August 15, 2017 Articles

SCOTUS Gets (More) Serious about Corporate Personal Jurisdiction: Bristol Myers Squibb v. Superior Court

By Bruce Jones, Christine Kain, and Nicholas Nelson

In recent years, the U.S. Supreme Court has repeatedly clarified the limits on states’ personal jurisdiction over foreign corporations. Some would say it has repeatedly restricted personal jurisdiction. Indeed, by now a pattern has emerged: State courts will try a new rationale for extending personal jurisdiction; the Supreme Court will reject it; the States will try yet another variation; and the Supreme Court will reject it as well. That pattern continued in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), which the Supreme Court decided the last week of its recently finished term.

At least three times in recent years, the Court has rejected states’ adventurous attempts at expansive personal jurisdiction. In 2011, the Court rearticulated the basic distinction between general and specific personal jurisdiction over foreign corporations: General jurisdiction allows a court “to hear any and all claims against” foreign corporations “when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Specific jurisdiction, on the other hand, depends on an affiliation between the forum and the underlying controversy. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). In 2014, the Court reiterated that rule in Daimler AG v. Bauman and emphasized that a subsidiary’s or affiliate’s contacts with the forum state cannot be aggregated with the parent’s for purposes of general jurisdiction. 134 S. Ct. 746 (2014). And earlier this year, the Court reminded us that “the general jurisdiction inquiry does not focus solely on the magnitude of the defendant’s in-state contacts”—so big companies that do a lot of business in many states are not for that reason subject to general personal jurisdiction in all of them. BNSF v. Tyrrell, 137 S. Ct. 1549, 1559 (2017).

In response to this trend, the California courts took a rather innovative approach. They adopted a sort of hybrid general/specific personal jurisdiction. The hybrid approach required some kind of nexus between the suit and the defendant’s contacts with California—but “the more wide ranging” the defendant’s California contacts, the “less direct” of a connection to the case was required. Bristol-Myers Squibb, 137 S. Ct. at 1778–79.

The California courts asserted this “sliding scale” personal jurisdiction over Bristol-Myers Squibb (BMS) in a suit filed over BMS’s blood-thinning drug Plavix. The suit was filed in California state court by several hundred plaintiffs who hailed from 38 different states. The California courts did not have general personal jurisdiction over BMS, which is incorporated in Delaware and headquartered in New York. And for the claims by non-California plaintiffs, under traditional tests, California did not have specific personal jurisdiction either. BMS did not develop Plavix in California; did not create a marketing strategy for Plavix in California; and did not manufacture, label, package, or work on the regulatory approval of Plavix in California. Moreover, the nonresident plaintiffs did not allege that they obtained Plavix through California physicians or from any other California source, nor did they claim that they were injured by Plavix or were treated for their injuries in California.

Nevertheless, the California courts found personal jurisdiction under their sliding-scale approach. They explained that BMS had other significant operations in California, and the California and non-California plaintiffs’ claims were “based on the same allegedly defective product and the assertedly misleading marketing and promotion of that product.” Id. at 1779. That, the California courts held, was enough.

The Supreme Court was having none of it, reversing by a vote of 8–1. The Court rejected the sliding-scale approach squarely—and rather brusquely—stating that it “resemble[d] a loose and spurious form of general jurisdiction.” The Court reiterated that specific jurisdiction does not arise merely “when third parties (here, the plaintiffs who reside in California) can bring claims similar to those brought by the nonresidents.” Id. at 1781.

