We’ve all seen lists of so-called hellhole jurisdictions — court systems that treat corporate defendants brutally. What about a list of the places where corporations get a fair shake? Indiana would be on that list. Jurors in the Hoosier State don’t casually toss around multimillion dollar verdicts. Further, both federal and state judges in Indiana tend to be conservative in the good sense – careful gatekeepers disinclined to invent goodies for plaintiffs. (There are exceptions, of course. After all, the author of the execrable Seventh Circuit Bausch decision hails from Indiana.)

We have a lot of reasons to like Indiana. We have wonderful relatives who live in Noblesville, Indiana. Their Halloween costumes were welcome images of joy amidst the political hot mess that littered our fall Facebook feed. One of our favorite clients is in Indianapolis. It’s also been a great year so far for college football in Indiana. We expect Notre Dame to be very good, but this year there is also first class football being played in Bloomington. Good times. And looking through Indiana cases more often than not warms our flinty, defense-hack heart.

And so, for the second consecutive week, we find ourselves writing about an Indiana case. We were delighted to find the year-old opinion in Evans v. Wright Medical Technology, Inc., 2019 WL 5390548 (N.D. Indiana Oct. 21, 2019), which demonstrated a solid application of SCOTUS teachings on personal jurisdiction. In Evans, the plaintiffs alleged injuries from implantion of artificial hip devices. They sued not only the device manufacturer, but also the manufacturer’s corporate parent and a foreign affiliate. The issue was whether the court could exercise personal jurisdiction over the parent and foreign affiliate. (Dear Reader: Surely you already know that we have written a lot on personal jurisdiction.)

The court went through the specific and general jurisdiction analyses. And it did so in that order: specific before general. We’ve seen it that way in some other cases and don’t get it. Shouldn’t general come first? That’s how we’ll proceed.

General jurisdiction in this case was, as it usually is, quite easy and quite bad for the plaintiffs. The SCOTUS Bauman case makes the analysis straightforward. Neither the parent company nor the foreign affiliate were incorporated in Indiana. Neither had a principal place of business in Indiana. So much for general jurisdiction. (Yes, SCOTUS did allow for exceptional circumstances but, aside from temporary relocation of operations due to a world war, good luck finding such an exception.)

Specific jurisdiction was, as it often is, where the real action was in Evans. But there wasn’t much action with respect to the foreign affiliate, which did not exist when the devices were implanted. Adios, foreign affiliate. Or, perhaps more appropriately in light of the affiliate’s Dutch home, vaarwel.

Most of the Evans opinion was about whether specific jurisdiction extended to the corporate parent. Did the corporate parent purposely avail itself of the privilege of conducting activities within Indiana, thus invoking the benefits and protections of Indiana laws? Did the lawsuit arise out of the parent’s Indiana-related activities?

The plaintiffs bore the burden of showing such personal jurisdiction, though the court would construe all facts in the nonmovant’ s favor. (We’re not agreeing that makes sense, but there it is.) The corporate parent was a holding company and it produced affidavits to the effect that it had nothing to do with the design, manufacture, marketing, etc., of the devices at issue.

The plaintiffs countered by pointing to SEC filings and press releases in which the parent company either took credit for the devices or alluded to litigation involving the devices. Evans is not the first case where plaintiffs seized upon corporate puffery to rope in corporate parents. But the 10-Ks, 10-Qs, and press releases were clearly using “we,” “us,” and “our” formulations in the context of talking about the corporate family. Merely being a corporate parent or affiliate does not create specific jurisdiction. The bloviatory corporate statements simply did not establish the requisite control over the implants by the parent. (That being said, we implore the lawyers who write 10-Qs and 10-Ks to devote at least a moment to thinking about how their words could conceivably affect a personal jurisdiction analysis.)

The plaintiffs were also unable to adduce any evidence showing that the parent utterly dominated the manufacturer or ignored corporate formalities. The court had before it no record that might justify piercing the corporate veil.

Most fundamentally, the plaintiffs never showed how the corporate parent’s Indiana-related conduct led to the alleged injuries. Nor did the plaintiffs provide any basis to believe that jurisdictional discovery would alter the facts on the (Indiana) ground. Thus, the corporate parent won its motion on personal jurisdiction and got out of the case.

Indiana is a splendid place with beautiful locations (amazing covered bridges) and friendly people. (Somewhat unexpectedly, many James Bond fans make the pilgrimage to Bloomington to visit the Ian Fleming Library.) All the same, we suspect that the corporate parent in Evans was pleased to exit the jurisdiction.

As we write this, there is great uncertainty in the country.  The intersection of state and federal law is a focus, as is the possibility that one or more of the many recent challenges to how states count votes for the presidential election will end up in the Supreme Court.  The tension is palpable, in the knots in our stomachs, the bile rising in our throats, the thump of our carotids, and our obsessive doom-scrolling of “news” on our phones.  Some find a hot cup of tea soothing.  We cannot offer that to our readers, but we can try to read some tea leaves on a relatively recent Supreme Court argument.  Will it help?  The margin of error in any predictions we could make would be unacceptably wide.  (We know that none of this is actually funny, but awkward humor is a defense mechanism.)

Since the Supreme Court decided Bauman in 2014, we predicted, tracked, and recapped its impact on drug and device litigation, particularly the scourge known as litigation tourism.  The contemporaneous decision by the Court in Walden yielded less attention, but we have often viewed Bauman and Walden as a pair, the former defining the new standard for general personal jurisdiction and the latter defining the standard for specific personal jurisdiction.  As the lawyers for litigation tourists refused to accept what Bauman meant for their business model, one of their main arguments boiled down to “specific personal jurisdiction for the claims of another plaintiff or group of plaintiffs should make a defendant be subject to general personal jurisdiction for other plaintiffs’ claims.”  The Court swatted that down in BMS, citing both Bauman and Walden.  Along the way, and since BMS, we have posted on many permutations of the personal jurisdiction issues that affect our drug and device clients.  You may be shocked to hear, however, that there is litigation out there that does not involve drug or device manufacturers.  Like in Bauman, automobile manufacturers still get sued.  And, like in Bauman, the Supreme Court is considering another appeal related to personal jurisdiction, this time on specific jurisdiction.

