Even if Bexis and McConnell like to sport overalls and tool around in souped-up tractors, we are not farmers.  We have grown enough heirloom tomatoes, ghost peppers, rainbow chard, purple basil, and other suburban garden staples, however, to know that “you reap what you sow” is usually true, assuming the levels of hydration, sunshine, and soil pH are appropriate.  (There are pleasant exceptions, like asparagus from prior owners or berries spread by critters, and undesired interlopers, like Japanese hops and any number of leafy weeds.)  It is often true in litigation too.  When the Bauman and Walden decisions came down in early 2014, it should have been apparent that the sort of litigation tourism that had driven so many verdicts and settlements based on fear of verdicts in plaintiff-friendly places was going to be a risky proposition going forward.  While we and many others touted these rulings and proclaimed what should happen with personal jurisdiction in such cases, the plaintiffs’ bar did not give up on what had been such a lucrative approach.  Instead, they continued filing multi-plaintiff cases in their desired jurisdictions, even though almost all of the plaintiffs had no ties to the jurisdiction and the defendants were not “at home” there.  They also fought against motions and appeals with sometimes creative arguments that generally flew in the face of what the Supreme Court had already ruled.  While these packaged tour cases remained in these dubious jurisdictions, they sometimes progressed to trial and, aided by lenient views of the admissibility of junky causation evidence or other rulings that tend to drive up verdicts, scored some really big verdicts.  While some defendants surely settled along the way, others stuck it out to get to appellate rulings that would undo everything with a pronouncement that “this plaintiff’s case never belonged here in the first place.”

If you are reading this and thinking about the talc litigation in Missouri, then you would be right.  It is not the only litigation to follow this pattern, but it has been one of the most visible.  The timeline implicated by Ristesund v. Johnson & Johnson, — S.W.3d –, 2018 WL 3193652 (Mo. Ct. App. June 29, 2018), is where we will start, because it shows the sowing to which we alluded so awkwardly above. Bauman and Walden come out in February 2014, signaling a tightening of the general personal jurisdiction standard and a refusal to expand the specific personal jurisdiction standard.  In September 2014, plaintiff, a South Dakota resident, filed a lawsuit in Missouri state court about alleged ovarian cancer from talc in cosmetic products along with a Missouri resident and seventy-three other non-Missouri residents.  Plaintiffs pushed forward through discovery and motions to a series of trials.  Motions to dismiss for lack of personal jurisdiction for the claims of the non-Missouri residents were denied based on the conclusion that the court’s jurisdictions over the claims of the sole Missouri resident was enough.  In February 2016, the estate of a non-Missouri plaintiff named Fox won a large verdict and then defendants appealed.  In May 2016, Ristesund won her own large verdict and then defendants appealed.  In June 2017, the Supreme Court issued the BMS decision, essentially rejecting reliance on the ties of (misjoined) plaintiffs to establish specific personal jurisdiction over the claims of a plaintiff who would not otherwise be able to establish general or specific personal jurisdiction.  In October 2017, the Missouri Court of Appeals ruled in Fox v. Johnson & Johnson, 539 S.W.3d 48 (Mo. Ct. App. 2017), that plaintiff did not establish personal jurisdiction consistent with constitutional requirements and should not get a chance to do so on remand.  (We detailed the decision here.)  The same court considered almost the same issues in Ristesund about two weeks ago.

Pretty straightforward, one would think.  Plaintiff, to her credit, even conceded that BMS controlled and the trial court lacked personal jurisdiction over defendants as to her claims. Ristesund, — S.W.3d –, 2018 WL 3193652, *2.  That meant the verdict could not stand.  The only issue left was plaintiff’s argument that “fairness requires” that she have an opportunity on remand to develop arguments and evidence support personal jurisdiction.  This is where that timeline mattered.  As in Fox, the plaintiff “had a full and ample opportunity to discovery and introduce any and all evidence that she believed would establish personal jurisdiction over the Defendants.” Id. at *3.  While not all plaintiffs try to gather and introduce evidence of personal jurisdiction, recall that this case was filed after Bauman was decided.  It went to trial after a personal jurisdiction motion was denied, an appeal on a companion case focused on personal jurisdiction, and scores of cases (see our cheat sheet) had been decided around the country on applications of Bauman that anyone would have realized undercut personal jurisdiction in this case.  The plaintiff lawyers pursuing all of these cases took a calculated gamble to work up these cases and win big verdicts in a court where personal jurisdiction was tenuous at best, as long as the defendants were willing to sustain the trial losses and get to appeals. Ristesund could have sued in South Dakota—where she lived—or in New Jersey—where the defendants were based—but she chose the litigation tourist route.

