As consumers, and connoisseurs, of personal jurisdiction precedent, we write today to consider the latest jurisdictional mess that has arisen, this time in talc litigation. Two courts, deciding the same jurisdictional issue on the same set of facts in the same week, have reached diametrically opposed decisions. The current contretemps concerns “Shimmer” – a minor J&J talc product that, for a few years was made by a contractor located in Missouri. Because of the Missouri contractor, this product has taken on absurdly outsized importance, as plaintiffs strain to create a “loose and spurious” form of general jurisdiction post-Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”), that could keep the talc claims of litigation tourist plaintiffs from around the country in notoriously plaintiff-friendly St. Louis City.
In Ingham v. Johnson & Johnson, ___ S.W.3d ___, 2020 WL 3422114 (Mo. App. June 23, 2020), the court allowed the plaintiffs’ Shimmer gambit to succeed, holding that non-residents purporting to use the product could assert personal jurisdiction over the non-resident defendants. But in the Talc MDL in New Jersey, the same arguments were rejected. See Hannah v. Johnson & Johnson Inc., 2020 WL 3497010 (D.N.J. June 29, 2020). You can guess which one of the two we favor.
We’ll get the unpleasantness out of the way first. Ingham is that notorious case involving that 22-plaintiff consolidation and the resultant four billion+ dollar verdict. These defendants had been shaking up the plaintiffs’ cozy little operation, and this was that system’s way of trying to punish them for it. There are a LOT of things wrong with Ingham, but in this post we’re dealing solely with personal jurisdiction. Of the 22 plaintiffs in the consolidation, 17 were litigation tourists. 2020 WL 3422114, at *1 (“Seventeen Plaintiffs lived, purchased Defendants’ Products, used Defendants’ Products, and [claimed injuries] outside Missouri”). Fifteen of those plaintiffs claimed (often preposterously) to have used the Shimmer talc product – but not in Missouri. Id. at *2. The allegations were:
Plaintiffs alleged Defendants were subject to specific jurisdiction on their claims because [J&J] had two long-term contractual relationships with [a third party], which is headquartered in Missouri. Plaintiffs alleged one contractual relationship involved the manufacturing, packaging, and supply of Shimmer and the other involved the manufacturing, packaging, and supply of Johnson’s Baby Powder. Plaintiffs argued [the third party] engaged in manufacturing, packaging, and supply activities relating to the Products in Missouri “at … Defendants’ direction and under [their] control.”
One would have thought that BMS would have dispatched this argument. After all, the Supreme Court held, 8-1:
A defendant’s relationship with a third party, standing alone, is an insufficient basis for jurisdiction. . . . The bare fact that BMS contracted with a California distributor is not enough to establish personal jurisdiction in the State.
137 S. Ct. at 1783 (citations and quotation marks omitted).
But not in Ingram. “The trial court” – the same judge who consolidated 22 plaintiffs into a single trial – “found Defendants contracted with Missouri-based [entity] to manufacture, label, and package the Products and [that entity’s] relevant actions were under the direction and control of Defendants.” 2020 WL 3422114, at *3. So what does “direction and control” mean? According to Ingram, that meant almost all the things that the Supreme Court in BMS didn’t find happened: “develop” the product, “create a marketing strategy,” and “manufacture, label, [and] package” the product in the state of Missouri. Id.
The intermediate appellate court in Ingram basically found that hiring a third-party to make a product according to the hiring party’s specifications is enough to create personal jurisdiction extending to anybody in the country (maybe the world) who uses that product. Id. at *13 (defendant “contracted . . . to manufacture, package, and label [the product] . . . in Missouri according to [defendant’s] specifications”). The appellate court characterized the hiring of an in-state company to produce a product to specification to create “a host of significant activities in Missouri.” Id.
Here, the parties concede Shimmer was manufactured, labeled, and packaged according to [defendant’s] specifications in Missouri. Unlike in [BMS] specific jurisdiction over [defendant] is proper because it is based on something more than a mere contractual relationship with a third party.
Id. (emphasis added).
But what “something more”? The defendant BMS also had a contract with an in-state entity. But in BMS it was to distribute the product. So the only difference is that, in Ingham, the defendant provided specifications that its independent contractor had to use. There’s not even an allegation that the defendant did anything more. So the act of providing specifications was all that was needed for anyone in the country who claimed to use a product (here, Shimmer) solely in that plaintiff’s home state to establish specific jurisdiction over the non-resident contracting party that provided the specification – and for all claims, not just manufacturing.
If you or your clients are making anything in Missouri, then you may want to reconsider, at least if Ingham stands and you (or your client) want to stay out of a 22-ring circus in St. Louis.
But the Supreme Court has a name for that kind of bloated specific jurisdiction theory – “a loose and spurious form of general jurisdiction.” BMS, 137 S. Ct. at 1781. As the eight-justice majority pointed out:
Our cases provide no support for this approach. . . . The present case illustrates the danger of the [this] approach. The [lower courts] found that specific jurisdiction was present without identifying any adequate link between the State and the nonresidents’ claims.
Id. The non-resident plaintiffs in Ingham had none of the kind of contacts that BMS recited actually were necessary:
[T]he nonresidents were not prescribed [the product] in California, did not purchase [the product] in California, did not ingest [the product] in California, and were not injured by [the product] in California. The mere fact that other plaintiffs were . . . does not allow the State to assert specific jurisdiction over the nonresidents’ claims.
BMS, 137 S. Ct. at 1781.
In contrast, the same facts – non-residents who claimed to have used the same Shimmer talc product manufactured by the same entity – failed to allow the State of Missouri to exercise specific personal jurisdiction over the same defendants in Hannah, 2020 WL 3497010. The jurisdictional question arose in a relatively convoluted way (which happens in MDLs).
