United States: Post Daimler AG v. Bauman Decisions

Recent Court Rulings Applying Bauman Create a Path for Defendants to Win Dismissal Based on a Lack of Personal Jurisdiction

Nationwide, courts are applying the United States Supreme Court's ruling in Daimler AG v. Bauman and granting defendants' motions to dismiss based on a lack of personal jurisdiction. Here are a few noteworthy examples.

On September 30, 2016, in Bauer v. Nortek Global HVAC LLC, the Middle District of Tennessee granted the defendants' motion to dismiss, holding that the Court lacked personal jurisdiction over the defendants.1 Applying Bauman, the Court held that it lacked general jurisdiction over the defendants because they were not essentially at home in Tennessee. Defendants were neither incorporated nor headquartered in the state.2 The Court also held that one of the defendant's in-state facilities did not meet the "continuous and systematic contacts" test, finding that, under Bauman, a defendants' "mere presence" in the forum state is not sufficient to find general jurisdiction.3 Finally, as to specific jurisdiction — which the Court noted requires a connection between the forum and the controversy and is "confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction"4 — the Court held that, under the Sixth Circuit's three-part test,5 the plaintiffs failed to "offer any factual allegations that the outof- state Plaintiffs had any dealings with the Defendants" in the state.6

On October 25, 2016, in Addelson v. Sanofi, the Eastern District of Missouri held similarly, finding that, under Bauman, the Court did not have personal jurisdiction over the defendants.7 First, citing two post-Bauman federal district court cases, the Court noted that while federal courts "customarily"8 resolve subject matter jurisdiction issues first, here personal jurisdiction merited an initial resolution because it was straightforward.9 Second, the Court found that the defendants were incorporated in Delaware, had their principal place of business in New Jersey, and that the complaint lacked facts to "establish continuous and systematic contacts with Missouri[.]"10The Court held that, under Bauman, "[s]imply doing continuous and systematic business in a state is not enough to establish general jurisdiction."11 The plaintiffs' allegations that Sanofi "distributed, marketed, promoted, and sold" the drug in Missouri was insufficient.12 Third, noting the plaintiffs' argument that Sanofi consented to general jurisdiction in Missouri by registering with the State's secretary of state and maintaining a registered agent there (as required by state law to do business there), the Court held that "more substantial contacts are required to hale a litigant into the Court's forum," finding that to hold otherwise would subject national companies to "suits in almost every state in the country continued 2 [which] would not comport with the principles of personal jurisdiction" established in Bauman.13

State courts have joined the party too. On April 18, 2016, faced with whether its own "interpretation of [Delaware's] registration statutes as conferring general jurisdiction over the foreign corporation remains tenable," based on the "major shift in our nation's personal jurisdiction jurisprudence" due to Bauman, the Supreme Court of Delaware overturned its precedent and held that Delaware's business registration statutes did not provide general jurisdiction over out-ofstate businesses.14 Finding that its early case law had read Delaware law "broadly as providing a basis for general jurisdiction," the Court held that "although it is possible, as [it had done], to read the concept of general jurisdiction into [the statute] . . . it is also possible to give that statute a narrower and constitutionally unproblematic reading."15 The Court determined that this narrower reading had the "intuitively sensible effect" of avoiding the U.S. Supreme Court's concern regarding subjecting foreign corporations "to an 'unacceptably grasping' and 'exorbitant' exercise of jurisdiction, consistent with Daimler's teachings,"16 whereas the Court's previous "construction . . . was strongly influenced by prior U.S. Supreme Court jurisprudence whose dependability has been undermined by Daimler."17 Finally, noting that "[t]he tension created by's Due-Process [l]imits [o]n [g]eneral [j]urisdiction [c]annot [b]e [i]gnored," the Court found that a state cannot "condition a foreign corporation's right to do business on consent to general jurisdiction" and that "a foreign corporation's consent to personal jurisdiction cannot be coerced or conditioned on the corporation waiving its right not to be subject to all-purpose jurisdiction in all but a few places where it has sufficient contacts."18

