This week the Supreme Court issued a new opinion in a case that involved the scope of personal jurisdiction in a nationwide mass action brought in a state court. Although it is not entirely clear the extent to which this decision may apply in a class action or in a case brought in federal court, defendants may be able to use this case to argue that nationwide or multistate class actions cannot proceed in a jurisdiction where the defendants are not subject to general jurisdiction (typically that is where they are headquartered and/or incorporated). The case also highlights for large corporations the importance of locating their headquarters and incorporating in a jurisdiction or jurisdictions where the judicial climate is potentially more favorable to them.
Bristol-Myers Squibb Co. v. Superior Court is a mass action brought by more than 600 plaintiffs in a California state court. The plaintiffs, most of whom were not California residents, asserted claims for personal injuries allegedly caused by Plavix, a Bristol-Myers Squibb drug. The drug was developed and manufactured in New York and New Jersey, and was sold and marketed nationwide. The non-California residents could not demonstrate that they sustained any harm in California. Given that Bristol-Myers was not subject to general jurisdiction in California (it is incorporated in Delaware and headquartered in New York), the issue was whether the California court had specific jurisdiction over the non-California residents’ claims. Specific jurisdiction, as the Court explained, depends on whether the claims alleged arose out of the defendant’s contacts with California.
In an 8-1 decision by Justice Alito, the Court held that there was no specific jurisdiction with respect to the non-California residents’ claims in the California state court because “[w]hat is needed – and what is missing here—is a connection between the forum and the specific claims at issue.” (Slip op. at 8.) Merely because other plaintiffs were injured in California was not enough for the California court to have jurisdiction over the nonresidents’ claims, where “the nonresidents’ claims involve no harm in California and no harm to California residents.” (Id. at 8-9.) The Court noted that plaintiffs seeking to bring a mass action could bring it in a state where the defendant is subject to general jurisdiction, and that there remains an open question as to whether it is constitutional for a federal court to exercise personal jurisdiction based on contacts with the nation as a whole rather than a specific state. The due process clause of the Fifth Amendment, rather than the Fourteenth Amendment, would govern the issue in the federal courts. Federal courts, however, have long evaluated these jurisdictional issues in essentially the same manner as if they were a state court in the jurisdiction in which they sit.
Justice Sotomayor’s dissent described the majority’s opinion as “holding that a corporation that engages in a nationwide course of conduct cannot be held accountable in a state court by a group of injured people unless all of those people were injured in the forum State.” (Slip op., Sotomayor, J., dissenting, at 1.) That is the rule that I would expect to see defendants advocating based on the majority’s opinion. Justice Sotomayor believed it was sufficient under Supreme Court precedent that the claims of the California residents and nonresidents arose out of the essentially the same acts by the defendant. She was concerned about situations where, because of the need to sue multiple defendants, or a defendant headquartered and incorporated outside of the U.S., there may be no state where all defendants would be subject to personal jurisdiction. In a footnote, she suggested that the Court’s opinion might not apply to a class action if absent class members were not treated as parties for purposes of personal jurisdiction.
I expect defendants will use Bristol-Myers Squibb to seek to reduce the breadth of nationwide or multistate putative class actions and certified class actions brought in jurisdictions in which the defendants are not headquartered or incorporated. And if the named plaintiff is not a resident of the state where the suit is brought that may be a basis for dismissal of the case in its entirety.
[View source.]