What follows is our impressions of the October 7, 2020, oral argument in Ford Motor Co. v. Montana Eight Judicial District Court, which is actually a combined appeal of two state court decisions.  We have not dug into the briefs or the decisions below and will try to focus on the implications for drug and device cases.  We also will not recap all the back-and-forth or comment on how the Court’s composition has changed since October 7.  So, keeping things fairly general, there was a case brought against Ford (and, we assume, non-diverse defendants) in Minnesota state court related to an accident with a Ford vehicle originally sold in North Dakota in the mid-1990s and a case brought against Ford (and, we assume, non-diverse defendants) in Montana state court related to an accident with a Ford vehicle originally in Washington.  Ford is at home in Michigan, designs its vehicles there, and manufactures them in multiple states but not in Minnesota or Montana.  As is often the case in Supreme Court arguments, like in law school classes and exams, the facts were a jumping off point for many hypotheticals.  From what we know, Ford contested both general and specific personal jurisdictions in these cases and plaintiffs argued that specific jurisdiction applied largely because Ford conducted activities in each state and the accidents occurred in the states where the plaintiffs lived and chose to sue.

While the decision that comes down may help to clarify the standards for specific personal jurisdiction, the overall message from the oral argument is that personal jurisdiction is a confusing subject.  Back when general personal jurisdiction was easy to establish (except perhaps for foreign-based defendants), the concepts were relatively simple and it was not often necessary to analyze specific personal jurisdiction.  While we do think some of the confusion rests at the feet of the litigation tourism proponents, we were surprised that the concepts kept blurring the way they did.  It is true that the line of specific jurisdiction cases leading to Walden and expounding on Walden is less robust than on the general jurisdiction side, but the concepts seem separable.  Applying the concepts to the sort of forum shopping in which drug and device plaintiffs engage, the general jurisdiction inquiry relates to whether the defendant can be subject to suit in California or Missouri, for instance, no matter where the plaintiffs are from, the defendant is at home, or the operative actions of their claims took place.  For specific jurisdiction, the decision may be between two states whether plaintiff and the facts of the case have ties, probably with some overlay of the likelihood the case will end up in federal court.  With those predicates, a few things struck us from the argument.

First, maybe it owed to a remote format, but there was more interrupting than we recall from other arguments.  The Justices are expected to interrupt, of course, but it went both ways.

Second, Justice Thomas asked questions of both sides.  Having once gone a decade between posing questions in oral argument, maybe the remote format agrees with him.

Third, there was a surprising amount of discussion of due process almost as to whether there was some doubt that there are constitutional limits on the state exercise of personal jurisdiction.  We think of the concept as so ingrained that it is rarely necessary to go back to the starting point to analyze personal jurisdiction.  Like recounting the supremacy clause when arguing preemption, however, starting at the start can help an explanation sometimes.

Fourth, after a bunch of hypotheticals on how the defendant’s proposed proximate cause  standard for the old Helicopteros phrase that specific personal jurisdiction means the claims “arise out of and relate to” the defendant’s contacts in the forum state, which did not seem to advance the ball much, Justice Gorsuch highlighted the framework:

We’ve made a firm distinction between specific and general jurisdiction for many years.  We say specific jurisdiction has to “arise out of.”  Everybody seems to know what that means. Nobody knows what “relates to” means, the other part of the test.

Transcript at 28.  He then spelled out how the long-arm statutes fit into the process, which seemed to focus the inquiry, at least for a while.  There was still conflation of general and specific jurisdictions cases and principles after this.

Fifth, the dueling standards articulated by the parties were something like ships in the night and it was not clear the Court wanted to get aboard either one.  The proximate cause standard, with a sort of “but for” causation back-up, from Ford was intended to apply to all specific personal jurisdiction inquiries and, like proximate cause issues in trial courts, how the justices saw the application to every conceivable permutation did not necessarily match up.  The plaintiffs offered a narrow two-part test for product liability cases (and maybe cases against manufacturers):  “would the defendant be submitting to the coercive power of a state with little interest in the controversy” and would the plaintiff’s claims “really comes within” the defendant’s in-forum contacts.  Plaintiff posited that sales of the same type of product into the forum where plaintiff was injured would create personal jurisdiction over the defendant manufacturer, even if the plaintiff’s product was manufactured, designed, and sold elsewhere.  That sounds quite a bit like a hybrid between the general and specific standards articulated in prior cases and we read BMS as rejecting blurring the lines.

Sixth, the issue of how the defendant’s actions outside the forum state might give rise to specific personal jurisdiction was less developed.  Justice Kavanaugh, in particular, pushed on the issue of purposeful availment by cultivating a market that included the forum.  Interestingly, the plaintiffs conceded that non-targeted advertisement—like just having a site on the internet that offered products for sale wherever—would be insufficient to bestow jurisdiction everywhere.

Seventh, litigation tourism has a bad name and the plaintiffs tried to distance themselves from the BMS plaintiffs.  That included an express denial of “forum shopping.”  By emphasizing that they had sued where their accidents/injuries occurred, these plaintiffs clearly wanted to be seen as different.  We wonder whether whatever the Court does here will include some comments that can be used to oppose litigation tourism.

Last, what does this mean for drug and device manufacturers?  Clearly, the standard Ford articulated would be better than the standard that plaintiffs articulated.  It certainly makes sense that the forum contacts should be alleged to have (proximately) caused the injuries that the plaintiff claims; of course, drug and device plaintiffs tend to allege many cause of action that can involve behavior in multiple places.  Plaintiffs offered the criticism that “it would send injured plaintiffs on an irrelevant scavenger hunt to trace the route of the particular pill or toaster that caused injury, just to try to figure out where to sue.”  Transcript at 36.  It is unclear if a majority will think the burden of such pre-suit diligence is too great to impose.

