Speed. Some things move faster than others. When we viewed last August's solar eclipse, in Tennessee, the Moon's shadow was moving along the Earth at a rate of about 1,450 miles per hour. Depending mostly on latitude, your speed may be greater or less. Indeed, totality was sufficiently exhilarating that we wondered when the would the next eclipse occur in Philadelphia. These days, one can find practically any information on the Internet, and eclipse locations was no exception. We found this page and simply typed in a date range, the type of eclipse we were interested in (total), and the decimalized GPS coordinates for Philadelphia (39.94 and -75.10). Unfortunately, a reasonable date range (± 100 years) showed nothing. So we used the maximum range available – the entire 5000 years between 1999 BCE and 3000 CE. That produced 14 Philadelphia total eclipses, but again unfortunately, the last one took place fourteen years before Columbus' first voyage. Even more unfortunately, totality will not be visiting Philadelphia until October 26, 2144. It's a cool site, since the same page looks like it would work for anywhere in the world. But for us in Philly, that means we have to keep going to totality; totality isn't coming to us anytime soon.

Anyway, getting back to speed. Some legal issues are evolving at breakneck speed right now. A little over two months ago (11/20/2017) we published a post entitled, " BMS & Nationwide Class Actions" about – you guessed it the probable impact that the personal jurisdiction rulings in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) ("BMS"), and Daimler AG v. Bauman, 134 S. Ct. 746 (2014) ("Bauman"), on attempts to bring multi-state class actions in fora other than where the targeted defendant was "at home" and therefore subject to general personal jurisdiction under Bauman.

That post discussed not quite a dozen cases, all decided since Bauman in 2014: McDonnell v. Nature's Way Products, LLC, 2017 WL 4864910 (N.D. Ill. Oct. 26, 2017); Fitzhenry-Russell v. Dr. Pepper Snapple Group, Inc., 2017 WL 4224723 (N.D. Cal. Sept. 22, 2017); In re Dental Supplies Antitrust Litigation, 2017 WL 4217115 (S.D.N.Y. Sept. 20, 2017); Spratley v. FCA US LLC, 2017 WL 4023348 (N.D.N.Y. Sept. 12, 2017); Plumbers' Local Union No. 690 Health Plan v. Apotex Corp., 2017 WL 3129147 (E.D. Pa. July 24, 2017); Famular v. Whirlpool Corp., 2017 WL 2470844 (S.D.N.Y. June 7, 2017); Demedicis v. CVS Health Corp., 2017 WL 569157 (N.D. Ill. Feb. 13, 2017); Bauer v. Nortek Global HVAC LLC, 2016 WL 5724232 (M.D. Tenn. Sept. 30, 2016); Kincaid v. Synchrony Financial, 2016 WL 4245533 (N.D. Ill. Aug. 11, 2016); Matus v. Premium Nutraceuticals, LLC, 2016 WL 3078745 (C.D. Cal. May 31, 2016); Demaria v. Nissan N.A., Inc., 2016 WL 374145 (N.D. Ill. Feb. 1, 2016). Of the eleven only one, Fitzhenry-Russell, allowed a nationwide class action to survive a post-BMS/Bauman personal jurisdiction challenge.

Well, the pace is picking up. In little over two months, three more cases have been decided, addressing the issue whether class actions defined to include forum non-residents can be brought against non-resident defendants after BMS: DeBernardis v. NBTY, Inc., 2018 WL 461228 (N.D. Ill. Jan. 18, 2018); LDGP, LLC v. Cynosure, Inc., 2018 WL 439122 (N.D. Ill. Jan. 16, 2018); and In re Chinese-Manufactured Drywall Products Liability Litigation, 2017 WL 5971622 (E.D. La. Nov. 30, 2017). We'll address these new cases today.

