An appellate court in New York City on Thursday affirmed a lower court ruling that the Empire state had no jurisdiction to hear a lawsuit brought by two overseas employees against Houston-based Baker Hughes.
The lawsuit, which involved a fatal car accident in Gabon, hinged on a question never before considered by the First Department the Appellate Division of the New York Supreme Court: Does the simple act of registering to do business in New York amount to consent to be sued? The court ruled it does not.
The ruling resolves an ambiguity that had existed for conglomerates like Baker Hughes that are registered to do business in most states including New York, a popular business venue for Fortune 500 companies.
Not to be confused with New York’s highest appellate court, the New York Court of Appeals, the Appellate Division of the New York Supreme Court is the Empire State’s system of intermediate appellate courts, akin to the Texas Court of Appeals.
The ruling by the First Department, which holds jurisdiction over most of the greater New York City area, was in line with case law from the Second and Fourth departments, which both predominately oversee upstate counties and faced this legal question earlier this year.
According to legal experts familiar with the issue, the ambiguity among New York’s lower courts began after the 2014 U.S. Supreme Court decision, Daimler AG v. Bauman, which narrowed the scope on the the grounds that a foreign (or out-of-state) company could be sued for foreign conduct. The high court ruled that the “all purpose” or “general” personal jurisdiction — the ability to hear claims unrelated to the forum state — is only proper where the corporation is “at home.”
Many New York courts had historically ruled that the act of a company registering to do business in the state meant that the company was consenting to general jurisdiction. Some were not convinced that Daimler fully addressed that issue, while others did, resulting in mixed rulings on the legal question.
Beyond providing more clarity on this issue, Thursday’s ruling also marks a win for a team of Skadden Arps Slate Meagher & Flom lawyers, led by Houston partner Noelle Reed, who represent Baker Hughes. Reed said she could not comment on the decision.
Other Skadden lawyers on the team include Houston associates William O’Hare and Christian Adriatico, as well as New York partner Scott Musoff.
The plaintiffs are represented by Phillipe Pradal, a French lawyer who also practices in New York. He was traveling outside the U.S. on Friday and could not comment before press time.
The lawsuit arose after two employees, Clarice Tsogou Mabengou and Joseph Fekah, were in an accident in Gabon while running some off-duty errands in a Baker Hughes company vehicle when a car coming the opposite way crossed over the median, court documents say. Mabengou, who was based in Gabon, was pregnant at the time and died from the accident. Fekah, who was based in Ghana, survived the accident but is permanently incapacitated as a result.
The plaintiffs and their families brought the lawsuit in New York state court, but a trial judge dismissed the lawsuit in September 2018.
On appeal, the plaintiffs argued that New York was the appropriate venue since the company had administered employment benefits and insurance coverage from the United States and the key witnesses to the events were in New York, court documents say.
A four-judge panel ruled that those arguments were “broad-based assertions.”
“[They’re] never linked to the tragic events alleged to have occurred in Gabon, and bear no apparent connection to New York,” the ruling says. “Their argument is unavailing, as the individuals they list as potential witnesses are at very high levels of management at defendant’s company, and plaintiffs’ conclusory assertions that those individuals have personal knowledge of the relevant facts are unsupported by anything in the record.”