United States: Amicus Briefs Not So Friendly to California Supreme Court's Dreadful BMS Personal Jurisdiction Decision

Last Updated: November 24 2016
Article by Stephen J. McConnell

We do a lot of grousing on this blog, but we acknowledge that there is much for which we should be thankful. This legal business permits us to keep our minds lively and our fingernails clean. Even the rotten decisions aren't totally awful; they force us to stay busy, offer a fine target for snark, and it is beyond glorious when logic and justice eventually triumph and eradicate the offending ruling. (We're looking at you Conte. Your days are numbered.)

The Supreme Court's decision in Bauman is an example of the beneficent arc of history. After decades of doctrinal incoherence on personal jurisdiction, under which a large corporation could pretty much be sued anywhere for anything, SCOTUS restored common sense by holding that a court could exercise general personal jurisdiction over a corporation only if that corporation was "at home" in that jurisdiction – which pretty much was limited to the place of incorporation or principal place of business. We blogged about Bauman more than once, but you can start here. Around the same time as Bauman, SCOTUS issued the Walden v. Fiore opinion, which limited specific jurisdiction over corporations to cases where the corporation's conduct targeted the jurisdiction and gave rise to the action in that jurisdiction. Simple, right?

Wrong, says the California Supreme Court. Bristol-Myers Squibb Co. v. Superior Court was a classic exercise in mass tort litigation tourism, as plaintiff lawyers cobbled together a group of plaintiffs who claimed that they had been injured by ingesting Plavix. Out of 678 plaintiffs, only 86 lived in California. The other 592 plaintiffs neither lived in California nor sustained any injury there. It is not as if those plaintiffs knocked back Plavix after enduring the scary experience of Space Mountain at Disneyland or the Angels' ineptitude at the Big A in Anaheim. None of the Plavix was manufactured in California. Clearly, the plaintiff lawyers had engaged in transparent forum-shopping, hoping that their non-California plaintiffs would benefit from pro-plaintiff California jurors and rulings.

And now here comes another one of those pro-plaintiff rulings. The California Supreme Court admitted that Bauman meant that general personal jurisdiction could not extend to BMS, which had the wisdom not to incorporate or locate its principal place of business in California. Adios to all those non-California plaintiffs, right? Wrong again, says the California Supreme Court, which, in a 4-3 decision, expanded specific jurisdiction to the point where it pretty much gobbles up general jurisdiction. Specific jurisdiction extends to a defendant when the plaintiff's claim arose from or related to the defendant's conduct. That obviously works for the California plaintiffs. How does it work for the non-Californians? That's the right question. The California Supreme Court came up with the wrong answer. It held that "[a] claim need not arise directly from the defendant's forum contacts in order to be sufficiently related to the contact to warrant the exercise of specific jurisdiction." That holding seems as wrong as can be. But if not "directly," what is enough? The California Supreme Court said it was enough that Plavix marketing throughout the nation was the same, plus BMS had employees and facilities in California. Huh? There is also a flavor of pendent jurisdiction in the court's holding. Since you, BMS, have to be in California anyway to defend against the claims of Californians, why not stay a while, have some avocadoes and almonds, and take on all those Illini, Hoosiers, Texans, etc. while you're at it? Either that is part and parcel of the court's theory, or maybe the court would have smiled on a case brought only by non-Californians. The fact that we are not sure that is not so is testament to the California Supreme Court's penchant for result-oriented lunacy.

Look, the California opinion was a blatant instance of juridical overreaching, if not flat-out defiance. We did not enjoy reading it. But we did enjoy blogging about the opinion's many howlers – here and here for example. Our harsh view of the California Supreme Court's 'reasoning' was almost as excoriating as the dissent opinion.

This week we enjoyed reading the amicus briefs recently filed in support of the petition for certiorari filed, which asked SCOTUS to correct the California error. You can find the briefs on the wonderful SCOTUS blog. One of those briefs was filed by one of our clients, so we won't say anything about that one, except to remark that it is just as excellent and wonderful and helpful as the client's fine products and stellar in-house lawyers. Let's talk briefly about the briefs filed by (1) the Chamber of Commerce and American Tort Reform Association (ATRA), (2) Pharmaceutical Research and Manufacturers of America (PhRMA), (3) the Product Liability Advisory Council (PLAC), and (4) the Washington Legal Foundation (WLF). As one would expect, these briefs make many of the same points, but they also differ slightly in their emphases.