A number of flaws in the plaintiffs’ proposal were highlighted by questioning from the justices and they would surely plat out in drug and device cases.  Focusing on sales of the product into the forum, for instance, could easily slide down a slope into sales of similar products or of components within the plaintiff’s product that were also included in other products.  Recent device litigation experience emphasizes how often complaints about a component can create a loud noise without any plausible connection to the claimed injury.  Speaking of device litigation, the plaintiffs touted that a number of state attorneys general had supported plaintiffs’ position, which made us think that the AGs want to expand the circumstances under which they can bring cases against out-of-state manufacturers for out-of-state conduct that alleged impacts in-state consumers.  We say “impacts” rather than “harms,” because some state consumer protection statutes, which bestow broad powers on AGs and the threat of treble damages, fines, etc., do not require demonstrable injuries to consumers.  Clearly, the plaintiffs’ proposal, which does not look at causation or injury, would be better for them.  Certainty on these issues for drug and device manufacturers, AGs, and private plaintiffs on the rules governing personal jurisdiction would be appreciated, but may not come as soon as anyone wants.  That dynamic sounds familiar.

 

We often say, as we said last week, that this blog is not designed to do plaintiffs’ work for them. Thus, we are a heckuva lot more likely to trumpet pro-defense rulings than wrong ones. Still, it is important to know the problem areas out there, and today’s case displays one of them. It relates to personal jurisdiction, where the momentum has very much been in defendants’ favor since the SCOTUS decisions in the Bauman and BMS cases.

In Collett v. Olympus Medical Systems Corp., 2020 U.S. Dist. LEXIS 10170 (M.D. Ga. Jan. 22, 2020), the court held that it could exercise personal jurisdiction over a Japanese parent company that did not actually do anything in Georgia. The Japanese parent company designed and manufactured colonoscopes. It then supplied the colonoscopes to a U.S. subsidiary that distributed them throughout the United States. A plaintiff in Georgia claimed that she had contracted an immunodeficiency virus from a defective colonoscope. She sued both the Japanese parent company and the U.S. distributing company.

The Japanese parent company challenged personal jurisdiction, furnishing an affidavit that it was not responsible for and did not control the marketing, advertising, promotion, sale, or distribution of the colonoscope in the United States, did not transact any business in Georgia, did not derive any direct revenues from Georgia, etcetera, etcetera. That “etcetera, etcetera” sounds like the King’s throwaway phrase in “The King and I,” but take it as shorthand for saying that the Japanese company had nothing to do with Georgia.

The court began its jurisdictional analysis by deciding that the Georgia long-arm statute reached the Japanese parent company because its conduct outside Georgia – the design and manufacture of the colonoscope – caused tortious injury inside Georgia. Moreover, the Japanese company expected that its products would be distributed everywhere in the U.S. – it certainly did not exclude Georgia. Further, at least some of its revenues indirectly came from Georgia.

But what about due process? Under the Bauman case, Georgia clearly could not exercise general jurisdiction over the Japanese company. All the conceptual action in the case concerned whether specific jurisdiction existed. Looking to some of the older specific jurisdiction cases – Burger King, Keegan, Helicopteros, World-Wide Volkswagen – the Collett court reasoned that a forum state does not offend due process by asserting “personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State and those products subsequently injure forum consumers.”

We are not in love with the stream of commerce theory. It too quickly veers into the boundless. It also threatens to make a mockery of recent SCOTUS personal jurisdiction teaching. Speaking of recent SCOTUS personal jurisdiction teaching, the Collett court dispensed with BMS on the grounds that BMS merely excluded personal jurisdiction when the plaintiffs were not residents of the forum state. The plaintiff in Collett, by contrast, was a Georgia resident. Okay, but we think there is a little more to BMS than that. How much more? Lots more. For example, as we recently blogged, BMS means that a defendant cannot be dragged into court based solely on its relationship with a third-party.

The SCOTUS case that really posed a problem for exercising personal jurisdiction over the parent company in Collett is the 2011 J. McIntyre Machinery case. In J. McIntyre, the Supreme Court plurality opinion applied a “stream of commerce plus” test, reversing the New Jersey Supreme Court’s decision that a New Jersey Court could exercise personal jurisdiction over a British manufacturer that sold a single machine to a New Jersey customer through an American distributor but had no other contacts with New Jersey. That “plus” is an additional requirement along the lines of purposeful availment. The Collett emphasized that the SCOTUS plurality was not a majority, and therefore declined to add that “plus” to the stream of commerce test. That is a surprising, and perhaps unnecessary way to go. One could see the Collett court emphasizing the singularity of the transaction in J. McIntyre, and going off on a Hegelian riff on how quantitative differences at a certain point become qualitative. (Not that we would advocate citations to anything by Hegel, who is more opaque than the tax code.)

J. McIntyre is a real barrier to Collett’s outcome because SCOTUS said that a foreign company that markets a product to the United States generally but does not purposefully direct its product to an individual state is not subject to specific jurisdiction in the state where its product causes injury. J.McIntyre and an earlier personal jurisdiction case, Asahi, rejected the view that a foreign company is subject to jurisdiction so long as it could reasonably foresee that the distribution of its products through a nationwide system might lead to those products being sold in any of the 50 states. Not to put too fine a point on it, Collett appears to be on the wrong side of SCOTUS doctrine. At the very least, Collett’s side-step of J.McIntyre via the plurality/majority distinction does not do much to reinforce the strength of the Collett decision.

The Collett court was plainly troubled by the notion that a “manufacturer can escape legal responsibility for any defect in its product because it has decided that its product will be sold generally everywhere but nowhere in particular.” We are not so troubled. This was not an instance of a wrong without a remedy (a dumb concept anyway – even an inattentive student of life knows that wrongs without remedy abound). After all, the plaintiff was able to sue the U.S. distributor. We did not see in the Collett case any allegation of an alter ego relationship between the parent and subsidiary, or that the subsidiary was some sort of insolvent shell or conduit. In Collett, it is as if doctrine was sacrificed out of fear of a nonproblem.

The Collett case came out last January. Around that same time, we blogged about how SCOTUS granted certiorari for a pair of automobile cases that would permit elaboration of the vitality – or non-vitality – of the stream of commerce test for personal jurisdiction. Then came Covid-19 and arguments for those cases were put off until next term. You can read the supremely well-reasoned amicus brief here.

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Shameless Promotion

McConnell, doubtless the grouchiest blogster of the group, has turned his July 22 post on “Watch Your (Deposition) Language” into a webinar. It runs this afternoon and is available thereafter on demand. You can find it here.

So if reading his various scolds about sloppy depositions isn’t enough for you, and you actually want to hear the frustration and exasperation in his voice, be sure to tune in.

