In a 4-3 decision, the California Supreme Court has found specific jurisdiction over the product liability claims of nonresidents against Bristol-Myers Squibb Company (BMS), a Delaware company headquartered in New York with substantial operations in New Jersey. Bristol-Myers Squibb Co. v. Superior Court (Anderson), S221038. It was undisputed that California plaintiffs had specific jurisdiction for their claims. However, on the pivotal issue of whether each nonresident claim “arises from or is related to” BMS’s California activities, the majority concluded that “the nonresident plaintiffs’ claims bear a substantial connection to BMS’s contacts in California” in light of the asserted nationwide marketing, promotion and distribution of the product.
California courts are authorized to exercise jurisdiction to the limits of constitutional authority. C.C.P. § 410.10. However, following the U.S. Supreme Court ruling in Daimler AG v. Bauman (2014) 571 U.S. ___, the California Supreme Court unanimously agreed that there was no general jurisdiction over BMS. While it characterized BMS’s activities in California as substantial in themselves (164 employees in research, 250 sales representatives, and an advocacy presence in Sacramento), the evidence showed this was only a small fraction of BMS’s national operations, which were primarily focused in New York and New Jersey. Citing Daimler, the Court concluded, “we find nothing to warrant a conclusion that BMS is at home in California.”
All agreed that the 86 California plaintiffs had specific jurisdiction to pursue their claims, leaving the question of whether the other 592 nonresident plaintiffs could do likewise. As established by the U.S. Supreme Court, there are three prongs to satisfy for specific jurisdiction over a nonresident defendant: (1) whether the defendant has “purposefully directed” its activities at the forum state; (2) whether the plaintiff’s claims arise out of or are related to these forum-directed activities; and, (3) whether the exercise of jurisdiction is reasonable and does not offend “traditional notions of fair play and substantial justice.” The plaintiff has the burden of proof on the first two prongs, and defendant on the third. BMS did not contest the first and third prongs of this test, although the majority still evaluated them to reach its conclusion that they were each satisfied.
Regarding the second prong, the evidence established that BMS did not research, develop or manufacture the product in California. Similarly, none of the work related to regulatory approval, labeling, packaging, or marketing was conducted by employees in California. The nonresident plaintiffs did not obtain the product in or through California, and did not allege they were injured or treated in California. However, the majority stated that BMS did not dispute that it conducted a nationwide marketing, promotion and distribution program which did not vary in substance from state to state, and which the majority characterized as “a single, coordinated, nationwide course of conduct.” In contrast, the dissent stated that BMS merely conceded “that some degree of commonality existed” but that the record was otherwise void on this issue.
The majority cited extensively from Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, for the proposition that the claim did not need to arise directly from the defendant’s contacts in order to be related, so long as it “bears a substantial connection to the nonresident‘s forum contacts.” In applying this idea to BMS’s nationwide program, the majority found that the claims of both resident and nonresident plaintiffs were based on the same allegedly defective product and that both arose from the same alleged defects in the national marketing program, creating “a substantial nexus between the nonresident plaintiffs’ claims” and BMS’s California contacts. The majority also concluded that BMS’s unrelated California research provided an additional connection regarding plaintiffs’ claims that BMS negligently researched the subject product, as well as increasing BMS’s overall contact with California. Finally, the majority cited the sliding scale in Vons, which reduced the connection required for “arising out of or related to” in proportion to the level of defendant’s state contacts.
The dissent found no specific jurisdiction when defendant’s state contacts have no legal relevance to the nonresident plaintiffs’ claims, noting that the cross-defendants in Vons had specific relationships with California residents that were part of the factual basis for the claims alleged. Thus, the dissent focused on the complete lack of contact between the nonresident plaintiffs, including the product and representations they received, and any BMS contacts with California. The dissent rejected the argument that the existence of similar representations in other states established a connection with California which could support jurisdiction, and noted that plaintiffs failed to produce any evidence regarding such a national program to meet their burden of proof. The dissent also expressed concern that the majority opinion undermined Daimler AG by substantially expanding the scope of specific jurisdiction.