US Supreme Court strikes death blow against forum shopping in mass actions by limiting personal jurisdiction

Lady Justice

Litigation Alert

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On Monday, the US Supreme Court continued its recent trend of contracting personal jurisdiction in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, No. 16-466, 582 U.S. ___ (2017) by holding that a California state court lacked jurisdiction over non-resident plaintiffs' product liability claims where the non-resident plaintiffs' exposure to the product did not occur in California. The Court held that the non-resident plaintiffs' claims were not sufficiently connected to the forum state for specific personal jurisdiction.

The Court's decision in Bristol-Myers comes on the heels of its recent decision in BNSF Railway Co. v. Tyrrell, 581 U.S. __ (2017), which held that the Court's general jurisdiction decision in Daimler AG v. Bauman, 571 U.S. __ (2014) was based upon an interpretation of the Fourteenth Amendment of the US Constitution and, as such, was not limited only to certain types of claims. BNSF reaffirmed the Court's recent trend of limiting personal jurisdiction, which the Court continued to follow in Bristol-Myers.

The respondents in Bristol-Myers had purchased the blood thinning drug Plavix, manufactured by the petitioner Bristol-Myers Squibb Company (BMS). The respondents, none of whom were California residents, brought product liability suits alleging harm from taking Plavix in California state court, where other lawsuits against BMS were being filed by residents of California. The respondents alleged no connection with California, except for bringing suit there.

BMS, a Delaware corporation with its headquarters in New York, had a national advertising campaign and distribution network that advertised and sold Plavix all over the country. BMS also has research and development facilities in California. BMS filed motions to quash service of summonses for lack of personal jurisdiction.

The California Supreme Court, using a "sliding scale approach to specific jurisdiction," which permits specific jurisdiction with more attenuated connection to the forum state if the defendant has "more wide ranging" forum contacts, concluded that the California Superior Court could exercise specific personal jurisdiction over BMS to adjudicate the respondents' claims.

In an opinion by Justice Samuel Alito, the Supreme Court reversed the California Supreme Court's decision. The Court began by contrasting the doctrines of general and specific jurisdiction, explaining that "[s]pecific jurisdiction is very different." Specific jurisdiction requires there to be "an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State." That specific jurisdiction framework, the Court said, is a "settled principle[]." The Court then rejected the California Supreme Court's "sliding scale approach," which it explained had no support in US Supreme Court precedent and was a "spurious form of general jurisdiction." The Court, relying upon Walden v. Fiore, 571 U.S. ___ (2014), reasoned that it was irrelevant that other plaintiffs were prescribed, obtained, and ingested Plavix in California and that such plaintiffs had the same claims and injuries as the respondents because "all the conduct giving rise to the nonresidents’ claims occurred elsewhere. It follows that the California courts cannot claim specific jurisdiction."

The Court also held the fact that BMS contracted with a forum defendant (here, a distributor) for services related to Plavix, alone, was an insufficient basis for specific jurisdiction. The Court left open the possibility, however, that the result might have been different if BMS and the forum defendant, McKesson, had engaged in "relevant acts together" in California, if BMS were "derivatively liable for McKesson's conduct in California," or if the plaintiffs could demonstrate evidence that McKesson supplied Plavix to their pharmacies.

Justice Sonia Sotomayor dissented, as she has repeatedly in the Court's recent personal jurisdiction cases. Justice Sotomayor called the majority's decision "its first step toward" contracting specific personal jurisdiction, just as the Court had contracted general jurisdiction in Daimler AG v. Bauman, 571 U.S. __ (2014). Justice Sotomayor focused her analysis on questions the majority did not address – namely, whether the minimum contacts test from International Shoe was satisfied such that jurisdiction did "not offend traditional notions of fair play and substantial justice." She concluded that BMS's conduct satisfied that test and, in fact, noted that BMS did not really dispute that conclusion. Justice Sotomayor criticized the majority for focusing its analysis on federalism rather than fairness and indicated her view that the opinion will be the death knell for mass actions where plaintiffs wish to sue for individual injuries arising out of a nationwide course of conduct: "The effect of the Court's opinion today is to eliminate nationwide mass actions in any State other than those in which a defendant is essentially at home."

The Court's opinion continues the recent trend of limiting personal jurisdiction. In recent years, the Court has reshaped the confines of the Fourteenth Amendment with respect to personal jurisdiction.

The Court left open significant questions that are certain to be the subject of future litigation. Most notably, the Court did not resolve the circuit split as to the degree of relatedness required for specific jurisdiction. The Court also left open the possibility that a plaintiff could secure personal jurisdiction over a non-resident corporation by establishing that a manufacturer engaged in acts with a distributor within a state. Similarly, the Court left open the possibility that a manufacturer could be subject to jurisdiction within a state if it was derivatively liable for its distributor’s forum-related conduct.

The Court further noted that the opinion was limited in application to the exercise of specific jurisdiction by a state court, "leav[ing] open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court."

A final question raised, and not resolved, by the opinion involves specific jurisdiction in a nationwide class action, through which a plaintiff injured in the forum state purports to represent a class of plaintiffs, many of whom were injured in another state.

Find out more about the implications of this decision for your business by contacting any of the authors.