Williams, J. v. OAO Severstal v. Tri-State Safety

J-A02021-18

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

JOHN WILLIAMS, AN : IN THE SUPERIOR COURT OF
INCAPACITATED PERSON, BY : PENNSYLVANIA
BRANDY WILLIAMS, GUARDIAN (AD :
LITEM); JOHN WILLIAMS, BRANDY :
WILLIAMS :
:
:
v. :
: No. 938 WDA 2017
:
OAO SEVERSTAL, SEVERSTAL :
RESOURCES, PBS COALS, INC; MINE :
SAFETY APPLIANCES COMPANY :
:
:
v. :
:
:
TRI-STATE SAFETY TRAINING :
SERVICES :
:
:
APPEAL OF: OAO SEVERSTAL

Appeal from the Order May 31, 2017
In the Court of Common Pleas of Westmoreland County Civil Division at
No(s): 1396 of 2014

BEFORE: BOWES, J., OLSON, J., and KUNSELMAN, J.

MEMORANDUM BY BOWES, J.: FILED OCTOBER 03, 2019

OAO Severstal (“Appellant”) appeals from the May 31, 2017 order

overruling its preliminary objection to the trial court’s exercise of personal

jurisdiction. We affirm.

On April 19, 2012, John Williams suffered severe injuries while working

for Merit Contracting, Inc. constructing a raw coal bin at the Shade Creek
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Plant, a coal facility owned by Appellant’s subsidiary, PBS Coals, Inc. (“PBS”).

On June 9, 20 14, Mr. Williams, both individually and through his guardian

ad litem (hereinafter “Mr. Williams”), filed a complaint against Appellant and

PBS Coals. Appellant responded by filing preliminary objections that asserted,

inter alia, that the trial court lacked personal jurisdiction. On April 6, 2017,

following extensive discovery, including the deposition of two former PBS

Coals executives and a former board member, who is also Appellant’s Chief

Executive Officer (“CEO”), the trial court overruled Appellant’s preliminary

objections as to personal jurisdiction. On May 31, 2017, the trial court

amended the order to certify that the case presented a substantial issue of

personal jurisdiction. See Pa.R.A.P. 311(b)(2). This timely appeal followed.

Appellant presents three questions for our review:

A. Whether the trial court committed an error of law when it
denied [Appellant’s] preliminary objection to the court’s exercise
of specific personal jurisdiction over it . . . [pursuant to] 42 Pa.C.S.
§ 5322 . . . ?

B. Whether the trial court’s holding that it had specific personal
jurisdiction under 42 Pa.C.S. § 5322 over [Appellant], a Russian
corporation, in this personal injury action is inconsistent with the
due process requirements of the 14th Amendment?

C. Whether a plaintiff suing an out-of-state defendant should be
required to plead the existence of personal jurisdiction and facts
in support thereof?

Appellant’s brief at 6 (unnecessary capitalization omitted).

At the outset, we address Appellant’s assertion that Mr. Williams was

required to plead the existence of personal jurisdiction. This claim is identified

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as issue “C” in Appellant’s statement of questions presented. Id. The

argument requires us to interpret the Pennsylvania Rules of Civil Procedure;

therefore, it is a question of law over which our standard of review is de novo

and our scope of review is plenary. See Tillery v. Children’s Hosp. of

Phila., 156 A.3d 1233, 1249 (Pa.Super. 2017).

Appellant’s argument is without merit because this Court has repeatedly

held that “when a defendant challenges a court’s personal jurisdiction, that

defendant bears the burden of supporting such objections to jurisdiction by

presenting evidence. The burden of proof only shifts to the plaintiff after the

defendant has presented . . . evidence in support of its preliminary objections

challenging jurisdiction.” Trexler v. McDonald's Corp., 118 A.3d 408, 412

(Pa.Super. 2015) (cleaned up); see Scoggins v. Scoggins, 555 A.2d 1314,

1317 (Pa Super. 1989); Schmitt v. Seaspray–Sharkline, Inc., 531 A.2d

801, 803 (Pa.Super. 1987). Hence, Mr. Williams was not required to plead

facts in his complaint supporting the exercise of personal jurisdiction over

Appellant. Instead, he was entitled to aver the facts supporting the exercise

of personal jurisdiction in his response to Appellant’s preliminary objections

and thereafter present evidence in support of those averments. Accordingly,

we conclude that Appellant is not entitled to relief on this claim of error.

We address Appellant’s remaining claims collectively. Essentially,

Appellant argues that Mr. Williams adduced insufficient facts to demonstrate

that his cause of action arose out of Appellant’s contacts with Pennsylvania.

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Appellant’s primary contention is that personal jurisdiction is not conferred to

Pennsylvania simply because PBS Coals is one of its subsidiaries. Appellant

continues that, absent evidence that Appellant controlled PBS Coals’ decision-

making in relation to the coal bin’s construction, it did not have sufficient

minimum contacts with Pennsylvania to attach personal jurisdiction that

satisfies the due process considerations outlined in the Fourteenth

Amendment.

Mr. Williams counters by highlighting that the trial court’s determination

is based upon acts that stemmed from Appellant’s ownership and control of

its subsidiary. He argues, “The undisputed acts found by the [t]rial [c]ourt all

arose from [Appellant’s] ownership and management of PBS Coals.

Construction at the Shade Creek Plant was merely one aspect of [Appellant’s]

management and operation of PBS Coals.” Appellee’s brief at 8-9.1

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1 The contentions that Mr. Williams asserted on appeal regarding the level of
Appellant’s oversight in the parent-subsidiary relationship with PBS Coals and
the trial court’s review of that relationship clearly implicate the alter-ego/mere
instrumentality theory of personal jurisdiction. To the extent that Mr. Williams
did not express this precise argument on appeal, our review is not constrained
by the assertions leveled in an appellee’s brief. Indeed, it is well settled that
this Court may affirm the trial court’s order on any basis supported by the
record. See, e.g., Preferred Contractors Ins. Co., RRG, LLC v. Sherman,
193 A.3d 1009, 1022 n.3 (Pa.Super. 2018). Thus, insofar as the certified
record supports the trial court’s decision to overrule Appellant’s preliminary
objections, this Court may affirm that order regardless of the arguments that
Mr. Williams asserted in his brief.

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We review a trial court’s order overruling preliminary objections for an

abuse of discretion and “[we] must consider the evidence in the light most

favorable to the non-moving party.[2]” Sulkava v. Gaston Finland Oy, 54

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2 There are two distinct classifications of preliminary objections pursuant to
Rule 1028(a): 1) objections that directly challenge the adequacy of the
pleading, i.e., subparagraphs (a)(2), (3), and (4); and 2) objections that raise
challenges that transcend the four corners of the pleading. As the note to
Rule 1028(a) explains, objections that relate to a nonconforming pleading,
insufficient specificity in a pleading, and a demurrer need no additional
evidence and may be determined from the face of the pleading. However,
unlike preliminary objections that are self-evident, preliminary objections that
implicate, inter alia, personal jurisdiction require additional evidence.

