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October 24, 2018 Articles

Applying BMS/Bauman in Other Personal Jurisdiction Contexts—The Defense Position

By James M. Beck

With last term’s 8–1 Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (BMS), added to the unanimous decision in Daimler AG v. Bauman, 571 U.S. 117 (2014), defendants should argue for universal application of the personal jurisdiction due process principles these decisions espouse. Two particular applications of these principles are (1) enforcing the “arising from”/“related to” test for “case-linked” specific jurisdiction and (2) the incompatibility of BMS/Bauman with nationwide class actions—except when brought in jurisdictions where defendants are “at home.”

First, “arising from”/“related to”: BMS reiterated that other plaintiffs’ and other defendants’ contacts do not count in specific personal jurisdiction. 137 S. Ct. at 1781 (“that other plaintiffs were prescribed, obtained, and ingested [the product] 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 1783 (“[A] defendant’s relationship with a . . . third party, standing alone, is an insufficient basis for jurisdiction.”).

However, the record in BMS was minimal. The defendant “did not develop [the product] in California, did not create a marketing strategy for [it] in California, and did not manufacture, label, package, or work on the regulatory approval of the product in California.” Id. at 1778. “[T]he nonresident [plaintiff]s were not prescribed [the product] in California, did not purchase [it] in California, did not ingest [it] in California, and were not injured by [it] in California.” Id. at 1781. “The bare fact that [the defendant] contracted with [an in-state] distributor is not enough to establish personal jurisdiction in the State.” Id. at 1783.

While plaintiffs will attempt to use the Court’s recitation of what was missing in BMS as a road map, causal contacts, not just contacts, are what really count. “[T]he suit must arise out of or relate to the defendant’s contacts with the forum.” Id. at 1780 (emphasis original). The required “affiliation between the forum and the underlying controversy” means that “an activity or an occurrence [must] take[] place in the forum State.” Id. (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. In determining the existence of personal jurisdiction, “the primary concern” is “the burden on the defendant.” Id.

Thus, specific personal jurisdiction after BMS requires “a connection between the forum and the specific claims at issue.” Id. at 1781. BMS permits only two types of mass tort aggregation: (1) Plaintiffs from anywhere may bring “a consolidated action” in a state that has “general jurisdiction” under Bauman. (2) Plaintiffs who are “residents of a particular state” can “probably sue together in their home states” (assuming that was also where they were injured). Id. at 1783.

The top two takeaways from BMS are, first, a “defendant’s relationship with a third party, standing alone, is an insufficient basis” for jurisdiction. Second, BMS requires that the defendant’s jurisdictional contacts for specific jurisdiction must relate to a plaintiff’s “specific claims”—ruling out general contacts that every plaintiff in a mass tort could assert. An in-state manufacturing plant should matter only if a manufacturing defect claim is alleged and the product the plaintiff took originated in that facility. In-state activity related to overall Food and Drug Administration (FDA) approval would not be “specific” to any plaintiff and thus not a relevant contact under BMS. Only if a plaintiff actually enrolled in a clinical trial and claimed injury from that participation would such a contact be “specific” to that plaintiff.

Relevant case law is trending toward these conclusions. That the defendant operated an in-state warehouse was irrelevant to post-BMS personal jurisdiction where the claimed injuries did not involve that property. Aspen Am. Ins. Co. v. Interstate Warehousing, Inc., 90 N.E.3d 440, 446 (Ill. 2017) (observing that Bauman “expressly rejected” reasoning that would render a defendant “at home in all” states where it operated). Aspen Insurance effectively overrules M.M. v. GlaxoSmithKline LLC, 61 N.E.3d 1026 (Ill. App. 2016), which purported to recognize jurisdiction in any state (more than 40) where the defendant conducted clinical trials of a drug.

