The concept of “minimum contacts” has been at the heart of any substantive personal jurisdiction–related analysis or discussion for more than 70 years.1 Considered black letter law by students and lawyers alike, the rules of the road were relatively straightforward. While case- and defendant-specific facts were necessary for the analysis, the path to an appropriate forum was historically straight and narrow. However, the signs along the path began to change after the U.S. Supreme Court seemed to deviate from what was the jurisdictional norm.2 By the early 1990s, decisions followed in various venues that obscured the jurisdictional path.3 The procedural cloud created by these decisions also led to an opportunity for plaintiffs to do battle over personal jurisdiction and identify certain courts that are favorably disposed to look expansively at and deny personal jurisdiction challenges, regardless of the forum’s contacts with the parties or the connection to the underlying subject matter of the claims. More often, the cases or claims involve multiparty products liability or toxic tort cases that complicate the issues of exposure and jurisdiction. With that said, the trend has been changing with two recent U.S. Supreme Court decisions, Bristol-Myers Squibb Co. v. Superior Court4 and Daimler AG v. Bauman,5 combining to restore direction to the analysis of jurisdictional challenges and police forum shopping efforts in a meaningful way. The national impact of these decisions is playing out in real time across the country, with federal and state courts redefining the approach and often granting defendants’ motions to dismiss6 or for mistrials and reversing jury verdicts.
This article details the new parameters by which courts will resolve jurisdictional motions and outlines critical issues that attorneys should consider with their clients before asserting a jurisdictional challenge.
Overview of Critical Personal Jurisdiction Principles
At the outset of every litigation, a preliminary question is asked: Does the court have jurisdiction over the defendant? Of course, without jurisdiction, the court has no authority to adjudicate a case. When a defendant—either an individual or a corporation—does not reside in a jurisdiction, a court may exercise personal jurisdiction only to the extent permitted by the due process clause of the U.S. Constitution.7 This requires a showing that the defendant has sufficient contacts with the forum state so the court’s exercise of jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.’”8 While the interests of the forum and the plaintiff’s choice of forum are factors to be considered, the “‘primary concern’ is the ‘burden on the defendant,’” and the primary focus of the “personal jurisdiction inquiry is the defendant’s relationship to the forum State.”9
Personal jurisdiction can be “general,” meaning all-purpose jurisdiction, or it can be “specific,” meaning conduct-linked jurisdiction.10 For general jurisdiction, the nonresident defendant must have connections to the forum state that are so “continuous and systematic” as to render the party essentially at home there.11 Specific jurisdiction, in contrast, may only be asserted if the lawsuit arises out of the defendant’s contacts with the forum state.12 The distinction between these jurisdictional concepts are critical to the analysis.
General jurisdiction. The Supreme Court has addressed the limits and requirements for general jurisdiction in a series of recent decisions. In these cases, the Court explained that “the paradigm forum for the exercise of general jurisdiction” over a corporation is one in which the corporation is (1) incorporated or (2) has its principal place of business.13 However, there are “exceptional circumstances” where general jurisdiction can be established in a forum state that differs from the corporation’s place of incorporation or principal place of business. In these rare instances, jurisdiction may be found where the entity’s connections to the forum are “so substantial and of such a nature as to render the corporation at home in that State.”14 Such exceptional circumstances have been found where the corporation conducts its management activities within the forum, such as distributing salaries, holding board meetings, and authorizing purchases.15
Specific jurisdiction. Specific jurisdiction derives from “the relationship among the defendant, the forum, and the litigation.”16 “For a State to exercise jurisdiction consistent with due process, the defendant’s suit-related conduct must create a substantial connection with the forum State.”17 “In other words, 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.’”18 For specific jurisdiction to attach, “even regularly occurring sales of a product in a State do not justify the exercise of jurisdiction over a claim unrelated to those sales.”19
In Bristol-Myers, the Supreme Court was asked to evaluate whether California had specific jurisdiction over a class action that asserted state-law claims for injuries allegedly caused by the Bristol-Myers drug Plavix. The affected plaintiffs did not reside, were not prescribed Plavix, did not purchase Plavix, did not ingest Plavix, and were not injured by Plavix in California. Bristol-Myers sold the medication in California and engaged in substantial business activities there, including maintaining five research and laboratory facilities that employed approximately 160 employees, a small state-government advocacy office in Sacramento, and about 250 sales representatives in California. However, Bristol-Myers “did not develop, create a marketing strategy for, manufacture, label, package, or work on the regulatory approval for Plavix in [California].”20 The facts confirmed that the plaintiffs’ products liability claims related to the alleged defects in the warnings, design, and manufacture of Plavix did not arise from Bristol-Myers’s business activities conducted in, or directed from, California. The Court therefore determined that the California court did not have specific jurisdiction over the plaintiffs’ claims because there was no “affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.”21
Critical Factors When Considering a Personal Jurisdiction Challenge
Prevailing on a personal jurisdiction challenge likely will not end the litigation for the moving defendant unless the claims are barred for some other reason; instead, it merely means that the plaintiff can refile all or some of the claims in another forum. Accordingly, there are a number of strategic issues to consider when deciding whether to assert or oppose a challenge.