Relying upon Nutrition Management Services Co. v. Hinchcliff, 926
A.2d 531 (Pa.Super 2007), the concurrence asserts that the extensive
discovery conducted in this case was superfluous because Appellant’s
preliminary objections “did not cast doubt upon the jurisdiction-conferring
allegations in the complaint.” See Concurring Memorandum at 7. We
disagree. In Nutrition Management Services Co., supra at 536, this Court
concluded that there was no need to develop an evidentiary record prior to
sustaining a preliminary objection where “neither party presented evidence
that raised factual issues which required the creation of an evidentiary record.”
We highlighted, “there was no need to develop an evidentiary record
[because] there is no indication that [the plaintiff] sought to depose any [out-
of-state-defendants] prior to oral argument. Moreover, [the plaintiff] fails to
identify a single factual issue that needs to be resolved.” Id. Hence, we
concluded that, even though the out-of-state defendant “readily admitted” to
the actions that formed the factual basis of the Pennsylvania plaintiff’s
assertion, those allegations did not support the exercise of personal
jurisdiction. Id. Stated in the parlance of the concurrence, discovery was not
warranted prior to sustaining the preliminary objection in that case because
the plaintiff failed to proffer any “jurisdiction-conferring allegations in the
complaint” upon which the defendants were required to cast doubt. See
Concurring Memorandum at 7.

The case at bar presents a drastically different situation. Rather than
sustaining a preliminary objection because the plaintiff neglected to assert a
factual basis for the trial court to exercise personal jurisdiction, the trial court

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A.3d 884, 889 (Pa.Super. 2012). Furthermore “ This Court will reverse the

trial court's decision regarding preliminary objections only where there has

been an error of law or an abuse of discretion. Once the moving party supports

its objections to personal jurisdiction, the burden of proving personal

jurisdiction is upon the party asserting it.” Id.

Considering the corporate dynamics that this case presents, we do not

believe that the trial court abused its discretion in overruling Appellant’s

preliminary objection to the trial court’s exercise of personal jurisdiction.

Appellant is an international steel manufacturing behemoth. PBS Coals, a

Delaware corporation with headquarters in Somerset County, Pennsylvania, is

____________________________________________

ordered discovery to “adduce and submit . . . facts that would allow [it] to
make a determination relative to the Preliminary Objections, based upon . . .
jurisdiction.” Trial Court Order, 11/25/14, at 2-3. Instantly, Appellant’s
preliminary objection contested the factual bases of Mr. Williams’s assertions
of jurisdiction, i.e., that because PBS Coals was Appellant’s agent,
instrumentality, or alter ego in Pennsylvania, Appellant owed a duty to
Williams as an invitee at the Shade Creek Plant owned by PBS Coals. In fact,
in arguing that its corporate relationship with PBS Coals was insufficient for
Pennsylvania to exercise personal jurisdiction, Appellant stressed that it did
not have a direct ownership interest in PBS Coals or operate the subsidiary at
the time of the accident. See Preliminary Objection at 8, ¶ 30. Furthermore,
Appellant averred that it neither maintained bank accounts, licensing, offices,
or a business address in Pennsylvania; nor did it employ personnel, own
property, or pay taxes in the Commonwealth. Id. at 8, ¶ 29. As Appellant’s
contentions challenged the factual basis of Mr. Williams’s assertion of
jurisdiction, i.e., that Appellant’s acts, or its corporate relationship with PBS
Coals, gave rise to the cause of action in Pennsylvania, discovery was
warranted.

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one of Appellant’s myriad wholly-owned subsidiaries.3 Appellant’s ownership

of PBS Coals twists through a series of international subsidiaries, including

holding companies in Russia, the Netherlands, and Canada, and two domestic

companies incorporated in Delaware. PBS Coals’ purpose was to produce

metallurgical coal for Appellant’s in-house consumption in its steel making

operations in North America. Although the caption also lists Severstal

Resources as a defendant in this case, that is not a corporate entity. In reality,

“Severstal Resources” is an informal sobriquet that Appellant uses to identify

its mining units collectively. N.T. Deposition of Lori Mason, 9/9/15, at 119-

21; Exhibit 2. In this vein, the name “Severstal” and the concomitant logo

that was emblazoned on PBS Coals’ letterhead, business cards, and signs,

represents a brand name, whose use and depiction were controlled by

Appellant.4

In addition to the enumerated acts specified in 42 Pa.C.S. § 5322(a),5

the Pennsylvania long-arm statute confers jurisdiction to “the fullest extent

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3In addition to PBS Coals, Appellant owned Rox Coal, Inc., a different coal
mining subsidiary under the Severstal brand that operated out of PBS Coals’
Somerset headquarters. The interdependent relationship between Rox Coal
and PBS Coals existed prior to Appellant’s acquisition of those assets.

4 The Severstal name and logo are not only imprinted on the service contract
between PBS Coals and Merritt Construction, Mr. Williams’s employer when
the injury occurred, but are also posted atop the insurance and compliance
certifications that were executed simultaneously with the contract.

This section of the long-arm statute provides:

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____________________________________________

(a) General rule.--A tribunal of this Commonwealth may exercise personal
jurisdiction over a person (or the personal representative of a deceased
individual who would be subject to jurisdiction under this subsection if not
deceased) who acts directly or by an agent, as to a cause of action or other
matter arising from such person:

(1) Transacting any business in this Commonwealth. Without
excluding other acts which may constitute transacting business in
this Commonwealth, any of the following shall constitute
transacting business for the purpose of this paragraph:

(i) The doing by any person in this Commonwealth of a series of
similar acts for the purpose of thereby realizing pecuniary benefit
or otherwise accomplishing an object.

(ii) The doing of a single act in this Commonwealth for the purpose
of thereby realizing pecuniary benefit or otherwise accomplishing
an object with the intention of initiating a series of such acts.

(iii) The shipping of merchandise directly or indirectly into or
through this Commonwealth.

(iv) The engaging in any business or profession within this
Commonwealth, whether or not such business requires license or
approval by any government unit of this Commonwealth.

(v) The ownership, use or possession of any real property situate
within this Commonwealth.

(2) Contracting to supply services or things in this
Commonwealth.

(3) Causing harm or tortious injury by an act or omission in this
Commonwealth.

(4) Causing harm or tortious injury in this Commonwealth by an
act or omission outside this Commonwealth.

(5) Having an interest in, using, or possessing real property in this
Commonwealth.

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allowed under the Constitution of the United States and may be based on the

most minimum contact with this Commonwealth allowed under the

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(6)(i) Contracting to insure any person, property, or risk located
within this Commonwealth at the time of contracting.

