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U.S. Supreme Court Sets the Stage For Jurisdictional Limitations in Product Liability Matters

Posted in California Courts, Litigation Trends, Missouri Courts, Pharmaceutical and Medical Devices, Products Liability

supreme-court-building-1209701_1280In a groundbreaking decision that follows closely on the heels of its jurisdictional decision in BNSF Railway Co. v. Tyrrell, 581 U.S. __ (May 30, 2017) (“Tyrrell”), the United States Supreme Court held that the California Supreme Court was wrong to let approximately 600 non-California residents join 86 state residents in a pharmaceutical claim against Bristol-Myers in which plaintiffs alleged that it misrepresented the risk of heart attacks and strokes associated with the use of its blood thinner, Plavix. In overturning the decision of the California Court, the Supreme Court premised its holding on the fact that the out-of-state plaintiffs had not shown enough of a connection between their alleged injuries and the company’s activities in California.

 

As previously reported, in an effort to find a way around the restrictions imposed on a court’s exercise of specific personal jurisdiction over a foreign corporation by the U.S. Supreme Court’s Daimler decision,  the California Supreme Court used specific personal jurisdiction as a tool to enlarge the Court’s power to exercise personal jurisdiction over a foreign corporation.  In Bristol-Myers Squibb, the California Supreme Court expressly held that Bristol-Myers Squibb was not subject to general personal jurisdiction in California, as its contacts with the state were not substantial enough to render it “at home” in the jurisdiction. It held, however, that specific personal jurisdiction existed over Bristol-Myers Squibb in California—even for plaintiffs who were not injured in California—based on its “purposeful availment” of the benefits and privileges of the laws of the State of California as a result of its “nationwide marketing, promotion and distribution [that] created a substantial nexus between the non-resident plaintiffs’ claims and the company’s contacts in California . . . .” Bristol-Myers Squibb Co. v. Superior Court, No. S221038, 2016 WL 4506107 (Cal. Aug. 29, 2016).

 

In the Supreme Court’s June 19, 2017 opinion, it reversed the California Supreme Court by a vote of 8-1. It made clear that specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.” If a state has no “legitimate interest” in particular claims, a defendant should not be forced to submit to the coercive power of the state with respect to those claims. Bristol-Myers Squibb Company v. Superior Court of California, San Francisco County, et al., 582 U.S. ___, ____ (2017) (slip op. at 6). The Supreme Court explicitly held that specific jurisdiction requires a connection between the forum and the specific claims at issue. Id. When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State. Id. at ­­­___ (slip op. at 7).  Applying that requirement, the Court found that California could not exercise specific jurisdiction over Bristol-Myers Squibb with respect to non-residents’ claims because: (1) the non-residents did not claim to have suffered harm in California; and (2) all the conduct giving rise to the non-residents’ claims occurred elsewhere. Further, the fact that other plaintiffs were prescribed, obtained and ingested Plavix in California, and allegedly sustained the same injuries as the non-residents, or that Bristol-Myers Squibb conducted research in California on matters unrelated to Plavix, was irrelevant to specific jurisdiction. Id. at __ (slip op. at 7-9).

 

The Supreme Court’s decision had an immediate impact, as a Missouri state court granted Johnson & Johnson’s motion for a mistrial in a multi-plaintiff talcum powder case based on the Bristol-Myers decision that same day. Johnson & Johnson’s motion focused on the lack of connection between the plaintiffs and the forum state, as well as defendants’ ties to Missouri. This is likely just the beginning when it comes to the impact the Bristol-Myers and BNSF Railway decisions have, particularly in mass tort, multi-plaintiff suits. These decisions certainly limit plaintiffs’ ability to forum shop product liability cases, providing more certainty for corporations as to where a suit may be brought against it, and likely resulting in fewer cases filed in plaintiff-friendly jurisdictions. But, one issue that does appear to be left open by the decision is how much of a connection between a plaintiff’s claim and the forum state is required to permit the assertion of specific jurisdiction. In the instant matter, this issue was not decided because there was no connection at all (Plavix was not manufactured in California, and the non-resident plaintiffs did not purchase, obtain and/or ingest the drug in the state of California). Given the complexities this decision raises for plaintiffs who now may be put in a position to bring separate actions in separate states against separate defendants, this issue is likely to be further litigated, particularly in the mass tort and class action context.