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.”

Id.

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.

Id.

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.

Id.

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).

We have an update today on a case from Idaho on which we blogged late last year.  The issue then was innovator liability, and we gave our enthusiastic stamp of approval to the court’s rejection of “product liability” where the innovator manufacturer neither made nor sold the product that allegedly harmed the plaintiff.  As the Idaho court held, a manufacturer is generally not liable for another manufacturer’s product, and the court was unwilling to make innovators “de facto insurers” for their generic competitors.

There are two important updates:  First, since we penned that blogpost, we have been to Idaho, for the first time.  We spent only a few hours there as we passed through en route to Yellowstone, but the scenery definitely did not disappoint.  The wide-open expanses were stunning, and as we were crossing the Snake River, its rugged beauty immediately struck us, and we could not help but recall 1970s daredevil Evil Knievel, whose attempt to jump the Snake in a steam-powered rocket made headlines worldwide.  Good times.

Second, the Idaho court has now decided that it lacks personal jurisdiction over the innovator on a residual fraud claim, which the plaintiffs pleaded in an amended complaint and which appears to have been the subject of jurisdictional discovery.  Stirling v. Novartis Pharm. Corp., 2020 WL 4259035, Slip Op. at 2-3 (Idaho Dist. Ct. July 13, 2020).  This order does not surprise us.  As we recently observed here, personal jurisdiction should be a defense to claims against innovators because both issues rely on the defendant’s contacts with plaintiffs and their claims.  If an innovator did not make and did not sell the product that the plaintiff used, that should be the end of the inquiry.  Similarly, if that same innovator is not “at home” in the forum jurisdiction, what contacts with the plaintiff’s claims and forum could possibly support specific personal jurisdiction?  As we know from the U.S. Supreme Court’s opinion in Bristol-Myers Squibb Co. v. Superior Court, a defendant’s contacts or transactions with other individuals are not sufficient, nor are the defendant’s contacts with an intermediary distributor.

The facts in Stirling lay this out very neatly.  The product at issue was a generic version of a drug that the innovator stopped selling several years before the plaintiff used it.  Thus, no one in Idaho—let alone the plaintiff herself—used the innovator’s product for years before the plaintiff sued.  Where are the claim-specific contacts upon which specific jurisdiction could be based?  They simply are not there.

The innovator’s arguments on these facts were strong:  “[W]hat is needed—and what is missing here—is a connection between the forum and the specific claims at issue.”  Slip op. at 4.  The innovator’s marketing years before the plaintiff’s prescription do not show forum contacts that actually gave rise to the plaintiffs’ claims.  Id.  The innovator’s purported “agency” relationship with a distributor that specifically targeted Idaho was not sufficient either.  Even if specific jurisdiction is possible though “agency”—and we have serious doubts whether any form of “agency jurisdiction” survives BMS—the distributor never contacted the plaintiff or her prescribing physician.  Id.  Moreover, the distributors’ calls were in connection with a different use of the product, and it made those calls seven years before the plaintiff received her prescription from her OBGYN.  Id. at 4-5.

The court put it this way:

[A]fter significant opportunity for discovery on this issue, the Plaintiffs’ evidence of contacts fails to establish that [the product] was marketed to Idaho as a tocolytic [i.e., the plaintiff’s use]  [¶]  Important to the Court’s decision is the lapse in time between the alleged contacts with Idaho . . . and Plaintiff Michelle’s use of the generic form . . . .  This lapse in time, combined with the facts that [the innovator] sold the . . . NDA in 2001 and then ceased marketing the product, support the Court finding this litigation does not arise out of the alleged marketing activities. . . .

Overall, the Court finds the two . . . marketing phone calls by . . . agents to non-OBGYN doctors in Idaho that occurred approximately seven years before Plaintiff Michelle used . . . a generic form . . . are insufficient to establish the minimum contacts necessary to confer personal jurisdiction . . . .

Id. at 5.

We expect we will continue to see this interplay between innovator liability and specific personal jurisdiction in other cases.  The only question is the sequence in which courts will take up these issues.  In Stirling, the Idaho court decided innovator liability first, thus dismissing product liability claims and leaving only a weak fraud claim.  In another case on which we recently blogged, the court addressed personal jurisdiction first, Henry v. Angelini Pharma, Inc., 2020 WL 1532174 (E.D. Cal. Mar. 31, 2020).

It makes more sense to decide personal jurisdiction first.  Courts generally prefer to address jurisdictional issues at the threshold, and if the court lacks jurisdiction, that disposes of the entire case and avoids piecemeal proceedings.  The Idaho court went another way, driven in part by the plaintiffs’ amended pleadings and the perceived need for discovery.  In fact, the allowance of “jurisdictional discovery” is the only factor keeping this case from being one’s own private Idaho.  Given that it was undisputed that the innovator had not marketed the drug to anyone anywhere for several years—and especially not to the plaintiff or her OBGYN—we are not sure what facts discovery could have revealed that could have changed this result.

But now we’re just griping.  In the end, the court came to the correct result for the correct reasons.  Because eventually, all things merge into one, and a river runs through it.  Wait, that’s Montana.

Earlier this year we posted about the decision on defendant’s motion to dismiss in Crockett v. Luitpold Pharmaceuticals, Inc., 2020 WL 433367 (E.D. Pa. Jan. 28, 2020).  We called it a “patchwork” decision, meaning we generally liked it but it wasn’t a seamless defense victory.  Well, the court ruled on another defense motion just this month and this one we can say we like completely.

In case you’ve forgotten, or been thinking of something else for the last four months, the case involves an injectable medication used to treat iron deficiency anemia in people who are intolerant to oral medications.  This drug was first developed in Europe before being approved by the FDA in 2013.  In the United States, the drug is manufactured and marketed by two companies.  The complaint, however, also names as defendants the European companies who manufacture and sell the equivalent generic product there.  Crockett v. Luitpold Pharmaceuticals, Inc., 2020 U.S. Dist. LEXIS 102216, at *2 (E.D. Pa. Jun. 11, 2020).  One of those companies, headquartered in Switzerland, moved to dismiss based on lack of personal jurisdiction.

