SCOTUS Reinforces Position On Protections For Companies

Jun 28, 2017 | Asbestos

On June 19, 2017, the United States Supreme Court published an 8-1 decision (Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 582 U.S. __ (2017)) further clarifying and reinforcing historical personal jurisdiction precedent dating back to the seminal 1945 decision in International Shoe v. Washington. The Court reversed a judgment of the California Supreme Court and held that Bristol-Myers Squibb Co. (BMS), a corporation incorporated in Delaware and headquartered in New York, could not be sued in California by nonresident plaintiffs whose claims had no connection to California.

The litigation involved a group of 86 California residents and 592 nonresidents who filed complaints in California Superior Court alleging that Plavix, a blood-thinner manufactured by BMS, damaged their health. The nonresident plaintiffs did not obtain or ingest Plavix in California, nor did they seek treatment for their injuries in California. As a result, the Court held that California lacked personal jurisdiction over BMS because there was no affiliation between the state and the underlying facts of the nonresidents’ claims. The case was remanded to California where the nonresidents’ claims will be dismissed.

The Supreme Court’s opinion is based on decades of constitutional precedent, and its impact will be felt in all state courts that hear civil matters. The Due Process Clause of the Fourteenth Amendment limits the personal jurisdiction of state courts based on a defendant’s relationship to the forum state. Over the past 70 years, the Court developed two distinct legal tests to determine whether a state court may exercise personal jurisdiction over a defendant. First, a state court may exercise “general” personal jurisdiction over a corporate defendant if the corporation’s affiliations with the state are so continuous and systematic as to render it essentially at home in the state. See, BSNF Railway Co. v. Tyrell; Daimler AG v. Bauman and Goodyear Dunlop Tires Operations, SA v. Brown. Courts typically only have general personal jurisdiction over a corporate defendant in its state of incorporation and the state where it is headquartered. Second, a state may exercise “specific” personal jurisdiction over a defendant when there is an affiliation between the state and the underlying controversy. See, Goodyear. Typically, this is established when there is a connection between the state and the specific claims at issue.

In its twelve-page opinion, the Supreme Court provided a clear and practical explanation of the distinction between general and specific personal jurisdiction. When a corporation is essentially at home in a state, it will be subject to general personal jurisdiction and the state’s courts may hear any claim against it. Specific personal jurisdiction, the Court writes, “is very different.” To exercise specific personal jurisdiction the lawsuit must arise out of or relate to the corporation’s contacts with the state. Thus, there must be a link between the state and the underlying controversy giving rise to the lawsuit. When no such connection exists, specific jurisdiction is lacking, regardless of the extent of a defendant’s unconnected activities in the state.

The California Supreme Court had already determined that general personal jurisdiction did not exist because Bristol-Myers was incorporated in Delaware with its headquarters in New York. At issue was whether specific personal jurisdiction existed. Consistent with its precedent, the Supreme Court held that California did not have specific personal jurisdiction over the non-residents’ lawsuits because they were not prescribed Plavix in California, did not ingest Plavix in California, did not purchase Plavix in California and were not injured by Plavix in California.

The Court’s opinion strengthens constitutional barriers against forum shopping and provides a first line of defense to corporations, insurers and individuals sued in states which have no connection to the facts of the lawsuit.

The attorneys at CMBG3 Law have extensive experience briefing and arguing personal jurisdiction matters. If you have any questions or would like more information, please contact Nicholas J. Blei (email him or 617-936-4353, ext. 208).




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