SCOTUS Gets Specific About Personal Jurisdiction

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Just in time for the July bar exam, the Supreme Court of the United States issued a decision that substantially impacts specific personal jurisdiction—a fundamental concept that all law students encounter in their first-year Civil Procedure course.[1]  See Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., 582 U.S. ___ (2017) (No. 16–466, June 19, 2017).  For practitioners, phrases like minimum contacts, International Shoe, and purposeful availment certainly ring a bell, but few among us would survive Socratic inquiry without the benefit of additional research.  Aside from rendering everyone’s hazy recollections of these principles essentially worthless, the Court’s June 19 decision might upend the current state of play in nationwide mass tort litigation.

Personal Jurisdiction 101

Without getting too far into the weeds, the Due Process Clause of the Fourteenth Amendment limits a state court’s ability to exercise personal jurisdiction over a nonresident defendant.  There are two types of personal jurisdiction:  (i) general and (ii) specific.

A court with general, or all-purpose, jurisdiction may hear any claim against that defendant, even if all the incidents underlying the claim occurred in a different state.  For individuals, the “paradigm forum” is the state of domicile.  For corporations, it is where they are “at home”—generally, the state of incorporation or principal place of business.

Specific, or case-linked, jurisdiction is “very different.”  Id. at 5.  For a state court to exercise specific jurisdiction, the suit must arise out of or relate to the defendant’s contacts with the forum.  See id.  In other words, there must be an affiliation between the forum and the underlying controversy, principally, an activity or occurrence that takes place in the forum state and is therefore subject to the state’s regulation.  See id. at 5–6.  When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the state.  See id. at 7.

The Decision on Appeal

A group of plaintiffs—consisting of 86 California residents and 592 residents from 33 other states—filed eight separate complaints in California Superior Court, alleging that Plavix, a drug manufactured by Bristol-Myers Squibb, had damaged their health.  See id. at 2.  All of the complaints asserted claims under California law, including product liability, negligent misrepresentation, and misleading advertising.  See id.  None of the nonresident plaintiffs alleged that they obtained the drug from California physicians or any other California source; nor did they claim that they were treated for their injuries in California.  See id.

Bristol-Myers is incorporated in Delaware and headquartered in New York.  See id. at 1.  It did not develop Plavix in California, did not manufacture, label, package, or work on the product’s regulatory approval in California.  See id. at 2.  Rather, it engaged in all of those activities in either New York or New Jersey.  See id.

Using a sliding-scale approach to specific personal jurisdiction, the California Supreme Court affirmed a denial of a motion to quash service of summons on the nonresidents’ claims.  See id. at 2–3.  The California court concluded that Bristol-Myers’ extensive contacts with California permitted the exercise of specific jurisdiction based on a “less direct connection” than might otherwise be required.  See id. at 3.  This—in SCOTUS’ words—“attenuated requirement” was met because the nonresident plaintiffs’ claims were similar in several ways to those of the California residents, as to which specific jurisdiction was not contested.  Id.

The Supreme Court’s Ruling

In a very cut-and-dry manner, the Court invoked “settled principles” of specific personal jurisdiction to reverse the California Supreme Court’s decision.  See id. at 7.  According to the Court, its precedent provided “no support” for California’s belief that the strength of the requisite connection between the forum and the specific claims at issue could be relaxed if the defendant had extensive forum contacts that were unrelated to those claims.  Id.  Such an approach, in the Court’s view, not only resembled a “loose and spurious” form of general jurisdiction, but was “danger[ous].”  Id. at 7–8.

Simply put, a corporation’s continuous activity within a state is not enough to exercise specific jurisdiction over suits unrelated to that activity.  See id. at 7–8.  Therefore, the mere fact that some plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—could not allow all plaintiffs to sue Bristol-Myers in California.  See id. at 8.  Rather, there must be “a connection between the forum and the specific claims at issue.”  Id.

Looking to the Future

In her dissent, Justice Sotomayor repeatedly expressed her fear that the consequences of the Court’s decision would be “substantial.”  See id. at 1, 9–10 (Sotomayor, J., dissenting).  Specifically, plaintiffs would no longer be able to “join their claims together and sue a defendant in a State in which only some of them have been injured.”  Id. at 10 (Sotomayor, J., dissenting).

That is certainly true for the 592 non-Californians affected by the Court’s decision.  But, as the majority noted, Bristol-Myers would not prevent all 678 plaintiffs from joining together in a consolidated action where the defendant is subject to general jurisdiction—i.e., Delaware or New York.  See id. at 12.  That alternative, however, seemed unsatisfactory to Justice Sotomayor.  In her view, the Court’s ruling would force injured plaintiffs to “bear the burden of bringing suit in what will often be far flung jurisdictions.”  Id. at 10 (Sotomayor, J., dissenting).

But didn’t the non-California plaintiffs willingly assume that burden here?  The plaintiffs chose to sue in a state where they did not live, receive medical treatment, or ingest the drug.  Seemingly, the venue was not so far flung that it deterred the nonresident plaintiffs from filing in California.

Perhaps to assuage Justice Sotomayor’s concerns, the majority also suggested that plaintiffs might band together in their home state, specifically mentioning the 92 plaintiffs from Texas and 71 from Ohio.  See id. at 12.  Such procedural posturing might result in several, simultaneous intrastate consolidated proceedings.

Takeaways

Bristol-Myers marks the end of an era.  As state courts can no longer exercise specific personal jurisdiction to entertain nonresidents’ claims, cases between a Texas plaintiff and a Delaware defendant, generally, will not be funneled into a forum with no connection to the alleged harm, Missouri, for example.  Instead, if the plaintiffs want to prosecute their claims as a nationwide class in state court, they must go to where the defendant is subject to general jurisdiction.  As a result, Delaware, where many companies are incorporated, may see an uptick in nationwide class actions.

Alternatively, should plaintiffs decide to remain close to home, they may seek to join other similarly situated individuals to form a statewide class.  In a case like Bristol-Myers, this might result in 33 separate consolidated state court actions across the country—a headache for any General Counsel.  Assuming the plaintiffs’ are domiciled where the defendant lacks citizenship, the defendant might then choose to remove each action to federal court.  Once removed, any party could ask the Judicial Panel for Multidistrict Litigation to consolidate those actions for pretrial proceedings under 28 U.S.C. § 1407.  Doing so would reduce the parties’ expenses and avoid inconsistent factual and legal determinations on key issues.

In effect, plaintiffs may yet be able to unite on a nationwide basis for certain purposes—namely, discovery and settlement negotiations.  The procedural path will just look a bit different.  Most notably, the complaint must be filed, and any resulting trial will occur, in one of two places:  (i) where the defendant is at home, or (ii) where the defendant’s conduct allegedly injured the plaintiff.

We’ll keep an eye on this developing situation here at the Monitor.

[1]          Yes, Civil Procedure is now tested on the Multistate Bar Exam.