Grant J. Esposito, Brian R. Matsui, and Bryan J. Leitch
Appellate + Supreme Court, Commercial Litigation, Litigation, Product Liability and Counseling, and Trials
The Supreme Court strikes again. In Bristol-Myers Squibb Company v. Superior Court of California, the Supreme Court addressed the critical question of specific personal jurisdiction: Whether a plaintiff’s claims can be said to “arise out of or relate to” a defendant’s forum activities if there is no causal connection between the plaintiff’s claims and the defendant’s activities in the forum state. In an 8-1 decision authored by Justice Alito, the Supreme Court of the United States said no. Reversing the California Supreme Court’s “sliding scale” approach, the Supreme Court held that specific jurisdiction required an “adequate link” between the nonresident plaintiff’s claims and the forum state of California. Bristol-Myers Squibb Co. v. Superior Court of Cal., No. 16-466 (U.S. June 19, 2017) (slip op., at 8) (emphasis added). In so holding, the Court has effectively established, if not reaffirmed what was already implicitly required, a causation requirement between a plaintiff’s claims and the defendant’s in-state conduct.
Broadly speaking, personal jurisdiction involves the scope of a court’s constitutional authority over an out-of-state defendant under the Due Process Clauses of the Constitution’s Fifth and Fourteenth Amendments. Personal jurisdiction comes in two forms: general and specific. A court having general or “all-purpose” jurisdiction over an out-of-state defendant can “hear any and all claims against” that defendant, but only if the defendant’s affiliations with the forum state “are so constant and pervasive as to render it essentially at home” there. Daimler AG v. Bauman, 134 S. Ct. 746, 751 (2014) (internal quotation marks and brackets omitted). In practice, this means a corporate defendant will be subject to general personal jurisdiction only in its state of incorporation and/or principal place of business. Id.
But specific personal jurisdiction involves a different analysis. Courts may exercise specific or “case-linked” jurisdiction over an out-of-state defendant only when the claims at issue “arise out of or relate to” the “defendant’s suit-related conduct,” and only when such conduct creates “a substantial connection with the forum state.” Walden v. Fiore, 134 S. Ct. 1115, 1121-22 & n.6 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011); J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873, 881 (2011) (plurality opinion). As the Court has explained, the “substantial connection” element, or “minimum contacts” inquiry, asks whether the defendant has intentionally acted within the forum state to such a degree that it would have fair notice of being subject to suit in that jurisdiction. Walden, 134 S. Ct. at 1121-23. The Court has refined and clarified that standard in numerous decisions.
There have been fewer opportunities, however, for the Court to define the precise metes and bounds of the “arise out of or relate to” component of specific personal jurisdiction. The Bristol-Myers case was set to provide additional guidance on that issue.
The California State Court Decision
In Bristol-Myers, 678 individual plaintiffs filed suit in California state court against Bristol-Myers Squibb (BMS) an out-of-state pharmaceutical manufacturer and its California-based distributor (McKesson) involving an allegedly defective drug (Plavix). Only 86 of the plaintiffs, however, were residents of California. The rest were scattered across 33 other states, including 92 plaintiffs from Texas and 71 from Ohio. BMS argued that, as to the out-of-state plaintiffs, the California court lacked personal jurisdiction over it as a company incorporated in Delaware and headquartered in New York. In particular, BMS contended that it was not subject to specific jurisdiction in California for the nonresident plaintiffs’ claims because they were not causally linked to its conduct in the forum state—i.e., the out-of-state claims did not “arise out of or relate to” BMS’s activities in California.
In a divided 4-3 opinion, the California Supreme Court rejected BMS’s causation-based rule for specific jurisdiction. Instead, the California Court applied a “sliding scale” standard to determine relatedness, under which “the intensity” of a defendant’s forum contacts are “inversely related” to their “connection” with the plaintiffs’ claims. In other words, the more substantial a defendant’s activities are in the forum state, the less they need to be directly related to the plaintiffs’ actual suit. Applying that sliding-scale approach, the California Court found that BMS’s “nationwide marketing, promotion, and distribution” of the challenged product created a “substantial nexus” between the nonresident plaintiffs’ claims and its forum activities given that the suit was “based on the same allegedly defective product and the assertedly misleading marketing and promotion of that product,” which led to related litigation in California where personal jurisdiction was not contested. As a result, the California Court held that BMS was subject to specific personal jurisdiction in California state court—even as to nonresident plaintiffs alleging injuries that arose from BMS conduct outside California.
The Supreme Court’s Decision
The United States Supreme Court granted certiorari to decide the following question: “Whether a plaintiff’s claims arise out of or relate to a defendant’s forum activities when there is no causal link between the defendant’s forum contacts and the plaintiff’s claims.” Pet. for Writ of Certiorari at i.
The Supreme Court in Bristol-Myers decided the case in favor of out-of-state defendants. After Bristol-Myers, state courts cannot exercise specific jurisdiction over foreign defendants “where the plaintiff’s claims would be exactly the same even if the defendant had no forum contacts.” Pet. for Writ of Certiorari at i. The Court stressed that, without a sufficient “connection” or “affiliation between the forum and the underlying controversy … specific jurisdiction is lacking, regardless of the extent of a defendant’s unconnected activities in the State.” Id. at 7. In so holding, the Court expressly rejected the California court’s “sliding scale” approach to specific jurisdiction, which it described as “a loose and spurious form of general jurisdiction.” Id. The Court explained that the sliding scale approach allows courts to demand less of a “connection between the forum and the specific claims at issue” when exercising specific jurisdiction “if the defendant has extensive forum contacts that are unrelated to those claims.” Id. But the Court made clear that its “cases provide no support for this approach,” and it reiterated once more the standard framework for personal jurisdiction. Id.
