Recently, a team of attorneys from MG+M successfully obtained a dismissal of all claims against their client, based on the lack of personal jurisdiction.  The case was Howell v. Asbestos Corporation, pending in Los Angeles County Superior Court before the coordinating asbestos judge, the Honorable Steven J. Kleifield.  In his decision dismissing the claims, Judge Kleifield applied the stringent personal jurisdiction standards recently set forth in Bristol-Meyers Squibb Co. v. Superior Court of California 137 S. Ct. 1773 (2017).

In Bristol-Meyers, the United States Supreme court examined whether a state court could exercise personal jurisdiction over the claims of non-resident plaintiffs against a non-resident corporate defendant for injuries occurring out of the forum state.  Id. at 1778  Specifically, a group of plaintiffs sued Bristol-Myers Squibb (Bristol) in a California court for injuries sustained after ingesting a drug manufactured and supplied by Bristol.  Many of the plaintiffs were not from California. Bristol was incorporated in Delaware with its principal place of business in New York; however, it did have some connections with California, as it sold its drug within the state.

Ultimately, the Court ruled that California courts could not exercise specific personal jurisdiction over Bristol with respect to any plaintiffs who did not reside in California, because any conduct giving rise to the non-resident plaintiffs’ claims occurred outside of California. The Court noted that specific jurisdiction necessitates “an affiliation between the forum and underlying controversy, principally, [an] activity or an occurrence that takes place in the forum state.”  Id. at 1781.  Thus, because the complaint did not allege any acts or occurrences in California that specifically resulted in injury, the Court ruled that California could not exercise personal jurisdiction over the claims against Bristol.

In the Howell v. Asbestos Corporation case decided last week, the plaintiffs alleged that Mr. Howell developed malignant epithelial mesothelioma as a result of exposure to various asbestos-containing products. Although the plaintiff did reside in California for a short period of time, the vast majority of the plaintiff’s alleged exposure to asbestos occurred in the state of Texas. On behalf of one of the defendants, attorneys from MG+M argued that California courts lacked personal jurisdiction over our client pursuant to the standard set forth in Bristol-Meyers. Specifically, MG+M attorneys argued the plaintiff’s claims did not relate to any contacts that the defendant had with the state of California. For example, the defendant was not incorporated in California, did not have its principal place of business in California, and had less than 1 percent of employees residing in California, meaning there was no general jurisdiction. Additionally, the plaintiff’s alleged injury from the defendant’s product occurred outside of the state of California, meaning there was no specific jurisdiction. Ultimately, Judge Kleifield applied the Bristol-Meyers standard and held that because the plaintiffs’ claims did not bear a substantial connection to the non-resident defendant’s forum contacts, the exercise of personal jurisdiction was not appropriate.

The Future of Bristol-Meyers

 

Since the decision in Bristol-Meyers,
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According to the Supreme Court of Illinois, merely conducting business within that state is insufficient to satisfy the standards for personal jurisdiction established by the U.S. Supreme Court in Daimler AG v. Bauman, 134 S. Ct. 746 (2014).  The Illinois Supreme Court recently explored that issue in Aspen American Insurance Company v. Interstate Warehousing, Inc., where a plaintiff headquarted in Indiana attempted to bring an action in Illinois for damages allegedly caused by the collapse of a warehouse in Michigan.  Plaintiff Aspen brought a subrogation action in Cook County, Illinois seeking to recover damages allegedly caused by the collapse of a warehouse near Grand Rapids, Michigan, which was owned by Defendant Interstate Warehousing. The Defendant, which is headquartered in Indiana, operates eight warehouses across the country, one of which is in Joliet, Illinois.

In its pleadings, the Plaintiff sought to rely upon the Defendant’s Joliet warehouse to establish personal jurisdiction in Illinois. In its motion to dismiss for lack of personal jurisdiction, the Defendant did not dispute that it was doing business in Illinois. Instead, the Defendant argued that the business it was conducting in Illinois was insufficient to subject it to general personal jurisdiction under the U.S. Supreme Court’s decision in Daimler AG v. Bauman. Relying on Daimler, the Defendant explained that the Plaintiff failed to establish that the Defendant was either domiciled or “at home” in Illinois. The circuit court disagreed, and denied the Defendant’s motion. A divided appellate court affirmed the dismissal denial of the motion to dismiss.