The most recent decision, DeBernardis, involved a putative nationwide class action under a consumer protection statute. The defendants moved to dismiss, inter alia, "claim[ing] that this Court does not have jurisdiction to hear the case involving non-resident class of plaintiffs" under BMS. The court agreed. The plaintiffs relied on the Fitzhenry-Russell decision we critiqued in our prior post, and the Chinese Drywall decision we'll be examining below, to claim that personal jurisdiction in class actions was somehow exempt from the Due Process limits recognized in BMS. 2018 WL 461228, at *2. The court in DeBernardis, however, found the reasoning in McDonnell and other decisions from the Northern District of Illinois more persuasive. Id. Although calling it a "close question," the court in DeBernardis refused to distinguish class actions from mass torts for due process purposes. It did not believe that the Supreme Court would do so:

The Court believes that it is more likely than not based on the Supreme Court's comments about federalism that the courts will apply BMS to outlaw nationwide class actions in a form, such as in this case, where there is no general jurisdiction over the Defendants. There is also the issue of forum shopping, which was mentioned in the Chinese DryWall case as a basis for distinguishing mass torts from class actions, but possible forum shopping is just as present in multi-state class actions.

DeBernardis, at 2018 WL 461228, at *2. Consequently, those portions of the class action that sought to represent "out-of-state plaintiff classes" was dismissed. Id.

The LDGP decision reached a similar result, but was somewhat less emphatic in its holdings. Class action plaintiffs in LDGP sought to add new representative plaintiffs, including non-residents, who would serve as representatives of non-resident classes. 2018 WL 439122, at *1 n.1. Since the amendment would create a situation of non-resident plaintiffs suing non-resident defendants, the defense opposed on BMS jurisdictional grounds. LDGP held that, since the suit asserted state-law claims under diversity of citizenship, there was no occasion to consider the caveat (137 S. Ct. at 1784) in BMS concerning the Fifth Amendment and federal causes of action. Id. at *2 n.2 ("the court is exercising diversity jurisdiction and looking to Illinois law"). Plaintiffs' other argument, "that because the claims of at least one plaintiff . . . arose out of events taking place in [the forum], defendant is also subject to personal jurisdiction for similar claims brought by other plaintiffs that have no other connection to [the forum]," id. at 3, ran straight into the BMS buzzsaw:

Plaintiffs' arguments are unconvincing. Though the nonresidents' claims are similar to those of resident plaintiffs, the difference that plaintiffs point out is fundamental: the events that lead to the nonresidents' claims took place outside of [the forum]. The number of would-be nonresident plaintiffs has no bearing on whether those plaintiffs' claims arise from or relate to the defendant's activity in the forum. [quotations from BMS omitted] Consequently, this court does not have personal jurisdiction over defendant with regard to the claims brought against it by the nonresident plaintiffs.

Id.

As already indicated, the Chinese Drywall decision goes the other way. The defendants against whom a nationwide class action was asserted were not sympathetic – they had defaulted, thumbed their collective noses at the court, and were essentially daring the plaintiffs to try to come after them in China. 2017 WL 5971622, at *4. The plaintiffs wanted the biggest cudgel they could get – a money judgment on behalf of a nationwide class action − and only weeks before BMS was decided, the MDL court had given it to them. Id. at *5. It was not inclined to let BMS take it away, so Chinese Drywall, held:

BMS would not affect the jurisdictional holding in the present case. BMS was not a class action; it was a "mass tort action" in state court. This factor materially distinguishes this action from [BMS] because in class actions, the citizenship of the unnamed plaintiffs is not taken into account for personal jurisdiction purposes.

2017 WL 5971622, at *12 (citations and quotation marks omitted). For this proposition, the decision cited the Fitzhenry-Russell decision discussed in our prior post, and the same two cases that Fitzhenry-Russell had relied upon, AM Trust v. UBS AG, 78 F. Supp.3d 977, 986 (N.D. Cal. 2015), aff'd on other grounds, 681 Fed. Appx. 587 (9th Cir. 2017)); and Senne v. Kansas City Royals Baseball Corp., 105 F. Supp. 3d 981, 1022 (N.D. Cal. 2015).

Just as they were inadequate in Fitzhenry-Russell, these two district court citations, simply don't suffice to limit a subsequent Supreme Court decision based on Due Process principles. AM Trust involved the reverse situation – an attempt to assert the residence of class members in favor of personal jurisdiction. 78 F. Supp. at 986. AM Trust dismissed for lack of personal jurisdiction, which hardly supports the massive extension of personal jurisdiction to a nationwide class that Chinese Drywall permitted. Moreover, the only support AM Trust cited for the proposition, Ambriz v. Coca Cola Co., 2014 WL 296159 at *46 (N.D. Cal. Jan. 27, 2014), was a venue, not a jurisdiction, case. The same thing is true of Senne: the court granted a motion to dismiss for lack of personal jurisdiction and relied solely on AM Trust. 105 F. Supp. at 1022.