Applying those settled principles, the Court held that specific jurisdiction was lacking because there was no “adequate link between the State and the nonresidents’ claims.” Id. at 8. Indeed, the nonresident plaintiffs weren’t prescribed Plavix in California, they didn’t buy Plavix in California, and their alleged injuries did not stem from actions BMS took. Id. As the Court put it, the “mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims.” Id. Moreover, it was not “even relevant” to specific jurisdiction “that BMS conducted research in California on matters unrelated to Plavix.” Id. Likewise, BMS’s decision to contract with McKesson for distribution services in California was similarly inadequate, on its own, to change the jurisdictional analysis: the nonresident plaintiffs didn’t allege that BMS engaged in relevant acts with McKesson in California; they didn’t allege that BMS was derivatively liable for McKesson’s conduct in California; and they didn’t show that McKesson distributed the Plavix they ingested in their home state. Id. at 11-12. As a result, the Court concluded that California courts were missing a key ingredient for specific jurisdiction: “a connection between the forum and the specific claims at issue.” Id. at 8.
The Court also dismissed the nonresident plaintiffs’ concern that the Court’s decision would impair the aggregation of mass tort actions. Id. at 12. The Court explained that its decision in Bristol-Myers would not prevent the plaintiffs in that case—both in and out of California—from jointly suing BMS where it is “at home” for purposes of general jurisdiction (i.e., New York or Delaware), which BMS conceded. Id. Similarly, the Court noted that plaintiffs from other states were quite numerous (92 from Texas, 71 from Ohio), and that, because their claims likely did arise out of BMS contacts where they resided, those plaintiffs “could probably sue together in their home States.” Id. Additionally, the Court limited its decision in Bristol-Myers to due process limitations on state courts under the Fourteenth Amendment, thus leaving unanswered the question whether the Fifth Amendment’s due process principles would be less restrictive of federal courts. Id. Accordingly, adherence to the Court’s settled framework for personal jurisdiction “will not result in the parade of horribles that respondents conjure up.” Id.
A principle motivation for the Court’s ruling was federalism. The Court explained that, although personal jurisdiction primarily concerns “the burden on the defendant,” any analysis of personal jurisdiction “also encompasses the more abstract matter of submitting to the coercive power of a State that may have little legitimate interest in the claims in question.” Slip op., at 6. Indeed, restrictions on personal jurisdiction do not simply shield foreign defendants from inconvenient litigation; they also reinforce the “territorial limitations on the power of the respective States.” Id. After all, one state’s exercise of sovereignty in trying a case in its courts “implies a limitation on the sovereignty of all its sister States.” Id. And that “federalism interest may be decisive” in narrowing the scope of personal jurisdiction—even where the forum state would be the most convenient location for litigating the case, and even where the forum state has a strong interest in adjudicating the controversy. Id. at 6-7. That is because, in addition to ensuring fairness and convenience, the Due Process Clause serves “as an instrument of interstate federalism,” which “may sometimes act to divest the State of its power to render a valid judgment.” Id. at 7 (quoting World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294 (1980)).
In dissent, Justice Sotomayor reiterated her continuing disagreement with the Court’s approach to personal jurisdiction, much of which she aired in a lone dissent a few weeks earlier in BNSF Railway v. Tyrrell. Justice Sotomayor’s disagreement with the majority in Bristol-Myers was threefold. Id. at 1-11 (Sotomayor, J., dissenting). First, she argued that the Court’s decision will adversely affect plaintiffs and the judicial system overall by making it more difficult for plaintiffs to aggregate claims on a nationwide basis, by encouraging piecemeal litigation, and by prompting the unnecessary bifurcation of claims that could otherwise be joined in one action. Id. at 1. Second, Justice Sotomayor argued that the “core concern” of personal jurisdiction is “fairness,” and that, rather than fashion a rigid framework, the Court should instead “measure jurisdiction first and foremost by the yardstick set out in International Shoe—‘fair play and substantial justice.’” Id. at 1, 9. Lastly, Justice Sotomayor argued that, even under the majority’s framework, specific jurisdiction existed in Bristol-Myers because the nonresident plaintiffs’ claims “relate to” BMS’s in-state conduct: those claims concern out-of-state “conduct materially identical to acts the company took in California”—i.e., “its marketing and distribution of Plavix, which it undertook on a nationwide basis in all 50 States.” Id. at 5-6. Thus, in Justice Sotomayor’s view, it did not matter that the nonresident plaintiffs were allegedly injured outside of California; rather, as long as those plaintiffs were injured by the same “nationwide course of conduct,” Justice Sotomayor argued that there was a sufficient “connection” between their claims and California. Id.
While there was no express criticism of the forum shopping behind most cases dismissed for lack of personal jurisdiction, the Supreme Court’s message in Bristol-Myers and other recent rulings could not be more clear: plaintiffs need to stop filing, and state courts need to stop deciding, cases in the wrong forum. As Bristol-Myers and its many prequels demonstrate, a refusal to follow the basic requirements for personal jurisdiction will not go unnoticed by reviewing courts. After all, this Supreme Court Term has taught us (again) that the test for general personal jurisdiction could not be clearer: file suit where the defendant company is incorporated or has its principal place of business. And after Bristol-Myers, the test for specific personal jurisdiction is equally easy to follow: file suit where the defendant did something significant that caused the claim to arise, even if it is not the court where you prefer the law or the judge. Refusal to heed these recent Supreme Court precedents (8-1 in BNSF, 8-1 in Bristol-Myers) will lead to expired claims when statutes of limitations run, angry clients, and motions seeking to recover the costs of defending against baseless assertions of personal jurisdiction.
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