Plaintiffs waived any argument that the court had general jurisdiction over defendant by failing to respond to defendant’s argument on that point.  Id. at *6.  That left only the question of specific jurisdiction which requires that the defendant have “personally directed [its] activities at the forum” and “the litigation must arise out of or relate to at least one of those activities.”  Id.

Plaintiff’s first argument regarding purposeful availment was that defendant designed a product that caused injury to someone in Pennsylvania.  But, the court was quick to note that the Third Circuit has already shot down stream of commerce as a basis for exercising personal jurisdiction over a foreign defendant.  Id. at *6-7.

Plaintiff’s second argument was that one of the European companies, not the one who moved to dismiss, had a licensing agreement with one of the US manufacturers to allow it to sell the generic version of the drug in the US.  This the court found “far too attenuated.”  Id. at *7.  Not only was the agreement with a different entity, but the licensing agreement covered rights to sell the drug in the United States, not in Pennsylvania specifically.  The agreement did not support an “intent to distribute in Pennsylvania” and awareness alone that a product “may end up in Pennsylvania” is not enough to confer personal jurisdiction.  Id. at *8.

Plaintiff next tried to argue that the Swiss company’s “coordination” with the US companies provide sufficient activity to establish jurisdiction.  But, as the Supreme Court has already determined that a relationship with a third party alone is an insufficient basis for jurisdiction, plaintiff had to demonstrate “something more.”  Id. at *8-9.  Here, plaintiff argued that “something more” was the foreign defendant’s participation in things like clinical trials, adverse event reporting, and marketing.  Id. at *9.  On these “cooperative” activities, defendant put in evidence via affidavit that refuted it had any “direct engagement” in any US-based activities.  The “cooperation of a party who does no business in Pennsylvania with a third party engaged in business in Pennsylvania” does not provide “a basis for the exercise of specific jurisdiction over the first party.”  Id.  Plaintiff conceded she was not making an alter ego or piercing the corporate veil argument, and therefore had no grounds on which to impute the US defendant companies’ contacts to the foreign defendants.  Id. at *10.

To sum things up, plaintiff failed to meet her burden of proof to establish specific jurisdiction.  At best, plaintiff could show that the foreign defendant possibly directed some activity to the United States as a whole, but not that any actions were directed at any particular state, including Pennsylvania.  With that, the court denied plaintiff’s request for jurisdictional discovery and dismissed the claims against the Swiss defendant with prejudice.

 

Sometimes the DDL blog is ahead of the curve.  On more than one occasion we’ve advanced the idea that lack of personal jurisdiction should be a good defense to innovator liability in a post-BMS world.  After all, BMS held that there was no specific jurisdiction over a plaintiff’s claim just because the defendant allegedly sold the drug at issue to other, in-state residents, causing similar injuries:

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.”

Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1781 (2017). (quoting Walden v. Fiore, 134 S.Ct. 1115, 1123 (2014)).  Rather, “case-linked” personal jurisdiction requires case-linked conduct by the defendant within the jurisdiction.  Under BMS, where does the “case-linked” conduct of the branded defendant take place in an innovator liability case?  That conduct does not include sale of a product.  The defendant did not sell the allegedly injurious product, but only a different bioequivalent product with the same risks.  Sale of a different product to different people, even if those other people are in-state residents, can’t support specific, “case linked” personal jurisdiction.

Now, we have a case that puts those ideas into practice – Henry v. Angelini Pharma, Inc., 2020 WL 1532174 (E.D. Cal. Mar. 31, 2020).

Plaintiff, a California resident, was prescribed and ingested generic trazodone for insomnia.  He alleges that the trazodone caused him to experience priapism, a prolonged penile erection, lasting over 24 hours and he is now impotent.  Id. at *1.  Plaintiff brought claims for strict liability, negligence, breach of implied and express warranties, negligent misrepresentation, negligence per se, and punitive damages against the manufacturer of the generic trazodone as well as companies involved with its branded competitor.  On the brand side, one of the defendants was an Irish company with a U.S. headquarters in Pennsylvania who was the successor to the original brand manufacturer.  The other brand defendant was the current brand NDA holder, a Delaware corporation headquartered in Maryland.  Plaintiff alleged the brand label had an inadequate warning which in turn was used by the generic manufacturer.  Brand defendants moved to dismiss for lack of specific jurisdiction.

The Ninth Circuit uses a three part test to determine whether specific jurisdiction exists:  (1) defendant must have purposefully availed itself of the privilege of conducting activities in the state by an affirmative act or conduct; (2) plaintiff’s claim must “arise out of or result from” those activities; (3) the exercise of jurisdiction must be reasonable.  Plaintiff bears the burden of proof on the first two prongs.  Id. at *2.

Defendants’ argument was correctly centered on the lack of a connection between the state, plaintiff’s alleged injury, and any activity on their part.  Plaintiff’s opposition focused solely on the fact that according to LinkedIn, five years before plaintiff was prescribed trazodone, defendants employed a sales representative to market the brand drug in California.  Id. at *4.  Plaintiff further theorizes that the brand rep “almost certainly” misrepresented the risk of priapism to healthcare providers in California.  Id.

The court’s analysis begins as it ought to:  “Plaintiff’s claim arises from taking a drug in California that was not manufactured by [brand defendants].”  Id.  Hence, it is an innovator liability claim.  “The trouble with this attenuated legal theory is that there is nothing that ties Plaintiff’s claim to Defendant’s activities in California.”  Id.  As for the lone sales rep:

Plaintiff fails to explain how the actions of a single salesman in California, marketing and selling a drug Plaintiff did not take to an unknown number of practitioners, four to five years before an injury that was caused by a different drug manufactured by [a different defendant], has anything to do with Plaintiff’s claims.

Id.  That is BMS, except BMS involved the same product, not a bioequivalent generic.  Selling a drug the plaintiff did not take, here the brand version, to others in the state does not satisfy specific jurisdiction.