In short, Chinese Drywall, like Fitzhenry-Russell, could not find any precedent that actually allowed personal jurisdiction based on totally ignoring the "citizenship of the unnamed plaintiffs" in whose favor judgment would eventually be entered. Ignoring the non-resident class members seems like an extremely slender reed for holding that a brand-new 8-1 United States Supreme Court "straightforward application . . . of settled principles of personal jurisdiction," BMS, 137 S. Ct. at 1783, does not apply to class actions.

Conscious of its weak precedential basis, Chinese Drywall, 2017 WL 5971622, at *14 ("This Court is cognizant of the superficial similarities between mass tort actions (like in BMS) and a class action"), the opinion seeks to buttress its jurisdiction-expanding result in several ways. Id. at *14-21.

First – class actions and mass torts are different, the chief basis being that "a class action has different due process safeguards" arising from Fed. R. Civ. P. 23. Id. at *14 (citing "numerosity, commonality, typicality, adequacy of representation, predominance and superiority"). Sorry, but those Rule 23 requirements are almost solely to protect the absent plaintiffs' Due Process rights. Personal jurisdiction is different. As BMS concisely put it, "the primary concern is the burden on the defendant." 137 S. Ct. at 1780. It is a fallacy to justify denigration of a class action defendant's Due Process rights by citing Due Process protections intended to protect plaintiffs. Unfortunately, in MDLs and class actions, it still seems to be a radical proposition that defendants have Due Process rights, too.

Second – "fairness" is "the fundamental purpose of due process." Chinese Drywall, 2017 WL 5971622, at *15. In a word, no – not in personal jurisdiction. Once again, BMS answers this question:

[R]estrictions on personal jurisdiction are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States. . . . The sovereignty of each State implies a limitation on the sovereignty of all its sister States. . . . [E]ven if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.

137 S. Ct. 1780-81 (numerous citations and quotation marks omitted). Fairness may play a role, but fundamentally Due Process restrictions on personal jurisdiction exist because the Constitution created a federal system of government. Chinese Drywall involved plaintiffs from three states – Louisiana, Florida, and Virginia, 2017 WL 5971622, at *9-11 – and defendants from China. There is simply no Due Process basis for adjudicating in Louisiana claims involving harm to persons in California, Texas, or New York. BMS declared the era of that kind of big litigation to be over.

ThirdPhillips Petroleum Co. v. Shutts. Like plaintiffs in BMS, Chinese Drywall invokes Shutts. 2017 WL 5971622, at *15-16. Once again, BMS supplies the answer. "Shutts, which concerned the due process rights of plaintiffs, has no bearing on the question presented here." 137 S. Ct. at 1777 (citing Id. at 1783-84). "[T]he [Shutts] Court stated specifically that its 'discussion of personal jurisdiction [did not] address class actions where the jurisdiction is asserted against a defendant class.'" Id. at 1783 (quoting Shutts, 472 U.S. at 812 n.3.

Fourth – Congress, in creating Rule 23 (and secondarily Rule 4), permitted nationwide class actions. 2017 WL 5971622, at *17, *18. Maybe Congress could, under the cited U.S. Const. art. III §2, but it hasn't. Rule 23 (and Rule 4) is not a statute, it is only a rule of civil procedure. As we discussed at length in our prior post, rules of civil procedure are enacted under the Rules Enabling Act, which prohibits any federal rule, even Rule 23, from "abridg[ing], enlarg[ing] or modify[ing] any substantive right." 28 U.S.C. §2072(b). The mass creation of personal jurisdiction – personal jurisdiction that the Supreme Court just reiterated was unconstitutional under the Due Process Clause − where none otherwise exists, can only be substantive. Look at the federal rules. They don't even impose pre- or post-judgment interest. Why, because "[p]rejudgment interest in a diversity action is . . . a substantive matter governed by state law." In re Exxon Valdez, 484 F.3d 1098, 1101 (9th Cir. 2007). The federal rules can't even add interest to a judgment. They certainly cannot create the personal jurisdiction needed to enter the judgment itself.