(ii) Being a person who controls, or who is a director, officer,
employee or agent of a person who controls, an insurance
company incorporated in this Commonwealth or an alien insurer
domiciled in this Commonwealth.

(iii) Engaging in conduct described in section 504 of the act of May
17, 1921 (P.L. 789, No. 285), known as The Insurance
Department Act of 1921.

(7) Accepting election or appointment or exercising powers under
the authority of this Commonwealth as a:

(i) Personal representative of a decedent.

(ii) Guardian of a minor or incapacitated person.
(iii) Trustee or other fiduciary.

(iv) Director or officer of a corporation.

(8) Executing any bond of any of the persons specified in
paragraph (7).

(9) Making application to any government unit for any certificate,
license, permit, registration or similar instrument or authorization
or exercising any such instrument or authorization.

(10) Committing any violation within the jurisdiction of this
Commonwealth of any statute, home rule charter, local ordinance
or resolution, or rule or regulation promulgated thereunder by any
government unit or of any order of court or other government
unit.

42 Pa.C.S. § 5322(a)(1)-(a)(10) (foot note omitted).

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Constitution of the United States” See 42 Pa.C.S. § 5322(b). As explained

below, we disagree with Appellant’s assertion that it and PBS Coals maintained

a typical parent-subsidiary relationship that was insufficient to confer personal

jurisdiction upon Appellant in Pennsylvania. To the contrary, Appellant’s

corporate structure and oversight of PBS Coals’ mining operations for its

internal consumption of metallurgical coal negates the jurisdictional

protections that a foreign parent corporation typically enjoys pursuant to

Daimler AG v. Bauman, 571 U.S. 117 (2014), and Bristol-Myers Squibb

Co. v. Superior Court, 137 S. Ct. 1773 (2017), two decisions that limited

states’ personal jurisdiction over out-of-state defendants. Moreover, while

Appellant did not specifically oversee the construction of the raw coal bin

where Mr. Williams was injured during 2012, such a precise connection to the

injury is not required. Instead, Appellant’s use of PBS Coals to internally

source its demand for metallurgical coal rendered the subsidiary the mere

instrumentality of the parent company. Thus, acknowledging the coal bin’s

role in the mining operations, the facts in this case support the trial court’s

decision to exercise specific personal jurisdiction over Appellant. See Bristol-

Myers Squibb Co., supra at 1780 (“In order for a state court to exercise

specific jurisdiction, the suit must arise out of or relate to the defendant’s

contacts with the forum.”) (cleaned up).

In Daimler AG, supra at 762, the High Court explained that the

requirement of personal jurisdiction should “permit out-of-state defendants to

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structure their primary conduct with some minimum assurance as to where

that conduct will and will not render them liable to suit.” (citation and

quotation marks omitted).6 Similarly, the Supreme Court’s holding in Bristol-

Myers Squibb, supra at 1781, required “an affiliation between the forum and

the underlying controversy, principally, an activity or an occurrence that takes

place in the forum State.” Instantly, Mr. Williams’s injury arose from the

construction of a coal bin that PBS Coals utilized in its operations to meet

Appellant’s demand for metallurgical coal.

While agency-based theories such as instrumentality, piercing the

corporate veil, and alter ego are typically utilized to exercise general

jurisdiction, there is neither an express bar nor conceptual restraint that

precludes applying those principles to specific jurisdiction where, as here, the

cause of action flows from the veiled action of the foreign parent.7 Regardless

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6 In a nod to a hypothetical that the High Court posed in Daimler, supra at
121-22, the learned dissent posits that, by exercising general personal
jurisdiction over Appellant in this case, we open a theoretical gateway for a
Ukrainian citizen to sue Appellant in Pennsylvania for injures that arise in
Alaska. See Concurring/Dissenting Memorandum at 12 n.7. Though
imaginative, the dissent’s hypothetical is unpersuasive for the identical
reasons that Justice Sotomayor rejected its counterpart in Daimler. Stated
plainly, where “foreign plaintiffs su[e] a foreign defendant based on foreign
conduct,” the suit has no relation to the forum state, and “given that a more
appropriate forum is available,” the “exercise of jurisdiction would be
unreasonable”– which is a bedrock principle of jurisdiction. Daimler supra
at 143-44, (Sotomayor Concurring).

7 The dissent’s reference to BNSF Ry. Co. v. Tyrrell, 137 S.Ct 1549 (2017)
is not instructive insofar as that case does not address the principles of

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of the name given the test to determine specific personal jurisdiction, the

relevant jurisdictional principles of minimum contacts, fair play, and

substantial justice remain static. See Jennifer A. Schwartz, PIERCING THE

CORPORATE VEIL OF AN ALIEN PARENT FOR JURISDICTIONAL PURPOSES: A PROPOSAL FOR A

STANDARD THAT COMPORTS WITH DUE PROCESS, 96 Cal. L. Rev. 731, 735 (2008)

(advocating for “jurisdictional veil-piercing jurisprudence related to alien

parents of U.S. subsidiary corporations in the context of specific jurisdiction.”).

Ultimately, the analysis centers on whether it is reasonable to extend

jurisdiction to an alien parent corporation based upon its actions within the

forum as transmitted through the conduit of its wholly-owned subsidiary.

This is not a novel perspective. Indeed, the Daimler Court specifically

noted the applicability of agency theories to specific personal jurisdiction. Id.

at 759 n.13 (“Agency relationships, we have recognized, may be relevant to

the existence of specific jurisdiction.”). Moreover, other courts have employed

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agency, instrumentality, or alter ego that are at the heart of this case. Indeed,
BNSF concerns a Montana court’s attempt to extend general personal
jurisdiction to an out-of-state corporate defendant with negligible ties to
Montana in a lawsuit with no connection to Montana. Echoing the reasoning
that it employed in Daimler AG, the High Court concluded, inter alia, “BNSF
[is not] so heavily engaged in activity in Montana as to render it essentially at
home in that State.” Id. at 1559 (cleaned up). Instantly, the certified record
is replete with evidence that ties Appellant to the underlying litigation in
Pennsylvania through its control over PBS Coals. Hence, the foreign
corporation is subject to the Commonwealth’s specific personal jurisdiction
even though Pennsylvania is not its home forum for the purpose of
determining general personal jurisdiction.

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similar theories to establish specific jurisdiction over foreign parent

corporations based upon the contacts its subsidiary has to the forum and

litigation. See Celgard, LLC v. SK Innovation Co., Ltd., 792 F.3d 1373,

1379 (Fed. Cir. 2015) (“For purposes of specific personal jurisdiction, the

contacts of a third-party may be imputed to the defendant under either an

agency or alter ego theory. In order to establish jurisdiction under the agency

theory, the plaintiff must show that the defendant exercises control over the

activities of the third-party”); In re Chinese-Manufactured Drywall Prods.

