This post is from the non-Reed Smith side of the blog.
Today’s case involves several multi-plaintiff complaints filed in California involving out-of-state plaintiffs who allege they suffered an injury from using out-of-state defendants’ prescription drug product that was distributed by a company headquartered in California. Afraid you’ve fallen through a portal that transported you back in time three years? Let’s see, if it was really 2017 what would we be talking about? Moonlight over La La Land; Cross-Fit; the eclipse; the Women’s March; Justin Verlander; Hurricanes Harvey, Irma, Jose, Maria; avocado toast. And of course, Bristol-Myers Squibb Co. v. Superior Court, 137 S.Ct. 1773 (2017). While the facts of today’s case sound an awful lot like BMS, it’s in fact a decision from just last week. What are we talking about in 2020? Covid-19; social distancing; Kobe Bryant; George Floyd; Ahmaud Arbery; Breonna Taylor. Of course, the presidential election. And, In re Amiodarone, 2020 WL 4355756 (Cal. App. Ct. Jul. 30, 2020).
These amiodarone complaints were in fact filed on behalf of hundreds of plaintiffs many of whom reside outside California against brand and generic manufacturers which are also not California residents and McKesson, a then-California-based distributor of the drug. Id. at *1. As with other amiodarone cases the allegations center on off-label promotion and failure to provide medication guides. Id. at *2. As in BMS, the question at issue is one of specific jurisdiction – specifically whether “the controversy relates to or arises from the defendant’s contact with the forum.” Id. Again, just like in BMS, plaintiffs don’t allege they were prescribed or purchased the drug in California. The similarities don’t stop there:
We learn from BMS that the fact that a respondent distributes, sells and promotes a prescription drug (in BMS, Plavix; here, amiodarone) in California does not justify the exercise of specific jurisdiction over that respondent for claims unrelated to its California sales. Nor does the mere fact that a respondent has contracted with a California defendant (in BMS and here, McKesson) for the national distribution of a prescription drug, provide an adequate basis for specific jurisdiction.
Id. at *3 (citations omitted).
Apparently undaunted by the confines of the law as handed down in 2017, plaintiffs attempt a 2020 end-run around BMS. First they argued derivative liability as a basis for personal jurisdiction. This argument hinges on the Supreme Court’s observation that plaintiffs in BMS “had not alleged that BMS is derivatively liable for McKesson’s conduct in California.” Id. (citation omitted). So the amiodarone plaintiffs alleged just that leading the court to “look closely” at the indemnification provisions of the McKesson supply agreements. The manufacturer defendants agreed to indemnify McKesson against liability arising from the manufacturer’s nonadherence to certain regulatory or legal requirements and against claims arising from manufacturer’s products unless the claims are “proven to be due to McKesson’s negligent handling of the products.” Id. at *5. In other words, the manufacturers agreed to indemnify McKesson for their own conduct. Nowhere have the manufacturers agreed to be derivatively liable for McKesson’s conduct.
Plaintiffs next argued joint and several duties as a basis for jurisdiction. This argument centered on the medication guides. Plaintiffs contended that the FDA regulations imposed a “joint and several” obligation on the manufacturers and McKesson regarding distribution of the medication guides. Another “close look” at the regulations was plaintiffs undoing. The regulations say manufacturers have to provide medication guides (or a means to produce medication guides) to distributors, packers, or authorized dispensers. Id. at *6. Separately, the regulations provide that distributors are responsible for providing medication guides (or a means to produce them) to any authorized dispenser it ships to. Id. Rather than joint duties, the regulations impose “individual duties on each entity in the chain of distribution.” Id. at *7.
Having struck out with both factual arguments, plaintiffs’ attempted to argue simply that BMS doesn’t apply “if the plaintiff alleges case-related contact with a forum defendant.” Id. But that’s exactly what BMS said was not sufficient. None of the cases plaintiffs cited were remotely applicable and did not change the court’s thinking. BMS controls.
Finally, plaintiffs argued they should have been allowed to take more jurisdictional discovery – namely McKesson’s delivery of amiodarone to the pharmacies used by plaintiffs. Their theory is that if a plaintiff went to the pharmacy shortly after the pharmacy got a delivery from McKesson it is “virtually certain” that plaintiff got amiodarone from McKesson. Id. at *8. This is again tied to a suggestion by the Supreme Court in BMS that such information could be relevant to a jurisdictional inquiry, but plaintiffs neglected to demonstrate how the information would establish jurisdiction in this particular case. McKesson provided evidence that when it ships to out-of-state pharmacies it does so from an out-of-state (non-California) distribution center. So, even if plaintiffs took McKesson shipped product, it wouldn’t have come from California. But even that was immaterial. Regardless of where the product shipped from, “that would not show anything more than unilateral action by McKesson, as opposed to action by [manufacturers.]” Id. Whatever decisions McKesson made about how it would ship and label amiodarone, whether made in California or elsewhere, would be just that – McKesson’s decisions. McKesson’s decisions alone are insufficient to establish jurisdiction over out-of-state defendants.
Now hundreds of plaintiffs have to refile their cases in their home states (or the defendants’ home states) which may, or may not, bar the action under their statute of limitations tolling rules. After all, it’s 2020. Why should litigation tourism thrive when vacation tourism withers? What are we talking about in 2020? Zoom; Tik Tok; Zoey’s Extraordinary Playlist; curbside pickup . . . .