A string of post-BMS precedent similarly holds that only in-state contacts affecting the plaintiff individually support “case-linked” specific personal jurisdiction under the “arising from”/“related to” test. See Campbell v. Acme Insulations, Inc., 2018 WL 2305692, at *5–6 (Ill. App. Ct. May 18, 2018) (no specific jurisdiction over asbestos defendant where nonresident plaintiff not exposed in state to that defendant’s products); Goellner-Grant v. JLG Indus., Inc., 2018 WL 3036453, at *2 (E.D. Mo. June 19, 2018) (an in-state sales network does not establish jurisdiction where the product was not sold in state); Blackburn v. Shire US, 2018 WL 2159927, at *6 (N.D. Ala. May 10, 2018) (defendant’s involvement in obtaining FDA product approval did not target any particular state); In re Nexus 6P Prods. Liab. Litig., 2018 WL 827958, at *4 (N.D. Cal. Feb. 12, 2018) (necessary “affiliation between the forum and the underlying controversy” requires evidence of “where Plaintiffs purchased [the product], where Plaintiffs experienced the defects, [and] where Plaintiffs were residing”); Dyson v. Bayer Corp., 2018 WL 534375, at *4–5 (E.D. Mo. Jan. 24, 2018) (alleged in-state clinical trials and product marketing “too attenuated” where plaintiffs were neither enrolled in the trials and nor exposed to the marketing); In re Santa Fe Nat’l Tobacco Co. Mktg. & Sales Practices & Prods. Liab. Litig., 288 F. Supp. 3d 1087, 1214 (D.N.M. 2017) (defendant’s “intimate involvement in the marketing, advertising, and overall business development” of the product was not a contact with any particular state); Sae Han Sheet Co. v. Eastman Chem. Corp., 2017 WL 4769394, at *8 (S.D.N.Y. Oct. 19, 2017) (no jurisdiction where product “shipped through” state, when nonresident plaintiff was injured elsewhere); BeRousse v. Janssen Research & Dev., LLC, 2017 WL 4255075, at *4 (S.D. Ill. Sept. 26, 2017) (“multiple clinical trials” in forum insufficient where nonresident plaintiff did not purchase or ingest drug in jurisdiction); Spratley v. FCA US LLC, 2017 WL 4023348 (N.D.N.Y. Sept. 12, 2017) (nonresident’s exposure to purported “uniform, nationwide design, manufacture, and distribution” of product cannot establish specific jurisdiction); Jinright v. Johnson & Johnson, Inc., 2017 WL 3731317, at *4–5 (E.D. Mo. Aug. 30, 2017) (“creating the defect in” the state not a relevant contact when “all the conduct giving rise to the nonresidents’ claims occurred elsewhere”); Jordan v. Bayer Corp., 2017 WL 3006993, at *4 (E.D. Mo. July 14, 2017) (only one nonresident plaintiff, who had medical device implanted in the forum, could assert personal jurisdiction).

Post-BMS legal precedent is well on its way to establishing—as it should—that a nonresident plaintiff can obtain personal jurisdiction over a nonresident defendant only when the plaintiff can establish that the defendant’s in-state activities in fact caused the plaintiff’s injuries.

This proposition likewise demonstrates why a nationwide class action cannot constitutionally be brought against a corporate defendant not “at home” in the jurisdiction. A nationwide class against a nonresident defendant necessarily supposes the prosecution of claims against the nonresident corporate defendant by the numerous nonresident plaintiffs of the out-of-state class or classes. Both due process and the Rules Enabling Act forbid such a result—due process for the reasons stated in BMS/Bauman, and the act because the class action device cannot be used to deprive defendants of “defenses to individual claims,” personal jurisdiction being one. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 367 (2011).

After BMS, a 48-state consumer protection class action was trimmed to the forum state. Plumbers’ Local Union No. 690 Health Plan v. Apotex Corp., 2017 WL 3129147, at *1 (E.D. Pa. July 24, 2017). Defendants not selling in the forum were not subject to specific jurisdiction. Id. at *7–8 (even if stream-of-commerce jurisdiction is viable, it fails without in-state sales). All absent class members’ claims from non-forum states lacked personal jurisdiction.

Only [plaintiffs’] Pennsylvania Claims arise out of or relate to Selling Defendants’ sales of generic drugs in Pennsylvania. . . . [T]he Non-Pennsylvania Claims do not arise out of or relate to any of Selling Defendants’ conduct within the forum state. Accordingly, the Court cannot exercise specific jurisdiction over the Non-Pennsylvania Claims brought against Jurisdiction Defendants.

Id. at *9.

Plumbers’ Local followed two post-Bauman but pre-BMS decisions—Demedicis v. CVS Health Corp., 2017 WL 569157 (N.D. Ill. Feb. 13, 2017), and Demaria v. Nissan N.A., Inc., 2016 WL 374145 (N.D. Ill. Feb. 1, 2016)—that had correctly predicted the direction that personal jurisdiction jurisprudence would take in BMS.

In an antitrust case, In re Dental Supplies Antitrust Litigation, 2017 WL 4217115 (S.D.N.Y. Sept. 20, 2017), non-forum, pendent state-law claims were likewise dismissed because would-be class representatives did not buy any of the defendant’s products in the forum state. Id. at *6. BMS precluded assertion of personal jurisdiction based merely on the defendant’s contract with an independent distributor, which in turn sold into the forum state. Id. at *9. Dental Supplies firmly rejected the plaintiffs’ argument that personal jurisdiction requirements were less stringent in class actions. “A putative class representative seeking to hale a defendant into court to answer to the class must have personal jurisdiction over that defendant just like any individual litigant must.” Id. at *6 (quoting Newberg on Class Actions § 6:25 (5th ed. 2011)).

The constitutional requirements of due process do not wax and wane when the complaint is individual or on behalf of a class. Personal jurisdiction in class actions must comport with due process just the same as any other case.

Id. at *9 (citation omitted).

Numerous other cases have reached the same result. A disproportionate number are from the Northern District of Illinois.