Liab. Litig., 753 F.3d 521, 531 (5th Cir. 2014) (interpreting Daimler as

embracing significance of principal-agent relationship in specific-jurisdiction

analysis); see also Gerlinde Berger-Walliser, RECONCILING TRANSNATIONAL

JURISDICTION: A COMPARATIVE APPROACH TO PERSONAL JURISDICTION OVER FOREIGN

CORPORATE DEFENDANTS IN US COURTS, 51 Vand. J. Transnat'l L. 1243, 1275

(2018) (discussing Daimler and its progeny, “it remains uncertain if, in the

future, the Court will allow the actions of a third party, including a subsidiary

not completely dominated by its out-of-state parent corporation, to be

transposed to the defendant who has not purposefully availed itself of that

forum.”). Thus, a finding that an undercapitalized Pennsylvania subsidiary is

acting as the agent, instrumentality, or alter ego of a foreign parent

corporation can form a foundation for a court to exercise specific personal

jurisdiction.

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Typically, a corporate parent, such as Appellant, retains its distinct

identity even though it may share common directors, officers, and

shareholders with a subsidiary. See Botwinick v. Credit Exch., Inc., 213

A.2d 349, 354 (Pa. 1965). As a separate legal entity, a parent corporation is

generally not subject to the jurisdictions of its subsidiaries, absent overt

interaction with the forum state that would satisfy the minimum contacts

standard established in International Shoe Co. v. Washington, 326 U.S.

310, 316 (1945). Botwinick, supra at 352-53. However, to the extent that

the certified record demonstrates that the parent and subsidiary are so

intertwined that the subsidiary is the instrumentality of the parent corporation,

then the parent may be considered to be doing business within the state under

the facade of the subsidiary. Id. at 354. In Botwinick, our Supreme Court

addressed whether a parent company was “doing business” through its

subsidiaries for purposes of determining personal jurisdiction. It articulated

this determination as follows:

Neither the similarity of names between the parent and subsidiary
corporation nor the total ownership of the stock of the subsidiary
by the parent nor the fact that a single individual is the active chief
executive of both corporations will per se justify a court in piercing
the corporate veil if each corporation maintains a bona fide
separate and distinct corporate existence.

Botwinick, supra, at 353-54 (citations omitted).

The determination of whether a subsidiary is merely the instrumentality

of its parent corporation depends on the manner in which a parent conducts

and maintains its relationship with the subsidiary. In re Enter. Rent–A–Car

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Wage & Hour Emp’t Practices Litig., 735 F. Supp. 2d 277, 317 (W.D. Pa.

2010), aff’d, 683 F.3d 462 (3d Cir. 2012) (whether exercise of jurisdiction

over parent corporation is proper under alter-ego theory depends upon details

of relationship between parent corporation and its subsidiary). Thus, it is a

fact-based inquiry that focuses on the specific acts that demonstrate the

parent company’s control over its subsidiary. Id.

While there is a dearth of authoritative precedent addressing this

principle following our High Court’s decision in Botwinick, our sister

jurisdictions in the federal courts have honed the pertinent inquiry as follows:

As part of this inquiry, courts in this District often consider the
following discrete factors: (1) ownership of all or most of the stock
of the subsidiary; (2) common officers and directors; (3) a
common marketing image; (4) common use of a trademark or
logo; (5) common use of employees; (6) an integrated sales
system; (7) interchange of managerial and supervisory personnel;
(8) performance of business functions by the subsidiary which the
principal corporation would normally conduct through its own
agents or departments; (9) marketing by the subsidiary on behalf
of the principal corporation, or as the principal's exclusive
distributor; and (10) receipt by the officers of the subsidiary
corporation of instruction from the principal corporation. . . .
These factors are best viewed as a non-exclusive guide to help
resolve the broader issue of whether the companies have a “single
functional and organic identity.”

Simeone ex rel. Estate Of Albert Francis Simeone, Jr. v. Bombardier-

Rotax GmbH, 360 F.Supp.2d 665, 675-76 (E.D. Pa. 2005).

The test involves a “flexible, pragmatic inquiry into all relevant factors

that relate to the intimacy of the parent-subsidiary relationship.” Arch v.

American Tobacco Co., Inc., 984 F. Supp. 830, 837 (E.D. Pa. 1997)).

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Moreover, as the District Court for the Middle District of Pennsylvania

explained, “[t]he alter-ego test for personal jurisdiction is ‘less stringent’ than

the test for piercing the corporate veil to impose liability. No single factor is

dispositive, and the court may consider all relevant evidence to determine

whether the parent exercises actual control over a subsidiary beyond that

which is characteristic of a usual parent-subsidiary relationship.” Sincavage

v. Schott North America, 2018 WL 4852218 (M.D. Pa. 2018) (cleaned up);

In re Enter. Rent–A–Car, supra at 319; see also Clark v. Matsushita

Elec. Indus. Co., Ltd., 811 F.Supp. 1061, 1067 (M.D. Pa. 1993) (“A

subsidiary is an ‘alter ego’ of its parent corporation if domination and control

by the parent renders the subsidiary its mere instrumentality.”). Indeed,

“[t]he significant factor in this inquiry is the degree of control that the parent

corporation retains over the subsidiary.” Id. (quoting 2 James W. Moore et

al., MOORE’S FEDERAL PRACTICE ¶ 4.41–1[6], at 4–368 (2d ed. 1992)).8

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8 The dissent cites Anwar v. Dow Chem. Co., 876 F.3d 841 (6th Cir. 2017)
in order to highlight the fact that Appellant does not micro-manage PBS Coals’
daily operations. However, when considered in conjunction with the intricate
corporate structure and oversight that we describe in the body of this
memorandum, the relevant facts demonstrate a level of involvement by
Appellant that exceeds the mere macro-management that the dissent depicts.
For similar reasons, we are not convinced that the dissent’s discussion of
district court cases from California and Louisiana provides any meaningful
guidance. In describing the decisions in Kellman v. Whole Foods Mkt.,
Inc., 313 F.Supp.3d 1031 (N.D. Cal. 2018), and Ezell v. Medtronic plc, 2018
WL 1100901 (W.D. La. Feb. 6, 2018) (not reported), the dissent isolates
certain factors that the respective district courts found deficient. In Kellman,
it was the district court’s reference to Ranza v. Nike, Inc., 793 F.3d 1059

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Courts have applied the alter-ego test with variable outcomes. In

