Proving “Affiliation” with the State
The BMS decision expressly allowed a basis to maintain specific or personal jurisdiction over a defendant not at home, if the facts of the case had an “affiliation” with that state:
In order for a court to exercise specific jurisdiction over a claim, there must be an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State. . . . When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.
Id. at 1781 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).
The BMS decision also stated that jurisdiction must “arise out of or relate to the defendant’s contacts with the forum.” Id. at 1780. Where the “relevant conduct occurred entirely” out of state, “the mere fact that this conduct affected plaintiffs with connections to the forum state did not suffice to authorize jurisdiction.” Id. at 1781–82 (quoting Walden v. Fiore, 571 U.S. 277, 291 (2014)). Without a case-specific factual hook, “specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.” Id. at 1781. Further, the BMS court observed that a defendant’s distribution of a product through independent third parties doesn’t create personal jurisdiction either. Id. at 1783.
Expressly as to the activities of BMS in California relating to Plavix, the decision observed that “BMS did not develop, create a marketing strategy for, manufacture, label, package, or work on the regulatory approval for Plavix” in California. Id. at 1778. This list stands as a useful guide, however, as to what sort of contacts plaintiffs might look to establish in order to obtain personal jurisdiction.
We can look at some recent decisions to see what judges have found to justify a basis for personal jurisdiction and what fell short.
A decision finding local contacts sufficient to maintain personal jurisdiction:
- Hammons v. Ethicon, Inc., 2018 WL 3030754 (Pa. Super. Ct. June 18, 2018). Specific jurisdiction was held proper as the activities in the forum state were related to the claims at the heart of the product liability lawsuit: defective manufacturing and design claims. First, the defendant’s control over a non-subsidiary defendant in the design, manufacture, and quality control of the defective product was sufficient. Id. at *9. Second, the defendant’s collaboration with a forum state physician over the design of the product proved a further basis. Id.
Decisions finding that the local contacts were insufficient to maintain personal jurisdiction:
- Dyson v. Bayer Corp., 2018 WL 534375 (E.D. Mo. Jan. 24, 2018). The defendant’s marketing and pre-market clinical trials were insufficient local contacts for specific jurisdiction. The reasoning behind the ruling was that the plaintiffs failed to claim reliance on the marketing and clinical trials.
- Moore v. Bayer Corp., 2018 WL 4144795 (E.D. Mo. Aug. 29, 2018 (initial marketing efforts for a medical device in Missouri were insufficient; non-Missouri plaintiffs were not exposed to it).
- Roland v. Janssen Research & Development, LLC, 2017 WL 4224037, at *4 (S.D. Ill. Sept. 22, 2017) (clinical trials in the forum state that allegedly helped form the foundation for the Food and Drug Administration application were not enough to establish personal jurisdiction over claims of nonresidents who were not prescribed the drug and were not injured by the drug in the forum state).
As a practical matter, the plaintiff ideally should have proof of the basis for “affiliation” before suit is commenced and alleges this proof in the pleadings.
However, the actual contacts that the defendant had with the state in relation to the product involved (or the events involved in other areas of the law, e.g., breach of contract) may not be known to the plaintiffs, so they would naturally seek discovery as to the defendant’s contacts after filing suit. Here, one might expect the defendant to object on the usual “fishing” basis.
Plaintiffs without demonstrable proof before suit may at least want to engage in what I call “Goolgovery”: seeing what is on the web and showing that to the court as a rationale for conducting formal discovery. For example, in a case I had recently (in which the issue was doing business in New York), I found a business address for a subsidiary, an ad for a salesperson to cover a New York territory, a stock exchange agent, etc.
Arguing That BMS Does Not Apply to Class Actions
While the BMS decision dealt with a mass tort litigation, it was inevitable that defendants would seek to apply its limitations to nationwide class actions against nonresident corporations (where putative members had no contacts with the forum). They would thereby extend to federal litigation the due process concerns BMS had for state due process under the Fourteenth Amendment.
In the year plus that has passed since the Supreme Court’s decision, trial courts have ruled both ways on whether BMS applies to class actions, and perhaps at some time in the future, the Supreme Court will opine on that issue. (Note that there is also a split among lower court decisions as to whether BMS applies to federal courts in the first place, but that is not the topic being discussed here).
There are cogent arguments that class action plaintiffs can make to avoid having the BMS decision apply to their cases. First, there are really two distinct types of national class actions: those based on federal law—usually a violation of some federal statute (i.e., federal question jurisdiction)—and those based on state law violations, most frequently involving consumer protection statutes. Therefore, in looking at what led courts to reject the application of BMS to putative foreign class members, we will divide cases that have found for plaintiffs into these two parts.
