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In This Case, The First Filed Case Was Last

In 2014, Kimberly-Clark Corporation, a Delaware corporation, spun off Halyard Health, Inc., a Delaware corporation, pursuant to a distribution agreement.  The distribution agreement required Halyard to indemnify Kimberly-Clark against certain claims.  After a $350 million in punitive damages (later reduced to about $19 million) was awarded against Kimberly-Clark, Halyard filed an action in California seeking a declaration that Halyard was not required to pay the punitive damage award.  The next day, Kimberly-Clark filed an enantiomeric complaint in the Delaware Court of Chancery.  After the Delaware Court of Chancery stayed Kimberly-Clark's suit, Los Angeles Superior court Judge Ann I. Jones quashed Halyard's complaint.  The Second District Court of Appeal in a 2-1 opinion affirmed Judge Jones' ruling.  Halyard Health, Inc. v. Kimberly-Clark Corp., 2019 Cal. App. LEXIS 1307.

The Court of Appeal's opinion does not address whether an agreement to indemnify can be enforced with respect to punitive damages.  Nor does the opinion determine whether California or Delaware law applies to the indemnification provision itself.  Rather, the case concerns whether California has personal jurisdiction over Kimberly-Clark.

As discussed in other posts, personal jurisdiction may be either general or specific. Because Halyard conceded that the California courts do not have general jurisdiction over Kimberly-Clark, the Court of Appeal's analysis focused on whether specific jurisdiction exists.  The majority found the answer to be "no".  Consequently, it appears that the later filed Delaware action may proceed even though it was filed after the California action.

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