A complaint gets filed in California naming hundreds of plaintiffs, only 20 of whom reside in California, against out-of-state manufacturers. Sound familiar? Sound like something the Supreme Court rejected in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017). It should. So, why are we here again? I guess you can credit plaintiffs’ counsel with persistence. But you what they say about the definition of insanity? Well, it’s getting close to that point.
In BMS, the Supreme Court held that California’s courts could not exercise specific personal jurisdiction over an out-of-state defendant unless there is “an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.” Id. at 1781 (2017). That means there must be a causal link between the defendant’s forum contacts and the alleged injury to the plaintiff. Contacts with other people do not count. And while BMS primarily focused on the contacts of resident versus non-resident plaintiffs, it also says that the presence of a California distributor – equally uninvolved with the plaintiffs who brought the suit – does not change the result one iota. “The bare fact that BMS contracted with a California distributor is not enough to establish personal jurisdiction in the State.” Id. at 1783.
But plaintiffs in In re Amiodarone Cases, No. JCCP 4956, slip op. (Cal. Super. Jan. 10, 2019) may not have been paying close enough attention to that portion of the decision. When defendant manufacturers challenged the lack of personal jurisdiction over the claims of non-residents, plaintiffs relied exclusively on the manufacturers’ relationship with an in-state distributor. BMS wasn’t decided that long ago as to have been forgotten already? No, the court remembered it quite accurately.
Plaintiffs, whose claims were premised on allegations of off-label use and failure to provide the Medication Guide, argued that the supply agreements entered into by the drug manufacturers and the California-based distributor conferred specific personal jurisdiction because they contained provisions agreeing the contracts were governed by California law. But that didn’t amount to a contact related to plaintiffs’ lawsuit that would give rise to personal jurisdiction. The choice of law provision applied to disputes over the contract, not plaintiffs’ products liability claims. Id. at 7. Additional provisions of the supply agreements provided that California law applied and California was the appropriate venue for disputes regarding the indemnification requirements of the agreements. Those provisions even said that for such disputes, the parties agreed to waive personal jurisdiction and inconvenient forum arguments. Id. at 7-8. Despite the plain language of the agreements, plaintiffs tried to argue that those provisions should equally apply to the underlying claims that may trigger the indemnification provisions. And once again the court reiterated that the contractual obligations between the manufacturers and distributor was “not evidence of a contact for jurisdictional purposes.” Id. at 8.
But plaintiffs pressed on. They also argued that they were third-party beneficiaries under the supply agreements and therefore could enforce the personal jurisdiction waiver. Id. But just because the supply agreements set up the chain of distribution that may have ultimately led to plaintiffs ingesting the drug did not make plaintiffs third-party beneficiaries. Moreover, the waiver was “expressly limited” to indemnification disputes and so wouldn’t apply to products liability actions anyway. Id.
Choice of law didn’t work. Third-party beneficiary didn’t work. What about compliance clauses? The supply agreements contained compliance clauses that stated that the drugs shall comply with all governing laws and regulations, will not be adulterated or misbranded, and will comply with the Prescription Drug Marketing Act. Id. at 8-9. But again, the court found those clauses don’t run to plaintiffs or their claims and so can’t be used to establish specific personal jurisdiction.
If not the supply agreements, what about compliance with regulations? Plaintiffs argued that manufacturers were required to provide the California distributor with the Medication Guide which it in turn was required to distribute to physicians and pharmacies. This, they claimed, evidenced a sufficient connection between California and the non-resident plaintiffs’ claims. Id. at 9. But, going back to BMS, that a manufacturer has business transactions with third-parties isn’t sufficient. To satisfy due process, a defendant must be “haled into court in a forum state based on its own affiliations with the State, not based on the ‘random, fortuitous, or attenuated’ contacts he makes by interacting with other persons affiliated with the State” Id. Here, plaintiffs have more than enough evidence to establish a relationship between the manufacturers and their supplier, but they’ve offered no evidence to take the leap of a connection to the non-resident plaintiffs. There is no evidence that any non-resident plaintiff took Amiodarone distributed by any California-based distributor. Id.
What about derivative liability? Plaintiffs argued, but offered no authority to support, that the indemnification provisions in the supply agreement create derivative liability by manufacturers for conduct of McKesson. Id. at 10. The best plaintiffs could come up with here was to rely on California’s old sliding scale approach to personal jurisdiction. But that was expressly rejected by BMS.
Finally, what about the fact that the manufacturers sold the drug to the distributor in California? It’s irrelevant because it’s completely unconnected to the plaintiffs.
Call it persistence. Call it “E” for effort. Call it insanity. If the question of personal jurisdiction via third-party contacts wasn’t sufficiently answered in BMS (by the way, it was), In re Amiodarone should be viewed as shutting the door for good in California.