By now the Court’s message is pretty clear: The classic flavors of specific and general personal jurisdiction are the whole menu. The Court looks very skeptically on any attempts to invent new, exotic alternatives or variants. Nor does the Court seem likely to change its tune in the near future, given the eight-vote majority in Bristol-Myers Squibb. California’s sliding-scale approach was arguably the most theoretically sound variant the Court has considered recently. Its application to BMS may have been questionable, but it is easy to think of cases that seem much closer. For example, what if BMS had made identical versions of Plavix at two plants, one in California and one somewhere else, and the non-California plaintiffs could not prove which plant their particular prescription had come from? But the Court did not seem to find the sliding-scale approach interesting even in theory; it slapped it down 8–1 as “spurious.” If other state courts decide to go on adventures in personal jurisdiction, it seems likely they’ll end in a similar way. The fate of M.M. v. GlaxoSmithKline LLC, 61 N.E.3d 1026 (Ill. App. Ct. 2016), finding an in-state clinical trial enough for personal jurisdiction in a case otherwise similar to BMS, will be instructive. This case is currently before the Supreme Court (No. 16-1171), and the Court could act as early as late September on the pending certiorari petition.

More broadly, these cases suggest that the Court likely would not approve a prominent variant called “consent jurisdiction.” Before Daimler, some courts held that corporations consent to personal jurisdiction in foreign States by registering to do business there. These holdings seemingly would do an end-run around Daimler and its progeny, as noted by the Missouri Supreme Court in State ex rel. Norfolk Southern Railway Co. v. Honorable Colleen Dolan. In Norfolk Southern, the court reasoned that because “every state requires a foreign corporation doing substantial business in a state to register under the foreign corporation statutes,” permitting consent jurisdiction on this basis “would allow national corporations to be sued in every state,” rendering Daimler “pointless.” 512 S.W.3d 41, 51 (Mo. 2017). This concept holds some theoretical interest: Of course, a defendant can consent to personal jurisdiction in any court, so could states make such consent a condition of doing business within their borders? But given the recent trend, if that argument reached the Supreme Court, most likely the only difference would be that the Court would cite some privileges-and-immunities cases or dormant Commerce-Clause cases in the course of rejecting it. That’s if the Court agreed that the state had adopted the consent theory at all. Another possible outcome would be that the Court would impose a sort of clear-statement rule, requiring that if a state wants to adopt the “consent theory,” it must do so by clear legislation and not by judicial decision. The Norfolk Southern court took that type of approach. Id. at 52–53. Most recently, so did an appellate court in New Jersey. See Dutch Run-Mays Draft, LLC v. Wolf Block, LLP, 2017 WL 2854420, at *6–7 (N.J. Super. Ct. App. Div. July 5, 2017) (rejecting consent jurisdiction as “belied” by Daimler).

The Supreme Court’s Bristol-Myers Squibb decision had immediate impact, especially in mass tort cases. The very same day it was decided, a Missouri state court judge in St. Louis followed it by declaring a mistrial in a significant case. The Missouri suit was brought on behalf of three women—two of them not from Missouri—who used Johnson & Jonson’s talcum powder and later died of ovarian cancer. Johnson & Johnson moved for the mistrial, arguing “[u]nder the reasoning of Bristol-Myers, the mere fact that nonresident plaintiffs have joined their claims with those of a handful of Missouri residents does not suffice to give rise to personal jurisdiction over the Johnson & Johnson defendants with respect to their claims.” The judge agreed.

So, if the new rules are apparently set, where can a corporate defendant be sued in a mass tort case? Plaintiffs who want solid personal jurisdiction arguments seem to have four choices, not all of which may be available in every case:

  1. Sue in the state where the defendant is incorporated.
  2. Sue in the state where the defendant is headquartered.
  3. Group plaintiffs by their contacts with a specific state—for instance, plaintiffs who live in the state, suffered the alleged injury there, or purchased the allegedly injurious product there—and sue in that state.
  4. Sue in the state where the defendant made or designed the allegedly injurious product or decision, or engaged in the allegedly injurious action.

If a plaintiff sues a corporation somewhere else, the corporation likely will be able to object to personal jurisdiction. And given the Supreme Court’s continuing trend of enforcing traditional concepts of jurisdiction, it is unlikely plaintiffs will be successful in expanding jurisdiction any time soon.

Copyright © 2018, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).