Lured by the promise of huge jury verdicts and favorable laws, out-of-state asbestos plaintiffs and their counsel have flocked to California in increasing numbers since at least 2000 to avail themselves of California courts. To avoid having their cases forcibly returned to their home states on forum non conveniens grounds, plaintiffs have made sure to name defendants in their lawsuits subject to jurisdiction only in California. Although such defendants are characterized as “nominal” or “sham” by others in the litigation, cases such as American Cemwood Corp. v. American Home Assurance Co. (2001) 87 Cal.App.4th 431, 433, hold that an action cannot be dismissed for forum non conveniens unless all defendants are subject to jurisdiction in the alternate forum. Thus, the presence of even one “sham” or “nominal” defendant is sufficient under American Cemwood to defeat a forum non conveniens motion seeking dismissal of the action. Though Hansen v. Owens Corning Fiberglas Corp. (1996) 51 Cal.App.4th 753 still permits a stay, such a stay can be lifted upon a showing that the California-only defendant is not subject to jurisdiction in the alternate forum. Thus, the doors of the “Hotel California” have historically been wide open to out of state litigants, with no meaningful way for a defendant to close them no matter how strongly the public and private interest factors favor transfer to another state.
While the Hotel California has not yet closed its doors, it may have finally hired a doorman. A California appellate court has now ruled that the claims of the California-based “nominal” venue defendant could be severed and the action dismissed on forum non conveniens grounds in favor of the remaining parties.
David v. Medtronic, Inc. was filed in Los Angeles County Superior Court by 37 plaintiffs, none of whom had any connection to Los Angeles. Indeed, 36 plaintiffs lived out of state, and the only California-resident plaintiff lived far from Los Angeles County in Sacramento. Plaintiff sued multiple Medtronic and Wyeth entities, who were sued as manufacturers and sellers of an allegedly defective medical device called Infuse. Neither Medtronic nor Wyeth are California corporations.
The only connection to Los Angeles County was a local physician, Dr. Gary Michelson, who served as plaintiff’s nominal “venue” defendant. Over the course of litigation defendants were, in fact, able to prove that Dr. Michelson was nominal, having had no involvement in the manufacture or marketing of the device. Medtronic then brought a “three pronged” motion seeking to (1) sever the claims of each plaintiff from each other; (2) to dismiss the claims of the 36 out-of-state plaintiffs on forum non conveniens grounds; and (3) to transfer venue of the California-resident defendant to his home county of Sacramento. The trial court granted the motion on all three grounds; plaintiffs appealed the court’s rulings as to the first and second.
On appeal, the David court recognized that “this case squarely presents the issue of whether the existence of a nominal defendant, over whom jurisdiction cannot be established in the proposed alternative forum, can defeat a forum non conveniens motion which should otherwise be granted.” Although David found that the trial court erred in dismissing plaintiffs’ claims against all defendants, including the resident Los Angeles physician, it held that the dismissal of claims against the non-California defendants was proper. In doing so, the court noted that there was no dispute that Dr. Michelson was a nominal defendant, and cited various federal cases supporting the transfer of cases despite the claims of a nominal defendant. While the court stopped short of carving out an exception for nominal defendants, it held that it could properly sever the claim of such a nominal defendant, and dismiss the claims against the remaining non-California defendants on forum non conveniens grounds. Thus, it affirmed the dismissals of the Medtronic and Wyeth entities.
Though not an asbestos case, David will have wide-ranging impact on asbestos litigation, in which individual cases frequently have dozens of defendants, only a handful of which may subject to jurisdiction in California. The David decision returns rationality to a forum non conveniens analysis ripe for abuse, and potentially deprives plaintiffs of a “hook” to keep cases otherwise unconnected to the state from being tried here, thereby discouraging forum shopping. Most importantly, it is a win for California citizens and potential jurors, who will find themselves relieved from hearing cases unconnected to the State and the communities in which they live.
While the Hotel California is still open, perhaps more plaintiffs will be forced to check out.