does not exist any evidence to support plaintiffs' implicit theory that B&W is being drained of profits by BAT, and thus left insolvent to the detriment of tobacco smokers who have brought or may bring suit against B&W.
Moreover, the possibility that a plaintiff may have difficulty enforcing a judgment against a defendant is not enough to justify piercing the corporate veil. Skidmore, Owings & Merrill v. Canada Life Assurance Co., 907 F.2d 1026, 1028 (10th Cir. 1990). Courts do not pierce the corporate veil unless the "corporation is so undercapitalized that it is unable to meet debts that may reasonably be expected to arise in the normal course of business." Laborers Clean-Up Contract Admin. Trust Fund v. Uriarte Clean-Up Serv., Inc., 736 F.2d 516, 525 (9th Cir. 1984); see also Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503, 1522 (3d Cir. 1994) (refusing to pierce corporate veil, noting that sole shareholder had right to draw profits from profitable company were corporate formalities were generally observed). In this case, there is simply no evidence that B&W is so undercapitalized that it is unable to meet debts that may be expected to arise in the normal course of business; indeed, the evidence is to the contrary. Thus, the Court refuses to pierce the corporate veil between B&W and BAT under the circumstances of this case.
Plaintiffs' assertion that this Court should impute the contacts of B&W to BAT because B&W undertakes activities in Pennsylvania that BAT would have to undertake if not for B&W is misplaced. As stated previously, the contacts of the subsidiary corporation may be imputed to the parent when the subsidiary is engaged in activities "that, but for the existence of the subsidiary, the parent would have to undertake." Gallagher, 781 F. Supp. at 1085. However, in the case of a holding company such as BAT, "the subsidiary is not performing a function that the parent would otherwise have had to perform itself (the holding company simply could hold another type of subsidiary). In such a case, imputing jurisdictional contacts would be improper." See id.
Here, the imputation of B&W's contacts, under this theory, would be improper because B&W is not engaged in a business that BAT would necessarily have to undertake if B&W did not exist. B&W's business is the manufacture, marketing, sale, and distribution of cigarettes; whereas, the business of BAT is the business of investment. Thus, it is clear that BAT would not have to undertake the activities of B&W in the absence of B&W.
Plaintiffs implicitly argue that BAT is the successor to BATCo, and as such, BAT should be liable under the theory of corporate successor liability. Defendants explicitly contend that as a matter of law, BAT could not have succeeded to the liabilities of BATCo because the requirements for imposing corporate successor liability have not been satisfied. The Court agrees with BAT's position.
As a matter of law, a corporation succeeds to the liabilities of another corporation only in certain limited instances. One such instance is where two or more corporations combine through a merger or consolidation and the corporation or corporations that are merged cease to exist. Under these circumstances, the surviving corporation becomes liable for all of the obligations of the constituent corporations, even those liabilities which are contingent. See Generally 8 Zolman Cavitch, Business Organizations § 161.02 (1994).
By contrast, where a corporation acquires the stock of another corporation and the target corporation continues to operate as a separate corporate entity, the purchaser corporation does not thereby assume the liabilities of the acquired corporation unless it does so expressly. Id. § 161.02. See also Roy v. Bolens Corp., 629 F. Supp. 1070, 1073 (D. Mass. 1986) (the successor liability doctrine has no applicability where, "the original manufacturer remains in existence to respond in tort for its alleged negligence and breach of warranty").
The facts of this case do not support plaintiffs' implied theory of corporate successor liability. In 1976, BAT became the separate and indirect parent company of both BATCo and B&W. In 1976, BAT brought all of the stock of BATCo, not its assets. (Wilson Reply Aff. P 6). Importantly, at the time of this stock purchase, BAT did not assume any of liabilities that BATCo potentially had. Further, BATCo has been in existence since 1902 and continues to exist today as a separate legal entity from BAT, despite the 1976 stock purchase by BAT. Thus, BATCo remains in existence today to respond to any potential litigation brought against it.
Plaintiffs' implied theory of corporate successor liability must fail because no evidence has been produced which would support this theory.
Accordingly, for the foregoing reasons, the Court grants BAT's motion to dismiss plaintiffs' first amended complaint for lack of personal jurisdiction. Plaintiffs have failed to satisfy their burden of establishing a prima facie case of personal jurisdiction over BAT.
B. Motion to Quash and for Entry of a Protective Order
BAT has also moved to quash plaintiffs' discovery requests and for entry of a protective order until resolution of BAT's motion to dismiss for lack of personal jurisdiction. Since the Court has granted BAT's motion to dismiss for lack of personal jurisdiction, the Court should simply deny BAT's motion as moot.