Florida Medical Malpractice Non-economic Damage Caps: Before and After Kalitan

Posted in Florida Courts, Insurance Litigation, Litigation Trends, Medical Malpractice

blood-pressure-1573037_1920No, this is not déjà vu. On June 8, 2017, the Supreme Court of Florida struck down another legislative mechanism to limit damages in personal injury cases. In North Broward Hospital District v. Kalitan, the Supreme Court decided that non-economic damage caps on medical malpractice actions violate the Equal Protection Clause of the Florida Constitution. Non-economic damages are non-pecuniary harms such as permanent disability, disfigurement, blindness, loss of a limb, paralysis, trauma, or physical pain and suffering. While shocking to some, this decision is not entirely surprising due to the Supreme Court’s 2014 decision in Estate of McCall v. United States that invalidated non-economic damage caps for wrongful death actions under equal protection.

In 2003, the Florida Legislature decided to address the medical malpractice insurance crisis in Florida by enacting Florida Statute 766.118, which limits the non-economic damages that could be awarded in personal injury matters arising from medical negligence.  According to legislative findings at that time, as cited in the McCall opinion, the increase in medical malpractice liability insurance premiums resulted in “physicians leaving Florida, retiring early from the practice of medicine, or refusing to perform high-risk procedures, thereby limiting the availability of health care.” To counter this crisis, Florida Statute 776.118(2) limits non-economic damages awards for medical negligence of practitioners to $500,000 per claimant except where the negligence resulted in a permanent vegetative state, death, or catastrophic injury and a manifest injustice would occur unless increased damages are awarded.  In that case, damages may be awarded in an amount up to $1 million. Section 766.118(3) limits damages to $750,000 and $1.5 million, respectively, when the injury results from the negligence of non-practitioners. By enacting theses caps, the Legislature anticipated that physicians’ medical malpractice insurance premiums would drop, physicians would remain in Florida, not opt for early retirement, the number of physicians practicing without insurance would decrease, and the number of physicians who refused to perform high-risk procedures would decrease.

While it was the Legislature’s position that this alleged crisis was said to be of an “unprecedented magnitude,” the Supreme Court in Kalitan determined that the Legislature’s findings were not supported by the available data. In fact, in the years since the cap’s implementation, the Court found that the intended effects have not manifested themselves.  Instead, physicians have chosen to remain in Florida, but still opt not to carry malpractice insurance; medical malpractice premiums are the same, if not slightly higher; and insurance income increased.

Even if the data were accurate, the Supreme Court declared that the statute nonetheless arbitrarily infringes upon the constitutional guarantee of equal protection under the laws, because there is a lack of evidence supporting a direct correlation between non-economic damage caps and reduced malpractice premiums. Relying on its McCall decision, the Supreme Court explained that the damage caps have the effect of saving a minimal amount for many by imposing devastating costs on the most catastrophically injured, and those who sustain the greatest damage and loss. Doing so “offends the fundamental notion of equal justice under the law.” To illustrate this example, the Supreme Court offered a helpful hypothetical: “Plaintiff A suffers a moderate injury; therefore recovery is capped at $500,000 if caused by a practitioner and $750,000 if caused by a non-practitioner. Plaintiff B suffers a statutorily defined ‘catastrophic injury,’ such as the loss of a hand, and therefore recovery may be capped at $1 million if caused by a practitioner and $1.5 million if caused by a non-practitioner. Plaintiff C suffers a drastic injury, such as a permanent vegetative state, and therefore recovery is capped at $1 million if caused by a practitioner and $1.5 million if caused by a non-practitioner. Under these circumstances, plaintiff A has the best chance of being fully compensated, plaintiff B may have a chance of being fully compensated, and plaintiff C has utterly no chance of being fully compensated.”