Chamber of Commerce/ATRA

This brief makes the point that, contrary to the California Supreme Court's position, there must be a direct connection between the defendant's conduct and the plaintiff's cause of action for specific jurisdiction to lie. The California Supreme Court's sliding scale approach – the greater the corporate defendant's presence in California, the less connection to the cause of action is required – is a mess that finds support precisely nowhere. Nothing in SCOTUS precedents "suggests that mere parallelism between a defendant's in-State conduct and the conduct that allegedly caused an out-of-State injury is enough to create specific jurisdiction over the out-of-State claim." Moreover, the California Supreme Court's ruling breeds uncertainty. Companies cannot calibrate their actions and sales to possible litigation exposure in California. In for a penny, in for billions. Instead, California has essentially blessed forum shopping by plaintiff lawyers. That approach not only guarantees further crowding of the California court system, but it also wounds federalism. States might want to see to the vindication of their own citizens' claims, but now those claims will head to California and other heckholes.

PhRMA

The California standard is "formless." It provides no real guidance. Instead, it turns California into a "magnet" – a polite word for heckhole, which is, in turn, a polite word for what we really mean. The brief likens California to what has been going on in St. Louis, where local judges seem almost gleefully eager to prove their proficiency at home cooking for the local plaintiffs' bar. PhRMA's first argument heading is nothing short of brilliant: "WHETHER CALIFORNIA COURTS CONSTITUTIONALLY MAY SERVE AS NATIONAL COURTS FOR RESOLVING CLAIMS OF OUT-OF-STATE PLAINTIFFS IS A PROFOUND AND RECURRING QUESTION." Like all artfully phrased questions, it answers itself. The brief includes fascinating statistics, such as that in 2900+ cases recently filed in LA and San Francisco counties against pharmaceutical companies, there were over 25,000 plaintiffs, with only 10.1% residing in California. PhRMA also decries the difficulty in bringing live treating physician testimony for out of state plaintiffs (though that would also usually be true if the case was filed in the defendant's home state, and no one doubts jurisdiction there). The PhRMA brief makes good use of the dissent in the California case, especially the observation that the majority opinion "expands specific jurisdiction to the point that, for a large category of defendants, it becomes indistinguishable from general jurisdiction."

PLAC

This brief does a marvelous job of tracing the origin of the doctrinal confusion to Helicopteros Nacionales de Colombia, S.A v. Hall, 466 U.S. 408 (1984), where SCOTUS was unclear on what "arise from" and "relating to' mean, or whether there is any difference between them. SCOTUS had the chance to clear things up in Shute v. Carnival Cruise Lines, 499 U.S. 585 (1991), but went off on another issue. Since SCOTUS created this ambiguity, it is up to SCOTUS to clarify. As with several of these amicus briefs, PLAC makes the point that the California ultra-expansive view of "relating to" means an utter lack of predictability for corporations as to where they might get sued. (This argument probably does have practical significance. Then again, we wonder whether, in a way, crummy rulings can create predictability. Isn't it becoming predictable that plaintiff lawyers will, by hook or crook, find ways to sue in heckholes such as California, Madison County, and St. Louis? It reminds us of search and seizure law, where court decisions themselves can influence expectations of privacy.). PLAC takes a whack at the California court's reliance on the nationwide similarity of the product marketing. Regularity regimes impose a certain degree of uniformity, and the "nationwide advertising" rationale "is potentially far-reaching given the ubiquitous use of social media and the internet today by companies of all sizes." Moreover, the California "sliding scale" for measuring whether a "substantial connection" only "compounds the indeterminacy and unpredictability." That sliding scale ends up being a fig leaf covering up a blessing of plaintiff forum shopping. PLAC also demonstrates that this personal jurisdiction issue is recurring, important (often dispositive), and implicates concerns over whether other countries will reciprocate with similarly absurd jurisdictional claims.

WLF

This brief convincingly shows that the California decision undermines Bauman and is inconsistent with Walden. In Walden, SCOTUS referred to jurisdiction arising from the defendant's "suit-related conduct." Any large company in America "that aspires to conduct business on a nationwide basis has no choice but to conduct business in California" – probably lots of it. The "limitless" nature of specific jurisdiction in the BMS case ensures forum-shopping and prevents companies from being able to "structure their conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." Finally, the BMS case is well set up for SCOTUS review because the issues are clear and the facts are uncontested.

All in all, these briefs are superb. Unlike the California decision, they actually make sense. Unlike the California decision, they respect SCOTUS precedent. We are grateful for the fine work that went into these briefs, and will be even more grateful when SCOTUS sets things aright.

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

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