By Matthew Santoni

Law360 (July 9, 2021, 4:18 PM EDT) -- Pennsylvania's appellate courts could breathe new life — or sap the last hopes — for hundreds of businesses suing their insurers for COVID-19-related losses with rulings in the latter half of 2021, and they could decide whether out-of-state companies can be hauled into Pennsylvania courts just by virtue of registering here, attorneys tell Law360.

With the year more than halfway over, some of the biggest cases still pending could determine if state law favors businesses in disputes over pandemic insurance coverage, or if a few rulings against insurers were just flukes in how they defined whether the pandemic caused a "physical loss or damage" to establishments across the state.

The state's highest court could also decide if merely registering to do business in the Commonwealth is enough to give local courts jurisdiction over an out-of-state corporation, whether pharmacies and drug suppliers can share liability for opioid abuse, or the scope of the claims plaintiffs can pursue against medical device makers.

Here are some of the major cases that could come up in the rest of 2021:

Mallory v. Norfolk Southern Railway Co.

A former railroad worker's claims under the Federal Employers' Liability Act could offer the Supreme Court of Pennsylvania an opportunity to address a 2018 ruling that suddenly meant almost any company that touched the Keystone State could be sued there.

Robert Mallory sued Norfolk Southern in the Philadelphia Court of Common Pleas in 2017, claiming he developed colon cancer from exposure to chemicals during his work for the railroad in Virginia and Ohio. Neither party had a clear connection to Pennsylvania, but Mallory argued that under Pennsylvania's "long-arm statute" giving the state jurisdiction over out-of-state companies, any company registered to do business in the state could be hauled into state courts.

The trial judge disagreed and ruled that section of the law was unconstitutional in February 2018. But in June 2018, the Superior Court found the opposite in a separate case, Webb-Benjamin LLC v. International Rug Group LLC , and said that merely registering to do business in the state — as all out-of-state corporations are required to do if they want to sell their goods in Pennsylvania — was enough for a company to consent to Pennsylvania courts' jurisdiction.

Mallory's appeal had been stayed to await the full Superior Court's decision in a similar suit, Murray v. American LaFrance , but the court ruled that the jurisdictional arguments in Murray had been waived.

When Mallory's case resumed, the Superior Court immediately punted it to the Supreme Court, ruling in October 2020 that the state's highest court held exclusive jurisdiction over appeals from the Court of Common Pleas that questioned the constitutionality of state law.

"Mallory is huge … because of its impact on the state's general jurisdiction," said John Hare, chair of the appellate group at Marshall Dennehey Warner Coleman & Goggin PC. "It's probably the most important case on the Supreme Court's very busy docket."

Dockets showed the Supreme Court had agreed in April to hear oral arguments on the case, but it did not yet show a date. The court has not yet released the cases it will hear at its three remaining sessions for 2021: September in Harrisburg, October in Pittsburgh and December in Philadelphia.

The case is Mallory v. Norfolk Southern Railway Co., case number 3 EAP 2021, in the Supreme Court of Pennsylvania.

The Scranton Club v. Tuscarora Wayne Mutual Group

A number of lawsuits questioning whether insurers owe businesses coverage for income lost during the pandemic and its associated government closure orders are working their way up Pennsylvania's appellate ladder. Most state and federal courts have ruled that the pandemic wasn't covered because of "virus exceptions" written into insurance policies or because the pandemic didn't have a physical impact on properties, but there have been a few exceptions, and one challenge appears ready to be heard by the Superior Court of Pennsylvania.

That case, The Scranton Club v. Tuscarora Wayne Mutual Group et al. , was dismissed by Lackawanna County Court of Common Pleas Judge Terrence Nealon on the grounds that the Scranton social club had not suffered any physical loss or damage to its premises from the pandemic. The business appealed to the Superior Court, and the last briefs are due in early August.

While similar to rulings in several federal cases now being consolidated for appeals in the Third Circuit, the Scranton Club case will likely be the first where a state appellate court could reach the question of whether there had to be physical damage to sustain a claim, or if the loss of use of a property was enough, said John Ellison, a partner at Reed Smith's insurance practice and attorney for amicus United Policy Holders in the Scranton case.

"Insurance has historically been an issue ceded to the states for decisions. We really have 50 different sets of insurance laws in the U.S. because each state gets to set its own rules," Ellison told Law360. "There really have never been any claims like this in any state, let alone at the federal court level … The 'physical loss' question is the threshold issue, and the decision the Superior Court is going to make is going to have applicability to every case."

Ellison contrasted Judge Nealon's ruling with two others from Allegheny County Court of Common Pleas Judge Christine Ward, one of a handful to rule in the businesses' favor in cases involving a dentist's office and a Pittsburgh tavern. Judge Ward had interpreted "physical loss" as being separate from physical damage, so the loss of use of a business' premises during a closure order could be enough to trigger coverage even if the business didn't suffer physical damage.