The analysis usually begins with identifying the state(s) where the plaintiff has a reasonable basis to establish either general or specific jurisdiction. These other forums could include states where the defendant is “at home,” that is, the state of incorporation or principal place of business. The alternative forums could include states where key events occurred that gave rise to the plaintiff’s claims, e.g., where the plaintiff purchased or used the product at issue or where the defendant developed, created a marketing strategy for, manufactured, labeled, packaged, or worked on the regulatory approval for the product.22 Armed with a map that plots the plaintiff’s potential alternative forums, it is critical to conduct a comparative analysis of the potential benefits and pitfalls posed by litigating the plaintiff’s particular claims under each state’s laws.
The details matter. Counsel must evaluate the available claims and defenses under the alternative forum’s law as well as its standards for deciding dispositive motions. For example, a manufacturer defending a products liability claim with strong evidence that its product conformed with the state of the art at the time of manufacture will fare better in jurisdictions like New York, which recognizes this defense,23 rather than New Jersey, where the state-of-the-art defense has been rejected in failure-to-warn cases involving asbestos exposure claims.24
Practitioners defending a toxic tort case based on weak exposure proofs might prefer to litigate and move for summary judgment in a jurisdiction like New Jersey, where the plaintiff must prove that the alleged exposure was a substantial factor in causing the plaintiff’s disease,25 as opposed to California, where the plaintiff must prove that the alleged exposure was a substantial factor in increasing the risk of the exposure-related injury,26 or New York, where the moving defendant has the burden to demonstrate that the alleged exposure could not have contributed to the causation of the plaintiff’s injury.27
Layered on top of these issues are those involving choice of law principles and whether the relevant substantive or procedural law principles are critical to the ultimate decisions in the case, or whether certain law will apply regardless of the ultimate jurisdiction/venue of the case.
That good old gatekeeper. Defense counsel also must compare the original forum’s evidentiary standards with those applied by the alternative jurisdictions. Critical to products liability and toxic tort cases is whether the state law applies the Daubert or Frye or a hybrid test to gauge the admissibility of expert testimony. The Frye standard requires trial judges to admit expert evidence that comports with “generally accepted” knowledge within the relevant scientific community.28 Thus, expert evidence that comports with a “generally accepted” principle but is derived from an otherwise weak foundation or methodology might be admitted in a Frye jurisdiction. States like Illinois and Kansas restrict the application of their versions of Frye to scientific testimony, but not necessarily medical testimony.29
Conversely, trial judges in Daubert-like jurisdictions must assess the reliability of expert evidence.30 The Daubert standard evaluates the admissibility of expert testimony based on four factors: (1) whether such evidence was generally accepted by the relevant scientific community, (2) whether the methodology was published and subject to peer review, (3) whether the methodology has a known or potential rate of error, and (4) whether the results are testable. Legal pundits acknowledge the stated rigors of the Daubert standard while worrying that causation theories based on “junk science” can survive exclusion by merely claiming adherence to a legitimate methodology. These concerns often turn on whether the trial judges shy away from the required reliability assessment under Daubert and forgo evaluating the basis and methodology underlying an expert opinion for fear of sliding into an impermissible credibility assessment of the challenged expert evidence. Because the gatekeeping role can be carried out differently on a state-by-state basis—and possibly even on a courthouse-by-courthouse basis—practitioners must dig into recent decisions to determine how the relevant judges discharge their gatekeeping roles when faced with the type of expert proofs anticipated in their cases.