Plaintiffs respond that this Court should deny BAT's motion to quash and entry for a protective order to the extent that they be permitted to conduct discovery into jurisdictional facts. See Renner v. Lanard Toys Ltd., 33 F.3d 277, 283 (3d Cir. 1994). Plaintiffs also request that the Court defer ruling or deny BAT's motion to dismiss until they have had the opportunity to conduct jurisdictional discovery.
A trial court has discretion to refuse to grant jurisdiction discovery. Rose v. Granite City Police Dep't, 813 F. Supp. 319, 321 (E.D. Pa. 1993); Poe, 662 F. Supp. at 7. A court may deny jurisdictional discovery where the plaintiff has failed to meet its burden of making out a threshold prima facie case of personal jurisdiction. Rose, 813 F. Supp. at 321. As stated by the United States District Court for the Northern District of Florida:
the plaintiff asks that rather than dismissing the case, [the court] allow limited discovery in hopes that it might uncover some evidence supporting jurisdiction. That is not the purpose of discovery. When the defendant is required only to present a prima facie case, discovery is not appropriate.
Milligan Elec. Co. v. Hudson Construction Co., 886 F. Supp. 845, 850 (N.D. Fla. 1995). In this case, plaintiffs have failed to establish a prima facie case of personal jurisdiction, thus the Court will exercise its discretion by not allowing plaintiffs to conduct limited discovery in the hopes that it may uncover some evidence supporting jurisdiction; discovery should not be used as a fishing expedition.
While Pennsylvania courts will grant jurisdictional discovery in cases where the plaintiff has had no opportunity to discover facts essential to the jurisdictional inquiry, this is obviously not such a case. Plaintiffs' counsel, as members of the Castano Plaintiffs' Legal Committee, already have had access to more than 13,000 pages of jurisdictional documents produced by BAT in other jurisdictions relating to BAT's contacts with the entire United States, including Pennsylvania. Indeed, plaintiffs admit that they have had access to these documents by using many of these documents as exhibits to their opposition papers. Plaintiffs failure to make out even a prima facie case of personal jurisdiction is even more glaring in light of the fact that plaintiffs have had access to these documents. Under these circumstances, it would be inappropriate for this Court to subject BAT to burdensome and redundant discovery.
Thus, the Court denies as moot plaintiffs' motion to quash and for entry of a protective order, BAT having been dismissed from this action for lack of personal jurisdiction and plaintiffs having failed to demonstrate that limited discovery is warranted.
C. Plaintiffs' Motion to Join BATCo
Plaintiffs have filed a motion to add BATCo as a party defendant under Rule 21 of the Federal Rules of Civil Procedure. Plaintiffs contend that research has demonstrated that BATCo is involved in the wrongful actions alleged in plaintiffs' first amended complaint, and as such, BATCo should be added as a party defendant in this action. No responses have been filed in opposition to this motion.
Federal Rule of Civil Procedure 21 gives this Court discretion to add parties "at any stage of the action and on such terms as are just." See National Union Fire Ins. Co. of Pittsburgh, Pa. v. Massachusetts Mun. Wholesale Elec. Co., 117 F.R.D. 321, 322 (D. Mass. 1987) ("Rule 21 gives the trial court discretion to drop or add parties at any stage of an action and upon such terms as are just."). The Court will exercise its discretion to grant plaintiffs leave to add BATCo as a party defendant.
Accordingly, for the foregoing reasons, the Court grants BAT's Motion to Dismiss the First Amended Complaint for Lack of Personal Jurisdiction and plaintiffs' Rule 21 Motion to Add Batco as a Party Defendant. Also the Court denies as moot BAT's Motion to Quash and for Entry of a Protective Order, the Court having dismissed plaintiffs' first amended complaint as against BAT.
An appropriate Order follows.
Clarence C. Newcomer, J.
AND NOW, this 16th day of June, 1997, upon consideration of the following Motions, and any responses thereto, it is hereby ORDERED as follows:
1. The Motion of Defendant B.A.T. Industries p.l.c. to Dismiss the First Amended Complaint for Lack of Personal Jurisdiction is GRANTED;
2. The Motion to Quash and for Entry of a Protective Order of Defendant B.A.T. Industries p.l.c. is DENIED as moot; and
3. Plaintiffs' Rule 21 Motion to Add the British American Tobacco Company as a Defendant is GRANTED.
AND IT IS SO ORDERED.
Clarence C. Newcomer, J.