The case is The Scranton Club v. Tuscarora Wayne Mutual Group et al., case number 238 MDA 2021, in the Superior Court of Pennsylvania.

Ebert v. C.R. Bard Inc.

Federal courts have had difficulty saying for certain whether Pennsylvania law bars negligent design and strict liability claims against the makers of medical devices, so the Third Circuit in June asked the state Supreme Court to weigh in on a lawsuit involving an allegedly defective vein filter.

Melissa Ebert had joined a multidistrict litigation after a portion of the C.R. Bard vein filter she received in 2008 broke off, but when her case was sent back to the Eastern District of Pennsylvania, the court granted summary judgment in Bard's favor.

On appeal, the Third Circuit said Ebert's claims for strict liability and negligent design both "hinge on unresolved questions of Pennsylvania law with significant ramifications for public policy in the Commonwealth."

For the negligent design claim, it was unclear if Ebert had to make a case that the filter was "too dangerous to be used by anyone," similar to the standard the state Supreme Court set for drugs in Lance v. Wyeth in 2014, or if she could advance the theory that there were safer alternative designs for the filter, the Third Circuit panel said.

The district judge had thrown out Ebert's strict liability claim by citing the state Supreme Court's adoption of a provision of the Restatement (Second) of Torts as part of its 1996 decision in Hahn v. Richter, barring such causes of action against drugmakers. But the Third Circuit noted that Pennsylvania's justices had contradicted that in 2014's Tincher v. Omega Flex ruling, which said only the state legislature could make such "categorical exemptions" from liability, and said "strict liability may be available with respect to any product."

The Third Circuit said the contradicting rulings left the federal courts with three possible interpretations: medical devices were categorically immune from strict liability under Hahn, they were categorically subject to it under Tincher, or they could be weighed on a case-by-case basis under the Restatement of Torts.

Charles "Chip" Becker of Kline & Specter, who wrote an amicus brief to the Third Circuit in the Ebert case, said the same issues had come up in many of the pelvic mesh cases that his firm had pursued, but those cases had settled or otherwise dissolved before the appellate courts could rule on strict liability or negligent design.

"We were within months, if not weeks of getting clarity from the Superior Court," he told Law360. "These are foundational issues of Pennsylvania tort law … whether there are special rules in medical device cases, or whether the general rules of Pennsylvania litigation apply."

Unable to predict how the state Supreme Court would rule on such questions, the Third Circuit asked Pennsylvania's justices to answer them before it could resume work on Ebert's appeal.

The case is Ebert v. C.R. Bard Inc. et al., case number 20-2139, before the U.S. Court of Appeals for the Third Circuit.

Albert v. Sheeley's Drug Store

A family's lawsuit against the pharmacy that let their son pick up a fentanyl patch he fatally overdosed on could affect whether Pennsylvania courts are willing to apportion blame in cases with questionable activities on both sides — and could more generally show how willing the state's justices are willing to allow common-law defenses like the "in pari delicto" doctrine, said Marshall Dennehey's Hare.

Cody Albert and Zachary Ross had been opioid addicts who picked up a prescription fentanyl patch intended for Ross' mother at Scranton's Sheeley's Drug Store, allegedly in spite of Ross' family warning the pharmacy that Zachary was an addict and shouldn't be given any drugs. Albert and Ross had discussed ways to get drugs, and Albert had driven Ross to the pharmacy to pick up his mother's prescription. Albert later cut up the patch and ate a piece, causing a fatal overdose.

His family's lawsuit against Sheeley's was dismissed on summary judgment under the in pari delicto doctrine, or the idea that Albert's illegal behavior made him equally or more responsible for the harm than the pharmacy.

The Superior Court upheld that ruling, but during arguments in May the Supreme Court justices questioned whether Albert had to be part of the "transaction" with the pharmacy for the doctrine to apply, or if his illegal possession and abuse of the prescription was enough to shield the pharmacy from sharing liability.

Hare said the justices in Albert would have to weigh the proper scope of the in pari delicto doctrine and whether comparative negligence could apply to the pharmacy. It could also represent the start of a trend, he said, if the court narrows the applicability of a common-law defense as it did with the "sudden emergency" doctrine late in 2020 in Graham v. Check .

That doctrine, which could formerly absolve a party of responsibility if they could blame a crash on a sudden, unforeseen hazard, was rejected by the justices as a defense.

"[Albert] is a very, very important case involving a common-law defense and whether it continues to be viable in Pennsylvania," Hare said.

The case is Albert v. Sheeley's Drug Store Inc. et al., case number 5 MAP 2021, in the Supreme Court of Pennsylvania.

--Additional reporting by Matt Fair. Editing by Amy Rowe.

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