While this ruling leaves defendants in medical malpractice actions vulnerable to higher jury verdicts, it is also a reminder to implement a best practices approach in defending these claims at the pre-suit phase. Implementing a protocol for pre-suit investigations, including a thorough background investigation of the claimant and claimant’s medical expert, as well as a medical review, and the policies and procedures of the defendant, is key in assessing liability and providing your client an informed basis to consider early resolution when appropriate. Knowing when to vigorously pursue a defense is just as important as recognizing when you are fighting a losing battle. Invest your time and resources wisely by litigating cases that have likelihood of success, and save your client’s time and expense on cases that don’t.

 

Supreme Court Reaffirms Limits on General Personal Jurisdiction For Foreign Corporate Defendants

Posted in Litigation Trends

supreme-court-building-1209701_1280With the United States Supreme Court hearing less than 100 cases every year, it is exceedingly rare for the Court to address a particular issue more than once.  However, with state courts throughout the country failing to properly apply its 2014 decision in Daimler AG v. Bauman, 134 S.Ct. 746 (“Daimler”), the Supreme Court recently found it necessary to reaffirm that absent “exceptional” circumstances a foreign corporate defendant is subject to general personal jurisdiction only in its state of incorporation or principal place of business.  Specifically, in BNSF Railway Co. v. Tyrrell, 581 U.S. __ (May 30, 2017) (“Tyrrell”), the Supreme Court held that Montana state courts could not exercise general personal jurisdiction over defendant BNSF, despite the fact that BNSF had fairly significant business ties to the state, because BNSF was neither incorporated in Montana nor had its principal place of business within the state.  While Daimler and Tyrrell will not eliminate the practice of forum shopping by plaintiffs, they do place material limitations on a plaintiff’s ability to file litigation in any forum where the injury did not occur and plaintiff must therefore rely on general personal jurisdiction alone in establishing personal jurisdiction over a foreign corporate defendant.

Background

Tyrrell involves two initially independent cases brought in Montana state courts by plaintiffs (Tyrrell and Nelson) under the Federal Employers’ Liability Act (“FELA”), 45 U.S.C. §51 et seq., which allows railroad employees to sue their employers for injuries sustained on the job.  Both plaintiffs brought suit in Montana state courts, but neither case involved an injury that occurred in the state, and neither plaintiff resided in the state.  While defendant BNSF is incorporated in Delaware with its headquarters in Texas, it does have significant business ties to Montana, where 5% of its work force is located and roughly 6% of its railroad track is contained.  BNSF filed a motion to dismiss in each lawsuit, asserting that pursuant to Daimler it was not “at home” in Montana, and therefore not subject to general personal jurisdiction.  Because the injuries giving rise to the causes of action did not occur in Montana, specific personal jurisdiction was not at issue.  In Nelson’s case the motion was granted, but in Tyrrell’s case the motion was denied.  The rulings were appealed, and on appeal the Montana Supreme Court consolidated the two matters.

The Montana Supreme Court found that the state courts had general personal jurisdiction over BNSF under FELA because BNSF was doing business in Montana at the time of the suit.  In finding personal jurisdiction over BNSF, the Montana Supreme Court distinguished the Supreme Court’s holding in Daimler based on the application of FELA, concluding that because of the federal statute general personal jurisdiction could be conferred to the state courts even if the Daimler test was not satisfied.  The Montana Supreme Court also found that Montana state law allows for the state courts to exercise personal jurisdiction over BNSF because BNSF conducts business in the state.  Mont. Rule Civ. Proc. 4(b)(1)(2015).

The United States Supreme Court granted certiorari to resolve two questions: (1) whether FELA allows state courts to exercise general personal jurisdiction over railroad defendants conducting business in the state, but that are neither incorporated in nor have their principal place of business in the state, and (2) whether the Montana courts’ exercise of personal jurisdiction in the two cases is consistent with the due process clause of the Fourteenth Amendment.