In an attempt to avoid dismissal, plaintiff requested a transfer to Maryland.  But a case can only be transferred to a court with subject matter jurisdiction that is a proper venue and where defendant is subject to personal jurisdiction.  And where there are multiple defendants, the personal jurisdiction and venue requirements must be satisfied as to all defendants.  Id. at *5.  As noted above, one of the brand defendants had a principal place of business in Maryland.  As to the other brand defendant and the generic manufacturer, plaintiff argued that their FDA-related interactions in the form of ANDA filings (generic manufacturer) and submission of the drug’s warning (brand defendant) were jurisdictional contacts conferring jurisdiction in Maryland.  Id. With no Ninth Circuit law on point, the court found Zeneca Ltd. v. Mylan Pharm., Inc., 173 F.3d 829 (Fed. Cir. 1999) persuasive.  Allowing government contacts to serve as jurisdictional contacts “would be contrary to the policy against the creation of national supercourts in Maryland and may offend due process.”  Henry, at *5 (quoting Zeneca).

Plaintiff is a California resident who was prescribed [ ] generic trazodone by his physician in California, the drug was dispensed and ingested in California, and the resulting injury occurred in California. The Court declines to find that [defendants] are subject to specific jurisdiction in Maryland based on nothing more than their FDA filings and the unsubstantiated possibility that [generic defendant] also sold its drug in Maryland. Based on the limited information before this Court, it is not clear that Maryland can exercise personal jurisdiction over all Defendants.

Id.  Plaintiff gets to continue its case against the generic defendant in California.  But, we know how those cases usually go.

Henry now gives us precedent to cite to support our previously posited position that the lack of case-related in-state conduct means that there can’t be specific personal jurisdiction over a branded defendant sued for no reason other than the plaintiff being injured in a state recognizing innovator liability.  Branded defendants sued outside their home states on innovator liability claims should raise personal jurisdiction as a defense.  Don’t forget it’s a waivable defense.

We’ve blogged several times before how the logic of the United States Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), dooms nationwide class actions against corporations – except in jurisdictions where they are “at home.”  BMS held, essentially, that a non-resident plaintiff could not sue a non-resident corporate defendant over injuries that did not occur in the forum – and that the presence of other, resident plaintiffs asserting the same claims didn’t create personal jurisdiction that otherwise wouldn’t exist.  “In order for a state court to exercise specific jurisdiction, the suit must arise out of or relate to the defendant’s contacts with the forum,” so that “there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.”  Id. at 1780; see also Id. at 1781 (lack of specific jurisdiction “remains true even when third parties (here, the plaintiffs who reside in California) can bring claims similar to those brought by the nonresidents”); 1783 (personal jurisdiction requirements “must be met as to each defendant over whom a state court exercises jurisdiction”; the “bare fact” that defendant has a “contract[] with” an in-state resident “is not enough”).

But that is exactly what any multi-state class action against a non-resident corporation necessarily does, since a large number of putative class members will necessarily be non-residents as well – with no injuries, and indeed no contact at all, with the forum jurisdiction.

BMS did not involve class actions, but the Court was well aware of the potential impact its ruling might have on purported nationwide classes, since this eventuality was mentioned in Justice Sotomayor’s lone dissent.  Id. at 1789 n.4 (BMS “does not confront the question whether its opinion here would also apply to a class action in which a plaintiff injured in the forum State seeks to represent a nationwide class of plaintiffs, not all of whom were injured there”).

The class action plaintiffs’ bar – their business model being threatened by BMS – launched a furious counter attack, claiming “we’ve always done it this way,” unnamed class members don’t count, and that class actions are different from other types of litigation.  We’ve rebutted these arguments at length in our prior posts and won’t go into them in any detail here.  A three sentence thumbnail:  One:  For decades before Daimler AG v. Bauman, 571 U.S. 117 (2014), everyone thought “continuous and substantial” business supported general jurisdiction – “always done it this way” doesn’t defeat due process.  Two:  The Rules Enabling Act precludes Rule 23 from creating personal jurisdiction for a claim where, without the class action mechanism, it would not exist.  Three:  Fed. R. Civ. P. 82 explicitly provides that the rules of civil procedure “do not extend or limit the jurisdiction of the district courts or the venue of actions in those courts.”

But unfortunately, it looks like this personal jurisdiction issue is going to require the Supreme Court, once again, to pick up that two-by-four, and beat the lower courts into compliance with due process as construed in BMS and Bauman.

Two courts of appeals recently looked at that question.  The Seventh Circuit, in Mussat v. IQVIA, Inc., ___ F.3d ___, 2020 WL 1161166 (7th Cir. March 11, 2020), succumbed to the “we don’t wanna change, and you can’t make us” mantra of the plaintiffs’ class action bar:  “Decades of case law show that this has not been the practice of the federal courts.”  Id. at *3.  Defendant “urges a major change in the law of personal jurisdiction and class actions.”  Id. at *5.  Mussat goes on to cite several decisions that ignore absent class members with respect to diversity jurisdiction and venue.  Id. at *4.  But Mussat ignores a critical difference.  Those cases all involved statutes:  28 U.S.C. §1332, 28 U.S.C. §1367 (jurisdiction), and 49 U.S.C. §16(4) (venue under the Interstate Commerce Act).  Mussat, however, construes nothing but Rule 23 – and Rule 23 cannot change the substantive rights of the parties or the substantive requirements of constitutional law.  The same goes for Fed. R. Civ. P. 4, which Mussat attempts to draft into the expansion of personal jurisdiction for class actions.  2020 WL 1161166, at *5.

We continue to believe that all litigants are entitled to the same due process, and that due process (whether under the 5th or 14th Amendments) applies in the same way to defendants in all litigation – individual (Walden v. Fiore, 571 U.S. 277 (2014)), mass action (BMS), or class actions.  No Federal Rule of Civil Procedure can change the stark fact that, if Plaintiff A can’t get personal jurisdiction over Defendant B in Jurisdiction C, then an entire class of Plaintiff As can’t use Rule 23 to sue Defendant B in Jurisdiction C for the exact same thing.  Due process, the Rules Enabling Act, and the Federal Rules themselves all forbid it.  See Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1048 (2016) (a court “violate[s] the Rules Enabling Act by giving plaintiffs and defendants different rights in a class proceeding than they could have asserted in an individual action”).

In the second decision, the District of Columbia Circuit decided to punt.  Molock v. Whole Foods Market Group., Inc., ___ F.3d ___, 2020 WL 1146733 (D.C. Cir. March 10, 2020).  The class plaintiffs in Molock took the extreme position that “[Rule] 23 permits a federal court sitting in diversity to exercise personal jurisdiction over unnamed, nonresident class members’ claims, even if a state court could not.”  Id. at *2.  That, of course, directly implicated the Rules Enabling Act and Rule 82.