Caveat emptor. Critical to the analysis is whether the current or alternative forums have caps on compensatory damages awards or if other types of damages, like punitive damages, are barred entirely. Three states—Michigan,31 Nebraska,32 and Washington33—do not permit punitive damages awards. Three states—Louisiana,34 New Hampshire,35 and South Dakota36—only permit such damages awards in certain statutorily created causes of action. Twenty-seven states permit punitive damages awards but impose caps on the quantum of punitive damages that may be recovered.
Most states do not limit the noneconomic damages that a party can recover. However, in products liability and other personal injury lawsuits, 11 states, including Alaska,37 Colorado,38 Hawaii,39 Idaho,40 Kansas,41 Maryland,42 Mississippi,43 Ohio,44 Oklahoma,45 Oregon,46 and Tennessee,47 have statutorily imposed ceilings on pain and suffering awards. Even fewer states—Colorado,48 Indiana,49 Louisiana,50 New Mexico,51 and Virginia52—cap both economic and noneconomic damages, and these limitations apply to medical malpractice actions only.
Potential for removal to federal court. The alternative forums also might create complete diversity among the parties and provide an opportunity for removal to federal court. Consider whether the alternative forum might be where key events gave rise to the claim—e.g., the state where the plaintiff alleges product exposure—which often differs from both the plaintiff’s home state and the state where the defendant was either incorporated or has its principal place of business. For one reason or another, a party may prefer federal court, particularly where there is concern about a hometown advantage. Federal courts have been known to follow more stringent pleading requirements, utilize more uniformly applied procedural and evidence rules, draw from larger jury pools, and be less influenced by local factors or issues. In certain jurisdictions, having federal judges who are appointed rather than elected may provide the parties with more confidence in the process. A federal court venue will also ensure that the Daubert standard will govern the admissibility of expert-related and novel scientific evidence.
Application of joint and several liability. In cases involving multiple defendants, it is important to evaluate the joint and several liability laws in the potential forum states, which impact the extent to which a party is expected to bear the risk that a plaintiff will be unable to recover damages from an insolvent party. This analysis should similarly include an evaluation of how settled parties are treated at trial. Some jurisdictions use a pro tanto approach in which a nonsettling defendant’s liability is reduced by the amount paid by a settling defendant. Others use a pro rata approach where liability is distributed equally among liable defendants regardless of fault. In some pro rata jurisdictions, like Massachusetts, settled parties do not appear on the verdict sheet and the liable defendants may be entitled to a setoff for any settlements, making these jurisdictions particularly unattractive for cases involving a likely allocation of liability among several defendants. Other jurisdictions, like New Jersey, use a modified pro rata approach where a jury apportions liability among defendants, including settled parties and bankrupt entities, based on each party’s relative degree of fault.
Conundrum of jury verdict allocations. Allocation becomes critically important where a successful personal jurisdiction motion leaves a party defending the case in a new forum while a parallel action continues in the original jurisdiction. Counsel should consider the potential downside of a client standing as the only defendant at trial or on the verdict sheet if no other defendants are subject to jurisdiction in the refiled or transferred action. The jurisdictional arguments can be used as a sword in certain settings and a shield in others. New York’s civil procedure rules provide that a defendant may seek an apportionment of fault to nonparties in an action, but a recent decision barred this practice if the plaintiff “proves that with due diligence he or she was unable to obtain jurisdiction over” the nonparty tortfeasor in the action.53
Other jurisdictions, like New Jersey, permit juries to allocate fault to a nonparty that settled in a separate but concurrent tort action arising out of the same injury and events.54 New Jersey does not require the defendant to implead the nonparty, provided that the plaintiff had more than “last minute” notice that such an allocation would be sought.55 In such situations, defendants would be wise to utilize the first pleading or discovery responses to notify all parties of the identities of any nonparties against whom an allocation will be sought.
