July 6, 2017, Trial News

TrialNews logo

SCOTUS finds no jurisdiction for nonresident plaintiffs in pharma case

Kate Halloran

photo of judge with gavel

A California court cannot exercise personal jurisdiction over a defendant for nonresident plaintiffs’ claims, the U.S. Supreme Court has ruled. In a closely watched case involving claims against drugmaker Bristol-Myers Squibb Co., the Court found that the California Supreme Court’s “sliding scale” approach to specific jurisdiction was not in line with its specific jurisdiction precedents.
 

A California court cannot exercise personal jurisdiction over a defendant for nonresident plaintiffs’ claims, the U.S. Supreme Court has ruled. In a closely watched case involving claims against drugmaker Bristol-Myers Squibb Co., the Court found that the California Supreme Court’s “sliding scale” approach to specific jurisdiction was not in line with its specific jurisdiction precedents. (Bristol-Myers Squibb Co. v. Super. Ct. of Calif., San Francisco Cnty., 2017 WL 2621322 (U.S. June 19, 2017).)

In a mass action against the drugmaker alleging claims under California law for injuries resulting from its blood thinner Plavix, most of the plaintiffs resided in 33 states other than California. While the defendant was challenging the California courts’ personal jurisdiction over the nonresidents’ claims, the Supreme Court issued Daimler AG v. Bauman, which refined its general jurisdiction test to the corporation being “at home” in the forum state (134 S. Ct. 746 (2014)). In response, the California Court of Appeal ruled that the state’s courts could not exercise general jurisdiction over the defendant, but that they did have specific jurisdiction over the nonresident plaintiffs’ claims.

When Bristol-Myers appealed, the California Supreme Court affirmed the decision, relying on a sliding scale test—“the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.” Even though the nonresident plaintiffs did not assert that they had been injured in California, the state high court found that the drugmaker’s “extensive contacts” in California and the similarity between the claims of California residents and nonresidents allowed for specific jurisdiction “based on a less direct connection . . . than might otherwise be required.”

Bristol-Myers petitioned the Supreme Court for certiorari to consider whether California’s exercise of specific jurisdiction violated the due process clause of the Fourteenth Amendment. The Court heard oral arguments in April, as Trial News previously reported.

An 8-1 majority of the Court disagreed with California’s approach, with Justice Samuel Alito writing that the sliding scale test was more akin to a general jurisdiction analysis and that it did not “square” with “settled principles of specific jurisdiction.” The Court clarified that specific jurisdiction requires a connection between the forum state and the underlying claim, such as the injury occurring in that state—“a defendant’s general connections with the forum are not enough.” The Court noted that although California residents could bring these claims against Bristol-Myers in California, the nonresident plaintiffs could not join their claims based only on a third party’s relationship with the defendant.

The Court dismissed the plaintiff’s argument that the drugmaker’s contract with California-based distributor McKesson Corp. was sufficient to assert personal jurisdiction. That relationship alone was not enough—unless the plaintiff could demonstrate that Bristol-Myers and McKesson acted together, that Bristol-Myers is vicariously liable for McKesson’s activities, or that the nonresident plaintiffs received Plavix through McKesson’s distribution channel.

The Court was not persuaded by the plaintiff’s argument that nonresident plaintiffs have been allowed to bring their claims in state courts in other cases, finding that these cases were distinguishable because one involved a nonresident’s libel claim against a magazine that was circulated in the forum state and affected state residents, and the other involved exercising specific jurisdiction over nonresident class members, not a defendant.

Justice Sonia Sotomayor dissented, stating that the decision’s effect could be “substantial,” making it more difficult for plaintiffs to aggregate claims that “may be worth little alone.” She further noted the impact on mass actions in which defendants are not “at home” in the same states and cautioned about the risk of “piecemeal litigation”—all concerns that the majority barely addressed, if at all. Much of Sotomayor’s dissent focused on whether exercising jurisdiction in this case would be reasonable and, under a due process analysis, whether it would be fair and substantially just to the defendant. Since Bristol-Myers already must litigate the residents’ identical claims, and because to litigate them in 34 different states would be more burdensome, jurisdiction would be reasonable, she reasoned. To do otherwise, she wrote, “hands one more tool to corporate defendants determined to prevent the aggregation of individual claims, and forces injured plaintiffs to bear the burden of bringing suit in what will often be far flung jurisdictions.”

The potential consequences of the Court’s decision are already being felt—hours after the opinion was released, a St. Louis circuit court judge declared a mistrial in Swann v. Johnson & Johnson, an ovarian cancer talc case that involved out-of-state plaintiffs. And Johnson & Johnson has already begun requesting that other cases be dismissed in light of the Bristol-Myers ruling.

Washington, D.C., attorney Robert Peck, who worked on AAJ’s amicus brief in support of the plaintiffs, cautioned that plaintiff attorneys should measure their response to the ruling. “As expected, courts are taking the decision seriously, but it would be a mistake to concede that plaintiffs may only file in states where the defendant is at home or where the injury itself occurred,” he said. “The Court expressed the need for an ‘affiliation’ between the defendant’s misconduct and the state for the courts of that state to exercise its coercive power. Therefore, where there have been clinical trials of the product or production of it took place, jurisdiction may still lie.” Peck also noted that the Court’s decision applies only to state courts, not federal courts.

As to how plaintiff attorneys should proceed, Peck said that “the decision puts a premium on discovery that connects the underlying claim and the state of filing.”