As anticipated, the just-released U.S. Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Court, No. 16-466, 2017 WL 2621322 (U.S. June 19, 2017), establishes an important limitation in the law of personal jurisdiction, especially as it relates to mass tort and class action litigation. Just as the Court in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), drastically limited the ability of lower courts to assert general jurisdiction over non-resident defendants, the Bristol-Myers opinion likewise restricts the ability of plaintiffs to establish specific jurisdiction over non-resident defendants. The impact of this decision has been immediate. The very day Bristol-Myers issued, a Missouri state court judge declared a mistrial with respect to talcum powder claims brought by plaintiffs who were both residents and non-residents of Missouri, given that the Missouri state court likely did not have personal jurisdiction over the claims of the two non-resident plaintiffs.
The question presented in Bristol-Myers was whether out-of-state plaintiffs’ claims arose out of or related to a defendant’s forum activities – sufficient to establish specific jurisdiction – when there was no causal link between those forum contacts and the plaintiffs’ claims. More particularly, the Court addressed a California Supreme Court decision in a mass tort action instituted on behalf of nearly 600 non-California residents asserting California state law claims leveled at Bristol-Myers’ drug Plavix, where none of the non-residents’ claims had any connection with Bristol-Myers’ activities in California. Plavix was not marketed, prescribed, or ingested by any of the non-residents in California. None were injured or received treatment in the state. Plavix was not developed or packaged in California. Bristol-Myers’ regulatory compliance efforts regarding Plavix also took place elsewhere. And even though Bristol-Meyers had entered into a distribution agreement with California-based co-defendant McKesson, it was not possible to trace any Plavix pill taken by a non-resident plaintiff to McKesson.
Notwithstanding this complete lack of connection between the non-resident plaintiffs and their injuries and California, the California Supreme Court held – by a bare (4 to 3) majority – that specific jurisdiction over Bristol-Myers was established. It did so by applying a “sliding scale” test to determine whether non-residents’ claims were sufficiently related to California. Under that test, the intensity of a defendant’s overall forum contacts and the connection between those contacts and a plaintiff’s claims are inversely-related. In other words, the more extensive a defendant’s overall activities in the forum, the easier it is to demonstrate “relatedness” to a claim, for purposes of specific jurisdiction. Additionally, under this approach, a defendant’s forum contacts do not need to be a “but for” or even a “proximate” cause of the injuries alleged.
According to the California Supreme Court’s majority opinion, Bristol-Myers’ connections to California were extensive, even though they were insufficient to render it “at home” (i.e., subject to general jurisdiction) in California. Because national marketing and other efforts with respect to Plavix were conducted in California (among the other states), because California was the site for some company R&D activity (though not involving Plavix), and because claims asserted by the non-resident class members were similar to those advanced by California residents, the California Supreme Court held that there was sufficient “relatedness” to establish specific jurisdiction relative to the claims of the non-resident plaintiffs.
The Supreme Court disagreed by a margin of 8 to 1. According to the Court, under “settled principles regarding specific jurisdiction,” “there must be an ‘affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.’” Id. at *6 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Even regularly occurring sales or other continuous activity within a state will not suffice if there is no connection between those contacts and the issue in dispute. Likewise, “‘a defendant’s relationship with a … third party, standing alone, is an insufficient basis for jurisdiction.’” Id. at *8 (quoting Walden v. Fiore, 571 U.S. ___ (2014) (slip op., at 8)). That principle undercut any contention that similar or even identical injuries suffered by resident and non-resident claimants provided a proper foundation for the exercise of specific jurisdiction. In light of these limitations, the Court described California’s sliding scale approach as “difficult to square with our precedents” and “resembl[ing] a loose and spurious form of general jurisdiction.” Id.
The Court’s holding – that specific jurisdiction does not exist where a non-resident asserts claims over a non-resident defendant where the relevant, alleged misconduct took place elsewhere – casts a cloud over state court mass tort and class actions asserted by non-resident plaintiffs against non-resident defendants. Obviously, a corporate defendant will still be subject to suit in its “home state,” as a matter of general jurisdiction. But combining resident and non-resident claims in a “non-home” forum has become far more difficult (if not impossible), as Justice Sotomayor pointed out in her lone dissent. Id. at *17. Further still, and again as noted in the dissent, joining corporate co-defendants domiciled in different states in a single state court proceeding may be impossible, as well. Id. The days of creative forum shopping for mass tort cases involving a multi-state class may be coming to an end.
It must be emphasized that the Bristol-Myers court did not decide two important issues. First, the Court left open the question whether the restrictions it established for specific jurisdiction on state courts apply to the exercise of jurisdiction by federal courts. Id. at *11. And second, the Court did not address Bristol-Myers’ argument that “relatedness” for purposes of specific jurisdiction can be satisfied only by a showing of actual causation. That leaves open the split which has emerged among courts – both state and federal – as to the meaning of “suit related conduct” in assessing specific jurisdiction. The vast majority (nine circuits along with the highest courts of Arizona, Massachusetts, Oregon, and Washington) have ruled that a plaintiff’s case does not “relate to or arise out of” a defendant’s forum contacts unless those contacts caused in some manner the injury alleged. Several of these courts express the relatedness requirement in “but for” terms while others articulate a “proximate cause” or foreseeability” test. In all instances, though, some direct linkage is required. By contrast, a minority of courts – including the Federal Circuit as well as the highest courts of California, the District of Columbia, and Texas – have adopted a more flexible (and easy to satisfy) approach. Although California’s “sliding scale” standard has now been struck down, it remains unclear whether and to what extent other similarly-relaxed standards will pass constitutional muster.