Drug Manufacturer Petitions SCOTUS on Specific Jurisdiction Divide

Bristol-Myers petitioned the United States Supreme Court last month to review a California Supreme Court decision finding specific jurisdiction over the company where there was no causal link between its forum contacts and Plaintiffs’ claims.  Bristol-Myers emphasized that this case is an “ideal vehicle” for the Supreme Court to clarify the requirements for specific jurisdiction and to “restore predictability” for corporations as to when and where they may be haled into court.

Personal jurisdiction may be either general or specific. General jurisdiction refers to the power of a state to adjudicate any cause of action involving a particular defendant regardless of where the cause of action arose.  General jurisdiction exists based on contacts with no relationship to the injury that gave rise to the suit.  Specific jurisdiction, on the other hand, refers to jurisdiction that exists only when the defendant’s suit-related conduct creates a substantial connection with the forum.

The California Supreme Court opinion at issue was decided this past August, where the Court held in a 4-3 decision that Bristol-Myers could be sued in California on Plaintiffs’ product defect claims relating to the prescription drug Plavix.  The California Supreme Court concluded that Bristol-Meyers was not subject to general jurisdiction in California, in light of the Supreme Court’s decision in Daimler, which essentially limited a finding of general jurisdiction to where the company is incorporated or headquartered.  The majority, however, did find specific jurisdiction despite the fact that the drug was not manufactured or designed in California, the marketing, packaging and regulatory materials were not prepared in California, and the drug was not prescribed, dispensed or ingested by Plaintiffs in California.

Specifically, the California Supreme Court applied a “sliding scale approach” to find personal jurisdiction in California, relying on the fact that the drug company marketed and sold the same drug to other people in the state.  This sliding scale views the “intensity of the defendant’s forum contacts and the connection of the plaintiff’s claim to those contacts as inversely related.”  Thus, “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.”  Notably, under this approach, the claim need not arise directly from defendant’s contacts or be related to the contact to warrant specific jurisdiction.  As argued in Bristol-Myers’ petition, “[t]hat is not how specific jurisdiction works.”  Indeed, the Supreme Court has emphasized on numerous occasions that where there is no causal relationship between the defendant’s forum contacts and the plaintiff’s suit, specific jurisdiction cannot exist.

The company’s petition emphasized the reasons why the Supreme Court should take on this critical issue.  First, the company explains the split among the courts on the relatedness standard required for specific jurisdiction.  Bristol-Myers stressed that this recent California Supreme Court decision exacerbates this conflict over when a plaintiff’s suit is sufficiently connected to the defendant’s contacts in the forum state to warrant specific jurisdiction.  The courts’ confusion about relatedness stems from the Supreme Court’s decision in Helicopteros Nacionales de Colombia, S.A. v. Hull, which repeated the “arising out of or related to” requirement, but never expressly answered what kind of ties are necessary.  The petition sets forth the “three camps” that have emerged as a result.

The first group is what the petition calls the “but-for” group, which includes the Fourth, Ninth, and Tenth Circuits, and the highest state courts of Arizona, Massachusetts, and Washington.  These courts find specific jurisdiction only if the defendant’s forum state conduct is a “but for” cause of the plaintiff’s injury.  The second group has applied a proximate cause or foreseeability standard, which demands something more than “but for” causation.  This includes the First and the Sixth Circuits, which have concluded that plaintiff’s injuries must be “proximately caused” by defendant’s forum contacts, and the Third, Seventh, and Eleventh Circuits, which also require a “closer and more direct causal connection than that provided by the but-for test.”  Indeed, in all of these courts, specific jurisdiction does not exist unless the plaintiff would not have been injured had there been no contacts between the defendant and the forum state.  The third group, however, including the California Supreme Court, the Federal Circuit, the highest court of Texas, and the District of Columbia, has concluded that the relatedness requirement does not demand any causal connection between the defendant’s contacts and plaintiff’s injury.  Instead, those courts have held that it is sufficient if there is some general “relationship” or “connection” between the two and that such a nexus can be found even if the plaintiff’s injury would have occurred had the defendant never made contact with the forum.

The petition further argues that the California Supreme Court’s sliding scale approach directly conflicts with the Supreme Court’s prior decisions.  Indeed, those decisions have made clear that specific jurisdiction is only warranted if defendant’s activity gave rise to the episode in suit.  Furthermore, the petition emphasizes that the California Supreme Court’s decision “guts Daimler” by conflating general and specific jurisdiction.  Bristol-Myers explains that the majority essentially re-imposed the old pre-Daimler “doing business” test for general jurisdiction by calling it specific jurisdiction.  The company urges that Supreme Court review would stop courts from avoiding Daimler’s requirements on general jurisdiction through a specific jurisdiction label.  Moreover, the petition emphasizes the importance of this issue, especially for corporate defendants and the predictability that the Due Process Clause is intended to provide them.

The standard for specific jurisdiction is an extremely important question for corporate defendants conducting nationwide business.  We will continue to monitor this case and provide an update as to whether the Supreme Court opts to take on this critical issue.