Her last gasp was to claim that BMS being decided after her trial verdict somehow entitled her to another chance to prove personal jurisdiction.  The court’s rejection of this contention can stand on its own.

Principles of fairness do not dictate or warrant remand. The pronouncement in BMS neither introduced new concepts in the law nor relied upon new principles of law. BMS was not a decision that “came out of nowhere.” To the contrary, the parties in BMS, as in Daimler, argued long standing principles of personal jurisdiction in our jurisprudence. The parties before us were well aware of the legal principles being argued before the Supreme Court, as evidenced by their pleadings and argument before the trial court.  Ristesund was not precluded from broadening the scope of her claims for personal jurisdiction while her case was before the trial court . . . . Similar to our reasoning in Fox, we are not persuaded that the law either warrants or permits us to now return this matter to the trial court for a “do-over.”

Id. at *5.  That sounds pretty fair to us.

We were reading the appallingly bad personal jurisdiction (and other things, but those aren’t what we’re interested in today) decision in Hammons v. Ethicon, Inc., ___ A.3d ___, 2018 WL 3030754 (Pa. Super. June 19, 2018).  While many of the jurisdictional issues in Hammons are factually limited to the particular defendant and the particular product, one holding made us drop what we were doing and turn to research.

That question is very simple – who has the burden of proof where the issue is whether a plaintiff’s assertion of personal jurisdiction violates Due Process.

Hammons held:

A defendant making a challenge to the court’s personal jurisdiction has, as the moving party, the burden of supporting its objection to jurisdiction.

2018 WL 3030754, at *6 (quoting De Lage Landen Services, Inc. v. Urban Partnership, LLC, 903 A.2d 586, 589 (Pa. Super. 2006)) (emphasis added).

This holding − that the defendant, not the plaintiff who asserted jurisdiction in the first place, has the burden of proof when a constitutional challenge to personal jurisdiction is raised – is virtually unprecedented and contrary to practically all the cases we have seen addressing this issue. It also seems intuitively wrong, since analogous issues, such as subject matter jurisdiction, standing, and the admissibility of evidence, impose the ultimate burden of proof on the party advocating jurisdiction or admissibility of evidence, even though the opposing party usually makes the motion to have the issue decided.

Moreover, in Hammons we think that the burden of proof question matters.  Much of Hammons revolves around the same third-party contractor issue that we recently discussed in this post about another adverse jurisdictional decision from the same Philadelphia mass tort.  Although Hammons tries harder to disguise the lack of causal relationship between what the third party did (knitting the mesh together) and any design or manufacturing claim actually asserted by the plaintiff (see 2018 WL 3030754, at *9 (defendant “worked together” with the third-party “in Pennsylvania to design, test and manufacture the” product), the problem we identified in the prior post still exists – Hammons never states how this third-party’s activities contributed to the particular defect/injuries alleged by this plaintiff.  None of the “specifications” for the knitting originated with the Pennsylvania entity, but rather with the defendant. Id. (“knitted . . ., and tested samples for, compliance with [defendant’s] specifications”).

Ultimately, we don’t think that the Superior Court’s proposition – that any allegation of “design” or “manufacturing” defect allows jurisdiction to rest on any arguably in-state “design” or “manufacturing”-related activities where those activities don’t have anything to do with what allegedly injured the plaintiff – flies under Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”).

But there’s a second set of allegations in Hammons, that the defendant “relied heavily on an Allentown, Pennsylvania gynecologist . . . for the development, study, and marketing of [the product].”  Id.

Those facts, whether significant or wildly overblown, were nonetheless “trial evidence,” id. − meaning that plaintiff did not assert them in opposition to the defendant’s previous jurisdictional motion.  The court’s excuse for considering them was:

We may affirm on any ground.  Thus, we need not confine our reasons for affirming to evidence adduced during proceedings on [defendant’s] preliminary objections to jurisdiction.

Id. at 9 n.6 (citation and quotation marks omitted).

That’s fine if the defendant bears the burden of proof, and is thus responsible for ensuring a complete jurisdictional record.  But if the plaintiff bore the burden of proof in Hammons, then the plaintiff had the obligation to complete the jurisdictional record in a timely fashion, and it would not be proper for an appellate court to decide the jurisdictional issue on facts that the trial court did not have before it because the plaintiff failed to present them.  Reliance on such after-the-fact facts is called “sandbagging,” and is generally frowned upon. E.g., Com. v. Johnson, 456 A.2d 988, 996 (Pa. Super. 1983).  We can’t evaluate whether the extent of this Pennsylvania consulting was enough for this litigation tourist to remain in a Pennsylvania court under BMS, but we do believe that it was procedurally improper for an appellate court to consider it if the party being benefited bore (and thus failed to meet) the burden of proof on personal jurisdiction.

