Two days ago, we posted on a West Virginia Supreme Court decision that told non-resident plaintiffs the closing time refrain “you don’t have to go home, but you can’t stay here.” OK, we took some liberties there, but the non-resident plaintiffs who had gone shopping in a non conveniens forum could not stay even after poking around for two years. We commented that the same result seemed dictated by last year’s Bauman decision on personal jurisdiction, which has been the subject of a few other posts, like this, this, and this. Last week, another Wild and Wonderful court took the Bauman route to send 141 plaintiffs packing, although they will probably be back.
Starting in Texas state court with the sort of CAFA-defying, misjoindering gamesmanship that we often see in serial product liability and mass tort litigation, two cases presenting virtually identical motions to dismiss were eventually heard by the pelvic mesh MDL court in Huston v. Johnson & Johnson, No. 2:15-cv-01519, 2015 WL 1565648 (S.D.W. Va. Apr. 8, 2015), and Kraft v. Johnson & Johnson, No. 2:15-cv-01517, 2015 WL 1546814 (S.D.W. Va. Apr. 8, 2015). Separated only to help the effort to stay out of federal court, one case had ninety-four plaintiffs with only three allegedly from Texas (or connected to Texas by their medical care), and the other had fifty-two plaintiffs with only two allegedly from Texas (or connected to Texas by their medical care). Of course, each case had the obligatory one plaintiff from the defendant manufacturer’s home state. The plaintiffs were linked together in that they were suing over the same or similar products and injuries, although with nothing suggesting it was appropriate for these plaintiffs to be together. On the same schedule, with the fairly predictable procedural steps, these cases made their way to the MDL court to address the basic—and appropriately first addressed—issue of whether all these non-Texans could drag a non-Texas company into Texas state court without offending due process requirements of general personal jurisdiction.
If they could, then trials through the MDL court sitting by designation or after remand back from the MDL would be in the United States District Court for the Northern District for Texas. If they could not, then each forum shopping plaintiff faced the choice of 1) not re-filing, 2) re-filing in her home jurisdiction (where there would be probably specific personal jurisdiction over the defendant), or 3) coming up with some other way to avoid removal. The second option eventually gets the plaintiff back to the MDL court, but in a single plaintiff case and with any eventual trial in the federal district court whose boundaries cover where she lives. The “but” part of the preceding sentence makes a difference to defendants, but there is also the larger issue of striking a blow against forum shopping in its various forms. A manufacturer of drugs or medical devices (principal among potential defendants, at least here) is entitled to expect to face individual product liability lawsuits in its home state’s (state) courts or in the federal court in plaintiff’s home state (as of the relevant events) after a successful removal. Setting aside MDLs or state coordinated proceedings, other options typically mean some jurisdictional games have been played.
The court in Huston and Kraft did not let the out-of-state plaintiffs play their Texas games. Starting off with what we like to see—a clear statement that the burden is on the plaintiff—and adding in the strong language from Bauman and Goodyear, it was clear that personal jurisdiction would not be an easy hurdle. Bauman articulated a preference for suing companies where they are incorporated or have their principal place of business and Goodyear required that contacts with another state be sufficiently “‘continuous and systematic’ that the defendants may be ‘fairly regarded as at home’ in the [other] state.” Huston, 2015 WL 1565648, * 5. In advocating that Texas could exercise jurisdiction over a New Jersey registered and based company as to the claims of 141 plaintiffs that had nothing with Texas, plaintiffs offered six arguments for personal jurisdiction:
(1) large sales of products, specifically more sales than in New Jersey;
(2) the defendants’ hiring and training of Texas-based employees, including physicians acting as consultants;
(3) marketing of products;
(4) maintenance of company files and equipment;
(5) payment of employee salaries; and
(6) maintenance of websites directed to all states, including Texas.
Id. at *6. For companies with websites, sales, sales reps, and consultants—that is, active dug or device companies—at least five of these statements will typically apply no matter where it is based or where it is being sued. The one that may not always apply—larger sales in the purported forum state than in the defendant’s home state—“is unavailing for purposes of general jurisdiction.” Id. It also would not make sense that the most populous states, where drug or device sales would generally be expected to outpace the sales in less populous states, would end up with more jurisdictional/gravitational pull than other states.
Beyond just basic allegations of being a company that does modern business around the nation, the plaintiffs need to show “activity typical of a corporate headquarters” in the proposed forum.” Id. Paying employees in the forum by direct deposit to their banks in the forum may be some sort of business activity, but it is not evidence of making “key business decisions” in the forum, as has been found sufficient for general jurisdiction in rare cases. Id. “Finally, permitting the maintenance of a website accessible in all states to tip the scale in the general-jurisdiction calculus would effectively eviscerate the doctrine: the defendants here and countless other corporations, large and small, would be subject to all-purpose jurisdiction nationwide.” Id. So, the plaintiffs in each case—the analysis is identical in Kraft—failed to established personal jurisdiction in Texas over the defendant as to the claims of plaintiffs from elsewhere. These are nice decisions applying Bauman logically to help limit forum shopping. Even if the court dismissing the plaintiffs will probably see them again, we still think due process matters.