Nothing in Bristol-Myers suggests that it does not apply to named plaintiffs in a putative class action; rather, the Court reaffirmed a generally applicable principle—that due process requires a “connection between the forum and the specific claims at issue.” That principle applies whether or not the plaintiff is a putative class representative.

Al Haj v. Pfizer, Inc., 2018 WL 1784126, at *6 (N.D. Ill. Apr. 13, 2018); see America’s Health & Res. Ctr., Ltd. v. Promologics, Inc., 2018 WL 3474444, at *2 (N.D. Ill. July 19, 2018); Chavez v. Church & Dwight Co., 2018 WL 2238191, at *10–11 (N.D. Ill. May 16, 2018); Anderson v. Logitech, Inc., 2018 WL 1184729, at *1 (N.D. Ill. Mar. 7, 2018); DeBenardis v. NBTY Inc., 2018 WL 461228, at *2 (N.D. Ill. Jan. 18, 2018); LDGP, LLC v. Cynosure, Inc., 2018 WL 439122 (N.D. Ill. Jan. 16, 2018); Greene v. Mizuho Bank, Ltd., 289 F. Supp. 3d 870, 874 (N.D. Ill. 2017); McDonnell v. Nature’s Way Prods., LLC, 2017 WL 4864910 (N.D. Ill. Oct. 26, 2017); Kincaid v. Synchrony Fin., 2016 WL 4245533, at *2–3 (N.D. Ill. Aug. 11, 2016).

However, precedent applying BMS/Bauman due process principles to bar nationwide class actions is widespread. See Gaines v. Gen. Motors, LLC, 2018 WL 3752336, at *3 (S.D. Cal. Aug. 7, 2018) (“agree[ing] with the many other federal courts that have found no reason Bristol-Myers’ limitation on personal jurisdiction would not apply to named parties in putative class actions”); Daniel v. Tootsie Roll Indus., LLC, 2018 WL 3650015, at *8 (S.D.N.Y. Aug. 1, 2018) (jurisdiction over nonresident class of product purchasers was “unwarranted” under BMS); Hickman v. TL Transp., LLC, 2018 WL 3388307, at *7 & n.2 (E.D. Pa. July 12, 2018) (“Plaintiffs have not presented any reason for distinguishing Bristol-Myers from this [state law] action”); In re Samsung Galaxy Smartphone Mktg. & Sales Practices Litig., 2018 WL 1576457, at *2 (N.D. Cal. Mar. 30, 2018) (dismissing nonresident named plaintiffs under BMS); Howe v. Samsung Elecs. Am., Inc., 2018 WL 2212982, at *4 (N.D. Fla. Jan. 5, 2018) (“Rule 23 does not expand a court’s personal jurisdiction over a defendant”; “a defendant who is not subject to personal jurisdiction on an individual claim also is not subject to jurisdiction on a class-action claim.”); Wenokur v. AXA Equitable Life Ins. Co., 2017 WL 4357916, at *4 n.4 (D. Ariz. Oct. 2, 2017) (“[t]he Court . . . lacks personal jurisdiction over the claims of putative class members with no connection to Arizona”); Spratley v. FCA US LLC, 2017 WL 4023348, at *7 (N.D.N.Y. Sept. 12, 2017) (“[O]ut-of-state Plaintiffs have shown no connection between their claims and [defendant’s] contacts with the forum state. Therefore, the Court lacks specific jurisdiction.”); Famular v. Whirlpool Corp., 2017 WL 2470844, at *7 (S.D.N.Y. June 7, 2017) (pre-BMS; due process “cannot allow [a court] to hear plaintiffs’ claims against the foreign defendant based on defendant’s actions occurring solely outside the forum state”); Bauer v. Nortek Glob. HVAC LLC, 2016 WL 5724232, at *6 (M.D. Tenn. Sept. 30, 2016) (pre-BMS; product “units [that] were purchased” in class plaintiffs’ “Home States” could not possibly “arise out of or relate to” any actions by the defendant in the forum state).

This area is hotly contested, but contrary decisions are unpersuasive and transparently result-oriented. Due process is due process, and nothing in BMS/Bauman suggests due process exempts class actions. Defendants should be particularly wary of plaintiffs attempting to bolster their position with cases decided under federal statutes that, unlike state law litigation, allow nationwide service of process.

Currently, relevant appellate authority is nonexistent, but that could soon change. One of the decisions going the other way, Molock v. Whole Foods Market, Inc., 297 F. Supp. 3d 114, 126 (D.D.C. 2018) (“the court . . . concludes that Bristol-Myers does not apply to class actions”), has since been certified the issue for interlocutory appeal. See Molock v. Whole Foods Mkt. Grp., Inc., 317 F. Supp. 3d 1 (D.D.C. 2018). Should the circuits split on this issue, personal jurisdiction could be headed for the Supreme Court yet again.

James M. Beck is a senior life sciences policy analyst at Reed Smith LLP in Philadelphia, Pennsylvania.

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