Similarly, jurisdictions such as Arizona and Indiana have comparative fault statutes that specifically permit defendants to assert a “nonparty” defense so that the defendant can seek an allocation of fault against a nonparty without resorting to impleader.56 Similar to the New Jersey cases, these statutory schemes require the defendant to disclose the identity of all nonparties against whom an allocation is sought within a particular time frame.
Potentially unfavorable venues. The proverbial caution “Be careful what you wish for” is no more relevant than with personal jurisdiction challenges that might cause a case to move from one plaintiff-friendly jurisdiction to another, even less hospitable place. Imagine the conversation scheduled to explain justification for the lawyer time and expense to achieve such a result. Practitioners would be wise to understand and communicate the risks associated with potential alternative forums and obtain informed consent from the client before a jurisdictional challenge is lodged or waived.
Timing is everything. The process and deadlines for asserting personal jurisdiction challenges vary significantly on a state-by-state basis. For instance, in Pennsylvania, within 20 days of service of the complaint, defendants must file preliminary objections outlining the salient facts concerning a lack of personal jurisdiction,57 while in New Jersey defendants are afforded a longer time period to act and only need to move to dismiss within 90 days of filing the answer.58 Failing to act within the window can forfeit the opportunity to escape an undesirable jurisdiction. With this in mind, all of the potential outcomes and client goals must be researched and factored into the decision-making process. On a simultaneous and parallel track, counsel must also work with the client to compile all of the important information necessary to demonstrate that there is neither general jurisdiction over the company in that state nor specific jurisdiction over the plaintiff’s claim.
Laying the Groundwork for a Successful Personal Jurisdiction Challenge
A successful personal jurisdiction challenge must be made by motion or application accompanied by a supporting affidavit signed by a representative who is familiar with the company’s current or historic contact with the particular state and those activities that are specific and relevant to the plaintiff’s claims. The substance of the affidavit must satisfy the mandates of Daimler and Bristol-Myers and demonstrate that the entity (1) is not “at home” in the forum and (2) conducts no business activities in the forum that give rise to the plaintiff’s claims. The affiant might be deposed, so his or her knowledge and presentation as a witness must be considered.
Defeating general jurisdiction. To defeat general jurisdiction, the affidavit must identify the entity’s state of incorporation and the location of the entity’s principal place of business, which is typically defined as “the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. . . . And in practice it should normally be the place where the corporation maintains its headquarters . . . .”59 Under the guidance of Daimler and Perkins v. Benguet Consolidated Mining Co.,60 the affiant should attest that the entity does not hold board meetings, shareholder meetings, or other management meetings in the jurisdiction and that the entity does not maintain bank accounts there and, if it does, that the entity does not pay salaries or make purchases from the jurisdiction.
Clients should be aware that plaintiffs often oppose jurisdictional challenges by arguing that a corporate defendant consented to general jurisdiction by registering to do business in the forum state. Numerous courts have rejected this argument and confirmed that corporate registration in a state is insufficient to impose general jurisdiction.61 However, at least one district court and one state court have held that registering to do business does confer personal jurisdiction.62 Clients should be mindful of state statutes that explicitly warn that registration will subject the entity to the state’s personal jurisdiction. Pennsylvania has such a statute, and, so far, recent district court opinions interpreting this statute have affirmed that a corporation consents to general jurisdiction when it registers to do business in Pennsylvania.63 However, one trial court recently rejected this argument and held that the nonresident defendants’ respective registration as foreign corporations with the commonwealth did not confer general jurisdiction.64
Defeating specific jurisdiction. Defeating specific jurisdiction under Bristol-Myers requires the defendant to establish that its business activities had no relationship to the plaintiff’s claims. In products liability actions, the defendant must establish that the plaintiff neither purchased nor used the identified product in the forum. The defendant must next confirm that it did not develop, manufacture, package, label, or direct marketing for the identified product in the forum, thereby establishing that it conducted no activities in the forum that would give rise to the plaintiff’s claims that the product is defective in design, manufacture, or warnings. This process is significantly more complicated in multidefendant toxic tort claims, where plaintiffs typically do not identify the specific products to which they were allegedly exposed at any particular time but instead allege exposure only to a particular type of product. In response, the defendant should try to develop facts to show that the plaintiff’s chosen forum was not where it developed, manufactured, and directed labeling and marketing activities for the alleged product type.
