Supreme Court’s Personal Jurisdiction Limits Could Lead to More Companies Being Sued in Their Home States
Product Liability Update
Date: June 26, 2017
The U.S. Supreme Court recently severely restricted out-of-state plaintiffs’ ability to join in mass torts and class actions filed in California, which likely will result in more class actions filed against companies in their home states.
In Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cnty., No. 16-466 (June 19, 2017), a group of over 600 plaintiffs sued Bristol-Myers (a Delaware corporation headquartered in New York) in California state court over Bristol-Myers’s blood-thinning drug Plavix. Most of the plaintiffs had no connection to California and had not taken the drug, seen advertising material for the drug, or suffered any injury in the state. The development of the drug had no connection to California, and though it was distributed by a California company, the plaintiffs did not base their claims on the distribution.
Nevertheless, the California Supreme Court determined that the state court could exercise jurisdiction over the out-of-state plaintiffs’ claims because Bristol-Myers had extensive, general contact with the state, and the out-of-state plaintiffs allegedly suffered the same injuries and were exposed to the same product marketing and promotion as in-state plaintiffs. The U.S. Supreme Court reversed, criticizing California’s “sliding scale approach to specific jurisdiction.” The Court found that the 14th Amendment Due Process Clause did not permit California to relax the requirement of “a connection between the forum and the specific claims at issue.” That is, state courts cannot assert specific jurisdiction over nonresidents’ claims where the claims are unrelated to the state.
The Court’s decision will change the direction of future litigation. Nationwide class actions are likely to be redirected away from plaintiff-friendly venues, such as California, to jurisdictions where defendants are headquartered or incorporated, such as Delaware, New York, or Ohio. Almost certainly, going forward, nationwide classes will be sustained only in defendants’ home states.
Plaintiffs attempting to pursue a nationwide class action against multiple defendants who are residents of different states will likely be forced to bring separate actions against each defendant in the defendants’ home states. If the plaintiffs want to file a single class action against all defendants, their only option is to pursue a statewide – not nationwide – class.
Overall, the number of large nationwide class actions will likely drop in favor of far more numerous, but smaller, state-specific class actions. This will reduce the plaintiffs’ leverage in each case and redirect claims away from plaintiff-friendly jurisdictions. However, it also will drive up litigation costs for defendants fighting on multiple fronts. The Court’s decision also may make it more challenging to resolve class actions on a nationwide basis.
In the coming months, companies may very well see a shift away from traditional class action venues, such as California, only to find themselves subject to a multitude of smaller class actions, including an increase of filings in their home states.
FOR MORE INFORMATION
For more information, please contact:
Kip T. Bollin
Andrew H. Cox
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