Another questionable trick that mass tort plaintiffs regularly used pre-BMS was the join together scores of plaintiffs (but under 100 to avoid creating a CAFA mass action) in the same complaint with a few plaintiffs from the defendant’s home state to defeat diversity and a few forum residents to create jurisdiction (supposedly). Indeed, that was what created the situation BMS itself had to deal with. See 137 S. Ct. at 1778 (eight complaints with 678 total plaintiffs, including 86 residents).
However, as we’ve discussed before, after BMS most federal courts took steps to dismantle these monstrosities, looking at personal jurisdiction first, dismissing the non-residents, which necessarily eliminated the plaintiffs that defeated diversity by sharing citizenship with the non-resident defendant, and keeping the rest in federal court.
That’s what happened, partially, in Hannah. The talc defendants removed a number of multi-plaintiff complaints so they could do precisely that – but instead of proceeding individually before whatever federal judge was randomly assigned the removed action, all of the removed actions were transferred to the Talc MDL with the parties’ competing remand and personal jurisdiction motions still pending. 2020 WL 3497010, at *2. Thus, whether all these talc plaintiffs were subject to dismissal in the MDL depended on whether they could establish personal jurisdiction in Missouri.
The Hannah opinion is quite lengthy, because each complaint had slightly different lineups of defendants that required separate consideration. But one of the issues that Hannah decided was whether non-residents of Missouri, who claimed to have used the Shimmer talc product, could by virtue of that use assert personal jurisdiction over the defendants in Missouri.
Plaintiffs allege that the [contractor defendants] participated in the Johnson & Johnson Defendants . . . conspiracy and processed, bottled, labeled, or distributed the products. Defendants claim that the products were only manufactured by [one of the contractor defendants] in Georgia, whereas another product, Shimmer Effects, was manufactured by [another of the contractor defendants] in Missouri.
2020 WL 3497010, at *4 (citations omitted). So what’s up with Georgia? Well, the same defendant at issue in Ingham was actually more than one separate entity. One piece of this defendant made some talc products in Georgia, whereas another subsidiary had produced the aforementioned Shimmer product in Missouri. Id.
Passing by a variety of fraudulent joinder and alter ego issues that are interesting in their own right, we come to Hannah’s resolution of the same question that was at issue in Ingham – Missouri personal jurisdiction over the J&J defendants, with respect to plaintiffs who did not allege that they used a J&J product (such as Shimmer) in Missouri.
Short answer – there was none:
Essentially, the Class Three Plaintiffs who have no connection to Missouri are missing the requisite contact between their claims and the Johnson & Johnson Defendants under [BMS]]. The fact that the Johnson & Johnson Defendants contracted with an instate manufacturer to produce some of its products does not confer jurisdiction. This is so because Johnson & Johnson’s agreements with the Missouri companies was to facilitate the indiscriminate nationwide sale of its products, including the products that allegedly injured Plaintiffs.
2020 WL 3497010, at *22 (emphasis added).
The emphasized sentence concerned the same type of allegations as in Ingham that “Plaintiffs’ ‘chain’ of minimum contacts begins with” the entity that “only produced Shimmer Effects.” Id. Vague allegations that this Missouri entity “was acting at the direction of or on behalf of the Johnson & Johnson Defendants,” id., did not (unlike Ingham) cut the jurisdictional mustard:
While those contacts might well constitute purposeful availment of the benefits and protections of the State of Missouri in a contract action, these contacts are irrelevant in this products liability action. Indeed, Plaintiffs have not demonstrated that their injuries in any way arise out of those specific agreements. In other words, they neglect to allege a connection between their injuries and those specific distribution agreements.
Nor did the other scattered Missouri contacts that the talc MDL plaintiffs were able to dredge up fill the void created by lack of purchase, use, or injury by any product within the relevant jurisdiction. Generalized “market research” was insufficient.
[T]here is no allegation that the Missouri market research was in any way integral to bringing the products at issue to market in the places where the Class Three Plaintiffs purchased them. In fact, it is not even clear from Plaintiffs’ evidence whether the Johnson & Johnson Defendants were conducting nationwide or Missouri-specific market research. Consequently, the attenuated contacts that Plaintiffs seek to attribute to the Johnson & Johnson defendants do not support their assertion of specific jurisdiction.
So now we have the conundrum that, if an action in Missouri state court contains Shimmer-related allegations, under Ingham there is specific personal jurisdiction under that court’s reading of BMS. If, however, the same case can be removed to federal court and shipped to the Talc MDL, then there is no jurisdiction. Of course, we agree with the MDL court in Hannah for the reasons just stated – the Shimmer allegations are merely the latest iteration of a “loose and spurious” form of general jurisdiction rejected in BMS. The easiest (and maybe only) way to resolve this paradox, from our perspective, is for the Missouri Supreme Court to accept an appeal in Ingham and to reverse. Ideally, that court would reach the same result as the Illinois Supreme Court in Rios v. Bayer Corp., ___ N.E.3d ___, 2020 WL 2963318 (Ill. June 4, 2020), discussed here, and put an stop to St. Louis’ run as a nationwide mass tort mecca.
If not, then our clients will need to reexamine the extent to which it is safe for them to contract with Missouri companies concerning just about any aspect of product manufacturing. For the result in Ingham – that providing specifications to an otherwise independent in-state contractor for the production of a minor product results in every plaintiff in the country that claims to have used that product also to have jurisdiction to also sue about all of the defendant’s other similar products no matter where they were made or used – is the epitome of an “unacceptably grasping” and “exorbitant” exercise of personal jurisdiction. Daimler AG v. Bauman, 571 U.S. 117, 138-39 (2014).