Delaware Supreme Court Says No to Lawsuit with Georgia Connection

The Supreme Court of Delaware, a state in which a considerable number of major U.S. businesses have incorporated thanks to a favorable corporate formation law and a largely pro-business climate, recently handed down a fascinating decision in a case in which the nexus of the dispute was actually centered here in Georgia.   

The case in question was filed in a Delaware Superior Court last year by a Georgia man and his wife against Genuine Parts Co., the parent company of NAPA Autoparts, which is incorporated in Georgia and headquartered in Atlanta.

According to the facts of the personal injury case, the man was employed as a warehouse worker for Genuine Parts from 1988 and 1991 in Jacksonville, Florida. During this time, he was allegedly exposed to asbestos, which resulted in the eventual onset of mesothelioma and other serious health conditions.    

Genuine Parts challenged the superior court’s jurisdiction over the matter given that the injury claim in question was not connected to the state of Delaware. The superior court, however, upheld its jurisdiction over the matter, citing precedent from a 1988 state Supreme Court case, which dictated that companies with offices or a business presence in the state — Genuine Parts has at least 15 stores here — were vulnerable to personal injury lawsuits.

Genuine Parts appealed to the state Supreme Court, which in a surprising turn of events, reversed the lower court via a 4-1 decision.

In its opinion, which relied heavily on the Supreme Court of the United State’s 2014 decision in Daimler AG v. Bauman, the justices held that plaintiffs can only file suit in the courts of Delaware if 1) the claim resulted from the defendant’s connection to the state or 2) the actual injury occurred in the state.

In other words, plaintiffs can no longer file a lawsuit against a corporate entity in Delaware just because it conducts some manner of business in Delaware. In support of this decision, the court pointed out that fewer than 1 percent of Genuine Parts’ stores and less than 1 percent of its total revenue are generated by the state.

The departure from this longstanding precedent was welcomed by many legal experts in the First State.

“[If] there really is no Delaware connection, why use the resources of Delaware courts and taxpayers?” said a professor at the University of Delaware. “We are a small state with a small number of courts and limited resources. Our courts should be focused on protecting Delaware citizens, including our corporate ones.”

While it remains to be seen where the plaintiffs will re-file their lawsuit, it appears that Georgia would be the most likely venue.

If you have questions concerning business matters or would like to learn more about your options concerning business litigation, please consider speaking with an experienced legal professional.

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