Supreme Court Specifies Limits on Personal Jurisdiction
n June 19, 2017, the United States Supreme Court in Bristol-Myers Squib Co. v. Superior Court of California, issued an 8-1 decision clarifying the bounds of specific jurisdiction over multi-state corporations. Following the trend established by the Supreme Court in its 2014 Daimler AG v. Bauman decision, the Court applied established principles of civil procedure to reach a decidedly pro-business holding that limits specific jurisdiction to cases where the facts at issue arise directly out of defendant’s presence in the forum state.
Over 600 plaintiffs filed suit in state court in California against Bristol-Meyers Squib Co. (“BMS”) claiming that one of BMS’s drugs, Plavix, had injured consumers. Of the 600 plaintiffs, only 86 were California residents – the rest had no connections with California at all (they did not purchase or ingest the drug in California, and were not injured in California). However, each plaintiff’s claim was essentially identical.
BMS moved to dismiss the claims brought by the out-of-state plaintiffs for lack of personal jurisdiction. During the Court’s deliberation on the jurisdictional issue, the Daimler decision came down, effectively foreclosing general jurisdiction as an option in this case. Instead, the California Supreme Court granted specific jurisdiction over the out-of-state plaintiffs, applying what they termed a “sliding scale approach to specific jurisdiction” in which the exercise of jurisdiction was allowed “based on a less direct connection between BMS’s forum activities and plaintiff’s claims than might otherwise be required.”
Certiorari was granted to determine whether this novel “sliding scale” approach violated BMS’s due process rights.
The Majority Holding
he majority of the Supreme Court held that the California Court’s sliding scale approach did violate the Due Process Clause of the Fourteenth Amendment (characterizing it as a “loose and spurious form of general jurisdiction”) and found that California courts lacked specific personal jurisdiction over the out-of-state plaintiffs under the traditional “arising out of” analysis.
Writing for the majority, Justice Alito explained that what is needed for a finding of specific jurisdiction “is a connection between the forum and the specific claims at issue.” Since the out-of-state plaintiffs had no personal connections to California, there was no reason to submit BMS to the “coercive power of a State that may have little legitimate interest in the claims in question.”
In a dissenting opinion, Justice Sotomayor focused on the apparent unfairness of the majority’s position, noting that the decision could have the effect of making it more difficult to “aggregate the claims of plaintiffs across the country whose claims may be worth little alone.” In particular, the dissent took issue with the level of relatedness required for a finding of specific personal jurisdiction, arguing that the majority holding narrowed this standard to an unworkable and unfair degree.
n its 2014 Daimler decision, the Supreme Court greatly limited corporate exposure to general jurisdiction by taking an extremely narrow view of where a corporation is “at home.” Now, in BMS, the Court has taken a similarly pro-business approach, this time to specific jurisdiction, and limited the exposure of companies who operate nationwide.
The impact of this decision on class action claims, foreign corporations, and multi-defendant litigation is yet to be seen. If this holding plays out as Justice Sotomayor believes, however, such claims will be severely curtailed, if not entirely stifled. This decision gives a protective shield to corporate defendants, and shifts the burden to plaintiffs to figure out whether and where the appropriate forum exists.
Lauren Corbett, the author of this case summary, is an associate at Beck Reed Riden LLP, focusing her practical on complex commercial litigation and employment disputes.
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