The Supreme Court decided “the big one” today – and not to keep anyone in suspense [the big one is a major earthquake in California mass tort litigation], the result is that the California Supreme Court finding of personal jurisdiction despite neither the plaintiff nor the defendant residing in the state has been reversed. Here is a link to the slip opinion in Bristol-Myers Squibb Co. v. Superior Court, No. 16-466 (U.S. June 19, 2017) (“BMS”).  It’s an 8-1 opinion, not a close decision, with Justice Alito writing for the Court.  Only Justice Sotomayor (predictably, from her prior positions) dissented.

After BMS, a lot of the litigation industry in California will go sliding into the sea.

This is one of the most important mass tort/product liability decisions ever, because expansive notions of personal jurisdiction – that large companies can be sued by anyone anywhere – are behind the growth of “magnet jurisdictions” (ATRA calls them something else) that attract litigation tourist plaintiffs from all over the country, suing companies from all over the country, without regard for whether any such defendant is incorporated or does business in the state.  Get rid of any personal jurisdiction basis for doing so, and we, if not end, at least put major limits on plaintiffs’ ability to forum-shop in this manner.

In our sandbox, product liability plaintiffs, suing manufacturers of FDA-regulated products, have flocked to what they view as their most favorable venues, certain notorious counties in Missouri, Illinois, Pennsylvania, New Jersey, New York – and yes, California. That’s what BMS rejected.  For several decades, plaintiffs’ litigation tourist strategy relied on expansive interpretation of “general” personal jurisdiction – that any defendant that conducted “continuous and substantial” business in any state could be sued in that state by anyone.  This theory was damaged by Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (which we call “Brown”), and then demolished altogether in Daimler AG v. Bauman, 134 S.Ct. 746 (2014) (which we call “Bauman”).

After Bauman, mere “continuous and substantial” business in a jurisdiction could not support general personal jurisdiction.  Rather only corporate defendants “at home” in the particular jurisdiction could be sued there. Bauman, 134 S. Ct. at 757; Brown, 564 U.S. at 919.  With no “exceptional” exceptions that apply to mass torts, Bauman limited general personal jurisdiction to those states where a corporation is incorporated or has its principal place of business. Bauman, 134 S. Ct. at 760-61.  “Exorbitant” and “grasping” jurisdictional allegations that would expand jurisdiction to “every other State” where large corporations do business, violate Due Process. Id. at 761-62.  “A corporation that operates in many places can scarcely be deemed at home in all of them.” Id. at 761 n.19.

Bauman thus threatened the viability of litigation tourism the litigation industry in numerous plaintiff-friendly venues, since 90%+ of the plaintiffs in such venues are typically non-residents.  Plaintiffs fought back.  The ink on Bauman was barely dry when they started trying to import the same expanded “continuous and substantial” rationale into the other major basis for personal jurisdiction, “specific” personal jurisdiction, which heretofore had been limited to suits “related to” the forum state – that is suits brought by in-state residents or persons injured in a state.  By a 4-3 margin, the California Supreme Court in Bristol-Myers Squibb Co. v. Superior Court, 377 P.3d 874 (Cal. 2016) (which we’ll call “BMS II”), conferred specific personal jurisdiction on litigation tourist plaintiffs from all over the country suing over a prescription drug.

No more.

As reiterated by the United States Supreme Court in BMS, the “primary consideration” of personal jurisdiction  is “the burden on the defendant.”  Slip op. at 6 (World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)).  While general jurisdiction is governed by Bauman’s “at home” requirements as to corporate defendants, “[s]pecific jurisdiction is very different.” Id. at 5.  “The suit” itself – not just some other aspect of litigation – “must arise out of or relate to the defendant’s contacts with the forum.” Id. (emphasis original) (citation and quotation marks omitted).

[S]pecific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.

Id. at 6 (quoting Brown, 564 U. S. at 918).

The California Supreme Court’s BMS II ruling that any “substantial connection” between a corporate defendant’s activities and California, whether or not causally related to a litigation tourist plaintiff’s claimed injuries, would suffice to support jurisdiction failed miserably.  Personal jurisdiction reflects a concern with “submitting to the coercive power of a State that may have little legitimate interest in the claims in question.”  BMS, slip op. at 6.  That would be California in this case, where the litigation tourist plaintiffs did not reside in the state and did not sue over a drug that they purchased in the state.  When there is no “affiliation between the forum and the underlying controversy, . . . specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.”  Id. at 7 (emphasis added).  We believed from day one that the California Supreme Court had improperly imported the general jurisdiction test rejected in Bauman into specific jurisdiction. In BMS the Supreme Court agreed:

[T]he California Supreme Court’s “sliding scale approach” is difficult to square with our precedents. Under the California approach, the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims.  Our cases provide no support for this approach, which resembles a loose and spurious form of general jurisdiction.

Id.  “Loose and spurious” – that’s a good description of the basis for most litigation tourism in mass torts.

