- The U.S. Supreme Court recently reaffirmed limitations on the exercise by US state courts of specific personal jurisdiction over foreign defendants (both out-of-state and out-of-country). This case, Bristol-Myers Squibb Co. v. Superior Court of Calif., San Francisco Cty., 16-466, decided on 19 June 2017, staunchly upholds the requirement for specific jurisdiction that the plaintiff’s action must arise from the foreign defendant’s in-forum activities.
- This decision, together with the Supreme Court’s previous decisions on specific jurisdiction in J. McIntyre Machinery Ltd. v. Nicastro, 564 U.S 873 (2011) and Walden v. Fiore, 571 U.S. __ (2014) afford companies and individuals based in the UK and the EU substantial protection against being drawn into litigation in US State courts.
- There are two different bases for establishing jurisdiction over a foreign defendant in a US state court: general and specific personal jurisdiction. A state court may exercise general jurisdiction over a foreign defendant - that is, jurisdiction for any claim whether or not it arises in the forum state or from in-state conduct – only if the defendant is essentially ‘at home’ in that state: Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 15 (2011), Daimler A.G. v. Bauman, 571 U.S. __ (2014). A company or individual incorporated or domiciled outside the US will not be subject to this allpurpose jurisdiction.
- Where general jurisdiction is not available, a state court can exercise only specific personal jurisdiction over a foreign defendant if three conditions are satisfied. First, the defendant must have “purposely availed” itself of “the privilege of conducting activities within the forum State” or have purposely directed its conduct towards the forum. In J. McIntyre Machinery Ltd. v. Nicastro the Supreme Court held that a British manufacturer of a metal shearing machine was not subject to specific jurisdiction in New Jersey state court in an action by a worker injured by such machine there, because the defendant’s US commercial conduct in the sale and distribution of the machines was not purposely directed at New Jersey. Later, in Walden v. Fiore, a plaintiff who was allegedly injured in Nevada by the defendant’s conduct in Georgia was held not to be subject to suit in Nevada, as the relevant connection with the forum state was not that of the defendant, but the plaintiff, and the defendant’s connection was not with the forum, but with the plaintiff.
- The second condition for specific jurisdiction is that the claim must arise out of or otherwise relate to the defendant’s in-forum conduct. The third condition is that the exercise of jurisdiction must be reasonable on the basis of considerations of the forum state’s interest in the dispute, the plaintiff’s interests of convenience and effective relief and general interstate interests in furthering substantial social policies.
- It was the second condition that occupied the attention of the Supreme Court in the Bristol-Myers case. There the defendant, Bristol-Myers Squibb (“BMS”) had marketed and sold the drug Plavix nationally, and substantially in California. BMS acknowledged that it was subject to suit in California state court by residents alleged to have suffered injuries there from taking the drug. But the majority of plaintiffs (592) were nonresidents, spread over 33 other states, who had allegedly suffered identical injuries to those of the 86 California plaintiffs. The Supreme Court held that the California court could not exercise specific jurisdiction over BMS in respect of the nonresidents’ claims, plaintiffs against BMS, which did not arise out of any activities by BMS in California.
- The California Supreme Court had upheld the claims to jurisdiction by the nonresidents, applying a ‘sliding scale’ approach, under which the wider and more extensive the defendant’s in-forum contacts, the more readily there will be shown the necessary connection between those contacts and the claims. It held that BMS’s extensive forum contacts permitted the court to exercise jurisdiction based on a less direct (and more analogous) connection than might otherwise be required.
- The Supreme Court reversed, on the basis of the absence of affiliation between the defendant’s activity in the forum and the nonresidents’ claims. The Court rejected the suggestion that the requisite connection between the forum and the specific claims is relaxed if the defendant has extensive in-forum contacts that are unrelated to those claims. This approach was described as resembling “a loose and spurious form of general jurisdiction” (per Alito J, writing for the Court).
- Thus, the position of prospective defendants based in the UK (or the EU), supported by substantial Supreme Court authority, appears to be as follows:
a. General, all-purpose jurisdiction will not be available to a plaintiff in a US state court;
b. Notwithstanding the defendant’s connection with the plaintiff or the plaintiff’s connection with the forum, including having suffered injury or damage there, specific jurisdiction will be exercised only where the defendant has demonstrable forum-directed contacts amounting to the purposeful availment of the privilege of doing business there, and the plaintiff’s claim arises from or is otherwise directly affiliated with the defendant’s forum contacts.