United States: Breaking News − Bristol-Myers Squibb Slams The Door On Litigation Tourism

Last Updated: June 26 2017
Article by James Beck

The Supreme Court decided "the big one" today – and not to keep anyone in suspense [the big one is a major earthquake in California mass tort litigation], the result is that the California Supreme Court finding of personal jurisdiction despite neither the plaintiff nor the defendant residing in the state has been reversed. Here is a link to the slip opinion in Bristol-Myers Squibb Co. v. Superior Court, No. 16-466 (U.S. June 19, 2017) ("BMS"). It's an 8-1 opinion, not a close decision, with Justice Alito writing for the Court. Only Justice Sotomayor (predictably, from her prior positions) dissented.

After BMS, a lot of the litigation industry in California will go sliding into the sea.

This is one of the most important mass tort/product liability decisions ever, because expansive notions of personal jurisdiction – that large companies can be sued by anyone anywhere – are behind the growth of "magnet jurisdictions" (ATRA calls them something else) that attract litigation tourist plaintiffs from all over the country, suing companies from all over the country, without regard for whether any such defendant is incorporated or does business in the state. Get rid of any personal jurisdiction basis for doing so, and we, if not end, at least put major limits on plaintiffs' ability to forum-shop in this manner.

In our sandbox, product liability plaintiffs, suing manufacturers of FDA-regulated products, have flocked to what they view as their most favorable venues, certain notorious counties in Missouri, Illinois, Pennsylvania, New Jersey, New York – and yes, California. That's what BMS rejected. For several decades, plaintiffs' litigation tourist strategy relied on expansive interpretation of "general" personal jurisdiction – that any defendant that conducted "continuous and substantial" business in any state could be sued in that state by anyone. This theory was damaged by Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (which we call "Brown"), and then demolished altogether in Daimler AG v. Bauman, 134 S.Ct. 746 (2014) (which we call "Bauman").

After Bauman, mere "continuous and substantial" business in a jurisdiction could not support general personal jurisdiction. Rather only corporate defendants "at home" in the particular jurisdiction could be sued there. Bauman, 134 S. Ct. at 757; Brown, 564 U.S. at 919. With no "exceptional" exceptions that apply to mass torts, Bauman limited general personal jurisdiction to those states where a corporation is incorporated or has its principal place of business. Bauman, 134 S. Ct. at 760-61. "Exorbitant" and "grasping" jurisdictional allegations that would expand jurisdiction to "every other State" where large corporations do business, violate Due Process. Id. at 761-62. "A corporation that operates in many places can scarcely be deemed at home in all of them." Id. at 761 n.19.

Bauman thus threatened the viability of litigation tourism the litigation industry in numerous plaintiff-friendly venues, since 90%+ of the plaintiffs in such venues are typically non-residents. Plaintiffs fought back. The ink on Bauman was barely dry when they started trying to import the same expanded "continuous and substantial" rationale into the other major basis for personal jurisdiction, "specific" personal jurisdiction, which heretofore had been limited to suits "related to" the forum state – that is suits brought by in-state residents or persons injured in a state. By a 4-3 margin, the California Supreme Court in Bristol-Myers Squibb Co. v. Superior Court, 377 P.3d 874 (Cal. 2016) (which we'll call "BMS II"), conferred specific personal jurisdiction on litigation tourist plaintiffs from all over the country suing over a prescription drug.

No more.

As reiterated by the United States Supreme Court in BMS, the "primary consideration" of personal jurisdiction is "the burden on the defendant." Slip op. at 6 (quotingWorld-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)). While general jurisdiction is governed by Bauman's "at home" requirements as to corporate defendants, "[s]pecific jurisdiction is very different." Id. at 5. "The suit" itself – not just some other aspect of litigation – "must arise out of or relate to the defendant's contacts with the forum." Id. (emphasis original) (citation and quotation marks omitted).

[S]pecific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.

Id. at 6 (quoting Brown, 564 U. S. at 918).

The California Supreme Court's BMS II ruling that any "substantial connection" between a corporate defendant's activities and California, whether or not causally related to a litigation tourist plaintiff's claimed injuries, would suffice to support jurisdiction failed miserably. Personal jurisdiction reflects a concern with "submitting to the coercive power of a State that may have little legitimate interest in the claims in question." BMS, slip op. at 6. That would be California in this case, where the litigation tourist plaintiffs did not reside in the state and did not sue over a drug that they purchased in the state. When there is no "affiliation between the forum and the underlying controversy, . . . specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State." Id. at 7 (emphasis added). We believed from day one that the California Supreme Court had improperly imported the general jurisdiction test rejected in Bauman into specific jurisdiction. In BMS the Supreme Court agreed:

[T]he California Supreme Court's "sliding scale approach" is difficult to square with our precedents. Under the California approach, the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims. Our cases provide no support for this approach, which resembles a loose and spurious form of general jurisdiction.

Id. "Loose and spurious" – that's a good description of the basis for most litigation tourism in mass torts.