This requires a careful examination of the history of the product from its initial product development phase, even if these events took place before the alleged period of use or exposure. The resulting corporate affidavit will help make an appropriate record and confirm that the forum has no relationship to where the product was designed and formulated; where and the company from which the company purchased the raw materials used to make the product, including any alleged to be defective; where relevant testing of the product took place; where the product was manufactured; where the company performed quality control functions; where the product labels were prepared, designed, manufactured, and placed on the product; where the products were packaged; and, finally, where and the location from which the product was ultimately distributed. Even if this investigation excludes the current forum as the place where all of these functions took place, the affidavit should also ideally confirm that no meetings or inspections took place and no decisions related to these tasks were made in the forum.
Defendants also should not discount the Bristol-Myers Court’s suggestion that it might have found jurisdiction had Bristol-Myers contracted with its third-party distributor in California to distribute the products used by the plaintiffs. Thus, the investigation ideally should determine whether there were company contracts with any in-state third parties and, if so, whether those contracts involved functions related to the development, manufacture, and marketing of the product within the forum. If the defendant contracted with an in-state third party, then the affidavit should concisely detail the extent and nature of these contracts, affirm that the third parties have no managerial or supervisory functions over the defendant, and indisputably confirm that these third-party contracts were unrelated to any products that the plaintiffs allege are causally connected to their injuries.
Responding to jurisdictional discovery. While the Daimler and Bristol-Myers decisions give practitioners new clarity on personal jurisdiction standards, what remains far from clear is whether a court can order a party to engage in limited jurisdictional discovery before the court decides the motion. Ideally, any affidavit that accompanies a jurisdictional motion should leave no relevant corporate questions unanswered. However, if this is not possible and additional information is sought through discovery requests, whether court sanctioned or not, clients are best served by lodging objections to the discovery that explicitly state that the discovery is improper due to the court’s lack of jurisdiction over the defendant. The objections should state that the defendant preserves its jurisdictional defenses and that its responses to discovery or deposition notices do not constitute waiver of any jurisdictional defenses. A motion for a protective order should be considered where the plaintiff seeks discovery or depositions that go beyond the scope of the corporate background deemed relevant to general and specific jurisdiction in Daimler, Perkins, and Bristol-Myers.
In the wake of the Daimler and Bristol-Myers decisions, personal jurisdiction challenges are being filed in large numbers, particularly in those jurisdictions previously favored by plaintiffs. Courts historically hesitant to make decisions are now forced to adjudicate the issues and make decisions, and many of these courts are now forced to grant these motions. However, consistent with the recommendations here, lawyers and clients should not reflexively file such motions without first assessing and counseling their clients on the controlling laws of the alternative forums and evaluating the prospect of litigating the same case in different jurisdictions. The new normal is playing out in real time. What is clear is that the standards for evaluating personal jurisdiction challenges are more well defined and that appellate courts will be more proactive in reviewing decisions not based on the facts and the law. However, the jurisdictional battles will continue for some time. n
. For those monitoring the area of personal jurisdiction, the path seemed to change gradually but distinctly after the U.S. Supreme Court’s decision in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987). In Asahi, decided on February 24, 1987, the Court was asked to decide whether a foreign corporation, by merely being aware that its products that later caused injuries could end up in the forum state and into the American “stream of commerce,” satisfied the minimum contacts necessary for the company to be subject to jurisdictional due process requirements. The Court was unanimous in the result but issued a fractured decision, with Justice Sandra Day O’Connor writing for a plurality of the Court.