Supreme Court Orders Reversal and Remand

In deciding the first question, the Supreme Court looked primarily at the FELA provision stating that a claim may be brought in a district “in which the defendant shall be doing business at the time of commencing such action.”  The Court determined that this provision deals with venue and subject matter jurisdiction only, and not personal jurisdiction.

More significantly, in deciding the second question, the Supreme Court found that BNSF was not “at home” in Montana, and therefore not subject to general personal jurisdiction there.  In making this finding, the Court echoed its reasoning from Daimler, noting that “a court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations . . . when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State . . . [t]he ‘paradigm’ forums in which a corporate defendant is ‘at home,’ . . . are the corporation’s place of incorporation and its principal place of business.”  The Supreme Court went on to clarify that “Daimler . . . applies to all state-court assertions of general jurisdiction over nonresident defendants; the constraint does not vary with the type of claim asserted or business enterprise sued.”  (Emphasis added.)  Although the Supreme Court noted that an “exceptional case” could occur to allow general personal jurisdiction over a foreign defendant outside of its state of incorporation or principal place of business, the Court found that BNSF’s contacts with Montana were not “so substantial” to qualify as such since its contacts represented less than 10% of BNSF’s overall contacts nationwide.

In sum, because FELA did not address personal jurisdiction over railroads, and because Montana state law allowing for the exercise of personal jurisdiction over BNSF did not comport with due process pursuant to the test set forth in Daimler, the Supreme Court reversed and remanded “for further proceedings not inconsistent with [its] opinion.”

Justice Sotomayor, the lone dissenter, concurred in part and dissented in part with the majority’s opinion.  She concurred with the majority’s decision that FELA does not confer personal jurisdiction to state courts over railroad defendants.  Where she dissented with the majority was in their strong reaffirmation of Daimler and their decision not to remand the case back to the Montana Supreme Court to conduct an independent review of BNSF’s ties to Montana, and whether those ties constituted an exception to the Daimler “at home” test.  Ultimately, Justice Sotomayor was concerned that in practice the ”exceptional case” identified by the majority would never be found to exist, creating an imbalance of the equities in defendants’ favor.

Future Impact

Prior to Daimler and Tyrrell, corporate defendants were essentially subject to general personal jurisdiction in any forum in which their business contacts were deemed to be sufficient enough by the state courts, resulting in forum shopping by plaintiffs.  Tyrrell makes it clear (again), that absent exceptional circumstances, corporations that do business on a national scale will not be subject to general personal jurisdiction in every state, thereby reigning in plaintiffs’ ability to forum shop.  As a result of Tyrrell, it is anticipated that plaintiffs will place greater emphasis on establishing specific personal jurisdiction.  Notably, Bristol-Myers v. Sup. Ct., No. 16-466, argued on the same day as Tyrrell, will likely address the issue of specific personal jurisdiction.  It is anticipated that the Supreme Court will render its opinion any day now, so stay tuned.

Kesner v. Superior Court: The Aftermath

Posted in Asbestos Litigation, California Courts, Premises Liability

Asbestos(Cropped)On Friday, June 2, 2017, the California Court of Appeal for the Second District, issued an unpublished opinion holding that Shell Oil Company owed a duty to protect from asbestos exposure the wife of a former machinist who worked at Shell facilities from approximately 1954 to 1992. Beckering v. Shell Oil Company (Cal. Ct. App., June 2, 2017, No. B256407), “Beckering II”). In this recent opinion, the Court of Appeal reversed its own earlier ruling from 2014 which initially held that a premises owner has no duty to protect a family member from secondary exposure to asbestos off the premises (Beckering v. Shell Oil Company (Cal. Ct. App., Nov. 21, 2014, No. B256407), “Beckering I”).

Beckering II, the latest appellate decision regarding the scope of duty owed in secondary asbestos exposure or “take home” cases, is the result of the trickledown effect of the California Supreme Court’s December 2016 decision Kesner v. Superior Court (2016) 1 Cal.5th 1132.

 

Kesner v. Superior Court

In Kesner, the California Supreme Court examined whether employers and landowners owe a duty of care to prevent secondary exposure to asbestos and held that “the duty of employers and premises owners to exercise ordinary care in their use of asbestos includes preventing exposure to asbestos carried by the bodies and clothing of on-site workers.” Kesner v. Superior Court (2016) 1 Cal.5th 1132, 1140. In so holding, the Court found it was “reasonably foreseeable that workers, their clothing, or personal effects will act as vectors carrying asbestos from the premises to household members [and that, therefore] employers have a duty to take reasonable care to prevent this means of transmission.” Id. Notably, “[t]his duty also applies to premises owners who use asbestos on their property” regardless of whether the premises owner is the vector’s employer, although the Court recognized that premises liability includes a number of affirmative defenses and exceptions which may be applicable depending on the facts of the case. See Id., at 1140, 1160.

To arrive at this conclusion, the Supreme Court examined and applied the well-established “Rowland factors” which, when balanced together, can justify a departure from the general rule of ordinary care: (1) the foreseeability of harm to the plaintiff; (2) the degree of certainty that the plaintiff suffered injury; (3) the closeness of the connection between the defendant’s conduct and the injury suffered; (4) the moral blame attached to the defendant’s conduct; (5) the policy of preventing future harm; (6) the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach; (7) and the availability, cost, and prevalence of insurance for the risk involved. Kesner, 1 Cal.5th at 1145; see Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764, 771; Rowland v. Christian (1968) 69 Cal.2d 105, 112; see also Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 472.

 

In finding that “[t]he most important [Rowland] factor” is whether the injury in question was foreseeable (although not wholly determinative), the Supreme Court concluded that “proper application of the Rowland factors supports the conclusion that defendants had a duty of ordinary care to prevent take-home asbestos exposure. Such exposure and its resulting harms to human health were reasonably foreseeable to large-scale users of asbestos by the 1970s, and the OSHA Standard affirmed the commonsense reality that asbestos fibers could be carried on the person or clothing of employees to their homes and could be inhaled there by household members.” Kesner, 1 Cal.5th at 1145, 1156. Notably, the Court attempted to put some boundaries on its holding limiting the class of potential plaintiffs solely to members of a worker’s household. Id., at 1140.

 

It is with the Kesner framework that the California Court of Appeals reversed its prior decision in Beckering I.

 

Beckering I and II

 

In Beckering, a former Shell Oil Company’s employee’s[1] wife brought a lawsuit against Shell alleging she laundered her husband’s work clothes for 38 years and developed mesothelioma as a result. Against Shell, Plaintiff brought a cause of action for negligence arising out of premises liability. Shell filed a motion for summary judgment in January 2014 arguing that Plaintiff’s premises liability claim was barred as a matter of law because, under the then-current legal test (as this was prior to Kesner), a property owner had no duty to protect family members of workers from secondary or off-site exposure to asbestos carried home on the worker’s clothing even it was foreseeable. See Beckering I, at 3.

 

Although the Court of Appeal originally affirmed the trial court’s ruling granting summary judgment in favor of Shell, in Beckering II the Court applied Kesner and reversed and remanded the case. See Beckering II, at 10.

 

In a footnote, Beckering II cited Kesner and cautioned: “It must be remembered that a finding of duty is not a finding of liability. To obtain a judgment, a plaintiff must [still] prove that the defendant breached its duty of ordinary care and that the breach proximately caused the plaintiff’s injury, and the defendant may assert defenses and submit contrary evidence on each of these elements.” Beckering II, at n.2 (quoting Kesner, 1 Cal.5th at 1157).

 

Despite the self-proclaimed limits both Kesner and Beckering II have attempted to define as integral components to their holdings, it appears that dispositive motions premised upon the legal issue of an employer’s or premises owner’s absence of duty in California are, and will be for the foreseeable future, futile.  Although unpublished, Beckering II will undoubtedly guide the lower courts on the application of Kesner going forward.