Barber v. Pittsburgh Corning Corp., 464 A.2d 323, 317 (Pa.Super. 1983),

this Court affirmed a trial court order that overruled preliminary objections

challenging, inter alia, Pennsylvania’s authority to exert personal jurisdiction

over a foreign corporation, Charter Consolidated, Ltd, (“Charter”), that

conducted business in Pennsylvania through two groups of wholly-owned

subsidiaries, Cape and Pandrol. Specifically, Cape sold thousands of tons of

asbestos to the plaintiff’s former employer, Pittsburgh Corning Corporation

(“Pittsburgh Corning”), and Pandrol sold railroad track equipment in

Pittsburgh. While Charter attempted to distance itself from Cape for the

purposes of specific personal jurisdiction in the underlying asbestos litigation,

this Court determined that the certified record demonstrated that Cape was

the instrumentality of its parent corporation. Id. at 329. We reasoned,

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(9th Cir. 2015), for the general proposition that a parent corporation’s
financing and macro-management is inadequate, and in Ezell, it was the
existence of distinct office space, separate accounting, and the lack of daily
oversight. While the dissent stresses that Appellant did not share office space
or telephone lines with PBS Coals, and emphasizes the subsidiary’s authority
to make major capital expenditures without formal approval, we are not
persuaded by the dissent’s approach of evaluating specific factors in isolation.
Indeed, when viewed in their proper context, none of the foregoing factors is
informative. More importantly, although the dissent concentrates on PBS
Coals’ formal authority to undertake major capital expenditures without
Appellant’s express approval, it overlooks the reality that said authority was
illusory. In actuality, PBS coals was undercapitalized and entirely reliant upon
Appellant’s machinations to maintain cash flow. Without the means to
undertake capital expenditures, PBS Coals’ formal authority to do so was
hollow.

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Charter maintains that its relationship with Cape is not such
that Cape's business transactions in Pennsylvania should be
significant in supporting the in personam jurisdiction of the
Pennsylvania courts over Charter. However, although Cape may
technically appear to be an independent business entity, the
record shows clearly the extent to which it comprises an operating
arm of Charter. . . . In the course of its purchase of such firm
control of Cape over several years, Cape announced the following
in a prospectus accompanying its offer to buy fifty percent of all
then outstanding shares:

It is Charter's purpose to make use of the wide experience
of Cape's management so that Cape can become the main
channel for the expansion of Charter's industrial activities
of this type; this could not be satisfactorily achieved unless
Charter acquired a considerably larger holding such as
would give Charter control of Cape.”

The record makes it clear that since it acquired such a
substantial ownership of Cape, Charter has been well represented
by its own executives placed on Cape's Board of Directors, and
has thereby participated in Cape's important business decisions.
This total involvement by Charter in Cape's affairs was clearly
significant to the lower court in its finding that through Cape,
Charter has engaged in business affairs in Pennsylvania to a
degree sufficient to assert in personam jurisdiction over Charter.
Id. at 328-29.

In contrast, in Enterprise, supra, the United States District Court for

the Western District of Pennsylvania applied the ten above-referenced factors

and concluded that a Pennsylvania subsidiary was not the instrumentality of

a parent company incorporated in Missouri. In sum, unlike this Court’s holding

in Barber, the district court determined that ownership, shared directors,

common marketing images, and a unified information technology system did

not implicate the parent company’s control over the Pennsylvania subsidiary’s

internal workings or daily operations. It reasoned, “A degree of control

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naturally flows from these aspects of the parent-subsidiary relationship, but

this incidental control does not rise to the level required to permit the exercise

of jurisdiction over the parent.” Id. at 323.

Importantly, however, as it relates to the eighth factor, the subsidiary’s

performance of business functions that the parent company would normally

conduct, the district court observed that it would have been improper to

impute jurisdiction in that case because “the subsidiary is not performing a

function that the parent would otherwise have had to perform itself.” Id. at

394 (quoting Action Mfg. Co., v. Simon Wrecking Co, 375 F.Supp.2d 411,

422 (E.D. Pa. 2005)). In this vein, the Enterprise Court differentiated the

relevant business relationships therein from the circumstances presented in

two other district court decisions, wherein the courts determined that a

Pennsylvania subsidiary was the alter-ego of its foreign parent corporation.

See, e.g., In re Chocolate Confectionary Antitrust Litig., 641 F.Supp.2d

367 (M.D. Pa. 2009) (“Chocolate Confectionary II”); and In re Latex

Gloves Prods. Liab. Litig., 2001 WL 964105 (E.D. Pa. 2001) (“Latex

Gloves”). For example, while the Enterprise Court recognized that the

parent corporation provided its wholly-owned subsidiary administrative

services for a fee, it attributed the heightened attention to the service-

centered nature of the car rental industry in which the parent and subsidiary

were engaged. Id.

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Similarly, the Enterprise Court deemed the diminished corporate

formalities between parent and subsidiary, i.e., shared directors, common

marketing images, and a unified information technology system, as

secondary. Again, the court distinguished the relevant facts before it from the

corporate structures in Latex Gloves, supra and Chocolate Confectionary

II, supra. Specifically, the district court stated that in those cases,

“numerous facts [tied] the parent to the subsidiary, such as common

ownership and the provision of administrative services.” Id. at 324. It found

“the failure to adhere to corporate boundaries” was “[a] key fact[or] in those

cases that resulted in the finding of alter-ego jurisdiction.” Id. In sum, the

Enterprise Court concluded,

In both [Latex Gloves] and Chocolate Confectionary II,
the failure to adhere to corporate boundaries was demonstrated
by the exercise of managerial power over the operations and
functions of one subsidiary or group of subsidiaries by employees
of a separate but affiliated corporation. [Latex Gloves], 2001 WL
964105, at *6; Chocolate Confectionary II, 641 F.Supp.2d at
401. In this case, there is no evidence of a failure to operate within
the corporate structures established among the Enterprise Rent–
A–Car companies. This court cannot exercise in personam
jurisdiction over [the parent company] in this case based upon the
alter-ego theory.

In re Enterprise, supra at 324-25.

Subsequently, in Hooper v. Safety-Kleen Sys., Inc., 2016 WL

7212586, at *7 (W.D. Pa. 2016), another trial court from the Western District

applied the same ten factors and determined that competent evidence of

record supported a finding that the subsidiary was the alter ego of the foreign

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parent corporation.9 In Hooper, Clean Harbors, Inc. (“CHI”), a Massachusetts

holding company, acquired Safety-Kleen Systems, Inc. (“Safety Kleen”), a

wholly-owned subsidiary that operated an industrial facility in Erie,

Pennsylvania. Including Safety Kleen, CHI owned 128 subsidiary companies

that it referred to collectively as the Clean Harbors family of companies. The

Clean Harbors companies had common officers, all of whom reported to Alan

McKim, CHI’s founder, President, Chairman and CEO. All of the subsidiaries

used the “Clean Harbors” trademark, which CHI owned. CHI utilized the board

of directors and officers of one of its subsidiaries, Clean Harbors Environmental

Services, Inc. (“CHESI”), to provide free administrative services to the

remaining Clean Harbors family of companies. Through CHESI, CHI provided

business guidelines, benefit plans, information technology, insurance, and

legal services. It also negotiated and provided the full panoply of human

____________________________________________

9 We do not rely upon the Hooper Court’s ultimate holding as persuasive
authority. We observe that the procedural posture of the instant case differs
from Hooper since that plaintiff had only to demonstrate a prima facie case
of personal jurisdiction at the preliminary stage in the proceedings that the
district court confronted the issue. Thus, while the Hooper Court declined to
dismiss the complaint for want of jurisdiction, the plaintiff retained the
ultimate burden of establishing personal jurisdiction by a preponderance of
the evidence before or during trial. See Hooper, supra at *3. Accordingly,
rather than attempting to draw value out of the trial court’s holding, we
discuss that case simply in order to highlight the similarities between the
corporate dynamics presented in it and the case at bar, and to illustrate how
that framework differed from the corporate structure in other district court
decisions that addressed alter ego as a basis to convey personal jurisdiction
over an out-of-state parent corporation.