The State Supreme Court found that specific jurisdiction was present without identifying any adequate link between the State and the nonresidents' claims. . . . [T]he nonresidents were not prescribed [the drug] in California, did not purchase [it] in California, did not ingest [it] in California, and were not injured by [it] in California. The mere fact that other plaintiffs were prescribed, obtained, and ingested [the drug] in California − and allegedly sustained the same injuries as did the nonresidents – does not allow the State to assert specific jurisdiction over the nonresidents' claims.

Id. at 8 (citing Walden v. Fiore, 134 S. Ct. 1115, 1123 (2014)). Nothing related solely to other plaintiffs matters in specific jurisdiction. As we suspected it would be, Walden was the critical precedent here. BMS, slip op. at 8-9. The cases plaintiffs relied upon, Keeton v. Hustler Magazine, Inc., 465 U. S. 770 (1984), and Phillips Petroleum Co. v. Shutts, 472 U. S. 797 (1985), were "amply" distinguishable and "had no bearing on the question presented here." BMS, slip op. at 10-11.

Nor did the presence of a California distributor – equally uninvolved with the plaintiffs who brought the suit – change the result one iota. Repeated prior precedents have held that personal jurisdiction "must be met as to each defendant over whom a state court exercises jurisdiction." Id. at 11 (citations and quotation marks omitted). "The bare fact that BMS contracted with a California distributor is not enough to establish personal jurisdiction in the State." Id. at 12. This ruling, while something of a side show in BMS, should be critical in other types of cases, such as asbestos, where dozens of defendants are typically joined together without regard for where either the defendants or plaintiffs are located.

Thus, unfortunately for litigation tourists, "a defendant's general connections with the forum are not enough." Id. at 7. Plaintiffs' unrestricted forum shopping days are over. "[S]traightforward" application of fundamental personal jurisdiction principles means that plaintiffs may "join[] together in a consolidated action in the States that have general jurisdiction over BMS." Otherwise, "the plaintiffs who are residents of a particular State . . . could probably sue together in their home States." Id. Finally, while the Court did not address "whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court, " id. as we mentioned above, Walden v. Fiore was probably the single most important prior precedent in BMS. As our post on Walden pointed out, Walden was a federal (Bivens) action filed in federal court. We thus don't see that caveat as being a meaningful one.

The result in BMS means that the era of big mass torts, filed by plaintiffs anywhere against anyone over anything, is (to paraphrase Bill Clinton) over. There will be still be mass torts, but as BMS pointed out at the end of the opinion, they will either be defendant-specific − filed in the target defendant's state of incorporation or principal place of business – or limited to plaintiffs from the state where the litigation is situate. San Francisco (as in BMS), Los Angeles, Philadelphia, St. Louis, Chicago, Madison County, wherever.... These jurisdictions can only assert jurisdiction over in-state plaintiffs, or else defendants that are (unfortunate enough to be) "at home" in those respective states (subject, of course, to state venue requirements).

A very good day for the right side of the "v." – and not very good for those on the wrong side. Plaintiffs will have to get used to the radical proposition that defendants have constitutional rights, too.

The only remaining personal jurisdiction theory available to the great majority of litigation tourist plaintiffs is the so-called "jurisdiction by consent" theory that posits that mere registration to do business/appointment of an agent for service of process – something that all 50 states require – constitutes "consent" to be sued even by non-residents in any state where a corporate defendant so registers. Of course, a lot of states (including California since way before Bauman) do not interpret their personal jurisdiction statutes in that manner (see our discussions here and here). Critically, as we've also pointed out before (including in our post-Bauman personal jurisdiction cheat sheet, which we will be now be converting to a consent cheat sheet), that consent theory would be just as expansive, and thus just as violative of Due Process, as the general and specific jurisdiction theories rejected in Bauman and BMS, respectively.

Remember, the basis for all of the Court's jurisdictional jurisprudence is Due Process. "[A] state court's assertion of jurisdiction exposes defendants to the State's coercive power," so that assertion "is subject to review for compatibility with the Fourteenth Amendment's Due Process Clause." BMS, slip op. at 5 (citation and quotation marks omitted). Plaintiffs should not expect to achieve the same unconstitutional result by other means, such as expanding state corporate registration statutes beyond recognition. Plaintiffs in BMS could not escape Bauman in that fashion. Future plaintiffs should not expect to escape both Bauman and BMS with yet another subterfuge. Under Due Process, there must be "a connection between the forum and the specific claims at issue." BMS, slip op. at 8.

Finally, we'd also like to point out one more implication of today's BMS decision – it affects available venues for a large number of federal causes of action. The general federal venue statute, 28 U.S.C. §1391, provides that, "[f]or all venue purposes," a corporation "shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court's personal jurisdiction." Thus, by the terms of §1391, the scope of personal jurisdiction recognized in BMS (subject to the Court's final caveat in BMS about federal personal jurisdiction) also becomes the template for the permissible venue choices available to federal plaintiffs bringing suit under any federal statute that does not contain its own statute-specific venue provisions.

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

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
James Beck
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions