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

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