                                                                                                                                                                                   

Writing on behalf of a unanimous Court, Justice Burke reversed the lower court decisions, holding that the Plaintiff failed to make a prima facie showing that the Defendant was “essentially at home” in Illinois, as required by Daimler. More specifically, the Court determined that the Plaintiff’s burden was to show that the Defendant was incorporated or had its principal place of business in Illinois, or in the alternative, that the Defendant’s contacts with Illinois were so substantial that an exception was warranted. In making its determination, the Court looked at Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), in which the defendant, a Philippines company, was forced to relocate from the Philippines to Ohio during World War II. In that case, the Supreme Court found that Ohio was “the center of the corporation’s wartime activities” and, effectively, a “surrogate for the place of incorporation or head office.” Perkins, 342 U.S. at 448.

In the Aspen case, the Defendant Interstate Warehousing was an Indiana corporation with its principal place of business in Indiana, which was registered to conduct business in Illinois and employed the general manager of a warehouse in Joliet. The Plaintiff pointed both to the Defendant’s registration with the Illinois Secretary of State and the business it carried out at its Joliet warehouse as establishing jurisdiction; however, the Illinois Supreme Court ultimately concluded that those facts were insufficient either to render the Defendant at home in the state or to
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As previously reported, the issue of establishing personal jurisdiction when there is no causal link between defendant’s forum contacts and plaintiff’s claims was recently decided by the United States Supreme Court in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017). Last week, the Bristol-Myers decision was applied by Judge Kleifield, presiding judge of Department 324 at the Los Angeles Superior Court, which oversees state court asbestos litigation for Counties of Los Angeles, San Diego, and Orange.

In Bristol-Myers, the Supreme Court considered whether a state court could exercise personal jurisdiction over the claims of non-resident plaintiffs against a non-resident corporate defendant for tortious injuries that occurred out of state. Bristol-Myers, 137 S. Ct. at 1778. Bristol-Myers Squib Company (“BMS”), incorporated in Delaware and headquartered in New York, had been sued in California state court by a group of plaintiffs, most of whom were not California residents, who alleged that a BMS drug damaged their health outside of California. Id. The non-resident plaintiffs had not alleged that they: (1) obtained the drug from any California source; (2) ingested the drug in California; or (3) were injured by the drug in California Id. However, it was established that BMS had some connections with California, as it sold the drug in the state. Id. at 1778. The Supreme Court reversed the decision of the California Supreme Court, which had held that there was specific jurisdiction over BMS. Id. at 1777, 1781.

The Supreme Court ruled that specific jurisdiction necessitates “an affiliation between the forum and underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.” Bristol-Myers, 137 S. Ct. at 1781 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). It further held that in order for a state court to exercise specific jurisdiction, “the suit’ must ‘aris[e] out of or relat[e] to the defendant’s contacts with the forum.” Bristol-Myers, 137 S. Ct. at 1781 (quoting Daimler AGv. Bauman, 134 S. Ct. 746, 754 (2014)).

Applying those requirements, the Supreme Court found that California courts could not exercise specific jurisdiction over BMS with respect to non-residents’ claims because the non-residents did not claim to have suffered harm in California and all of the conduct giving rise to the non-residents’ claims occurred outside of California. Id. at 1782. Ultimately, the Supreme Court ruled that there was no specific jurisdiction because there was no connection between the forum and specific claims at issue. Id. at 1782.

In Herford, at al. v. AT&T Corp., et al., No. BC646315 (L.A. Super. Ct.), Tina Herford allegedly suffered exposure to asbestos-contaminated talc in California. The talc was allegedly supplied by defendant Whittaker, Clark & Daniels, Inc. (“WCD”). WCD and its successors, Brenntag North America, Inc. (“BNA”) and Brenntag Specialties, Inc. (“BSI”) moved to quash service of the summons for lack of personal jurisdiction.

Plaintiffs conceded that there was
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lawjUSTICEBWIn its recent decision in Williams v. Yamaha Motor Co., 851 F.3d 1015 (9th Cir. 2017), the Ninth Circuit affirmed dismissal against a Japanese manufacturer because it was not “at home” in the forum. This consistent application of Daimler provides the benefit of predictable results.

In 2013, George Williams filed suit, on behalf of himself and others similar situated, against Yamaha Motor Co. Ltd (“YMC”), a Japanese corporation, and Yamaha Motor Corporation, U.S.A. (“YMUS”), YMC’s wholly-owned subsidiary. Those plaintiffs were purchasers of outboard motors, which were designed and manufactured by YMC, then, marketed and imported in California by YMUS. Despite being properly serviced and maintained, the motors failed after 500 to 700 hours of use, far less than the expected motor life of 2,000 hours. Williams alleged that YMC had knowledge of the defect, but failed to remedy the issue because the defect did not typically manifest until after the three-year warranty period expired.