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resource services and benefits for the entire Clean Harbors family of

companies.

Upon considering the foregoing corporate structure, the Hooper Court

concluded that the plaintiff established prima facie evidence of Pennsylvania’s

jurisdiction. The court noted that CHI owned all of the entities in the Clean

Harbor family of companies, that extensive overlap existed among the officers

and directors of the organizations, and that all of the officer’s report to CHI’s

CEO directly. In addition, the court found relevant the fact that all of the

companies used common marketing images, and that CHI promoted the Clean

Harbors family as one entity.

In distinguishing these facts from the relevant considerations that had

been determined to be insufficient to confer jurisdiction in Enterprise, the

District Court reasoned,

Clearly, the structure of the Clean Harbors corporate family
creates far more inter-dependence than the corporate structure
in Enterprise Rent-a-Car. In Enterprise, the subsidiaries paid
for the administrative services provided by the parent; issued
separate balance sheets and separate annual reports; and the
subsidiaries had authority over the employment practices that led
to the [underlying] claims in that case. By comparison, the Clean
Harbors companies act as branches of one functionally-integrated
organization, in which [the parent company] provides corporate
services without cost to the subsidiaries and there is one
consolidated financial statement and annual report for the whole
Clean Harbors family. The Court concludes that Plaintiff has
established a prima facie case sufficient to establish personal
jurisdiction over [the parent company].

Hooper, supra at *8.

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A review of the present case through the prism of the ten factors

outlined in Estate Of Albert Francis Simeone, supra and applied in

Sincavage, supra and Clark, supra, confirms that Appellant used PBS Coals

as its Pennsylvania instrumentality in the steel making process and provided

the undercapitalized subsidiary essential funding. When considered in

conjunction with the intricate corporate structure and oversight that we

describe below, the relevant facts demonstrate a level of involvement by

Appellant that exceeds mere macro-management. Namely, our review of the

relevant “alter ego” factors reveals a corporate scenario that aligns closely

with situations that we addressed in Barber and the district courts confronted

in Hooper, Latex Gloves, and Chocolate Confectionary II.

As we discuss, infra, Appellant neglected to adhere to corporate

boundaries that would distinguish PBS Coals as anything other than an arm of

Appellant’s mining operation. Like the framework the parent employed in the

foregoing cases, Appellant provided PBS Coals with extensive cost-free

services and maintained a level of operational oversight that is commensurate

with the attention given a functionally integrated division. In this vein,

Appellant promoted PBS Coals as a component of Severstal Resources, a

unified entity Appellant used to control its mining operations.

With these tenets in mind, we outline the facts that undermine the

Appellant’s contention that Mr. Williams’s injury did not arise from Appellant’s

connection with PBS Coals’ mining activities. In contesting Appellant’s

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preliminary objections to the personal injury complaint based upon, inter alia,

the lack of personal jurisdiction, Mr. Williams deposed two of PBS Coals’

former executives, Dmitry Goryachev and Lori Mason, Esquire, the company’s

Chief Financial Officer and the General Counsel, respectively. He also deposed

Vadim Larin, Appellant’s CEO and board member who also served as one of

PBS Coals’ board members during the relevant period.

Dmitry Goryachev testified that he worked for Appellant during 2009

and 2010 before he became the Chief Financial Officer (“CFO”) for PBS Coals

in 2011, approximately three years after Appellant acquired it in November

2008, and he remained in that position until Appellant sold the mining

operation to Corsa Coal in August 2014. N.T. Deposition of Dmitry Goryachev,

7/20/16, 7-10, 29, 34. He accepted the position and moved from Russia on

the advice of his manager at OAO Severstal. Id. at 9-10. In addition to his

role as the CFO, Mr. Goryachev managed the business’s finance, procurement,

and information technology (“IT”) departments. Id. at 11. He also served on

PBS Coals’ board of directors. Id. at 10-11, 36.

Mr. Goryachev explained that the informal unit of Appellant commonly

referred to as “Severstal Resources . . . managed PBS Coals.” Id. at 8.

Through that arm, Appellant maintained financial oversight of its subsidiary

but only required formal approval of expenditures exceeding ten million

dollars. Id. at 21, 35. Thus, smaller projects like the one on which Mr.

Williams worked typically did not require Appellant’s authorization. Id. at 31.

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Mr. Goryachev stated that he completed several trips per year to Appellant’s

headquarters in Moscow for budget presentations and finance conferences.

Id. at 38-39. In addition to attending monthly video conferences with

Appellant regarding PBS Coals’ expenses and performance, he also was

required to submit weekly performance sheets, monthly status reports, and a

proposed annual budget to the Moscow headquarters in a specific computer

format that Appellant dictated. Id. at 22-25, 34, 39. In fact, Appellant

controlled PBS Coals’ information technology from Moscow and, even though

PBS Coals managed the content of its website, Appellant hosted the site on its

Russian server. Id at 28, 86.

As it relates to the subsidiary’s capitalization during his tenure, Mr.

Goryachev testified that, acting through another subsidiary, Appellant issued

PBS Coals a line of credit in excess of $200 million soon after Appellant

acquired it. Id. at 12, 63. PBS Coals maintained positive cash flow between

2011 and 2013, but seemed to possess only sufficient capital to satisfy its

payment obligations to Appellant for the $200 million loan. Id. at 16-17.

Eventually, however, the repayments were suspended because PBS Coals was

unable to meet that obligation. Id. at 17-18. Thereafter, Appellant arranged

for PBS Coals to obtain financing from a different subsidiary in order for PBS

Coals to repay its initial obligation to Appellant. Id.at 59. As of August 2014,

when Appellant ultimately sold PBS Coals to Corsa Coal, the debt still had not

been repaid. Id. at 29-30. While Mr. Goryachev was unsure whether

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Appellant simply forgave the debt, he noted that it had not taken any legal

action to collect the debt prior to the sale. Id. at 30. Likewise, although Mr.