Rather than apply BMS to class actions, a 2-1 panel majority in Molock found prematurity, even though plaintiffs had never raised that issue in the district court:

It is class certification that brings unnamed class members into the action and triggers due process limitations on a court’s exercise of personal jurisdiction over their claims.  Any decision purporting to dismiss putative class members before that point would be purely advisory. . . .  Motions to dismiss nonparties for lack of personal jurisdiction are thus premature. . . .  Because the class in this case has yet to be certified, [defendant’s] motion to dismiss the putative class members is premature.

2020 WL 1146733, at *3 (citations omitted).  According to Molock, only after class certification may a defendant challenge a court’s personal jurisdiction over absent class member.  Id. (“Only after the putative class members are added to the action − that is, when the action is certified . . . − should the district court entertain [defendant’s] motion to dismiss the nonnamed class members.”).  Molock thus requires class action defendants to sacrifice themselves to the prospect of massive classwide liability in order to assert their due process rights under BMS.  That is ironic in the extreme, since:

In determining whether personal jurisdiction is present . . . the “primary concern” is “the burden on the defendant.”

BMS, 137 S. Ct. at 1780 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)).

The dissent in Molock recognized that the prematurity argument was ridiculous.  “[A] hypothetical named plaintiff would be entitled to extensive class discovery even after an on-point decision by the Supreme Court concluding, as I do, that the principles in [BMS] extend to class actions.”  2020 WL 1146733, at *8 (Silberman, J., dissenting).  And the dissent got the merits right, too:

[F]or the question at hand, the party status of absent class members seems to me to be irrelevant.  The Court’s focus in [BMS] was on whether limits on personal jurisdiction protect a defendant from out-of-state claims, and a defendant is subject to such claims in a nationwide class action as well.  A court’s assertion of jurisdiction over a defendant exposes it to that court’s coercive power, so such an assertion must comport with due process of law.  A court that adjudicates claims asserted on behalf of others in a class action exercises coercive power over a defendant just as much as when it adjudicates claims of named plaintiffs in a mass action. . . .  And much like the class action mechanism cannot circumvent the requirements of Article III, it is not a license for courts to enter judgments on claims over which they have no power.  A defendant is therefore entitled to due process protections − including limits on assertions of personal jurisdiction − with respect to all claims in a class action for which a judgment is sought.

Id. at *10 (citations and footnote omitted).  Even if Congress could, by statute, authorize nationwide class actions under state law “Congress has done no such thing.”  Id. at *11.

[T]he limits that do follow from applying [BMS] to class actions in federal court are no different from the limits that apply when individual plaintiffs sue on their own behalf, and that must be tolerated under current law.  For example, it is true that plaintiffs likely would be unable to bring a unitary nationwide class action against two or more defendants who are subject to general jurisdiction in different states. . . .  But similarly an individual plaintiff − not a class action − ordinarily cannot bring these sorts of defendants into a court to answer to claims that have nothing to do with the forum.  And procedural tools like class actions and mass actions are not an exception to ordinary principles of personal jurisdiction.

Id. (citations omitted) (emphasis added).

Nuff said.  Take it to the Supreme Court.

Don’t stop us if you’ve heard this before, because you have. A plaintiff brings an lawsuit over injuries allegedly from a medical device, sues not only the company that made and marketed the device but also a parent company that did not make or market the device, said parent moves for dismissal for want of personal jurisdiction, and the court grants the motion. That is what happened in Marcovecchio v. Wright Med. Grp., 2019 U.S. Dist. LEXIS 54414 (D. Utah, March 28, 2019). You might wonder whether there is anything to learn from this case, except that some plaintiff lawyers never learn. So at least learn this: when you consider your response to a complaint, don’t assume that the complaint was drafted with any degree of respect for even the most fundamental precedents. Consider a wide variety of motions, including jurisdictional ones. File the ones that look strong, make the other side do some work, and maybe the court will cut back the case to something coherent and manageable.

The plaintiff in Marcovecchio was a Utah resident who brought a lawsuit in Utah alleging personal injuries arising out of a hip replacement system. There were causes of action for strict products liability, negligence, breach of express and implied warranties, fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, and punitive damages. The plaintiff sued both the company that manufactured, marketed, and sold the hip system throughout the United States, including in Utah, as well as the parent company, which acted as a parent and holding company for various entities. Neither company was incorporated in or “at home” in Utah.

Utah is a lovely place, but the parent company wanted out. It supplied an affidavit establishing that the parent holding company and the manufacturing company were separate entities with separate accounting and banking records. The parent company had no contacts with Utah and did not manufacture, market, or sell the hip system. Rather, the parent was simply the sole shareholder of the manufacturer. It did not even have any employees. For these reasons, the parent had a strong argument that the court lacked personal jurisdiction over it.

The plaintiff went to the plaintiff playbook and responded with excerpts from the parent’s public SEC filings and press releases in which the parent, according to the plaintiff, publicly identified itself as a company that “specializes in the design, manufacture and marketing of reconstructive joint devices” and claimed the hip replacement products “as its own.” For example, in its 2001 10-K filing, the parent described itself as “a global orthopedic device company specializing in the design, manufacture and marketing of reconstructive joint devices …” that “offers a comprehensive line of products for hip joint reconstruction[.]”

Believe it or not, other plaintiffs have made this exact same argument before against this exact same parent company, citing the exact same documents in support of personal jurisdiction. And it never works. The Marcovecchio court held that these statement are insufficient to establish the parent’s role in the design of the hip system. The filings were outdated and the plaintiff cherry-picked phrases out of them to support his position. Plus, annual reports typically involves this sort of bloviation in characterizing the business of a parent and its subsidiaries. [Note to our transactional colleagues: couldn’t more precise draftsmanship avoid this issue completely?]. Even if the filings are not perfectly clear about separating the roles of parents and subsidiaries, the Marcovecchio court was clear that the filings were not necessarily discussing the activities of the parent as opposed to the subsidiary. Any pufferies in the filings certainly were not enough to contradict the parent’s sworn testimony.