Fifth − The Multidistrict Litigation Act. Chinese Drywall claims that 28 U.S.C. §1407 is "another example" of the "principle" that congressional action can create personal jurisdiction. However, §1407 expressly addressed personal jurisdiction in only one provision. An MDL judge "may exercise the powers of a district judge in any district for the purpose of conducting pretrial depositions in such coordinated or consolidated pretrial proceedings." §1407(b) (emphasis added). Thus the only expansion of jurisdictional power that Congress chose to confer on MDL judges is explicitly limited to facilitating depositions. The express terms of the MDL Act thus affirmatively refute the jurisdiction asserted in Chinese Drywall. An MDL judge simply does not "ha[ve] the same pre-trial jurisdiction as the transferor courts where the cases were initially filed." 2017 WL 5971622, at *20. The statute confers no additional personal jurisdiction over anyone save with respect to depositions. The statute "speaks not in terms of imbuing transferred [MDL] actions with some new and distinctive venue character." Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 37 (1998); cf. Gelboim v. Bank of America Corp., 135 S. Ct. 897, 904 (2015) (removing "venue" limitation from Lexecon quotation).

Sixth – The Class Action Fairness Act. 2017 WL 5971622, at *18. CAFA expanded the scope of federal diversity jurisdiction. It has nothing to do with personal jurisdiction. CAFA did not purport to create nationwide personal jurisdiction over persons sued by classes subject to its provisions. E.g., Burgess v. Religious Technology Center, Inc., 600 Fed. Appx. 657, 660-61 (11th Cir. 2015) (affirming dismissal of defendant in CAFA case for lack of personal jurisdiction). Perhaps Congress could have expanded personal jurisdiction, too, or perhaps not. Either way, nothing in CAFA purports to grant federal courts personal jurisdiction over non-resident defendants being sued by non-resident plaintiffs, as with the absent class members in Chinese Drywall.

Seventh – Settlement classes. Chinese Drywall states, accurately, that "courts have often approved national classes in mass tort cases in the settlement context." 2017 WL 5971622, at *18. That fact is neither here nor there. Settlement is consensual, and personal jurisdiction is waivable. If a non-resident defendant is agreeable to a nationwide settlement, encompassing non-resident plaintiffs, and so are the plaintiffs, personal jurisdiction is not a stumbling block, not even after BMS.

Eighth − Lack of federalism concerns. Relying primarily on the dissent in BMS, Chinese Drywall denies that these concerns exist in class actions. 2017 WL 5971622, at *19-20 (this case "involves Defendants that have made enough contacts to the forum states to hold them liable there in nationwide class actions"). This final proposition stuffs the rabbit way down in the hat. Yes, the defendants have sufficient jurisdictional contacts with the three "forum states" because each one has a resident plaintiff, also a class representative, claiming damages. But if BMS means anything, it means that the existence of personal jurisdiction over claims by other resident plaintiffs (three transferred plaintiffs from three states) does not support personal jurisdiction over similar claims by non-residents (everybody from everywhere else):

The mere fact that other plaintiffs were prescribed, obtained, and ingested [the product] in [the forum state] − and allegedly sustained the same injuries as did the nonresidents − does not allow the State to assert specific jurisdiction over the nonresidents' claims.

137 S. Ct. at 1781. This last rationale is, to us, the worst, because it simply tells the world that Supreme Court precedent be damned, these obnoxious defendants are going to get theirs.

Thus, right now the scorecard stands at 13-2 in favor of the proposition that BMS precludes nationwide class actions to the extent that they result in non-resident plaintiffs suing non-resident defendants. While Chinese Drywall certainly threw against the drywall all the mud it could find, ultimately we don't think anything sticks. Fittingly, the critical passage – "an MDL transferee court . . . has personal jurisdiction over nonresident class members and has the power to . . . approve a nationwide class," 2017 WL 5971622, at *14, has no citation at all. Moreover, as the steady decisional drumbeat described in this and our prior post indicates, the issue of BMS and nationwide class actions under state law is surely headed for the appellate courts, and we expect the first decisions by the end of 2018.

We like our chances.

This article is presented for informational purposes only and is not intended to constitute legal advice.