We knew that the Supreme Court’s opinion in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), was a game changer the first time we read it. Gone is the concept of general personal jurisdiction that we learned in law school, where a defendant’s “continuous and systematic” contacts with a forum could allow a plaintiff to bring any and all causes of action against that defendant in that forum. Personal injury claims, business disputes, consumer claims, claims that the day is too long, that the night is too dark, or that Zane should never have left One Direction. Whatever. General jurisdiction means that a defendant can be held to respond without regard to the subject matter of the lawsuit.
In its place we have the properly recalibrated principle that a defendant can be subject to general personal jurisdiction only in forums where it is “at home”—which for a corporation means the place of incorporation and the principal place of business. This rule places no undue burden on plaintiffs: A plaintiff can still proceed in the defendant’s home forum, and we still have specific personal jurisdiction, under which a plaintiff can proceed against a defendant in a forum where the dispute arises from the defendant’s forum contacts. The Supreme Court merely reestablished that the Constitution will not permit importing disputes into forums where they absolutely do not belong. We are on board with that.
Our fear when Bauman came out in 2014 was that it would take an entire generation for the rule to catch on. But to our modest surprise, the Bauman track record is shaping up nicely. We reported to you last August on Bristol-Myers Squibb Co. v. Superior Court, 175 Cal.Rptr.3d 412 (Cal. Ct. App. 2014), a wrongly decided case in the California Court of Appeal, where the court paid lip service to Bauman and rejected general personal jurisdiction. But then it reached out to find specific personal jurisdiction based on “substantial, continuous economic activity” within the state, which sounds a lot like the old test for general jurisdiction. This wolf in sheep’s clothing lasted less than four months on the books before the California Supreme Court wiped it away.
We find promise today in two additional recent cases rejecting general jurisdiction under Bauman: Neely v. Wyeth, Inc., No. 4:11-cv-00325, U.S. Dist. LEXIS 39879 (E.D. Mo. Mar. 30, 2015), and BNSF Railway Co. v. Superior Court, No. B260798, 2015 WL 1404544 (Cal. Ct. App. Mar. 27, 2015).
Neely is a prescription drug case. After the Supreme Court decided Bauman, two defendants re-asserted their previously rejected challenges to personal jurisdiction in Missouri. What were their forum contacts? One was registered to do business in Missouri, had designated an in-state agent for service of process, had distributed the drug in Missouri, and had a handful of employees there. Neely, at **2-3. The other had employees in Missouri and participated in a state-run program that provides prescription drugs to Missouri citizens. It was also owned by the world’s largest generic drug company, which meant by inference that it derived significant revenue from Missouri. (You might call this “too big to let plaintiff fail” jurisdiction.) Id. at *3.
The problem for the plaintiff was that the decedent had resided in Kentucky and had used the drug there, so no specific jurisdiction. It was either general jurisdiction or nothing in Missouri, and the district court decided nothing. Id. None of the defendants was incorporated or had a principal place of business in Missouri, and the plaintiffs’ other arguments proved too much: Registering to do business in a state obviously cannot establish general jurisdiction, or else every registered corporation could be sued in the state for any reason. Bauman “clearly rejects this proposition,” which we discussed a few weeks ago here Id. at *7.
The same goes for participating in the Missouri’s prescription drug program, whose nickname we love (“MoRx”), but cannot pronounce. Lots of drug companies participate, but that does not make them amenable to suit in Missouri for all purposes, nor does having employees in the state because “given the global nature of our economy and the ever increasing use of teleworking/telecommunications as a common means of conducting business, the employment of individuals physically located in the state of Missouri is immaterial. Id. at *9. We’re not sure why being owned by a giant parent company was ever relevant to jurisdiction, but if it ever was, the district court decided that the parent’s “revenue and extensive business dealings cannot be imputed” to the subsidiary. Id.
These are all sound points, and they are helpful because they cover many arguments that defendants can expect to see. The California Court of Appeal’s opinion in BNSF Railway Corp. v. Superior Court is equally as helpful, but for a slightly different reason. The plaintiff sued a Texas company over asbestos exposure alleged to have occurred in Kansas, but they sued in California. Why? Because it was convenient for their counsel, who wanted a forum of their liking (apparently not Kansas, for unexplained reasons) where they could sue multiple defendants at once. BNSF Railway Corp., at *7.
The trial court agreed with the plaintiffs, but the Court of Appeal issued a writ of mandate vacating that decision and holding that California’s courts could not exercise general personal jurisdiction over the Texas defendant. Id. The Court of Appeal’s opinion includes a nice discussion of personal jurisdiction from International Shoe up through Bauman, and we commend that discussion to anyone who is interested in the topic. Id. at **4-5. On the facts, the defendant admitted that it had substantial operations in California, but the court held that it was a relatively small part of the company’s business worldwide and thus did not make the company “at home” in California:
Petitioner concedes that it transacts substantial business in California. The business it transacts here, however, constitutes a relatively small portion of its overall operations. . . . “General jurisdiction . . . calls for an appraisal of a corporation’s activities in their entirety, nationwide and worldwide.” [citing Daimer AG v. Bauman] That appraisal here compels the conclusion that petitioner’s operations in California are not sufficient in comparison to its national operations and are not so “continuous and systematic” as to render it “at home” in California. . . . If petitioner’s California activities sufficed to allow adjudication of a Kansas-rooted case in California, “the same global reach would presumably be available in every other State in which [petitioner’s] sales are sizeable.” [again citing Daimer AG v. Bauman] This result is not permissible under the due process clause as interpreted in Daimler.
BNSF Railway, at *6. We like the BNSF Railway opinion for a few reasons. First, the Court of Appeal decided the issue on a discretionary interlocutory appeal, which means the court saw an error and exercised its discretion to fix it before the defendant was wrongfully subjected to expensive litigation in California. Second, the opinion follows through on Bauman’s admonition that the court must consider the defendant’s forum contacts relative to its worldwide operations. This is important to national and global companies, who tend to get sued a lot, because even substantial operations in a forum do not justify general jurisdiction if the forum contacts are modest relative to the company’s operations overall.
Third, the Court of Appeal rejected the plaintiffs’ plea of convenience. For one thing, we do not accept for one second that it would be a “grave injustice” to make plaintiffs sue either under specific jurisdiction or in the defendant’s home state. We also find it ironic that plaintiffs apparently considered it too inconvenient to file in their own home state of Kansas. But even if plaintiffs have to work a little harder, we agree with the Court of Appeal that “the due process rights of defendants cannot vary with the types of injury alleged by plaintiffs. Our analysis must focus on ‘the relationship among the defendant, the forum, and the litigation.’” Id. at *7 (quoting Daimler AG v. Bauman).
So due process trumps convenience. We are on board with that too and will continue to keep an eye on post-Bauman decisions going forward.