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July 17, 2017 Practice Points

The Changing Landscape of Personal Jurisdiction

By Celine L. Shirooni, with Robert L. Duckels

Sizable product-liability lawsuits often incite disputes over personal jurisdiction. The wide array of plaintiffs and their alleged injuries frequently originate from the state in which the claims are brought, but also frequently they do not. In recent years, and most specifically this year, the Supreme Court of the United States has tightened personal-jurisdiction holdings that may have a cooling effect on forum shopping.

Beginning in 2014 with Daimler v. Bauman, the Supreme Court has emphasized that plaintiffs must demonstrate a legitimate connection to the forum to exercise personal jurisdiction. In Daimler, Argentinian citizens brought suit against German corporation Daimler in California for its Argentinian subsidiary’s role in Argentina’s “Dirty War.” Daimler v. Bauman, 134 S. Ct. 746, 750–51 (2014). The plaintiffs argued that California was a proper venue because Daimler’s subsidiary MBUSA distributed vehicles to independent dealerships in the state. The Court held that the plaintiffs failed to establish general jurisdiction because Daimler was not “at home” in California, and “given the absence of any California connection to the atrocities, perpetrators, or victims described in the complaint . . . [such exercise] of personal jurisdiction so exorbitant . . . [is] barred by due process constraints on adjudicatory authority.” Id. at 751.

This summer, the Supreme Court issued two new decisions further limiting a plaintiff’s ability to bring suit in a forum to which their claims have no cognizable connection. In BNSF Railway Co. v. Tyrrell, two South Dakota residents brought suit under the Federal Employers Liability Act in Montana state court against BNSF Railway. BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1554 (2017). The Court stated specific jurisdiction could not be exercised because “[n]either plaintiff alleged injuries arising from or related to work performed in Montana; indeed, neither [plaintiff] appear[ed] ever to have worked for BNSF in Montana.”The Court then held that BNSF’s business in Montana “[did] not suffice to permit the assertion of general jurisdiction over claims like Nelson’s and Tyrell’s that are unrelated to any activity occurring in Montana.” Id. at 1559. This was despite BNSF’s substantial property holdings and thousands of employees in the state.

Three weeks following BNSF, the Court decided Bristol-Myers Squibb Co. v. Superior Court of California. The Court stressed that the “primary focus of our personal jurisdiction inquiry is the defendant’s relationship with the forum State” and that to find specific jurisdiction, “there must be ‘an affiliation between the forum and the underlying controversy, principally, an activity or occurrence that takes place in the forum State and is therefore subject to the State’s regulation.’” Bristol-Myers Squibb Co. v. Superior Court, 2017 WL 2621322 at *2. On June 19, 2017, the Court held that California could not assert personal jurisdiction over defendant Bristol-Myers for injuries caused by their drug Plavix because there was no “affiliation between the forum and underlying controversy” with regard to claims asserted by non-resident plaintiffs. The vast majority of these plaintiffs were not California residents, they “did not allege that they obtained Plavix through California physicians or from any other California source,” and they did not “claim that they were injured by Plavix or were treated for their injuries in California.” Id. at 1.

These decisions limiting the scope of personal jurisdiction have enormous implications for the product-liability field. For example, the day Bristol-Meyers was decided, a St. Louis judge declared a mistrial in a case against Johnson & Johnson where two of the three plaintiffs had no connection to Missouri. These decisions thus invite defense attorneys to file motions to reconsider jurisdiction rulings, or to challenge personal jurisdiction in the first instance due to changes in the law. As to the latter, it is well established in federal law that “a party cannot be deemed to have waived objections or defenses that were not known to be available at the time they could first have been made, especially when it does raise the objections as soon as [a change in the law provides a legal basis for the objection].” Holzsager v. Valley Hospital, 672 F.2d 792, 796 (2nd Cir. 1981); see also Bennet v. City of Holyoke, 362 F.3d 1, 7 (1st Cir. 2004) (same); Ridgewood Assoc., Inc. v. Trumpower, 2006 WL 3147439 at *3 (E.D. Cal.) (same).

Timeliness is a key element, and district courts have barred defendants from raising personal-jurisdiction defenses despite a minor delay after the law-altering decision. For example, in Laydon v. Mizuho Bank, Ltd. the court held that the defendants’ failure to raise personal-jurisdiction defenses before Daimler did not constitute waiver. Laydon v. Mizuho Bank, Ltd., 2015 WL 1499185 at *7 (S.D.N.Y. Mar. 31, 2015). However, the seven-month delay between the decision and the assertion of the defense did result in its waiver. If you choose to take advantage of these holdings, you should do so as soon as possible to increase the likelihood of success.

Celine L. Shirooni is a summer associate with Greensfelder, Hemker & Gale, P.C. in St. Louis, Missouri. Robert L. Duckels is an officer of Greensfelder, Hemker & Gale, P.C. in St. Louis, Missouri.

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