United States: SCOTUS Continues To Limit The Exercise Of Specific Personal Jurisdiction

Sarah Gogal Passeri is an Associate in our Charlotte officeSteven Raffaele is a Partner in our New York office.

Three years after its decision in Walden v. Fiore,1 the U.S. Supreme Court issued another decision that continues its trend of limiting the exercise of specific personal jurisdiction over non-resident defendants.2 In Bristol-Myers Squibb Co. v. Superior Court of Calif., San Francisco Cty.,3 the Court held that a non-resident defendant is not subject to specific jurisdiction unless there is a connection among the defendant, the forum, and the specific claims asserted by the plaintiff.

California Courts Find Specific Jurisdiction Using "Sliding Scale Approach"

The action involved a mixed group of resident and non-resident plaintiffs who brought personal injury claims against Bristol-Myers Squibb (BMS) in California state court arising from their use of the drug Plavix.  BMS engages in certain business activities in California, including the marketing and selling of Plavix to residents of California.  It does not, however, manufacture, package, label, or otherwise produce Plavix in California.  The non-resident plaintiffs did not allege that they bought or ingested Plavix in California; nor did they allege that they were treated for injuries or otherwise sustained damages in California.

The California Supreme Court affirmed the Court of Appeal's finding of specific jurisdiction over BMS for the claims brought by non-resident plaintiffs.4 Applying a "sliding scale approach," the court concluded that BMS's wide-ranging and extensive contacts with California permitted the exercise of specific jurisdiction even though there was "a less direct connection between BMS's forum activities and plaintiffs' claims than might otherwise be required."  The California court found significant that the claims asserted by residents and non-residents were based on the same allegedly defective product and the same misleading marketing of the product.  Three judges dissented, suggesting that the majority was expanding specific jurisdiction to a point where it becomes "indistinguishable" from general jurisdiction.

SCOTUS Majority Rejects Relaxed Jurisdictional Analysis

In reversing California's highest court, the U.S. Supreme Court underscored that the "primary concern" in a personal jurisdiction analysis is "the burden on the defendant."  The Court found that California's "sliding scale approach" "resemble[d] a loose and spurious form of general jurisdiction" that does not align with Supreme Court precedent. Rather, specific jurisdiction requires "a connection between the forum and the specific claims at issue."  Citing Walden, the majority held that the relevant conduct giving rise to the non-resident plaintiffs' claims occurred outside of California and thus a California court cannot assert specific jurisdiction over those claims.  It was of no measure that the California court had jurisdiction over similar claims asserted by resident plaintiffs.

The Court rejected the non-resident plaintiffs' "last ditch contention" that BMS's decision to contract with a California company to distribute Plavix nationwide provided a sufficient basis for jurisdiction.  The non-resident plaintiffs proffered no evidence that the drug they ingested was distributed from California.  The fact that BMS contracted with a California company, without more, was insufficient to establish specific jurisdiction.

In response to the non-resident plaintiffs' contention that a "parade of horribles" will result,  the Court stated that its decision would not prevent resident and non-resident plaintiffs from "joining together in a consolidated action in the States that have general jurisdiction over BMS."  The decision further noted that plaintiffs who are residents of a particular state could probably sue together in their home states.

Justice Sotomayor's Dissent

Justice Sonia Sotomayor dissented on the basis of "fairness," finding that the "majority's rule will make it difficult to aggregate the claims of plaintiffs across the country whose claims may be worth little."  She feared that the majority's decision – which she labeled as "federalism" by putting territorial limitation above concerns of fairness – would quash the ability of plaintiffs to bring a nationwide, consolidated action.  Construing prior precedent on specific jurisdiction, including Walden, Justice Sotomayor found that the non-residents' claims "relate to" BMS's nationwide conduct, including in California.  Because BMS is subjected to specific jurisdiction in California for the same claims brought by resident plaintiffs, it would not be unfair or burdensome to subject BMS to jurisdiction in California for the claims of non-residents. 

The Takeaway

The Supreme Court's decision, building on Walden and Goodyear, continues to narrowly define the scope of specific jurisdiction over non-resident defendants.  It confirms that the jurisdictional inquiry is focused on the link between the defendant's activity in the forum and the specific claims asserted by the plaintiffs.  It is likely that the sufficiency of those connections will continue to be tested as plaintiffs look for ways to file cases in states beyond those where general jurisdiction over a corporate defendant exists.

Footnotes

1 571 U.S. at __, 134 S. Ct. 1115 (2014).

2 Justice Alito delivered the opinion for the Court in which seven justices concurred.  Justice Sotomayor dissented.

3 137 S. Ct. 1773 (2017).

4 1Cal. 5th 783, 206 Cal. Rptr. 3d 636 (2016).  The trial court had exercised general jurisdiction over BMS, a Delaware corporation with its headquarters in New York, based on its extensive activities in California.  The Court of Appeal denied BMS's petition for writ of mandate, but the California Supreme Court subsequently vacated that order in light of Daimler AG v. Bauman, 571 U.S. __, 134 S. Ct. 746 (2014), which limited general jurisdiction to those states where a corporation is essentially "at home" - namely, where it is incorporated and has its headquarters.  The Court of Appeal then changed its decision on general jurisdiction, but concluded that specific jurisdiction existed over the non-residents' claims against BMS.  228 Cal. App. 4th 605, 175 Cal. Rptr. 3d 412 (2014).  The California Supreme Court unanimously affirmed the denial of general jurisdiction, but split in affirming on specific jurisdiction.

5 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S. Ct. 2846 (2011) (specific jurisdiction may be exercised only with respect to "activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation"). 

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