This is a follow-up to our post last week on the Missouri Supreme Court’s momentous personal jurisdiction decision in State ex rel. Norfolk Southern Railway Co. v. Dolan, ___ S.W.3d ___, 2017 WL 770977 (Mo. Feb. 28, 2017) (“NSRC”). We stated last week, and we continue to believe, that NSRC will ultimately kill litigation tourism in Missouri.
However, it won’t be easy. Nothing ever is against the rich and entrenched litigation industry.
As we would expect, the other side is talking out both sides of its mouth about NSRC.
On one hand, in the ongoing legislative push for a statutory fix to the bizarre and unfair way that courts have interpreted Missouri’s venue and joinder rules (see our post here), those supporting the other side of the “v.” are already claiming that the venue/joinder reform bill (H.B. 460 – which will be on the House floor this week) is no longer necessary; that NSRC supposedly “fixed” everything.
On the other hand, and essentially simultaneously, in the multi-plaintiff mass tort litigation that is the main reason tort reform is so desperately needed, they’re doing the opposite – trying to get around NSRC by claiming “pendent party” jurisdiction as a result of the very same venue/joinder problems that venue/joinder reform and H.B. 460 is intended to fix.
Talk is cheap. Watch what they do, not what they say.
They can’t have it both ways. In fact, they can’t have it either way. The plaintiffs’ first position is garbage, and the second is devoid of legal support.
For the reasons stated in our original post, H.B.460 remains necessary after NSRC. NSRC established that personal jurisdiction over non-resident corporations by non-resident plaintiffs over injuries not arising in Missouri is unconstitutional under the Due Process clause. There is no general personal jurisdiction because the defendant is not “at home.” There is no specific personal jurisdiction because out-of-state injuries to out-of-state plaintiffs are not “related to” a defendant’s Missouri activities. There is no “consent” merely by registering to do business.
But as good as it was, NSRC was not a mass tort case. Rather, it was an individual litigation tourist plaintiff suing a single non-resident corporation. NSRC thus had no occasion to address either the 99-plaintiff misjoined tort complaints that have become the bane of Missouri product liability practice or the 99-defendant complaints that are typical of asbestos (and some other) product liability litigation. Eliminating those abuses are at the core of H.B. 460, meaning that the reforms proposed in H.B. 460 remain every bit as necessary as before. As we discussed, the court of appeals in Barron v. Abbott Laboratories, Inc., ___ S.W.3d ___, 2016 WL 6596091, at *13 (Mo. App. Nov. 8, 2016), invited the legislature to correct the venue/joinder rules, and that is exactly what H.B. 460 will do.
True, there should be no personal jurisdiction over non-resident corporations by litigation tourists, because NSRC held such jurisdiction to be unconstitutional, but that won’t stop plaintiffs from trying to keep their gravy train rolling. Already they are arguing the facially absurd proposition that a Missouri court rule or a statute can override the Due Process Clause of the United States Constitution, They are betting that the same courts that messed up the joinder/venue rules in the first place will also ignore the Supremacy Clause. Their main argument is “pendent party” jurisdiction – dependent on the presence of the very same misjoined Missouri plaintiffs that H.B. 460 would eliminate.
Pendent party jurisdiction doesn’t really exist at all, and has never operated to create personal jurisdiction for plaintiffs otherwise unable to assert jurisdiction in a constitutional manner.
Pendent jurisdiction is recognized only where jurisdiction exists as to some claims, but not others, such as non-diverse state-law antitrust claims asserted in a federal antitrust action brought by the same plaintiff against the same defendant. In such cases, the plaintiff is already constitutionally able to obtain personal jurisdiction over the defendant(s). Pendent jurisdiction has never been a means of exploiting misjoinder to provide jurisdiction for other plaintiffs who, on their own, would have no constitutional basis for asserting personal jurisdiction.
These Missouri plaintiffs aren’t the first to try this unconstitutional dodge. Since Bauman put teeth in general jurisdiction’s “at home” requirement (as NSRC recognized), pendant party jurisdiction has been asserted, and rejected, in the following cases where (as in Missouri) other plaintiffs, not other claims, were at issue: Famular v. Whirlpool Corp., 2017 WL 280821, at *6-7 (S.D.N.Y. Jan. 19, 2017); In re Testosterone Replacement Therapy Products Liability Litigation Coordinated Pretrial Proceedings, 164 F. Supp.3d 1040, 1048-49 (N.D. Ill. 2016) (which we discussed here); In re: Bard IVC, 2016 WL 6393596, at *4-5 n.4 (D. Ariz. Oct. 28, 2016); In re Zofran (Ondansetron) Products Liability Litigation, 2016 WL 2349105, at *5 n.5 (D. Mass. May 4, 2016); Demaria v. Nissan North America, Inc., 2016 WL 374145, at *7-8 (N.D. Ill. Feb. 1, 2016); Tulsa Cancer Institute, PLLC v. Genentech, Inc., 2016 WL 141859, at *4 (N.D. Okla. Jan. 12, 2016); In re Plavix Related Cases, 2014 WL 3928240, at *9 (Ill. Cir. Aug. 11, 2014).
Not only does the plaintiffs’ pendent party argument have no legal basis, but tort reform or no, the validity of the peculiar construction of Missouri joinder procedure on which the pendent party jurisdiction argument is based is itself before the Missouri Supreme Court. As discussed in this blogpost, an application for transfer of the infamous Barron case (now called M.B. by Hitt) was granted on January 5, 2017, and the case is now docketed at SC96151. What the courts giveth, the courts can taketh away. With the venue/joinder issue thus still uncertain under current Missouri law, H.B. 460 remains essential to get rid of multi-plaintiff misjoinders and venue abuse once and for all, with a permanent rewriting of the applicable statute and rules. Even with personal jurisdiction now decided in our side’s favor, joinder and venue remain very much in need of fixing.
Finally, assume (1) that NSRC means that non-resident corporations can’t be sued in Missouri by litigation tourists, and (2) that pendent party jurisdiction is likewise rightfully rejected. Without venue/joinder reform, that result would leave Missouri law favoring non-resident corporations over those businesses that choose to maintain their principal places of business in Missouri. As to the non-resident corporations, there would be no jurisdiction from moment one. In this scenario venue and joinder eventually won’t matter, because without jurisdiction, there won’t be any pot of gold left at the end of the litigation rainbow. Not so for Missouri resident corporations, however. With the current, bizarre joinder and venue rules still in place, the same multi-plaintiff complaints could still be filed, since general personal jurisdiction would exist under the Bauman “at home” test. Thus, the same abuses would continue against many of Missouri’s largest employers, even though their out-of-state competitors are constitutionally exempt from this “litigation tax.” In that situation, moving those jobs out of Missouri and to a principal place of business in another state would start to look rather inviting.
Is that where the Missouri legislature wants to end up?
We don’t think so.
NSRC is thus a huge first step to cleaning up the litigation swamp created by Missouri courts that tolerated multiple misjoinders and pendent party venue forum-shopping unlike that found in any other state. NSRC means that any litigation tourist judgments against foreign corporations emerging from the swamp will not be enforceable, and that federal fraudulent joinder standards are more likely to keep otherwise diverse cases out of state court to start with. But NSRC doesn’t drain the swamp by itself. Tort reform – H.B. 460 – is still needed to stop unconstitutional end runs around NSRC, such as pendent party jurisdiction, that that the same pro-plaintiff state trial judges that created the swamp in the first place might be willing to indulge. Finally, even when NSRC is fully enforced, tort reform would still be essential to ensure a level playing field for Missouri corporations that otherwise would continue to be subject to abuse under the current system.