1. The current landscape in US courts for the exercise of jurisdiction over foreign individuals and companies is favourable to them, but not without a constant onslaught of efforts by plaintiffs to refine arguments supporting jurisdiction that circumvent the limitations on the exercise of jurisdiction imposed in recent US Supreme Court decisions. UK based parties are well advised to keep abreast of developments in this area, to better understand whether and how their activities may expose them to being sued in US courts.
2. One such argument from plaintiffs turns on the extent to which specific personal jurisdiction requires a causal relationship (as opposed to some more flexible form of nexus or relationship) between the defendant’s contacts with the forum State and the plaintiff’s cause of action.
3. Where a foreign defendant is not “at home” in the forum of a US court, in the sense of being resident or (for a corporate defendant) having its place of incorporation of principal place of business in the forum, then the US Supreme Court has precluded the exercise of general personal jurisdiction over the defendant, under which any claim can be maintained whether or not related to the defendant’s activities in the forum: Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, Daimler A.G. v. Bauman, 134 S. Ct. 746.
4. The narrower test, for specific personal jurisdiction, requires the dispute in question to arise from or be related to the defendant’s activities in the forum State: J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780, Walden v. Fiore, 134 S. Ct. 1115. It is in this context that two courts reached different conclusions as to the nature of the connection required between the defendant’s in-State activities and the plaintiff’s claim. The decision of the California Supreme Court is now bound for the US Supreme Court, with a decision expected in June 2017.
Bristol-Myers Squibb Co. v. Sup. Ct. of California
5. The first case is that of the California Supreme Court, in Bristol-Myers Squibb Company v. Superior Court of California (Anderson), 377 P.3d 874 (Cal. Aug. 29, 2016). The defendant, Bristol-Myers Squibb, is a pharmaceutical manufacturing company incorporated in Delaware and headquartered in New York, most of whose business, manufacturing and research activities are conducted outside California. A total of 678 plaintiffs, most of whom resided outside California, issued 8 separate complaints in the San Francisco Superior Court claiming to have been injured by BMS’s product Plavix, which was researched, tested, manufactured and mostly sold outside California. BMS moved to quash the summonses for lack of personal jurisdiction in California. Having failed at trial level and on appeal, BMS appealed to the California Supreme Court.
6. In reliance on Daimler, the Court rejected the prospect of exercising general personal jurisdiction over BMS. Notwithstanding the large volume of BMS sales in California, it operated much more extensively elsewhere, and was not ‘at home’ in California.
7. The Court then considered whether it could exercise specific jurisdiction over BMS to adjudicate the claims of the out-of-state plaintiffs, whose injuries were suffered outside the forum State. In a divided (4-3) opinion, the Court held that it could, as the plaintiffs’ claims need not be caused by its in-State activities in order for such claims to “arise out of or relate to” the defendant’s purposefully directed in-State activities.
8. The Court applied a “sliding scale” analysis to specific jurisdiction, under which a defendant’s contacts need not “be either the proximate cause or the ‘but for’ cause of the plaintiffs’ injuries” so long as there was a “nexus” between the claims and the defendant’s forum activities such that the claims were “based on the same allegedly defective product and the assertedly misleading marketing and promotion of that product”. Thus, the Court held, the more wide-ranging the defendant’s contacts with the forum, the more readily the Court would presume a connection between those contacts and the claim, even where the product complained about was never manufactured in the forum and the injuries relied upon were not caused by any BMS activities within the State.
9. This “sliding scale” analysis creates a continuum between general and specific jurisdiction. It was pointed out in O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312 (3d Cir. 2007) at 321 that the Supreme Court in Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (a case cited with approval in Daimler) clearly held that general and specific jurisdiction are “analytically distinct categories, not two points on a sliding scale”. Indeed, it is generally recognized that the gap between the two jurisdictional bases has widened significantly since general jurisdiction has been relegated by the Supreme Court to an increasingly “reduced role”: Daimler, 134 S. Ct. at 755.
Triple UP Limited v. Youku Tudou Inc.
10. That was indeed the point made in the second case, of Triple UP Limited v. Youku Tudou Inc., --- F. Supp. 3d ---, 2017 WL 354093, decided in the District of Columbia District Court on January 24, 2017. There, the Plaintiff, a Seychelles corporation, brought a copyright infringement action against a China-based Cayman Islands internet television company for allegedly uploading three Taiwanese movies over which Triple UP had exclusive broadcasting rights.
11. There being no grounds whatsoever for asserting general jurisdiction, the only issue concerned the due process analysis for specific jurisdiction, according to which the plaintiff’s claim must arise from or be related to the defendant’s forum activities, amounting to its purposeful availment of the privilege of conducting activities within the forum. The forum for these purposes included the whole of the United States, due to the operation of a federal rule (FRCP 4(k)(2)) which applies to claims under federal law where the defendant is outside the long-arm jurisdiction of any State.
12. The factors relied upon by the plaintiff to ground its case for specific jurisdiction included the defendant’s use of region-specific advertising groups based in the US to direct ads in English for US products at users of its website. The Court decided, however, that it need not address the issue whether such activity amounted to purposeful availment, since “Triple UP’s lawsuit does not arise out of or relate to those third party advertisements”.
13. The District Judge rejected an analysis based upon a sliding scale finding of a “discernable relationship” between the defendant’s in-forum contacts and the plaintiff’s cause of action, holding that the plaintiff must show a causal relationship between the defendant’s US contacts and the episode in suit. Randolph D. Moss DJ reasoned that the “discernable relationship” or “nexus” test did indeed blur illegitimately the relationship between general and specific jurisdiction. Moreover, he held, such a test undermines one of the principal objectives of the jurisdictional tests, namely to provide litigants with adequate notice of their exposure to US lawsuits that the constitutional mandate of due process requires. “The Due Process Clause exists, in part, to give ‘a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit”’: World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 at 297.
14. An appeal against the District Court decision in Triple UP was filed on February 22, 2017.
