of plants in Louisiana. In 2017, Hayes and his family filed suit against multiple defendants, alleging that Hayes was exposed to asbestos while working with insulation, gaskets, and packing materials at these plants. Hayes was diagnosed with mesothelioma in 2016, and passed away in 2018.

One of the plants where Hayes alleged exposure to asbestos was a fertilizer plant in Sterlington, Louisiana. This plant was incorporated under the name Ford, Bacon & Davis Construction Corporation (FBD) at the time of Hayes’s employment. FBD was incorporated in Louisiana and maintained its principal place of business in Monroe, Louisiana. In 1996, FBD changed its name to SFB Construction Corporation. SFB subsequently changed its name to EI in 1998. Finally, in 2000, a stock purchase agreement was executed between SYSTRA USA, Inc., as the buyer, and EI Associates Group, as the seller. The agreement stated that EI Associates Group, a New Jersey corporation, was the sole stockholder of EI, a New York corporation. Moving forward, the company became known as SYSTRA Engineering, Inc.

In 2018, SYSTRA filed a motion for summary judgment, maintaining that the Louisiana court did not have personal jurisdiction over it. As a New York corporation, SYSTRA asserted that it had no business connections to the state of Louisiana. SYSTRA also noted that the stock purchase agreement was silent as to the assumption of liabilities of FBD. The plaintiffs argued in opposition that the court did have personal jurisdiction over SYSTRA because the company was the successor in interest to FBD.

The court agreed that the most recent stock purchase agreement involving SYSTRA was silent as to whether SYSTRA assumed the liabilities of FBD. Despite this, the court noted that these public documents merely show a history of name changes and that the plaintiffs should not be prejudiced by the unavailability of additional records that would shed light on the nature of the transaction. Notably, the court pointed to statements made by SYSTRA’s counsel at trial acknowledging that SYSTRA, by virtue of a name change, was the same entity as FBD. Additionally, when asked if SYSTRA assumed the liabilities of predecessor corporations, counsel stated “that is correct.” Counsel noted that they could not stipulate to this, however, because they did not have documents that went that far back with regards to FBD. The court stated that it appeared counsel’s strategy was to argue the unfairness of a Louisiana court asserting personal jurisdiction over a distant successor corporation, rather than to argue that SYSTRA had insufficient business contacts with the state of Louisiana. Disagreeing with this strategy, the court held that the minimum contacts FBD had with the state of Louisiana can be imputed to SYSTRA under the circumstances of this case. As a result, SYSTRA’s motion for summary judgment was denied.

Read the full decision here.