United States: US Supreme Court Limits Jurisdictions Where Non-US Businesses May Be Sued

On June 19, the US Supreme Court decided Bristol-Myers Squibb Co. v. Superior Court of California, a case that may make efforts to litigate national product liability and consumer protection suits against non-US companies much more difficult to bring.

Here are the key facts: Eighty-six California residents and 592 residents from 33 other US States sued the drug make Bristol-Myers Squib (BMS) in a single action in California. All alleged injury from ingestion of a drug that they argued had been promoted and sold through a national marketing campaign. The drug was not developed or manufactured in California, and the campaign was neither designed nor implemented in that State. BMS argued that the claims of the 592 plaintiffs who were not California residents should be dismissed because they lacked any connection with California, and that a California court thus could not assert jurisdiction over the company for those claims under the Due Process Clause of the Fourteenth Amendment to the US Constitution. The California Supreme Court disagreed, but the US Supreme Court, which has the final say in this State case because a federal constitutional right is at issue, sided with the drugmaker and limited the case to the 86 California plaintiffs.

The decision turns on the peculiarly US concept of "personal jurisdiction"—the authority of a court to require a defendant to participate in a case and to order relief if warranted. Two types of personal jurisdiction exist. First, "general" personal jurisdiction over a defendant is hard to obtain but very broad in scope: it can support a claim brought by any plaintiff no matter where located and no matter where the conduct giving rise to a claim occurred. The parties in this case agreed that general personal jurisdiction over BMS did not exist in California because the US Supreme Court's 2015 Daimler decision essentially limited that type of jurisdiction to States where a corporate defendant is considered to be "at home"—generally just where it is incorporated or maintains its principal place of business, neither of which was California in the case of BMS. By contrast, "specific" personal jurisdiction may generally be asserted over a defendant in any US State (i) with which the defendant had contacts satisfying minimum criteria established by courts and (ii) where the defendant engaged in conduct "giving rise" to the claim. (Forcing the defendant to defend against a claim must also satisfy a third "fairness" requirement, which usually is satisfied where the first two requirements are met.)

Specific personal jurisdiction concededly existed as to the claims of the California plaintiffs. But BMS argued that the non-California plaintiffs' claims did not arise from the company's contacts with California and thus requirement (ii) for jurisdiction described above was not met. The company acknowledged that it conducted research in the State, but maintained that work was unrelated to the drug or its marketing that allegedly caused the plaintiffs' injuries. BMS likewise admitted that it had contracted with a California distributor to resell its drugs, but argued that neither the act of contracting nor the distributor's subsequent activities in the other States established the required connection between California and the claims of out-of-State plaintiffs.

The California Supreme Court disagreed. It applied a "sliding scale" test under which the greater a defendant's contacts with California, whether or not related to the plaintiff's claims, the less factual connection would be required between the defendant's activities in California and the injuries alleged for specific personal jurisdiction to exist. Applying this "sliding scale," the court first concluded that BMS's California research activities were substantial. That permitted a reduced showing to be made in order to establish the required connection between the out-of-State plaintiffs and California, and the court found that link in the fact that the claims of all plaintiffs, no matter where located, were based on the same alleged conduct.

In an 8-to-1 decision, the US Supreme Court rejected the California Supreme Court's expansive "sliding scale" rule of specific personal jurisdiction. The highest US Court held that specific jurisdiction required each and every named plaintiff's claims to have arisen from conduct by BMS in California, without reference to BMS's unrelated research activities in the State. Because BMS did not develop or make the drug in California, and marketing of the drug likewise was implemented elsewhere, the 592 non-resident plaintiffs could not assert specific personal jurisdiction over BMS and their claims were dismissed. In reaching this conclusion, the Court did not specifically address what it means for a claim to have "arisen from" the contacts of a defendant, the standard for which has been the subject of disagreements in the courts of appeals. It did, however, reject the contention that specific personal jurisdiction could be based on BMS's having engaged a California distributor, potentially for sales in States where non-California plaintiffs resided. Even if evidence showed that the distributor supplied the pills taken by the out-of-State plaintiffs, the "bare fact" that BMS contracted with a California company could not in any event fairly be said to have "give[n] rise to the claims," nor could the distributor's California conduct be attributed to BMS. The result, in the Court's view, was that the only locations where BMS could only be sued by all of the plaintiffs together were the jurisdictions outside of California where BMS could be considered to be "at home."

As relevant here, Justice Sotomayor, the lone dissenter, observed that the Court's holding meant that a non-US defendant might not be subject to suit anywhere in the US in connection with a "nationwide mass action" brought in State court—a common venue for such claims. She observed that the Court's holding would rule out specific personal jurisdiction in cases analogous to BMS and that, because of the Daimler ruling, general personal jurisdiction would not exist for non-US companies, as they are unlikely to be "at home" in any US jurisdiction. Justice Sotomayor also sought to limit the Court's holding to cases, such as the one at bar, in which multiple individual plaintiffs had sued, leaving open the question whether a class action could be brought on behalf of a class including plaintiffs whose claims had no connection with the forum.

* * *

Justice Sotomayor seems to be right that the BMS decision will make litigation against non-US companies in State courts more difficult because only specific personal jurisdiction would likely be available, and that would limit cases to those cases to States (if any) where the non-US company engaged in conduct giving rise to all of the plaintiffs' claims nationally. Whether she is right that the case will be found not to control class actions as well as suits by groups of individual plaintiffs is less sure.

The Court's majority also made a point of reserving judgment on whether a different rule for specific personal jurisdiction would apply to certain claims brought in federal court based on alleged violations of federal law. At least where the claim implicates a federal statute that provides for "nationwide service of process" (e.g., the securities and antitrust laws, and RICO, the statute targeting organized criminal activity), courts have historically recognized some differences in jurisdictional principles to be applied, as issues regarding the sovereign rights of individual States are not presented. In such cases, the relevant constitutional question is whether a defendant's contacts with the US as a whole, not with the particular State, are sufficient to satisfy Due Process requirements of fairness. Whether and how the BMS opinion will be applied to federal claims remains to be seen, although there is much reasoning in the opinion itself that appears not geared toward claims under federal statutes with nationwide service of process. Companies incorporated and based outside the US should also bear in mind that a special federal rule already makes them amenable to suit anywhere in the US for alleged violations of federal law, if their contacts with the US in the aggregate satisfy the "minimum contacts" standard, and there is no other US forum where the contacts are sufficient to support jurisdiction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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
 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.