. See, e.g., Nicastro v. McIntyre Mach. Am., Ltd., 987 A.2d 575 (N.J. 2010), rev’d, J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873 (2011); Hill ex rel. Hill v. Showa Denko, K.K., 425 S.E.2d 609 (W. Va. 1992).
. See, e.g., McDonnell v. Nature’s Way Prods., LLC, No. 16 C 5011, 2017 WL 4864910 (N.D. Ill. Oct. 26, 2017); In re Dental Supplies Antitrust Litig., No. 16 Civ. 696, 2017 WL 4217115 (S.D.N.Y. Sept. 20, 2017); Spratley v. FCA US LLC, No. 3:17-CV-0062, 2017 WL 4023348 (N.D.N.Y. Sept. 12, 2017).
. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011); see also Wilson v. Paradise Vill. Beach Resort & Spa, 929 A.2d 1122, 1126–27 (N.J. Super. Ct. App. Div. 2007) (noting that the standard for general jurisdiction is “fairly high” and requires that the defendant’s contacts be “of the sort that approximate physical presence”).
.. Dailey v. N. Coast Life Ins. Co., 919 P.2d 589, 590 (Wash. 1996).
. See, e.g., Ariz. Rev. Stat. Ann. §§ 12-2501 to 12-2509; Larsen v. Nissan Motor Corp. in U.S.A., 978 P.2d 119 (Ariz. Ct. App. 1998); Owens Corning Fiberglass Corp. v. Cobb, 754 N.E.2d 905, 911 (Ind. 2001).
. See, e.g., Brown v. Lockheed Martin Corp., 814 F.3d 619 (2d Cir. 2016); Chatwal Hotels & Resorts LLC v. Dollywood Co., 90 F. Supp. 3d 97, 105 (S.D.N.Y. 2015) (“After Daimler, with the Second Circuit cautioning against adopting ‘an overly expansive view of general jurisdiction,’ the mere fact of [the defendant’s] being registered to do business [in New York] is insufficient to confer general jurisdiction in a state that is neither its state of incorporation [nor] its principal place of business.” (quoting Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 135 (2d Cir. 2014)); Wal-Mart Stores, Inc. v. LeMaire, 395 P.3d 1116 (Ariz. Ct. App. 2017); Magill v. Ford Motor Co., 379 P.3d 1033, 1039 (Colo. 2016) (concluding that despite Ford’s extensive activities in Colorado, “[n]othing about Ford’s contacts with Colorado [including maintaining a registered agent] suggest that it is ‘at home’ here”); Genuine Parts Co. v. Cepec, 137 A.3d 123, 137 (Del. 2016) (“[Daimler] made clear that it is inconsistent with principles of due process for a corporation to be subject to general jurisdiction in every place it does business.”); State ex rel. Norfolk S. Ry. Co. v. Dolan, 512 S.W.3d 41 (Mo. 2017); Dutch Run-Mays Draft, LLC v. Wolf Block, LLP, 164 A.3d 435 (N.J. Super. Ct. App. Div. 2017) (holding that a plaintiff must show more than that the defendant engaged in some business or complied with corporate registration requirements of the forum); First Cmty. Bank, N.A. v. First Tenn. Bank, N.A., 489 S.W.3d 369 (Tenn. 2015); Segregated Account of Ambac Assurance Corp. v. Countrywide Home Loans, Inc., 898 N.W.2d 70 (Wis. 2017).
. See Bors v. Johnson & Johnson, 208 F. Supp. 3d 648 (E.D. Pa. 2016); Kearns v. N.Y. Cmty. Bank, No. 115,470, 2017 WL 114818 (Kan. Ct. App. Mar. 24, 2017) (“When a corporation applies to do business in Kansas, it consents to personal jurisdiction. Consenting to jurisdiction in Kansas by applying to do business in the state does not violate the requirements of due process.” (citing Merriman v. Crompton Corp., 146 P.3d 162, 177 (Kan. 2006)).