Violation of Federal Law:
- Casso’s Wellness Store & Gym LLC v. Spectrum Lab Products, Inc., 2018 WL 1377608 (E.D. La. Mar. 19, 2018). Suit was brought under the Telephone Consumer Protection Act (TCPA). The court held that class actions under this act are national in nature, with no state law individuality. Efficiency favored maintaining a class. In addition, discovery had not commenced.
- Morgan v. U.S. Xpress, Inc., 2018 WL 3580775 (W.D. Va. July 25, 2018). This is another TCPA case with the same reasoning. The basic purpose of Rule 23 class actions is to have all cases involved.
- Tickling Keys, Inc. v. Transamerica Financial Advisors, Inc., 305 F. Supp. 3d 1342 (M.D. Fla. Apr. 4, 2018). Another TCPA case. The court in BMS specifically left open the question of whether the decision applied to federal litigation, and the BMS dissent pointed out that class actions were not at issue. This decision distinguished between mass tort actions, in which each plaintiff is a real party in interest, and a class action, which has a representative basis.
- Becker v. HBN Media, Inc., 2018 WL 3007922 (S.D. Fla. June 6, 2018). The court relied on the reasoning in the Tickling Keys case.
- Sanchez v. Launch Technical Workforce Solutions, LLC, 297 F. Supp. 3d 1360 (N.D. Ga. 2018). Action was brought under the Fair Credit Reporting Act. The court adopted a long opinion by a magistrate. Class actions differ from mass torts because, in the latter, each person is a real party in interest, whereas class actions are a creature of equity, where individuals are part of a group. Unity is the nature of a class. Cases have held that class members have fewer individual rights.
In addition, the Supreme Court’s decision in Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), held that unnamed plaintiffs did not have to meet the “minimum contacts” test to establish personal jurisdiction.
Violation of State Laws:
- In re Chinese-Manufactured Drywall Products Liability Litigation, 2017 WL 5971622 (E.D. La. Nov. 30, 2017). These were property damage class actions within a long-running multidistrict litigation. In the longest discussion (so far) of the application of BMS to class actions, the court held that BMS did not apply to this situation. It found no federalism concerns. The stringent requirements of a Rule 23 class were a guarantee of protection of the defendants. In the Shutts decision mentioned above, the Supreme Court had allowed for a nationwide class action.
- Fitzhenry-Russell v. Dr. Pepper Snapple Group, Inc., 2017 WL 4224723 (N.D. Cal. Sept. 22, 2017). In a consumer class action asserting food-labeling claims, the court distinguished plaintiffs in a class action from those in a mass tort action. The latter were individually named plaintiffs, whereas in a class action, the putative members are less specifically defined. The court also stressed the efficacy in class actions.
Sloan v. General Motors LLC, 287 F. Supp. 3d 840 (N.D. Cal. 2018). In a long and learned discussion, in a class action involving motor vehicle defects, the court held that allowing out-of-state putative class members would place only a de minimis burden on the defendant and the defendant had presented no evidence of any actual problems. To disperse the cases would mean piecemeal resolution with overlaps and possible conflicts. Long-standing precedential requirements were complied with, including comporting with fairness. (The court also proceeded under a pendant jurisdiction rationale.)
Managing Mass Tort Cases Without Running into BMS Problems
The standard model for aggregating mass tort cases is, of course, multidistrict litigation, pursuant to 28 U.S.C. § 1407. The state court Plavix cases involved in BMS were not so organized. It is a safe argument that BMS’s jurisdiction restrictions will not be applied to multidistrict litigations. Congress created the multidistrict litigation model purposefully to group together cases pending in many federal district courts, for economy reasons. This view was taken in the Chinese Drywall litigation decision cited above as to class actions.
Broader Arguments on Limiting the Reach of BMS
- The BMS Court stated quite clearly that it was following settled principles on jurisdiction, 137 S. Ct. at 1781, and was not changing the law. From this proposition, counsel may cite previous decisions of courts at various levels in support of some forms of aggregation of cases.
- The Court in BMS cites many previous Supreme Court decisions, such as World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980). These precedents recognized other bases for asserting personal jurisdiction over foreign defendants, such the “stream-of-commerce” test, the “purposeful availment” test, and the “fair play and substantial justice” test.
- Use of pendant jurisdiction.
Plaintiffs’ attorneys should not necessarily feel required by the BMS decision to file mass tort actions only in the home state of the defendant or the domicile of the plaintiff. They are well advised to undertake discovery to show that the state in which they have sued had some manner of BMS “affiliation” with the cause of action. Lawyers mounting national class actions arising from state consumer law violations should continue to bring these actions, on the rationale noted above given by courts allowing them to proceed.
As with any major Supreme Court decision, moreover, one must await appellate decisions for better guidance.
Paul D. Rheingoldis of counsel to Rheingold Giuffra Ruffo & Plotkin, LLP in New York City, New York. Camila Lopezis a JD candidate at Benjamin N. Cardozo School of Law in New York City, New York.