We’re not done. There is a part two to the plaintiff’s jurisdictional playbook, just as ineffective as part one. The plaintiff in Marcovecchio argued that the subsidiary’s contacts with Utah (which were undisputed) could be imputed to the parent. Uh, no. A parent corporation is not subject to personal jurisdiction in a forum solely based on the subsidiary‘s contracts with the forum absent an allegation that either 1) the subsidiary was an agent of the parent, or 2) that the two companies are so intertwined as to be the other’s alter ego. Here, the plaintiff’s conclusory statement that each of the defendants was the “representative, agent … or alter ego of … the other” was not sufficient to establish personal jurisdiction under either an agency theory or an alter ego theory. Farewell, dear parent.

The manufacturing company was stuck in the lawsuit, but it also had a few beefs with the complaint. For example, the manufacturing defect claim contained nothing but conclusory statements. The plaintiff alleged that the hip system had “a tendency to (a) detach, disconnect and/or loosen from a Patient’s acetabulum, (b) generate dangerous and harmful metal debris …; (c) cause pain, (d) inhibit mobility; and (e) require revision surgery.” As the court pointed out, these allegations all identify harms caused by the hip system, not the actual manufacturing flaw that caused the harm. The court put it nicely: “Plaintiff alleges that because he was injured, there had to be a flaw.“ Because the plaintiff never identified the actual flaw in the manufacturing process that caused the hip system to differ from the design, he had failed to state a claim for manufacturing defect.

The plaintiff also failed to state a claim for failure to recall. The Marcovecchio court refused to entertain such a claim unless “(1) a governmental directive issued pursuant to a statute or administrative regulation specifically requires the seller or distributor to recall the product; or (2) the seller or distributor, in the absence of a recall requirement … undertakes to recall the product, and the seller or distributor fails to act as a reasonable person in recalling the product.” The complaint satisfied neither requirement. Instead, the plaintiff alleged only that the defendant failed to recall the product, which is insufficient to state a claim. (Over a decade ago, we wrote about a similar recall issue with a similar analysis here.)

The claim for breach of express warranty was also hobbled by bare-bones pleadings. Reliance is necessary to establish a cause of action for express warranty, and the plaintiff needed to allege that the product descriptions were communicated to him or his doctor and became the basis of the bargain. The plaintiff generally alleged that “express representations” were made “to healthcare providers and patients, including Plaintiff and Plaintiff’s healthcare providers,” but the plaintiff failed to allege how those warranties became a basis of the bargain. The court tossed the claim because “[m]ere recitations that Plaintiff relied are not enough to state a claim for breach of express warranty.”

Finally, there was the suite of deceit claims: fraudulent misrepresentation, fraudulent concealment, and negligent misrepresentation. The complaint referenced misrepresentations “to the medical community and the general public,” and also referenced misrepresentations in the 510(k) application submitted to the FDA. That last bit implicates Buckman preemption. The Marcovecchio court dodged the preemption issue by bouncing the active misrepresentation claims for failure to plead either the allegedly fraudulent statements or the plaintiff’s reliance with the requisite specificity. The concealment claim was allowed to stand (courts are a little too lenient on such claims), but there was a lot less left to the case than existed before the defendants filed their motions.

Today the Supreme Court agreed to take another shot at “stream of commerce” personal jurisdiction in two automotive cases.  Here are the case pages at SCOTUSBlog:  Ford Motor Co. v. Bandemer, No. 19-369, and Ford Motor Co. v. Montana Eighth Judicial District Court, No. 19-368.  The decisions being appealed are Bandemer v. Ford Motor Co., 931 N.W.2d 744 (Minn. 2019), and Ford Motor Co. v. Montana Eighth Judicial Dist. Court, 443 P.3d 407 (Mont. 2019).

Neither case involves the kind of litigation tourism that we frequently discuss on this Blog.  Rather, both cases involve variants of a set of facts that is relatively common in cases involving motor vehicles:  The plaintiff was injured while using a vehicle that was not purchased in the state where the accident occurred.  Oftentimes the vehicle has changed hands several times since it was initially sold in some other state, or else the plaintiff was responsible for bringing it into the state.  Nor was the vehicle in question manufactured, designed, or repaired by the defendant in the state where the injury occurred and suit was brought.  There is no basis for general jurisdiction because the defendant vehicle manufacturer was neither incorporated nor had a principal place of business in the state.  The defendant had plenty of branded dealerships in the state, but those dealerships had nothing to do with the car in which the plaintiff was injured.

Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), was pretty clear that, for there to be specific personal jurisdiction, “the suit must arise out of or relate to the defendant’s contacts with the forum.”  Id. at 1780.  “[W]hat is missing” in BMS was “a connection between the forum and the specific claims at issue.”  Id. at 1781.  Likewise, in Walden v. Fiore, 571 U.S. 277 (2014), the Court held that “the defendant’s suit-related conduct must create a substantial connection with the forum State.”  Id. at 284.

It’s hard to see how, given these holdings, that such plaintiffs have a jurisdictional basis for the suit, and we discussed the probable demise of stream of commerce jurisdiction here, shortly after BMS.  However, we are now talking about plaintiffs who are suing in their home states where their injuries occurred.  That makes them a lot more sympathetic than our clients’ mass tort litigation tourist opponents, all of whom have readily available (but not as pro-plaintiff) alternative fora.  Will personal jurisdiction really require auto accident plaintiffs to sue manufacturers in the manufacturers’ “home” states, unless those plaintiffs bought their cars new in the states where they live?  Courts have split all over the place on this issue, and our post-BMS cheat sheet includes defense-side wins.

We would have preferred that the Court clarify just what the specific personal jurisdiction “arising from”/”relating to” test means in a nationwide class action, but those cases move slower than individual auto accident cases like these two – so here we are.  Whatever the Supreme Court holds in these cases about the need for a causal connection between the defendant’s in-state contacts and the plaintiff’s claimed injuries will also determine the extent to which litigation tourists will be able to sue our clients in places like Philadelphia or St. Louis (to name two).  We’ve stated our preferred test in these situations – based on the BMS holding about “loose and spurious” forms of ersatz general jurisdiction – here.  We’ll see what happens.