Today’s case, BCBSM, Inc. v. Celgene Corp., 2021U.S. Dist. LEXIS 52785 (March 22, 2021), is an antitrust case. The plaintiffs alleged that a pharma company suppressed generic competition. We enjoy reading antitrust cases, always doing so with a healthy skepticism about the merits of the claims. We did, after all, attend the University of Chicago. But the BCBSM case is of immediate interest because of its sound application of the modern learning on personal jurisdiction.
The case was filed in Minnesota state court. The defendant removed to federal court. The plaintiffs moved to remand the case to state court for want of federal subject matter jurisdiction. The defendant argued that there was subject matter jurisdiction despite the that one of the plaintiffs shared Delaware citizenship with it, and despite the fact that all of the claims traveled under state law. Why? According to the defendant, the Delaware plaintiff was fraudulently joined, so there was diversity, and the claims turned on federal law. Meanwhile, the defendant argued that Minnesota courts could not exercise personal jurisdiction over the claims brought against it by the Delaware plaintiff in this case.
We’ve seen this movie before. (Here, for example.) There is a key threshold decision: should the court decide subject matter jurisdiction or personal jurisdiction issue first? Plaintiffs always urge resolution of subject matter jurisdiction first, hoping to return to the friendlier confines of state court. Defendants invariably head first to personal jurisdiction. Which route should the court choose? It’s a matter of discretion and courts typically select the easier route. In BCBSM, the issue of fraudulent joinder was complicated and unclear under Eighth Circuit law, and the issue of whether federal law really governed was worse. By contrast, personal jurisdiction was a factual and doctrinal picnic. So the court went to the picnic.
The question was whether the Minnesota federal court could exercise jurisdiction over the Delaware plaintiff’s claim against the Delaware defendant. To support personal jurisdiction, the plaintiffs pointed to reimbursement for certain drug purchases in Dakota County Minnesota – primarily through a particular pharmacy benefit manager (PBM). But there was no allegation that the Delaware plaintiff worked with that PBM, or was involved with any Minnesota reimbursements at all. There was no connection between that Delaware plaintiff and Minnesota. In short, the Delaware plaintiff was not a resident of the forum, suffered no harm in the forum, and none of the conduct animating its claim occurred in the forum. The BCBSM court was right; it was easy to decide it had no jurisdiction over the Delaware plaintiff’s claims against the defendant. Goodbye, Delaware plaintiff.
With the exit of the Delaware plaintiff, the subject matter jurisdiction suddenly became simple. The court did not need to mess with the knotty question of federal question, because it was now confronted with a simple matter of diversity jurisdiction. The parties on opposite sides of the v. were citizens of different states, and the amount in controversy exceeded $75,000.
Things got even simpler for the Minnesota court. After it determined it had subject matter jurisdiction over the claims brought by the non-Delaware plaintiffs against the defendant, it then transferred the case to federal court in New Jersey, because that court was well acquainted with both the parties and the antitrust issues afoot. Plus, opt-out cases were already there waiting. Judicial economy ruled the day. The plaintiffs’ choice of forum merited some deference, but not enough. Goodbye, Minnesota.