 

 

[1] The Court of Appeals’ opinion is not clear as to whether Decedent was actually employed by Shell; however, Plaintiff’s opening appellate brief indicates that Shell did employ Decedent during the putative time frame. Wanda L. Beckering, Plaintiff and Appellant, v. Shell Oil Company, Defendant and Respondent (Aug. 6, 2014) WL 4254334 (Cal.App. 2 Dist.), at *3.

 

MG+M Obtains Summary Judgment Via Supreme Court of Appeals of West Virginia’s Decision that Plaintiff Lacked Constitutional Standing to Bring Class Action Claim

Posted in Class Action Litigation, Litigation Trends

supreme-court-building-1209701_1280

Manion Gaynor & Manning LLP (“MG+M”) has obtained a summary judgment on behalf of client HealthPort Technologies (“HealthPort”) in Basil Crookshanks, on behalf of himself and all others similarly situated, v. HealthPort and Charlestown Area Medical Center (“CAMC”).  On Wednesday, May 25, 2017, the Supreme Court of Appeals of West Virginia issued a writ of prohibition ordering the trial court to dismiss a class action case against HealthPort and CAMC brought in the Circuit Court of Kanawha County for lack of subject-matter jurisdiction.  The Supreme Court held that the representative plaintiff, Basil Crookshanks, lacked Article 3 standing to assert a claim because his purported injury was contingent upon a future event.

Plaintiff’s complaint alleged that HealthPort and CAMC (collectively, “Defendants”) had violated W.Va. Code § 16-29-2(a) by overcharging for the production of medical records.  Plaintiff sought to certify a state wide class comprised of all similarly-situated individuals that had requested their records from CAMC or other providers serviced by HealthPort, who had been similarly charged purportedly excessive fees under West Virginia law.

The case arose from Plaintiff’s retention of a law firm (“Plaintiff’s Firm”) to prosecute a medical malpractice claim against a nursing home.  Plaintiff entered into a contingent fee agreement with Plaintiff’s Firm, whereby it would front all litigation expenses and only receive reimbursement, if there was a recovery on Plaintiff’s behalf.

Plaintiff’s Firm requested his medical records from CAMC.  HealthPort, which served as CAMC’s health information management provider, processed Plaintiff’s Firm’s request and invoiced it for the records.  Plaintiff’s Firm paid HealthPort’s invoice and filed the class action on Plaintiff’s behalf soon thereafter. At the time the class action complaint was filed, Plaintiff’s medical malpractice claim was pending and no money had been recovered on his behalf.

Defendants moved for summary judgment on the grounds that Plaintiff’s claims were not ripe and that he did not have standing because not only had he not yet paid for his medical records, but he may never pay for them.  The trial court denied Defendants’ motion for summary judgment.  Defendants petitioned the Supreme Court of Appeals of West Virginia for a writ of prohibition to stop the circuit court from exercising jurisdiction over the case.

The Supreme Court of Appeals of West Virginia agreed with Defendants’ argument that Plaintiff lacked standing, thereby depriving the circuit court of jurisdiction.  The Court summarized standing as “[a] party’s right to make a legal claim or seek judicial enforcement of a duty or right,” Findley v. State Farm Mut. Auto. Ins. Co., 213 W.Va. 80, 94, 576 S.E.2d 807, 821 (2002) (quoting Black’s Law Dictionary 1413 (7th ed. 1999)), and reviewed the three elements of standing as follows:

 

First, the party attempting to establish standing must have suffered an “injury-in-fact” – an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent and not conjectural or hypothetical.  Second, there must be a causal connection between the injury and the conduct forming the basis of the lawsuit.  Third, it must be likely that the injury will be redressed through at favorable decision of the court.”

Id.

 

The Court determined that Plaintiff could not satisfy the first prong of the standing analysis because the record demonstrated that he had not suffered an injury-in-fact.  The Court found that it was Plaintiff’s Firm that had suffered a “direct pocketbook injury.” Further, the Court noted that, “Mr. Crookshanks may become contractually liable to his lawyers for this allegedly unlawful expense at a future date, but until he does, his loss is contingent and conjectural.”

MG+M Partner, Javier Flores, a member of the firm’s class action litigation practice group, served as lead counsel for the Defendants.