Slowing down the exuberance for dismissal, the Eastern District of Pennsylvania, in Bors v. Johnson & Johnson, found that, under pre-Bauman Third Circuit case law not directly overturned by Bauman, it had general personal jurisdiction because, while Johnson & Johnson had no contacts with Pennsylvania and the plaintiff's action arose from transactions that occurred outside that commonwealth, the company had consented by simply registering to do business in the state.19 The Court held that unlike Delaware's registration statute, Pennsylvania's statute "specifically advis[es] the [foreign corporation] registrant of its consent to personal jurisdiction through registration" and that this explicit warning meant that "general and specific jurisdiction principles applying to non-consensual personal jurisdiction do not apply."20

Bauman has reset the landscape for permissible pleadings. Defendants may now consider motions to dismiss in cases where a plaintiff's personal jurisdiction claims are rooted in pre-Bauman case law. Moreover, while plaintiffs and some courts (as in Bors) may attempt to preserve jurisdiction by consent, defendants should carefully examine the due process arguments made by the Delaware Supreme Court in Genuine Parts. As Genuine Parts makes clear, this notion does not align with Bauman's due process concerns and the Supreme Court's conclusion that general jurisdiction is rooted in a defendant's home jurisdiction. Defendants should also point to the Addelson court's decision to resolve general jurisdiction prior to complex subject matter jurisdiction issues since it may comport with judicial economy and, most especially, save the parties time and money when defendants are not at home in the chosen jurisdiction.

Of course, the landscape could significantly change again when the U.S. Supreme Court rules in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, the Supreme Court's upcoming review of a California Supreme Court decision in which the State court took a very broad view of specific personal jurisdiction, permitting numerous out-of-state plaintiffs to sue in California courts.21 The case, which was granted certiorari in January, will be argued later this year. Stay tuned.

Footnotes

1.No. 3:14-CV-1940, 2016 WL 5724232 (M.D. Tenn. Sept. 30, 2016).

2.Id. at *5.

3. Id. at *6.

4. Id. (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)) (internal quotation marks omitted).

5. Id. ("First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.") (quoting S. Machine Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968)).

6. Id.

7. No. 4:16-CV-01277 ERW, 2016 WL 6216124 (E.D. Mo. Oct. 25, 2016).

8. Id. at *2 (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 578 (1999)).

9. Id. (citing Guillette v. PD–RX Pharmaceuticals Inc., No. 5:15-CV-00564–R, 2016 WL 3094073 at *2 (W.D. Okla. June 1, 2016); In re Testosterone Replacement Therapy Prods. Liab. Coordinated Pretrial Proceedings, 164 F. Supp. 3d 1040, 1045–46 (N.D. Ill. 2016)).

10.Id. at *3. Facts such as "maintain[ing] an office in Missouri, or employees here, or any other facts, which would suggest [Sanofi is] at home in Missouri." (Id.).

11. Id. (citing Bauman, 134 S. Ct. at 760–61).

12. Id. Regarding specific jurisdiction, the Court noted its power over a defendant regarding "specific claims, because of the relationship between the defendant, forum, and the litigation," (citing Bauman, 134 S. Ct. at 758), i.e., the existence of a "nexus between a plaintiff's claims and a defendant's forum-based activities" (quoting In re: Zofran (Ondansetron) Prods. Liab. Litig., No. 1:15-CV-13760-FDS, 2016 WL 2349105 at *5 (D. Mass. May 4, 2016)).

13. Id. (citing Keeley v. Pfizer Inc., No. 4:15-CV-0058-3 ERW, 2015 WL 3999488 at *4 (E.D. Mo. July 1, 2015); Neeley v. Wyeth LLC, 4:11-CV-00325-JAR, 2015 WL 1456984 at *3 (E.D. Mo. Mar. 30, 2015)).

14. Genuine Parts Co. v. Cepec, 137 A.3d 123, 137, 133 (Del. 2016) (citing Sternberg v. O'Neil, 550 A.2d 1105 (Del. 1988)).

15. Id. at 138-39.

16. Id. at 141.

17. Id. at 141-42.

18.Id. at 144-47.

19. Bors v. Johnson & Johnson, --- F.Supp.3d ----, No. 16- 2866, 2016 WL 5172816 (E.D. Pa. Sept. 20, 2016).

20.Id. at *1

21. Bristol-Myers Squibb Co. v. Superior Court of San Francisco Cty., 206 Cal. Rptr. 3d (2016), cert. granted sub nom. Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., No. 16-466, 2017 WL 215687 (U.S. Jan. 19, 2017).

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