On June 19th, the Supreme Court issued a decision that could have important consequences for multi-state class actions. In Bristol-Myers Squibb Co. v. Superior Court, the Court addressed the question whether a California state court could exercise personal jurisdiction over the claims of nonresident plaintiffs who had joined a group of California plaintiffs in suing Bristol-Myers Squibb (“BMS”) for alleged adverse health effects from its drug, Plavix. As a matter of 14th Amendment due process, the Court held that the nonresidents’ claims should have been dismissed for lack of personal jurisdiction.
Initially, the nonresident plaintiffs succeeded in the state courts in arguing that the courts could exercise general jurisdiction over BMS, but the California Court of Appeal reversed itself after SCOTUS issued its 2014 decision in Daimler Ag v. Bauman (holding that a court could not assert general jurisdiction over a non-resident corporate defendant solely because it engaged “in a substantial, continuous and systematic course of business” in the forum). Nevertheless, the state appellate courts held that BMS was subject to suit with respect to the nonresidents’ claims under the doctrine of specific jurisdiction.
SCOTUS disagreed. In an 8-1 opinion authored by Justice Alito (with a dissent by Justice Sotomayor), the Court held that, because the nonresidents’ claims were not based on any conduct that occurred in California, specific jurisdiction did not apply:
As noted, the nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California. The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims. . . . Nor is it sufficient—or even relevant—that BMS conducted research in California on matters unrelated to Plavix. What is needed—and what is missing here—is a connection between the forum and the specific claims at issue.
(Emphasis in original.)
The Court rejected plaintiffs’ argument that not allowing nonresident plaintiffs to join their claims with resident plaintiffs in California would result in a parade of horribles. It pointed out that plaintiffs could bring their claims together in a state that possessed general jurisdiction over BMS (specifically, New York or Delaware). It also explained that cases could be brought in multiple states by persons who allegedly were harmed in those states. Finally, the Court said that, “since our decision concerns the due process limits on the exercise of specific jurisdiction by a State, we leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court.”
The decision’s potential implications for class actions are apparent. Plaintiffs’ class action lawyers frequently assert claims against companies that sell products nationwide through putative multi-state class actions brought on behalf of named plaintiffs and would-be class members who reside in multiple states. Unless they bring such suits in the defendants’ home states (i.e., in the states in which the defendants are incorporated or maintain their principal places of business), or bring multiple suits on behalf of putative statewide classes, they risk having the nonresidents’ claims dismissed. Whether a different result might pertain in lawsuits filed in federal court remains to be seen.
Written by former litigation partner, Donald R. Frederico.