Goryachev testified that he was uncertain whether PBS Coals would have

maintained adequate capitalization without the money that it saved by

postponing the repayment, he conceded that, absent the forbearance, PBS

Coals would have had to alter its cash flow strategy to maintain a positive

cash flow. Id. at 56-57.

Attorney Mason’s deposition confirmed several aspects of her

colleague’s testimony. She acted as the General Counsel and Vice President

of PBS Coals between July 2010 and August 2014. N.T. Deposition of Lori

Mason, 9/9/15, at 30, 47. Significantly, Attorney Mason illuminated the

tortuous corporate structure of the holding companies, PBS Coals Canada,

Mincorp Acquisition, and Mincorp, Inc., and the two physical companies

located in Pennsylvania, PBS Coals and Rox Coals.10 Id. at 37, 46. Although

she represented PBS Coals and Rox Coals in her position as General Counsel,

Attorney Mason technically was employed by Mincorp Inc., which occupied a

higher rung in the corporate hierarchy than the mining concern. Her salary

was paid by yet another subsidiary, Norwich Services, which administered the

____________________________________________

10 Ms. Mason described the corporate chain of the North American subsidies
that connect Appellant to the Pennsylvania mining operation as follows:
Appellant owned three tiers of Canadian holding companies. The lowermost
Canadian subsidiary, PBS Coals Canada, owned Mincorp Acquisition, which, in
turn held Mincorp, Inc., which maintained PBS Coals and Rox Coal. Id. at 58-
59.

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executive payroll. Id. at 43-44. Attorney Mason confirmed that all of

Appellant’s subsidiaries utilized the identical Severstal trademark logo. Id. at

63. However, the various holding companies connected with the actual mining

operations at PBS Coals and Rox Coal lacked telephone numbers or email

addresses and, to her knowledge, did not have employees or a genuine

purpose in the mining or steel manufacturing operation. Id. at 38-39.

As General Counsel, Attorney Mason managed all of PBS Coals’ legal and

government affairs. Id. at 27. Her responsibilities extended to addressing

employment issues and reviewing the articles of incorporation and bylaws for

PBS Coals, Rox Coal and Mincorp, Inc., because the three entities shared

executives. Id. at 99-102, 108. She confirmed that PBS Coals was a wholly-

owned subsidiary of Appellant, and explained that, in her role as General

Counsel, she communicated with Appellant’s Moscow headquarters frequently,

sometimes daily. Id. at 30, 51. She also explained that Appellant engineered

the $200 million loan to PBS Coals through Lybica, a gold-mining subsidiary

located in the Netherlands. Id. at 31-32, 38-39, 57. She was unsure whether

Lybica was yet another holding company. Id. at 39.

Like Mr. Goryachev, Attorney Mason testified that PBS Coals paid for her

visits to Appellant’s Moscow headquarters. Id. at 23. Similarly, she stated

that PBS Coals’ CEO Lynn Shanks was required to attend annual meetings and

conventions with representatives from Appellant’s various subsidiaries once

or twice per year. Id. at 24, 26. Likewise, Appellant’s executives visited the

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Pennsylvania mining plant annually to review the subsidiary’s financial

statements and tour the facilities. Id. at 25.

Attorney Mason acknowledged that Appellant’s annual report stated that

it managed, inter alia, “a coking complex, PBS Coals in the USA” and used the

collective phrasing “we” when referencing the decision of PBS Coals to idle

inefficient mines. Id. at 76, 78. However, she maintained that Appellant was

not involved in daily supervision of the mining operation. Id. at 73, 81. To

the contrary, she indicated that major capital expenditures required the

approval of Mincorp, Inc.’s board of directors, whom she did not identify,

rather than Appellant’s, ostensibly because Mincorp Inc. was the immediate

owner of PBS Coals under Appellant’s elaborate organizational scheme. Id.

at 70-71. She identified at least one person, Vadim Larin, Appellant’s CEO

and the operational head of Appellant’s mining subsidiaries, who

simultaneously maintained positions on the board of directors for both

Appellant and PBS Coals. Id. at 70-71, 81-82.

According to Attorney Mason, the construction of a raw coal bin did not

require board approval because it did not exceed the ten-million-dollar

threshold. Id. at 103. However, PBS Coals did not convene any board

meetings during Mason’s four-year tenure as General Counsel. Id. at 104. If

PBS Coals’ board was required to act, she would draft a resolution and

transmit it to the individual members in Moscow and Pennsylvania for

approval. Id. at 104-06. Some resolutions were transmitted to Appellant’s

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Russian headquarters “to the extent that they were sent for signature by [its]

board members.” Id. at 110.

Mr. Larin, Appellant’s CEO and board member, referred to Appellant

interchangeably as Severstal and OAO Severstal throughout his testimony.

N.T. Deposition of Vadim Larin, Vol. I, 4/14/16, at 6. He confirmed that he

and another of Appellant’s executives, Sergey Starodubtsev, Appellant’s

Director of Raw Material Procurement, Sales, and Logistics, maintained seats

on PBS Coals’ four person board of directors while working for Appellant. 11

Id. at 6-7, 20, 27-28. In his view, Appellant and PBS Coals belonged to the

same family of companies. N.T. Deposition of Vadim Larin, Vol. II, 6/2/16, at

57. While he confirmed that PBS Coals received the large loan from Lybica,

he did not recall any of the specifics about the loan, terms, or interest rate, or

state whether the principal was repaid. N.T. Deposition of Vadim Larin, Vol.

I, 4/14/16, at 14. He did recall, however, that he discussed the credit line

with PBS Coals and was aware that the mining operation was using it to help

maintain a positive cash flow. N.T. Deposition of Vadim Larin, Vol.II, 6/2/16,

at 43.

____________________________________________

11 The witness later identified the board member as Sergey Kuznetsov, who
was a different Severstal executive during the relevant period. See N.T.
Deposition of Vadim Larin, Vol.II, 6/2/16, at 69-70. Regardless of this
inconsistency, the record bears out that Appellant’s executives retained at
least one-half of the seats allotted on PBS Coals’ board of directors.

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The foregoing evidence establishes that PBS Coals was the Pennsylvania

instrumentality of its Russian parent. The certified record reveals a

meandering corporate structure that routed Appellant’s connection to PBS

Coals through various international and domestic entities, some of which were

mere holding companies that lacked any corporate operations or business

activities. In this regard, Appellant employed all of PBS Coals’ executives

through an entirely different subsidiary and used yet another subsidiary to

administer the executive payroll. PBS Coals’ corporate finances and

production were managed by Severstal Resources, an opaque unit that

Appellant used to oversee natural resource assets. To add to the confusion

created by myriad subsidiaries under a unified corporate umbrella, the

subsidiaries utilized the identical “Severstal” trademark and logo, the manner

and depiction of which Appellant controlled.

