A case from Alabama this week got us to thinking about two topics on which we write a lot — innovator liability and personal jurisdiction. We thought the most interesting part of Bexis' recent post on innovator liability was its suggestion that innovators sued over the use of generic drugs should consider objecting to jurisdiction. After all, it is one thing to say that an innovator manufacturer can be potentially liable for a generic manufacturer's warnings under state tort law. It is a fundamentally different question whether the innovator manufacturer can be subject to personal jurisdiction in that state under the U.S. Constitution. The plaintiff's use of the generic drug cannot alone support specific personal jurisdiction over the innovator for the simple reason that the innovator did not make or sell the drug.
How does any of this relate to the aforementioned case from Alabama? Well, what if an enterprising plaintiff argued that a prescription drug manufacturer is subject to personal jurisdiction in the forum state because the manufacturer submitted a New Drug Application for its product to the FDA. Seems like a strained proposition, but that is what the plaintiff argued in Blackburn v. Shire U.S., Inc., No. 2:16-cv-963, 2018 U.S. Dist. LEXIS 78724 (N.D. Ala May 10, 2018). Innovator liability was not at issue in Blackburn, but innovator manufacturers are all NDA holders. Thus, if the Blackburn plaintiffs are correct and merely submitting an NDA can result in personal jurisdiction in distant forums, then innovators will not get very far with the jurisdictional challenges that Bexis has suggested.
Fortunately, the district court in Blackburn faithfully applied the law and properly rejected NDA-based personal jurisdiction. The plaintiff took a prescription drug and sued five different companies with "Shire" in their names over allegedly inadequate warnings after developing a kidney injury. Id. at **1-2. The district court dismissed three of the defendants for lack of personal jurisdiction, but the plaintiff later moved to reinstate one of them, the holder of the drug's NDA. Id. at **3-4. According to the plaintiff, the court could exercise specific jurisdiction because the defendant, "as the NDA holder" for the drug, "placed [the drug] into the stream of commerce to reach Alabama consumers, such as himself." Id. at *16.
The issue was specific jurisdiction, and the district court started by quoting BMS:
In order for a state court to exercise specific jurisdiction, the suit must arise out of or relate to the defendant's contacts with the forum. In other words, there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation. For this reason, specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.
Id. at *15 (quoting Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1773, 1780 (2017) (emphasis in original). As a general rule, it is not sufficient that a defendant might have predicted that its goods would reach the state. Rather, the defendant must have "targeted" the forum and "purposefully availed itself of the privilege of conducting activities within the forum." Id. at **15-16 (citations omitted).
The plaintiff did not dispute that the defendant had not actually manufactured or sold the drug. Instead, the plaintiff contended that the defendant, as the NDA holder, should be deemed a "manufacturer" for jurisdictional purposes. The district court had little difficulty rejecting these "semantics." First, the plaintiff argued that the defendant established sufficient minimum contacts when it sought permission from the FDA to manufacture, market, and sell the drug in Alabama and other states. But merely seeking permission from the FDA or submitting an NDA "does not rise to the level of targeting Alabama or invoking the benefits and protections of its laws (especially when none of these activities occurred within Alabama or were directed at Alabama)." Id. at *17
Second, the plaintiff argued that the defendant purposefully availed itself to Alabama by crafting a "defective label that it knew would be purchased by Alabama residents." But this is just a version of "the defendant might have predicted its product would be sold in the state," which is not sufficient to establish personal jurisdiction. Id. at *17. Third, the plaintiff argued that the that the actions of the entities that actually sold the drug should be attributed to the defendant under some sort of alter ego theory, but the plaintiffs' proposed amended complaint did not allege any facts supporting such a theory. Id. at *17-18.
There are other aspects to the order, but jurisdiction over the NDA holder is what caught our eye. Although we are not fond of saying that an argument "proves too much," we think that statement applies here. If merely submitting an NDA creates personal jurisdiction in Alabama, then it would arguably create personal jurisdiction in any state within the FDA's regulatory reach, i.e., within the United States and its territories. "NDA holder jurisdiction" would therefore be a form of universal jurisdiction that the Supreme Court condemned in Bauman. It does not fly. So for now, Bexis' advice to innovators remains sound. Innovators and NDA holders can and should consider challenging personal jurisdiction in cases where they did not make and did not sell the drug at issue.
This article is presented for informational purposes only and is not intended to constitute legal advice.
