March 07, 2018 Practice Points

Class Actions: The As-Yet-Unknown Impact of BMS

By Celeste M. Brecht

In June 2017, the U.S. Supreme Court issued a far-reaching 8–1 decision limiting the scope of personal jurisdiction in multi-plaintiff litigation. Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (BMS). Although the contours of this decision’s impact will be defined in years to come, most commentators agree that BMS clipped the wings of litigation tourists, hoping to fly away from their home states to litigate in notoriously plaintiff-friendly venues.

The Nuts and Bolts of BMS
Looking for a jurisdiction to call home, 592 non-California residents joined 86 California residents, to pursue their claims together in California state court, alleging injury resulting from their use of Plavix, a prescription blood thinner. Bristol-Myers Squibb did not develop, manufacture, label, or package Plavix in California. Indeed, the only relationship BMS had with California was that it sold Plavix there via a distributor.

The U.S. Supreme Court rejected California’s relaxed interpretation of specific jurisdiction, explaining that 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 and is therefore subject to the State’s regulation.” The Court explained that when there is “no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.”

The New Conflict in Class-Action Jurisprudence
Although the application of BMS has been widely discussed, its applicability to class actions remains largely unknown. The decision itself makes clear that the “mere fact” that resident plaintiffs were prescribed the drug in California, and sustained the same alleged injuries as nonresident plaintiffs, was insufficient to confer specific jurisdiction over the nonresidents’ claims. At first blush, this analysis seems likely to apply to class actions. Yet, footnote 4 of Justice Sotomayor’s dissent suggests that this door has been left open by the Court. If BMS were to apply to class actions, Justice Sotomayor observed that it “may make it impossible to bring certain mass actions at all.”     

Under prior Supreme Court jurisprudence, non-named class members “may be parties for some purposes and not for others.” Devlin v. Scardelletti, 536 U.S. 1, 9–10 (2002). Examples of these various procedural rules include tolling the statute of limitations for class members and, importantly, only considering the citizenship of named plaintiffs for the purpose of examining diversity of citizenship.

On the other hand, labeling a case a class action cannot alter the substantive legal standards applicable to a claim, and cannot deprive a defendant of defenses that would otherwise be available to it. Accordingly, BMS should apply in the class-action context to limit the jurisdictional reach of courts to adjudicate claims of putative nonresident plaintiffs over nonresident defendants.

Recent Rulings: A Mixed Bag
Only a handful of courts have addressed the specific issue of whether and how post-BMS personal jurisdiction applies to class-action litigation, and so far, courts have gone both ways.

In Wenokur v. AXA Equitable Life Ins. Co., for example, the court noted that it “lacks personal jurisdiction over the claims of putative class members with no connection to [the forum State,] and therefore would not be able to certify a nationwide class.” 2017 WL 4357916, at *4 n.4 (D. Az. Oct. 2, 2017). Another court rejected as “flawed” plaintiffs’ attempt to “side-step the due process holdings” in BMS: “The constitutional requirements of due process do[] not wax and wane when the complaint is individual or on behalf of a class.” In re Dental Supplies Antitrust Litig., 2017 WL 4217115, at *9 (E.D.N.Y. Sept. 20, 2017). Most recently, a federal court held that BMS applied to absent class members, noting that “forum shopping is just as present in multi-state class actions.” DeBernadis v. NBTY, Inc., 2018 WL 461228, at *2 (N.D. Ill. Jan. 18, 2018).

Other courts have held differently. In Fitzhenry-Russell v. Dr Pepper Snapple Group, Inc., a court held that BMS has no application to class actions. 2017 WL 4224723, *5 (N.D. Cal. Sept. 22, 2017). There, Dr Pepper moved to dismiss the plaintiffs’ putative class action, arguing that the court lacked personal jurisdiction over it, at least as to the non-California putative class members. Ultimately holding that it had personal jurisdiction over Dr Pepper as to the putative class, the court described BMS as “meaningfully distinguishable” and commented that Dr Pepper failed to present a persuasive argument compelling the extension of BMS. Other federal courts in California have reached similar decisions. See, e.g., Feller v. Transamerica Life Ins. Co., 2017 WL 6496803, at *17 (C.D. Cal. Dec. 11, 2017) (“The Supreme Court in BMS applied its reasoning to the narrower grounds of personal jurisdiction in the context of mass tort actions. Its reasoning does not reach so far as to bar the nonresident unnamed class members.”); Alvarez v. NBTY, Inc., 2017 WL 6059159, at *6 (S.D. Cal. Dec. 6, 2017) (stating, in dicta, that BMS “applied to a mass tort action with individually named plaintiffs, and not a class action”).

Questions Moving Forward
These early decisions illustrate the new jurisdictional divide. For now, both sides have had success in persuading courts to apply—or not to apply—BMS in the class-action context.

 

Celeste M. Brecht is a partner and Venable LLP, in Los Angeles, California.


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