After multiple amendments to the initial complaint, the district court dismissed Williams’ only remaining claim, granting YMC’s motion to dismiss for lack of personal jurisdiction and YMUS’s motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). Williams appealed and the Ninth Circuit affirmed the dismissal, finding that the district court lacked general jurisdiction of YMC and that Williams failed to adequately plead the elements of his claim against YMUS.

The Ninth Circuit relied on Daimler AG v. Bauman, 134 S. Ct. 746 (2014) in reviewing the jurisdiction issue. The court stated that the analysis for general jurisdiction is whether “corporation is essentially ‘at home’ in the forum state.” The court applied this analysis and expressly considered the following facts: Japan was YMC’s principal place of business; YMC had no offices or employees in California; and YMC’s total sales in North America made up only 17% of YMC’s total net sales. Accordingly, the Ninth Circuit was persuaded that YMC was not “at home” in California.

The Ninth Circuit acknowledged that its decisions after Daimler applied the alternative “alter ego test for ‘imputed’ general jurisdiction.” Under this theory, a foreign company would need to be so intertwined with its subsidiary that neither would have a separate identity and would merely function as alter egos of each other. However, even under this theory, the Ninth Circuit found no facts regarding the “nature of the parent-subsidiary relationship. “ Accordingly, the court declined to find support for the “alter ego” theory of jurisdiction.

This case is another example of a post-Daimler court strictly following the “at home” rule of general jurisdiction over a foreign business. Some argue that Daimler’s “at home” rule is inconsistent with historical trends and serves to “shrink the jurisdiction” where suits may be brought against corporations.[1] However, these concerns are outweighed by the benefits of a clear and predictable alternative to the previous “minimum [or substantial] contacts” analysis set forth by International Shoe and its progeny.

The “at home” rule is a straightforward analysis as compared to the previous analysis.
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supreme-court-building-1209701_1280 On February 28, 2017, the Missouri Supreme Court joined a growing list of tribunals to apply a strict reading of the United States Supreme Court’s seminal ruling in Daimler AG v. Bauman, 134 S. Ct. 746 (2014). In State ex rel. Norfolk So. Ry. Co. v. Hon. Colleen Dolan, No. SC95514, the Missouri Supreme Court held that Missouri courts lack the requisite personal jurisdiction, either specific or general, over a non-resident defendant, Norfolk Southern Railway Company, in a claim brought by a non-resident plaintiff who asserted a Federal Employer’s Liability Act (FELA) violation arising from his employment by Norfolk Southern in the State of Indiana. The ruling marks a significant victory for corporate defendants seeking to combat forum shopping by plaintiffs, the practice of bringing cases in jurisdictions which are more likely to provide a favorable judgment or a more lucrative verdict.

The plaintiff, Indiana resident Russell Parker, argued that Missouri courts had both general and specific jurisdiction over Norfolk based on the company’s contacts with the state. Specifically, the plaintiff cited Norfolk’s ownership of approximately 400 miles of railroad track in the state, 590 employees in the state, and approximately $232,000,000 in annual revenue from the company’s operations in Missouri. As grounds for its decision, the court found that the plaintiff’s allegations did not arise from or relate to Norfolk’s activities in Missouri so as to give rise to specific jurisdiction, nor were Norfolk’s operations in the State sufficient to give rise to a Missouri court’s exercise of general jurisdiction over a defendant such as Norfolk; a company incorporated in and with principal place of business in Virginia.

Citing the Second Circuit’s decision in Brown v. Lockheed Martin Corp., 814 F.3d 619, 627-30 (2d Cir. 2016), wherein .05 percent of the defendant’s employees and no more than .107 percent of total revenue were derived from the defendant’s activities in the state of Connecticut, the Missouri Supreme Court concluded that Norfolk’s activity in Missouri represents “a tiny portion” of the company’s business activities nationwide. Specifically, the court noted that the revenue derived from Missouri is approximately 2 percent of Norfolk’s total revenues; the tracks owned and operated in Missouri constitute approximately 2 percent of the tracks Norfolk owns and operates nationally; and the company’s Missouri-based employees account for only about 2 percent of its total employees.

The Missouri Supreme Court’s decision is particularly newsworthy for its refusal to find general personal jurisdiction based on a non-resident company’s appointment of a registered agent in the state. In its ruling, the court rejected the plaintiff’s argument that Norfolk’s compliance with Missouri’s mandatory business registration requirements for foreign corporations amounted to consent to the exercise of general personal jurisdiction by Missouri courts. To the contrary, the court held that as the relevant section of law provided only that registration is consent to service of process against non-resident corporations, “the registration statute does not provide an independent basis for broadening Missouri’s personal jurisdiction to include suits unrelated
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