All this being said, we can’t say with 100% certainty that the Hammons burden of proof ruling is erroneous – because neither the United States Supreme Court nor the Pennsylvania Supreme Court appears to have decided the burden-of-proof question in the specific context of personal jurisdiction.  No controlling decision of a higher court was ignored – at least that we could find.

In researching this question, we (of course) looked at to United States Supreme Court and found very little.  In Burger King Corp. v. Rudzewicz, the Court phrased the inquiry in the passive voice, “[o]nce it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered.”  471 U.S. 462, 476 (1985).  So did Asahi Metal Industries Co. v. Superior Court, 480 U.S. 102, 114, (1987) (“[w]hen minimum contacts have been established”).  Such language neatly avoids the burden of proof question, and presumably arises because the Supreme Court is usually dealing with undisputed factual records.

We found even less precedent in the Pennsylvania Supreme Court – not even passive voice holdings.

However, review of Superior Court precedents shows that the Hammons position was not even the majority rule.  A majority of Pennsylvania Superior Court decisions hold something like this:

Once the moving party supports its objections to personal jurisdiction, the burden of proving personal jurisdiction is upon the party asserting it.

Schiavone v. Aveta, 41 A.3d 861, 865 (Pa. Super. 2012) (quoting Gaboury v. Gaboury, 988 A.2d 672, 675 (Pa. Super. 2009) (emphasis added), aff’d, 91 A.3d 1235 (Pa. 2014) (per curiam).  See N.T. v. F.F., 118 A.3d 1130, 1134 (Pa. Super. 2015) (also quoting Gaboury); Sulkava v. Glaston Finland Oy, 54 A.3d 884, 889 (Pa. Super. 2012) (“Once the moving party supports its objections to personal jurisdiction, the burden of proving personal jurisdiction is upon the party asserting it.”); Mendel v. Williams, 53 A.3d 810, 816 (Pa. Super. 2012) (quoting Schiavone); Taylor v. Fedra International, Ltd., 828 A.2d 378, 381 (Pa. Super. 2003) (“Once the moving party supports its objections to personal jurisdiction, the burden of proving personal jurisdiction is upon the party asserting it.”); Barr v. Barr, 749 A.2d 992, 994 (Pa. Super. 2000) (same); Grimes v. Wetzler, 749 A.2d 535, 540 (Pa. Super. 2000) (“Once the [defendants] supported their jurisdictional objection, the burden shifted to [plaintiff] to prove that there is statutory and constitutional support for the trial court’s exercise of jurisdiction.”); General Motors Acceptance Corp. v. Keller, 737 A.2d 279, 281 (Pa. Super. 1999) (”Once the movant has supported its jurisdictional objection, however, the burden shifts to the party asserting jurisdiction to prove that there is statutory and constitutional support for the court’s exercise of in personam jurisdiction.”); McCall v. Formu-3 International, Inc., 650 A.2d 903, 904 (Pa. Super. 1994) (“once the moving party has supported his objection to jurisdiction, the burden of proof shifts to the party asserting jurisdiction”); Rivello v. New Jersey Automobile Full Insurance Underwriting Ass’n, 615 A.2d 342, 343 (Pa. Super. 1994) (“once the defendant properly raises the issue of jurisdiction, the plaintiff has the burden of proving that jurisdiction is proper”); Derman v. Wilair Services, Inc., 590 A.2d 317, 319 (Pa. Super. 1991) (same); (“When, as here, a defendant properly raises an objection on the ground of a lack of in personam jurisdiction, the plaintiff has the burden of proving that the exercise of jurisdiction is permissible.”); Babich v. Karsnak, 528 A.2d 649, 654 (Pa. Super. 1987) (same); Bergere v. Bergere, 527 A.2d 171, 173 (Pa. Super. 1987) (“When a defendant raises lack of personal jurisdiction, it becomes the plaintiff’s burden to prove that the exercise of jurisdiction is permissible.”).  There are older cases, but you get the point….

We tried following the line of cases Hammons quoted to see how a contrary position originated.  That wasn’t hard.  We started with the De Lage case, which Hammons quoted.  The burden of proof didn’t really matter in De Lage, since that case affirmed dismissal for lack of personal jurisdiction.  903 A.2d at 592.  On the burden issue, De Lage in turn quoted (id. at 589-90) two cases: King v. Detroit Tool Co., 682 A.2d 313, 314 (Pa. Super. 1996) (for the proposition, “A defendant making a challenge to the court’s personal jurisdiction has, as the moving party, the burden of supporting its objection to jurisdiction”), and Gall v. Hammer, 617 A.2d 23, 24 (Pa. Super. 1992).  King cited Scoggins v. Scoggins, 555 A.2d 1314, 1317 (Pa. Super. 1989).

