United States: Bauman Jurisdictional Limits Dismember Three More Misjoined Multi-Plaintiff Complaints

Last Updated: July 27 2016
Article by James Beck

In this post we happily bring to your attention three more favorable resolutions where pharmaceutical defendants faced with multi-plaintiff misjoined complaints utilized the limits on general personal jurisdiction imposed by Daimler AG v. Bauman, 134 S. Ct. 746 (2014). The misjoined complaints were sliced, diced, and ultimately dismissed in federal court. We've discussed this technique before, here, here, and here, but it bears repeating – this is a way for defendants to defeat CAFA-skirting plaintiff misjoinders while avoiding the morass of "fraudulent joinder."

We haven't rated Oklahoma particularly highly as one of the other sides' favored jurisdictions, but apparently parts of it are – at least in propoxyphene-related litigation. The three substantively identical decisions, Guillette v. PD-RX Pharmaceuticals. Inc., 2016 WL 3094073 (W.D. Okla. June 1, 2016); Manning v. PD-RX Pharmaceuticals Inc., 2016 WL 3094075 (W.D. Okla. June 1, 2016); and Nauman v. PD-RX Pharmaceuticals Inc., 2016 WL 3094081 (W.D. Okla. June 1, 2016), all involved complaints filed by multiple plaintiffs with nothing in common except allegations of injury due to products containing this drug. Multiple defendants that made multiple products were also involved.

Usually, complaints of this nature are structured so that at least one plaintiff is a resident of the forum state, but not here. "Admittedly, no Plaintiff is an Oklahoma resident." E.g., Guillette, 2016 WL 3094073, at *1 (since the three opinions are substantively identical, we'll cite only this one). That fact makes things a little easier for defendants (no need to sever and possibly remand the in-state plaintiff), but, as we've discussed in our prior posts, is in no way dispositive.

The first step after removal, and the most critical, since it requires judicial discretion, is for the court to elect to address personal jurisdiction before subject matter discretion, because the former is more clear cut than the latter. Courts have the power to do this under a controlling Supreme Court decision:

The Court may evaluate personal jurisdiction before subject matter jurisdiction pursuant to the holding in Ruhrgas AG v. Marathon Oil Co.: "[I]n cases removed from state court to federal court, as in cases originating in federal court, there is no unyielding jurisdictional hierarchy. . . . [T]here are circumstances in which a district court appropriately accords priority to a personal jurisdiction inquiry." 526 U.S. 574, 584 (1999). Such circumstances include where personal jurisdiction presents straightforward issues, while subject-matter jurisdiction raises issues that are difficult, novel, or complex. Id. at 588.

Guillette, 2016 WL 3094073, at *1-2. Subject matter jurisdiction, phrased in terms of "fraudulent misjoinder" (but really more like "grotesque" misjoinder) is controversial, whereas, after Bauman, the personal jurisdiction issues relating to foreign (that is, out of state) corporations are cut and dried. Id. at *2 (personal jurisdiction is "straightforward," whereas subject matter jurisdiction "presents complex issues").

Perfectly aware that Bauman killed any general jurisdiction claim, the plaintiffs attempted to assert "specific" personal jurisdiction. They couldn't because they were all litigation tourists who resided in states other than Oklahoma, and specific jurisdiction requires either residence or injury in the forum state:

Plaintiffs contend that their injuries arose out of [forum] contacts because their injuries . . . "relate[ ] to the genre of activities" that the Defendants perform in Oklahoma, "i.e., marketing of pharmaceuticals." Plaintiffs argue that their lack of in-forum residency is of no moment. . . .

[B]efore the Court may exercise specific jurisdiction over the Defendants, Plaintiffs must show some true causal element between the defendants' contacts and the litigation. Plaintiffs have not done so. Even assuming that Defendants purposefully directed their [pharmaceutical marketing] activities at Oklahoma, Plaintiffs have not met their prima facie burden to show that their injuries arose out of those activities. Plaintiffs are non-Oklahoma residents who ingested propoxyphene-containing products. . . . The injuries they complain of occurred outside of Oklahoma and arose out of Defendants' marketing and sales of propoxyphene-containing products outside of Oklahoma. Plaintiffs have put forth no evidence the products were ingested in Oklahoma nor any argument to draw any connection between their out-of-state injuries and Defendants' in-state activities under either the but-for or the proximate cause test. Accordingly, the exercise of specific jurisdiction over the Defendants is not proper.

Guillette, 2016 WL 3094073, at *4-5 (citations and quotation marks omitted) (emphasis added).

Bauman, of course, eliminated general jurisdiction as an alternative because "continuous and substantial" in-state business activity does not render a corporate defendant "at home" in a jurisdiction. Id. at *5. That a defendant "manufactur[ed] and market[ed] pharmaceutical products," "conducted extensive commercial activity within Oklahoma for years," and "transacted business" in Oklahoma wasn't enough for general jurisdiction after Bauman. Id.

Plaintiffs' last gasp jurisdictional argument was that the Oklahoma long arm statute required registration to do business and appointment of an agent for service of process, and since the defendants complied, they thereby "consented" to general personal jurisdiction. As we've discussed before, this argument has generally been a loser – and it was in these cases as well:

Oklahoma's registration statute is silent on the issue of whether registration constitutes consent to jurisdiction. Therefore, Plaintiffs' argument is one of implied consent. Neither party cites, nor has the Court found, any Oklahoma authority that provides a direct answer to this issue. Given this lack of authority, the Court applies the Supreme Court's "preferential construction" . . . and declines to exercise general jurisdiction over the Defendants on the basis of their registration in the state. . . .

Defendants also argue that Plaintiffs' argument raises due process concerns. . . . [O]ther courts have noted that registration as a basis for general jurisdiction may have limited reach post-[Bauman]. . . . However, because Plaintiffs' argument finds no support in Oklahoma law, the Court need not reach this issue.

Guillette, 2016 WL 3094073, at *8 (citations omitted).

For all of these reasons, the court in the Guillette, Manning, and Nauman cases dismissed the plaintiffs' complaints for lack of personal jurisdiction – without ever having to address either the pro-plaintiff standards for fraudulent joinder or the existence of the concept of fraudulent misjoinder. These cases are thus another textbook example of how post-Bauman limitations on personal jurisdiction can be employed to counter the other side's attempts to corral out-of-state corporate defendants into aggregated litigation against multitudes of out-of-state litigation tourist plaintiffs in state courts of plaintiffs' choosing. Nice work by defense counsel.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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