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"A Double Dose of Power"

Supreme Court’s Bristol-Myers Decision on Personal Jurisdiction

July 5, 2017

In Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, decided on June 19, 2017, the United States Supreme Court, in a majority opinion joined by eight justices and delivered by Justice Samuel Alito, reversed the California Supreme Court’s decision to allow the state to exercise specific personal jurisdiction over defendant, Bristol-Myer Squib Co., in a mass tort action for injuries allegedly caused by their blood thinning drug, Plavix, to entertain the non-California residents’ claims. As Justice Sotomayor notes in her dissent, this decision highly limits the ability of plaintiffs to consolidate their tort actions against a corporate defendant. As such, the Court effectively limits the reach of personal jurisdiction over a defendant in any state court in which the plaintiff’s injury did not “arise out of or relate to” the defendant’s contacts with that state.

The majority held that the California state courts violated the 14th Amendment Due Process Clause by exercising jurisdiction over these non-resident claims against Bristol-Myers, reasoning that it contradicted well-settled precedent as set forth in Daimler AG v. Bauman, 134 S.Ct. 746 (2014); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); International Shoe Co. v. Washington, 326 U.S. 310 (1945); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011); and Walden v. Fiore, 134 S.Ct. 1115 (2014). Bristol-Myers, a large pharmaceutical company, incorporated in Delaware, headquartered in New York, and with substantial operation in New York and New Jersey, was sued in California state court by a group of eighty-six California residents and five-hundred and ninety-two nonresident plaintiffs. The Plaintiffs sought to consolidate their claims regarding their injuries, which they allege were suffered from the use of Bristol-Myers’ drug, Plavix, in one action in California state court.

Although the Court concedes that Bristol-Myers engaged in business activity in California, as well as many other jurisdictions, the court notes that their presence in California is insignificant compared to New York and New Jersey. Bristol-Myers Squib Co., 2017 WL 2621322 at 4. Additionally, the Court noted that the research facilities and laboratories present in California that employed about 160 of their 250 California employees, did not develop or relate to any of their nationwide Plavix marketing, manufacture, label, packaging, or regulatory approval in support of finding against exercising jurisdiction over Bristol-Myers.

The Court reached their finding that the California state courts did not have authority to exercise jurisdiction over the nonresidents’ claims by relying on settled jurisdiction principles. See, Daimler AG v. Bauman, 134 S.Ct. 746 (2014); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980); International Shoe Co. v. Washington, 326 U.S. 310 (1945); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011); Walden v. Fiore, 134 S.Ct. 1115 (2014). Accordingly, the Court noted that the state can exercise specific jurisdiction over the defendant if there is an “affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.” Goodyear, 564 U.S. at 919. Although Bristol-Myers’ activities in the state regarding Plavix was enough to subject it to jurisdiction for the California resident claims, the Court rejected the argument that because the nonresident claims were substantially similar to those asserted by the residents, they should be subject to specific jurisdiction for those as well. Bristol-Myers Squib Co., 2017 WL 2621322 at 8. Without more, the Court found that “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.” Id., thus finding no “adequate link” between the nonresidents’ claims and the defendant’s contacts within the forum State. Id. at 15.

Justice Sotomayor, individually dissenting in the decision, notes that the majority created what she refers to as “a substantial obstacle” for plaintiffs to consolidate their claims in state court against a corporate, nationwide defendant. She argues that the decision “limits the corporation’s accountability” in a state court by a group of nonresident plaintiffs, unless the plaintiffs were injured within the forum state. Id. at 11. Accordingly, applying the majority’s establish principle will make it difficult for plaintiffs from different states to aggregate their claims, unless the defendant is considered “at home” within the forum and is subject to general jurisdiction.

Ultimately, Sotomayor proffers that applying the Court’s settled specific jurisdiction principles, the California state courts correctly exercised specific jurisdiction over the defendant in regards to the nonresidents’ claims. As such, Bristol-Myers “purposefully availed itself of the privilege of conducting activities within the forum State” by employing four-hundred (400) people in California and maintaining half of a dozen facilities in California; the plaintiffs’ claims “relate to” the defendant’s conduct within the forum State, even though their injuries likely arose from the defendant’s marketing and distribution conduct outside of the state; and, the exercise of jurisdiction over the defendant was undoubtedly reasonable, as Bristol-Myers is already subject to jurisdiction for identical claims by California residents. Id. at 13.

In sum, this decision effectively narrows the reach of specific jurisdiction. While some may argue that it limits the ability of plaintiffs to consolidate their claims against a corporate defendant with a national presence, the decision does not leave the plaintiffs without a method of redress. As such, the Court notes that the plaintiffs could bring individual actions in the state courts in the states in which they were actually injured, or the claims could be consolidated into a federal claim. While some may infer that the Court’s decision creates a burden on the plaintiffs to bring a claim that, on its own, may not be worth enough to bring, there is an equal burden to the defendants that they will be subject to defending separate litigations, depending on the location of the plaintiffs. This decision has resulted in a de facto stay on a number of pending mass tort actions where State court cases, including those where trials have already commenced, are addressing whether the state court has jurisdiction over the non-resident claims.

——

Thank you to WSHB summer associate, Anthony Desiderio, for co-authoring this piece. 

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