SCOTUS Reaffirms Precedent for Establishing Specific Jurisdiction over Non-Resident Defendants
The Supreme Court reaffirmed a long-held precedent regarding the standards for establishing specific personal jurisdiction in its recent opinion in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 16-466, 2017 WL 2621322 (2017), holding that a non-resident plaintiff cannot establish specific personal jurisdiction over a non-resident defendant unless there is a connection between the forum state and the underlying controversy.
The underlying case involved 600 plaintiffs, 592 of whom were non-residents of the forum state of California. The plaintiffs sued Bristol Myers Squibb Company in California state court alleging injuries caused by the pharmaceutical drug Plavix. Bristol is incorporated in Delaware and headquartered in New York and maintains business operations in New York and New Jersey, where over half of its U.S. work force is employed. All of the actions concerning the development, marketing strategy, manufacturing, labeling, packaging, and regulatory approval of the drug Plavix occurred in the two latter states. In California, Bristol has five laboratory facilities, a small state-government advocacy office and employs 250 sales representatives. Bristol also sells Plavix in California, the sales from which amount to a little over 1% of its nationwide sales revenue. However, the non-resident plaintiffs did not allege that they obtained Plavix from a California source, nor did they allege that they were injured in or treated in California.
Bristol moved to quash service of summons on the non-residents' claims asserting lack of personal jurisdiction. The lower California court denied the motion, finding that the California courts had general jurisdiction over Bristol because Bristol "engaged in extensive activities in California." The California Court of Appeals ultimately found that the California courts clearly lacked general jurisdiction, but went on to find that the courts did have specific jurisdiction over the non-resident plaintiffs' claims against Bristol.
The California Supreme Court affirmed, in unanimous agreement regarding general jurisdiction and with a split decision on the question of specific jurisdiction. The majority applied a "sliding scale approach", reasoning that "the more wide ranging the defendant's forum contacts, the more readily is shown a connection between the forum contacts and the claim." The majority found that Bristol's extensive contacts with California permitted the non-residents' exercise of specific jurisdiction despite the less direct connection between the forum activities and the non-resident plaintiffs' claims. They based this approach on the assertion that the claims of the nonresidents were similar to the claims of the California resident plaintiffs. The dissenting justices found that the mere similarity of the residents' and non-residents' claims was not enough to establish specific jurisdiction, and accused the majority of expanding the scope of specific jurisdiction.
On certiorari, the Court agreed with the dissent. The Court mapped out its precedential cases standing for the settled principle that in order for a state court to exercise specific jurisdiction, the suit must "arise out of or relate to the defendant's contacts with the forum." The Court further explained that there must be an affiliation between the forum and the underlying controversy, meaning an activity of occurrence takes place in the forum State and is therefore subject to the State's regulation. The Court noted that when there is no such connection, there is no specific jurisdiction despite the extent of a defendant's unconnected activities in the state. Thus, the Court reasoned that California's "sliding scale approach" was at odds with Court precedent because it relaxed the requirements that the forum state have a connection to the specific claims based on a defendant's extensive forum contacts that are totally unrelated to the claims. The Court found that there was no support for this approach, reaffirming that general, unrelated contacts are not enough to establish specific jurisdiction. Rather, there must be a connection between the forum and the specific claims at issue.
The non-resident plaintiffs claimed that the Court's decisions in Keeton v. Hustler Magazine, Inc.,465 U.S. 770 (1984)and Phillips Petroleum Co. v. Shutts,472 U.S. 797 (1985) supported their position. However, the Court distinguished Keetonon the grounds that the case involved injuries that occurred in state and injuries to residents of the forum state. The Court also distinguished Shuttson the grounds that it concerned the due process right of out-of-state plaintiffs, whereas this case concerned the exercise of jurisdiction over out-of-state defendants. The Court also noted that it specifically stated in Shuttsthat its discussion of personal jurisdiction did not address class actions where the jurisdiction is asserted against a defendant class. Lastly, the plaintiffs argued that there was specific jurisdiction based on Bristol's decision to contract with a California company to distribute its drug nationally. However, the Court explained that the defendant's relationship with a third party forum resident was not sufficient to establish personal jurisdiction over the non-resident defendant.
For these reasons, the Supreme Court held that there was not a direct connection between the forum state and the non-resident plaintiffs' specific claims, and that the California courts did not have specific jurisdiction over the defendant in this case. Thus, the Court reversed and remanded the decision of the California Supreme Court. The Court reasoned that this holding did not prevent the California and out-of-state residents from joining together in one of the states that had general jurisdiction over Bristol. Further, in the alternative, the plaintiffs could still join together to sue in their respective home states. Notably, the Court left open the question of whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court.
On the same day the Court delivered its ruling in Bristol,a Missouri judge declared a mistrial in another case involving the death of three women who died of complications from using Johnson & Johnson products. Two of the three deceased plaintiffs had not been Missouri residents, and the judge declared a mistrial on the grounds that the Bristolcase could sink their claims. The case is Michael Blaes et al. v. Johnson & Johnson et al., case number 1422-CC09326-01, in the 22nd Judicial Circuit Court of Missouri. An article regarding that ruling can be accessed here.