The State Supreme Court found that specific jurisdiction was present without identifying any adequate link between the State and the nonresidents’ claims. . . .  [T]he nonresidents were not prescribed [the drug] in California, did not purchase [it] in California, did not ingest [it] in California, and were not injured by [it] in California.  The mere fact that other plaintiffs were prescribed, obtained, and ingested [the drug] 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.

Id. at 8 (citing Walden v. Fiore, 134 S. Ct. 1115, 1123 (2014)).  Nothing related solely to other plaintiffs matters in specific jurisdiction.  As we suspected it would be, Walden was the critical precedent here. BMS, slip op. at 8-9.  The cases plaintiffs relied upon, Keeton v. Hustler Magazine, Inc., 465 U. S. 770 (1984), and Phillips Petroleum Co. v. Shutts, 472 U. S. 797 (1985), were “amply” distinguishable and “had no bearing on the question presented here.”  BMS, slip op. at 10-11.

Nor did the presence of a California distributor – equally uninvolved with the plaintiffs who brought the suit – change the result one iota.  Repeated prior precedents have held that personal jurisdiction “must be met as to each defendant over whom a state court exercises jurisdiction.”  Id. at 11 (citations and quotation marks omitted).  “The bare fact that BMS contracted with a California distributor is not enough to establish personal jurisdiction in the State.”  Id. at 12.  This ruling, while something of a side show in BMS, should be critical in other types of cases, such as asbestos, where dozens of defendants are typically joined together without regard for where either the defendants or plaintiffs are located.

Thus, unfortunately for litigation tourists, “a defendant’s general connections with the forum are not enough.”  Id. at 7.  Plaintiffs’ unrestricted forum shopping days are over.  “[S]traightforward” application of fundamental personal jurisdiction principles means that plaintiffs may “join[] together in a consolidated action in the States that have general jurisdiction over BMS.”  Otherwise, “the plaintiffs who are residents of a particular State . . . could probably sue together in their home States.”  Id.  Finally, while the Court did not address “whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court, ” id. as we mentioned above, Walden v. Fiore was probably the single most important prior precedent in BMS.  As our post on Walden pointed out, Walden was a federal (Bivens) action filed in federal court.  We thus don’t see that caveat as being a meaningful one.

The result in BMS means that the era of big mass torts, filed by plaintiffs anywhere against anyone over anything, is (to paraphrase Bill Clinton) over.  There will be still be mass torts, but as BMS pointed out at the end of the opinion, they will either be defendant-specific − filed in the target defendant’s state of incorporation or principal place of business – or limited to plaintiffs from the state where the litigation is situate.  San Francisco (as in BMS), Los Angeles, Philadelphia, St. Louis, Chicago, Madison County, wherever….  These jurisdictions can only assert jurisdiction over in-state plaintiffs, or else defendants that are (unfortunate enough to be) “at home” in those respective states (subject, of course, to state venue requirements).

A very good day for the right side of the “v.” – and not very good for those on the wrong side.  Plaintiffs will have to get used to the radical proposition that defendants have constitutional rights, too.

The only remaining personal jurisdiction theory available to the great majority of litigation tourist plaintiffs is the so-called “jurisdiction by consent” theory that posits that mere registration to do business/appointment of an agent for service of process – something that all 50 states require – constitutes “consent” to be sued even by non-residents in any state where a corporate defendant so registers. Of course, a lot of states (including California since way before Bauman) do not interpret their personal jurisdiction statutes in that manner (see our discussions here and here).  Critically, as we’ve also pointed out before (including in our post-Bauman personal jurisdiction cheat sheet, which we will be now be converting to a consent cheat sheet), that consent theory would be just as expansive, and thus just as  violative of Due Process, as the general and specific jurisdiction theories rejected in Bauman and BMS, respectively.

Remember, the basis for all of the Court’s jurisdictional jurisprudence is Due Process. “[A] state court’s assertion of jurisdiction exposes defendants to the State’s coercive power,” so that assertion “is subject to review for compatibility with the Fourteenth Amendment’s Due Process Clause.”  BMS, slip op. at 5 (citation and quotation marks omitted).  Plaintiffs should not expect to achieve the same unconstitutional result by other means, such as expanding state corporate registration statutes beyond recognition.  Plaintiffs in BMS could not escape Bauman in that fashion.  Future plaintiffs should not expect to escape both Bauman and BMS with yet another subterfuge.  Under Due Process, there must be “a connection between the forum and the specific claims at issue.”  BMS, slip op. at 8.

Finally, we’d also like to point out one more implication of today’s BMS decision – it affects available venues for a large number of federal causes of action.  The general federal venue statute, 28 U.S.C. §1391, provides that, “[f]or all venue purposes,” a corporation “shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction.”  Thus, by the terms of §1391, the scope of personal jurisdiction recognized in BMS (subject to the Court’s final caveat in BMS about federal personal jurisdiction) also becomes the template for the permissible venue choices available to federal plaintiffs bringing suit under any federal statute that does not contain its own statute-specific venue provisions.