Appellant and PBS Coals shared overlapping membership on their

respective boards of directors, and Appellant controlled supervision over the

subsidiary’s operations. While PBS Coals maintained corporate formalities

insofar as it maintained separate bank accounts and financial records, avoided

common officers, records, and active personnel, and developed clearly defined

functions, it shared two of its four directors with Appellant, including

Appellant’s CEO and its Director of Raw Material Procurement. The third

director, Mr. Goryachev, was employed by Appellant immediately before he

accepted a position as the subsidiary’s CFO. Moreover, PBS Coals did not

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convene any board meetings. If board action was required, PBS Coals

generated a resolution and transmitted it to the board members individually,

including the two executives at Appellant’s headquarters in Moscow, for

approval.

Other indicia of Appellant’s influence and oversight include the fact that

Appellant trained Mr. Goryachev, who accepted the position as PBS Coals’ CFO

at the suggestion of his Severstal manager. In addition, Appellant required

all of the executives of PBS Coals, including Mr. Goryachev, to travel to

Appellant’s Russian headquarters several times per year. Similarly,

Appellant’s executives visited the PBS Coals mining operation annually to

review business records and tour facilities. Appellant maintained daily contact

with the legal department of PBS Coals, as Appellant deemed necessary, and

mandated that other departments submit regular financial and performance

reports as often as once per week. Appellant not only designated the manner

in which PBS Coals submitted the periodic reports, it instructed the subsidiary

to utilize technology that Appellant controlled from Moscow.

PBS Coals amounted to little more than an instrument of Appellant to

source metallurgical coal for Appellant’s in-house consumption, and was

undercapitalized. It relied upon the $200 million loan that Appellant

orchestrated through another subsidiary in order to maintain positive cash

flow. In this vein, Mr. Goryachev testified that the capital that PBS Coals

managed to generate was used to repay the substantial loan. Despite the

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subsidiary’s diligent efforts, however, it was unable to satisfy its loan

obligations, and Appellant was required to eventually suspend repayment.

The certified record does not reveal whether PBS Coals repaid the loan before

Appellant cleaved it from the Severstal brand by selling it to a third party.

Several of the foregoing factors are consistent with a parent

corporation’s typical governance of a subsidiary which, when viewed

individually, do not impart personal jurisdiction over the parent company per

se. When severed from the remaining conditions, any one or two of these

facts typically would be insufficient to convey personal jurisdiction in

Pennsylvania. See, e.g., Clark, supra at 1067 (“The mere ownership of a

subsidiary, even one hundred percent ownership, is not sufficient to assert

that a subsidiary is the alter ego or agent of its parent corporation.”);

Botwinick, supra at 353-54 (neither similarity of names, total ownership of

the stock, nor commonality of leadership “will per se justify a court in piercing

the corporate veil if each corporation maintains a bona fide separate and

distinct corporate existence.”). However, this case does not present the

typical parent-subsidy relationship insofar as PBS Coals is not the archetypal

mining subsidiary engaged in a commercial enterprise. In the same manner

that this Court found Charter’s acquisition of Cape for the express purpose of

channeling its industrial activities through the subsidiary to be compelling

evidence of instrumentality in Barber, we highlight that Appellant acquired

PBS Coals to mine an essential element in its steel-making operation. In fact,

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the certified record bears out that PBS Coals was not an independently-viable

company under Appellant’s ownership. In actuality, PBS Coals was an

undercapitalized, wholly-owned subsidiary that was dependent upon

Appellant’s financial assistance, whether directly or indirectly. Although PBS

Coals observed corporate formalities as to separate accounts, records, and

personnel, it shared one-half of its board of directors with Appellant.

Moreover, considering that PBS Coals diverted its primary asset to Appellant,

the significance of those corporate formalities is diminished by the reality that

PBS Coals was little more than a source of coal for Appellant’s steel

manufacturing machine.

Correspondingly, in contrast to the diminished import of the corporate

formalities, the same reality which reveals PBS Coals’ function as the

instrumentality of its parent heightens the significance of the countervailing

factors that militate in favor of conveying personal jurisdiction. Stated plainly,

unlike the dynamics of the corporate relationship required in the service-based

industry that the district court addressed in Enterprise, PBS Coals is

performing an essential function in the steel making process that Appellant

would otherwise have to perform internally. Thus, notwithstanding the

complex corporate structure that Appellant used to purchase and govern PBS

Coals, we conclude that the facts associated with the international titan’s

utilization of the regional mining operation as an internal source of

metallurgical coal subjected it to personal jurisdiction in Pennsylvania.

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Finally, consistent with the requirements outlined in our long-arm

statute and Bristol-Myers Squibb, supra at 1781, that an affiliation exist

among the party, forum, and underlying controversy, we observe that the

facts of this case establish Appellant’s relationship with the Pennsylvania

litigation.12 Despite Appellant’s artful manipulation of multiple subsidiaries to

insulate it from responsibility for the subsidiary’s liabilities, Appellant failed to

maintain an arm’s length relationship with the internal mining operation.

Although the coal bin’s construction did not require Appellant’s formal

approval, that fact is not dispositive considering the patent cash flow problems

that PBS Coals endured after its acquisition by Appellant. It reasonably follows

that the $200 million loan to PBS Coals that Appellant engineered through its

other wholly-owned subsidiaries permitted PBS Coals to make capital

improvements at the facility, such as the raw coal bin that Mr. Williams was

constructing when the underlying injury occurred. In short, since Appellant

controlled the subsidiary’s purse strings and relied upon the Pennsylvania

mining operation for its in-house supply of the metallurgical coal that was vital

to its international steel making endeavor, its connection with Mr. Williams’s

injury was sufficient to extend jurisdiction over Appellant.

____________________________________________

12 Pursuant to § 5322(c), Scope of jurisdiction, “When jurisdiction over a
person is based solely upon [§ 5322], only a cause of action or other matter
arising from acts . . . forming the basis of jurisdiction under subsection (b),
may be asserted against him.

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In conclusion, consistent with U.S. Supreme Court in International

Shoe Co., and our High Court in Botwinick, and reviewing the evidence in

the light most favorable to the plaintiff, we conclude that the certified record

reveals that Appellant and PBS Coals were so intertwined that the

Pennsylvania mining operation was the mere instrumentality of its parent.

Under these circumstances, we find that the trial court did not abuse its

discretion in exercising personal jurisdiction over Appellant.

For all of the foregoing reasons, we affirm the trial court’s May 31, 2017

order overruling Appellant’s preliminary objections to Mr. Williams’s complaint

on the basis that the trial court lacked personal jurisdiction.

Judge Kunselman files a Concurring Memorandum.

Judge Olson files a Concurring/Dissenting Memorandum.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/3/2019

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