Bexis updated the Blog’s Personal Jurisdiction Cheat Sheet recently, with the able assistance of Reed Smith associate Kevin Hara. Having just read stories about oral arguments in a the first couple appellate cases concerning application of Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), Due Process principles to class actions, we can’t say we were terribly impressed. The argument that absent class members aren’t “parties” to a class action – a convenience developed many years ago to address unrelated class action management issues – simply can’t be used to create personal jurisdiction that wouldn’t otherwise exist over non-residents’ claims against non-resident corporations. That runs head long into the clear command of Fed. R. Civ. P. 82:
Jurisdiction and Venue Unaffected
These rules do not extend or limit the jurisdiction of the district courts or the venue of actions in those courts.
That’s pretty stark.
Thus, if non-resident “P” would not have personal jurisdiction to sue non-resident corporation “D” in a given federal court, under recognized constitutional principles, then application of Fed. R. Civ. P. 23 (or any other federal rule, for that matter) simply cannot create such jurisdiction. To construe Rule 23 in such a way as to confer jurisdiction on a district court where that court would not otherwise have had jurisdiction to entertain such a claim would be a direct violation of Rule 82. Period. Full stop.
That “we’ve done it this way for decades” doesn’t cut it either. Before Daimler AG v. Bauman, 571 U.S. 117 (2014), personal jurisdiction was widely accepted as being available anywhere a non-resident corporation did “continuous and substantial” business – but no longer. BMS in this respect was simply an outgrowth of Bauman. It arose from the unconstitutional rulings of the California appellate courts as they attempted to salvage that state’s litigation tourism mass tort business after Bauman removed the original jurisdictional business model – just read the original Cal. App. decision. See Bristol-Myers Squibb Co. v. Superior Court, 175 Cal. Rptr.3d 412, 424 (Cal. App. 2014) (pointing out that personal jurisdiction had been “based on a record created and an analysis engaged in prior to” Bauman) (lengthy subsequent history that everybody knows omitted).
Bauman corrected a pernicious and long-standing error that had crept into personal jurisdiction constitutional jurisprudence for more than half a century following International Shoe Co. v. Washington, 326 U.S. 310 (1945). Given that history, in this instance it is no argument that “everybody’s been doing it.” If the courts of appeals don’t get personal jurisdiction right in class actions, we fully expect the Supreme Court to set them straight again. Given Rule 82 – and the Rules Enabling Act (more about that, here) – it isn’t even that difficult an argument. Simply compare the existence of jurisdiction over any particular plaintiff’s action with, and without, that plaintiff being a member of a putative Rule 23 class. If the former is claimed to be greater than the latter, Rule 82 (not to mention Due Process) cuts it off.
Anyway, given the “ostrich effect” that class action plaintiffs have pushed courts to take towards BMS and Bauman, we’re pleased to point out the three new decisions in our last update, all of which recognized that Rule 23 doesn’t create jurisdiction that would not exist under Bauman/BMS.
Andrade-Heymsfield v. Danone US, Inc., 2019 WL 3817948 (S.D. Cal. Aug. 14, 2019), was a consumer class action, filed in California, but for some reason also including a New York class representative and putative class. Id. at *1-2. It was yet another class action over food filed by the California food fascists who want to force everyone to become vegans. Supposedly the class(es) relied on “nutrition in every sip” statements involving coconut milk. Id. The defendant was not “at home” for Bauman personal jurisdiction purposes in California.
The New York class was therefore dismissed. “The Court agrees with the line of cases that held [BMS] should apply where, as here, non-resident class representatives assert state-law claims against non-resident defendants on behalf of multistate classes.” Id. at *3. Since the defendant had its principal place of business in New York, plaintiffs could bring their New York class there. Id. at *4. Nor was there any “pendent” personal jurisdiction in this situation. Id. at *5.
In In re Nissan North America, Inc. Litigation, 2019 WL 4601557 (N.D. Cal. Sept. 23, 2019), “nationwide and statewide classes consisting of all persons who purchased, own, owned, lease, or leased a ‘Class Vehicle,” were alleged. Id. at *1. The issue was technically venue, since one of the defendants was headquartered in California, but had its principal place of business and manufacturing plant in Tennessee. The action was transferred because nine of ten putative class representatives had no venue in California. The venue statute, 28 U.S.C. §1391(b)(1), peculiarly treats each judicial district in a state with multiple districts as a “separate State.” Id. §1391(d). The defendant was not “at home” in the Northern District of California. 2019 WL 4601557, at *4. That killed any general jurisdiction, and made BMS directly on point. There was no specific jurisdiction either, since plaintiffs could produce no evidence of anything the defendant did in the district that had anything to do with the subject of the litigation. Id. at *5 (“Plaintiffs present no evidence to the contrary, and therefore fail to meet their burden of establishing that [defendant’s] presence in this district is a basis for personal jurisdiction.”). Thus, “Plaintiffs have not identified any link between this forum and the nonresident Plaintiffs’ claims, as those Plaintiffs did not purchase the vehicles in this forum, or even in California.” Id. The venue statutes did not allow cases to be brought where there would not be personal jurisdiction.
The Class Vehicle sales for the nine nonresident Plaintiffs did not take place in this district. Nor is there any showing that Defendants engaged in any advertising or marketing-related activities in this forum that caused the nonresident Plaintiffs to purchase the Class Vehicles in their respective home states. Venue for the nonresident Plaintiffs’ claims does not lie in this district.
Id. at *6. The court therefore transferred the whole kit and caboodle to Tennessee, where all the cars in question were manufactured. Id. at *10.
Finally, in Chavira v. OS Restaurant Services, LLC, 2019 WL 4769101 (D. Mass. Sept. 30, 2019), a class action under a federal statute, the Fair Labor Standards Act (“FLSA”) was stricken for lack of personal jurisdiction. Since the FLSA has no separate jurisdictional provisions, actions under it are governed by the same standards that governed state-law actions. Id. at *3 (citing Fed. R. Civ. P. 4(k)). All opt-in class claims (the only kind the FSLA appears to allow) filed by non-resident plaintiffs were therefore stricken under Bauman/BMS.
This Court’s obligation to follow the law as set forth in controlling precedent, however, cannot overshadow even the most compelling policy arguments. . . . The Court reaches the conclusion that [BMS] applies to this case. . . . [I]t is difficult to come to a different conclusion given the language in [BMS], which is repeated twice in the opinion, to the effect that for each plaintiff, “there must be an ‘affiliation between the forum and the underlying controversy, principally, an activity or occurrence that takes place in the forum State.’” The Court adopts [the] conclusion that the personal jurisdiction analysis applies to all opt-in plaintiffs in a collective action in the same way that the Supreme Court found that the personal jurisdiction analysis applies to each plaintiff in a mass tort action.
2019 WL 4769101, at *6 (citations and some quotation marks omitted). Because non-resident class members did not collect any wages from defendant in the forum state, personal jurisdiction could not be exercised. Id. at *7.
Thus, the cases we reviewed recently give us confidence that, ultimately, there is only one Due Process standard for personal jurisdiction – that articulated in Bauman/BMS – and that class actions under Fed. R. Civ. P. 23 do not, and indeed cannot, be subject to any other standards. As long as the Federal Rules (and relevant federal statutes) remain in their current form, that’s our position and we’re sticking to it.