February 28, 2017 Practice Points

Supreme Court to Address Constitutional Limits of Personal Jurisdiction

By Joe Winebrenner and Jeff Wojciechowski

On January 19, 2017, the Supreme Court granted a writ of certiorari in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, No. 16-466, 2017 U.S. LEXIS 787 (Jan. 19, 2017), a case that could have significant implications in mass tort actions against nationwide companies. The Court’s decision may either formally restrict or broaden the constitutionally defined limits for where a company may be sued. Although the court will hear arguments in April, several advocates for limited corporate jurisdiction have already filed amicus briefs.

The case comes from California, where Bristol-Myers faced hundreds of product liability claims alleging that its drug Plavix caused negative side effects. Although some plaintiffs’ claims arose out of events that occurred in California, the vast majority had no connection with the state. Bristol-Myers Squibb moved to dismiss the out-of-state claims for lack of personal jurisdiction because the claims had no connection to the forum of California: Although Bristol-Myers had marketed the drug in California, it had not manufactured or designed Plavix in California, and the out-of-state plaintiffs had not ingested the drug in California nor had they even been exposed to Plavix marketing efforts in California.

The California courts, however, determined that Bristol-Myers was subject to California jurisdiction. Specifically, the California Supreme Court applied a sliding-scale test that evaluated “the nature of the defendant’s activities in the forum and the relationship of the claim to those activities.” Bristol-Myers Squibb Co. v. S.C., 377 P.3d 874, 885 (Cal. 2016). The court determined that because the out-of-state claims were based on the same product and marketing campaign as those raised by the California plaintiffs, the out-of-state claims bore a substantial connection to Bristol-Myers’s California contacts.

Bristol-Myers’s successful petition for certiorari argued that the court’s approach exceeds the limits of personal jurisdiction set by the Constitution’s Due Process Clause. Specifically, Bristol-Myers argues that such an approach is contrary to principles announced in the recent Supreme Court case Daimler AG v. Bauman, 134 S. Ct. 746 (2014). The Daimler opinion rejected the idea that doing substantial business in a state was sufficient to subject a corporation to general personal jurisdiction in the state. The Court made clear that such a rule was important to ensure that national corporations would not face the uncertainty of knowing what contacts with a state would subject them to that state’s jurisdiction, a proposition at least partially contradicted by California’s Bristol-Myers decision.

The case is notable because it may resolve a split in how U.S. courts apply the personal jurisdiction standard. Certain courts, like California and Missouri, have become known for applying a more lenient personal jurisdiction standard. For example, Johnson & Johnson is defending numerous state-court Missouri lawsuits by non-Missouri residents, claiming that its talcum powder products cause ovarian cancer. Despite the fact that Johnson & Johnson is incorporated and headquartered in New Jersey, a Missouri state judge denied Johnson & Johnson’s motion to dismiss the out-of-state plaintiffs’ claims for lack of personal jurisdiction. Hogans, et al. v. Johnson & Johnson, et al., No. 1422-CC09012 (Mo. 22nd Cir. Ct., Mar. 17, 2015). Subsequently, two plaintiffs (who were exposed to the talc in Alabama and South Dakota) have won a combined $127 million in verdicts before St. Louis juries.

Product liability defendants are perhaps the most susceptible to the broader personal jurisdiction approach because their products are sold across the country and are not amenable to class action treatment, yet plaintiffs’ attorneys seem eager to attempt mass filings in favorable state-court jurisdictions. Presumably, by deciding the Bristol-Myers case, the Supreme Court will provide clarity for litigants on both sides with respect to the propriety of this strategy. 

Joe Winebrenner is a partner and Jeff Wojciechowski is an associate with Faegre Baker Daniels in Minneapolis, Minnesota.

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