WASHINGTON (Legal Newsline) – The U.S. Supreme Court has overturned rulings made by three California courts that concluded they had specific jurisdiction over lawsuits brought by out-of-state residents against a company not incorporated or headquartered there.
On June 19, the court released an 8-1 decision in favor of Bristol-Myers Squibb, which was sued by a more than 600 plaintiffs in San Francisco County Superior Court over its prescription blood thinner Plavix. The plaintiffs did not allege they purchased Plavix in California, only that BMS had enough business ties to the state that the courts there could exercise jurisdiction over their claims.
Only Justice Sonia Sotomayor voted to affirm the California courts’ rulings.
“The relevant plaintiffs are not California residents and do not claim to have suffered harm in that state,” Justice Samuel Alito wrote for the majority.
“In addition… all the conduct giving rise to the nonresidents’ claims occurred elsewhere. It follows that the California courts cannot claim specific jurisdiction.”
The group of plaintiffs in the mass action consisted of 86 California residents and 592 residents of 33 other states. The decision, according to Dorsey & Whitney partner Timothy Droske, will limit the number of out-of-state plaintiffs that can join in-state plaintiffs in mass actions and could force plaintiffs attorneys to file these types of cases in the specific jurisdictions in which corporations can be deemed “at home.”
“This case is another example of a marked trend by the Court since its decision in Daimler AG v. Bauman (in 2014) to reign in the scope of personal jurisdictions over corporate defendants,” Droske said.
Indeed, that has been the case this year, with the court limiting jurisdiction in two recent decisions. On May 30, the court ruled Montana courts were wrong to accept two cases of railroad workers suing their employer over injuries not sustained in the state.
Just eight days earlier, the court had ruled for a company that fought to have a patent case against it moved to its home jurisdiction. The case had been filed in U.S. District Court for the Eastern District of Texas, traditionally a magnet for patent claims.
BMS is incorporated in Delaware and headquartered in New York, with more than 50 percent of its workforce employed in New York and New Jersey. It also has five facilities in California and employs approximately 410 employees in the state.
Plavix wasn’t developed in California, and the company did not develop a marketing strategy for it there. It also did not make the drug in the state.
Nevertheless, out-of-state residents joined with in-state plaintiffs to sue over alleged side effects. The San Francisco Superior Court, an appeals court and the state Supreme Court all ruled against the company, which had moved to quash service of summons on the nonresidents’ claims.
The state Supreme Court’s reasoning “is difficult to square with our precedents,” Alito wrote.
“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,’” he added.
“When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.”
Sotomayor wrote that she fears the consequences of the opinion will make it difficult for plaintiffs across the country to combine their claims.
“It will make it impossible to bring a nationwide mass action in state court against defendants who are ‘at home’ in different States. And it will result in piecemeal litigation and the bifurcation of claims,” she wrote in her dissent.
Droske said he was struck that the court reached a near-unanimous decision. Sotomayor was the lone dissenter in the Daimler AG case too.
“Justice Sotomayor’s fear… may prove to be correct, but that has not dissuaded both the liberals and conservatives on the bench from reigning in personal jurisdiction’s reach,” he said.
From Legal Newsline: Reach editor John O’Brien at email@example.com.