Opinion analysis: Justices reject California courts’ jurisdiction over claims by out-of-state litigants against out-of-state defendants
on Jun 19, 2017 at 2:56 pm
The court’s decision this morning in Bristol-Myers Squibb v. Superior Court of California could hardly surprise anybody who noticed the court’s near-unanimous ruling last month in BNSF Railway Co. v. Tyrrell, which reaffirmed the justices’ commitment to the limitations on state-court jurisdiction announced a few years ago in Daimler AG v. Bauman. The issues in these cases are so closely related that it would have been remarkable if the court had not reversed the decision of the California Supreme Court.
Today’s decision involves litigation by several hundred individuals from 33 states (along with 86 California residents) seeking compensation for injuries associated with the Bristol-Myers drug Plavix. Although Bristol-Myers has extensive contacts with California, little about the claims of these particular plaintiffs involves California: Bristol-Myers did not develop or manufacture the drug in California and there is no reason to think that marketing, promotion or distribution in California was involved in the injuries of the out-of-state plaintiffs. The only way in which the nonresidents’ claims relate to California is that the marketing and promotion of the pharmaceutical was conducted on a nationwide basis: The same advertising and distribution arrangements that reached the out-of-state plaintiffs also reached the in-state plaintiffs (who plainly can sue in California courts).
Traditionally, the court has considered cases of this type under a two-part framework. Under the first part of the framework, the court has permitted state courts to assert “general” jurisdiction over all claims against companies that are so pervasively active in a particular state as to make it seem reasonable to hold them accountable in that state for all of their behavior, wherever it occurs. Under the second part of the framework, the court has permitted state courts to assert “specific” jurisdiction over defendants only if the claims are related to the defendants’ contacts with the particular state. The 2014 decision in Daimler AG was important because it held that general jurisdiction for the most part is limited to a corporation’s home state. All agree that California cannot assert general jurisdiction over Bristol-Myers under Daimler AG.
In this case, the California Supreme Court held that because Bristol-Myers has such substantial contacts with California, it was appropriate for the California courts to exercise specific jurisdiction over the nonresidents’ claims against Bristol-Myers even though the relation between the claims of the nonresidents and the activities of Bristol-Myers in California was elusive. The briefing and argument suggested that several of the justices regarded this as an effort to circumvent the limits Daimler AG imposed on state-court jurisdiction. The opinion of Justice Samuel Alito for eight of the nine justices (all but Justice Sonia Sotomayor) suggests that this concern dominated the court’s resolution of the matter.
Justice Alito’s opinion explains that the approach of the California court “is difficult to square with our precedents,” in large part because it “resembles a loose and spurious form of general jurisdiction.” To the Supreme Court, a simple recitation of the salient facts demonstrates the failure of the California court to “identif[y] any adequate link between the State and the nonresidents’ claims”:
[T]he nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California. The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the non-residents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims.
The opinion does not ignore the practical consequences of the limitation on state-court jurisdiction, but the justices seem persuaded that their rejection of the California courts’ authority “will not result in the parade of horribles that [the nonresident plaintiffs] conjure up.” To illustrate the point, the opinion closes by offering three specific ways in which the litigation could proceed notwithstanding this decision:
Our decision does not prevent the California and other out-of-state plaintiffs from joining together in a consolidated action in the States that have general jurisdiction over BMS. …. Alternatively, the plaintiffs who are residents of a particular State—for example, the 92 plaintiffs from Texas and the 71 from Ohio—could probably sue together in their home States. In addition, since our decision concerns the due process limits on the exercise of specific jurisdiction by a State, we leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court.
There is every reason to think that the events of this term reflect a consolidation of perspective. Justice Sonia Sotomayor was the lone dissenter in this case and in Tyrrell. Also, because this case was argued in April after the confirmation of Justice Neil Gorsuch, we can see from his joinder here that he will not be leading a charge to reshape this area of the law. In sum, plaintiffs’ attorneys seeking a forum for mass actions probably need to accept the reality that the defendant’s home jurisdiction often will be the only state-court forum for a consolidated nationwide suit.
[Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel to the respondents in this case. The author of this post, however, is not affiliated with the firm.]