Whaley v. Merck & Co., 2022 WL 1153151 (S.D. Cal. April 12, 2022), is an ugly example of overly grasping personal jurisdiction permitted in the service of facilitating an even worse overreach by a state’s substantive law. We’ve repeatedly criticized the substantive theory – innovator liability – because (among other things) it exposes manufacturers to liability for claimed defects in competing generic drugs from which the defendants received no benefit (quite the opposite), and did not control what their competitors did. Indeed, innovator liability strays so far from traditional product liability that it creates personal jurisdictional problems – since the target defendant often has no jurisdictional contacts whatever with the forum state, since it didn’t even sell the product that allegedly caused (very attenuated) harm.
Unfortunately, just as the California Supreme Court in T.H. v. Novartis Pharmaceuticals Corp., 407 P.3d 18 (Cal. 2017), ran roughshod over product liability concepts of product identification and causation, Whaley has run roughshod over the limits to personal jurisdiction established in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”). As we discussed at length when BMS was decided, the Supreme Court expressly rejected the California Supreme Court’s expansive view of personal jurisdiction where the defendant did not sell the drug that the plaintiff took:
The mere fact that other plaintiffs were prescribed, obtained, and ingested [the drug] in California − and allegedly sustained the same injuries as did the nonresidents − does not allow the State to assert specific jurisdiction over the nonresidents’ claims. As we have explained, “a defendant’s relationship with a … third party, standing alone, is an insufficient basis for jurisdiction.”
BMS, 137 S. Ct. at 1781 (quoting Walden v. Fiore, 571 U.S. 286 (2014)).
Whalen interpreted Ford Motor Co. v. Montana Eighth Judicial Dist. Ct., 141 S. Ct. 1017 (2021), to essentially nullify BMS. Ford, of course, held that extensive, contemporaneous in-state activity concerning the same product that injured the plaintiff could support personal jurisdiction, because the defendant was “serving the market” for the same product that injured the plaintiff.
[Defendant] had advertised, sold, and serviced those two car models in both States for many years. (Contrast a case, which we do not address, in which [it] marketed the models in only a different State or region.) In other words, [defendant] had systematically served a market in [these forums] for the very vehicles that the plaintiffs allege malfunctioned and injured them in those States.
141 S. Ct. at 1028. BMS was distinguishable in Ford Motor because the defendant “sold the specific products,” albeit not directly to the plaintiffs, and they “used the allegedly defective products in the forum States.” Id. at 1031.
That didn’t – and couldn’t – happen in Whalen because innovator liability, by its very nature, is brought against a defendant that did not sell the product that injured the plaintiff, whether inside or outside of the state. So Whalen bootstrapped California substantive law into a form of personal jurisdiction likewise divorced from Ford Motor’s concentration on the defendant’s intensive, contemporaneous marketing of its own products in the forum:
California law places liability on the Defendants for [the drug’s] label even when Plaintiffs’ do not ingest that drug. Accordingly, Defendants’ … activities in California relate to Plaintiffs’ warning label claims even though [plaintiff] ingested generic [drugs only]. To hold otherwise would impermissibly ignore binding California Supreme Court precedent.
2022 WL 1153151, at *6 (citing Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical. Co., 138 S. Ct. 1865, 1874 (2018)).
That’s a pure bootstrap – that if the California Supreme Court could dream up innovator liability, than somehow there must be personal jurisdiction so that California plaintiffs could assert it. The U.S. Supreme Court, however, has never recognized the nature of a plaintiff’s substantive claims as a basis for sustaining personal jurisdiction. Thus, the case Whalen cited is a federal antitrust case having nothing to do with personal jurisdiction.
In Whalen the plaintiff did not buy – directly or indirectly – any product at all from the defendant. That’s entirely unlike Ford Motor. In Whalen, also unlike Ford Motor, there is no allegation that the defendant engaged in any contemporaneous marketing of its similar product in the jurisdiction, only that at some unstated time it had once engaged in in-state “marketing.” Id. at *5. Since the defendant’s patent on the drug in question had expired seven years before the plaintiff took its generic equivalent, id. at *1, “there is a significant temporal gap between the advertisements cited by the Plaintiffs and the harm suffered.” Id. at *7. This lack of current product-related activity is critical, since there is no evidence that the defendant satisfied the Ford Motor criterion of actually “serving” the forum-state (or any other) market for this drug at the time plaintiff took a generic equivalent made by someone else. That would be like basing jurisdiction in Ford Motor on injuries caused by other manufacturers’ similar vehicles.
So to find jurisdiction in Whalen, “traditional notions of fair play and substantial justice,” 2022 WL 1153151, at *4, had to support hauling this defendant into a California court over something it did years before the plaintiff’s injury, involving a product other than the one the plaintiff took, and as to which the defendant was no longer actively marketing in California. That might not “offend” the Whalen court’s “notions of fair play and substantial justice,” id. at *7, but it certainly cannot be consistent with BMS. Whalen’s recitation of relevant facts is indistinguishable from what the Supreme Court rejected in BMS:
Plaintiffs allege that [the drug] is one of the best-selling prescription drugs of all time…. Plaintiffs assert that [the drug] has been widely marketed in California to consumers and medical insurance providers since its release. Defendants marketed [the drug] through television advertisement campaigns … [and] through magazines with a significant California readership. Defendants allegedly sponsored and conducted research studies on [the drug] in California.
Id. at *2 (citations omitted). Whereas in BMS:
[The defendant] also engages in business activities in other jurisdictions, including California. Five of the company’s research and laboratory facilities, which employ a total of around 160 employees, are located there. [defendant] also employs about 250 sales representatives in California and maintains a small state-government advocacy office in Sacramento. One of the pharmaceuticals that BMS manufactures and sells is … [the] prescription drug [at issue]…. BMS does sell [this drug] in California. Between 2006 and 2012, it sold almost 187 million … pills in the State and took in more than $900 million from those sales
137 S. Ct. at 1778 (citations omitted). It’s essentially the same argument. You sold a lot of your drug to other people in the same state, therefore you should be subject to personal jurisdiction here – except in Whalen the defendant never sold the drug that injured the plaintiff, and never sold any drug that the plaintiff actually used.
While we’re appalled by the jurisdictional overreach in Whalen, we can’t say that we’re all that surprised. The Supreme Court in Ford Motor solemnly declared that its decision “does not mean anything goes,” and that “the phrase ‘relate to’ incorporates real limits.” 141 S. Ct. at 1026. But Ford Motor failed to specify what those “limits” were. What did the Court think was going to happen? That’s an omission big enough to drive the State of California through. Thus, Ford Motor left defendants at the mercy of courts that, as in Whalen, impose “no limits” and are willing to let “anything go.”