Taking Gall first, it’s not any different in content from the string cite we have above – only in organization and placement.  In the body of the opinion, Gall did indeed state, “When a defendant challenges the court’s assertion of personal jurisdiction, that defendant bears the burden of supporting such objections to jurisdiction by presenting evidence.”  617 A.2d at 24.  That may involve a burden of production, but not the ultimate burden of proof.  The “then what” proposition in Gall was dropped to a footnote.  “The burden of proof only shifts to the plaintiff after the defendant has presented affidavits or other evidence in support of its preliminary objections challenging jurisdiction.”  Id. at 24 n.2.  So Gall is not authority for holding that a defendant, alone, bears the burden of proof when personal jurisdiction is at issue.  Nor is Scroggins.  In that case, the court simply separated “if X” from “then Y.”  Here is the complete discussion in Scroggins, with the two propositions highlighted:

When a defendant wishes to challenge the court’s exercise of in personam jurisdiction, he may do so by filing preliminary objections.  As the moving party, the defendant, has the burden of supporting its objections to the court’s jurisdiction.

Once the plaintiff has produced some evidence to support jurisdiction, the defendant must come forward with some evidence of his own to dispel or rebut the plaintiff’s evidence.  The moving party may not sit back and, by the bare allegations as set forth in the preliminary objections, place the burden upon the plaintiff to negate those allegations.  Only when the moving party has properly raised the jurisdictional issue does the burden of proving jurisdiction fall upon the party asserting it.  Where an essential factual issue arises from the pleadings as to the scope of a defendant’s activities within the Commonwealth, the plaintiff has the right to depose defendant as to his activities within the Commonwealth.

555 A.2d at 1317-18 (multiple citations omitted) (emphasis added as described above).

Thus the Hammons holding that the defendant has the burden of proof − period – on personal jurisdiction is unwarranted even by Superior Court precedent.  It confuses the initial burden of production of evidence with the ultimate burden of proof.  Hammons, along with the case it quotes, misstates the burden of proof by omitting the holding of numerous prior Superior Court panels that, once the defendant puts on some evidence to support its jurisdictional position (which we’re sure was done), then the burden switches to the plaintiff to establish jurisdiction as “the party asserting it.”  That makes practical sense as well.  If plaintiffs didn’t bear the burden of proof, why would they need jurisdictional discovery?

The majority Pennsylvania rule, that the plaintiff bears the ultimate burden of proof on personal jurisdiction, is also the federal rule.  While the United States Supreme Court hasn’t decided the issue, the Courts of Appeals have done so many times, and appear to be unanimous in imposing the ultimate burden of proving personal jurisdiction on the plaintiff asserting it.  Here are a few of the many decisions (the search pulled up 881 cases):

To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must plead sufficient facts to support a reasonable inference that the defendant can be subjected to jurisdiction within the state.  But where, as here, the parties submit affidavits to bolster their positions on the motion, and the district court relies on the evidence, the motion is in substance one for summary judgment.  The plaintiff bears the burden of proof on the issue of personal jurisdiction, and must establish jurisdiction by a preponderance of the evidence at trial or when the court holds an evidentiary hearing.

Creative Calling Solutions, Inc. v. LF Beauty Ltd., 799 F.3d 975, 979 (8th Cir. 2015) (citations and quotation marks omitted).

It was [plaintiff’s] burden to convince the district court that it had jurisdiction over the persons of the defendants.  That is, [plaintiff] had to satisfy a threshold requirement, the prima facie establishment of jurisdiction.  The plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, non-resident defendant.

PVC Windoors, Inc. v. Babbitbay Beach Construction, N.V., 598 F.3d 802, 810 (11th Cir. 2010) (citations and quotation marks omitted).

The plaintiff bears the burden of establishing” personal jurisdiction, and though he need only make a prima facie case at the Rule 12(b)(2) stage, his burden escalates to preponderance of the evidence by the end of trial.

In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Products Liability Litigation, 888 F.3d 753, 778 (5th Cir. 2018) (citations and quotation marks omitted).

See also, e.g., John Crane, Inc. v. Shein Law Center, Ltd., 891 F.3d 692, 695 (7th Cir. 2018) (“When challenged, the plaintiff has the burden of proving personal jurisdiction.”) (citation omitted); Scottsdale Capital Advisors Corp. v. The Deal, LLC, 887 F.3d 17, 20 (1st Cir. 2018) (“a plaintiff must proffer evidence which, if credited, is sufficient to support findings of all facts essential to personal jurisdiction and may not rely on unsupported allegations”) (citation and quotation marks omitted); Friedman v. Bloomberg L.P., 884 F.3d 83, 90 (2d Cir. 2017) (“The plaintiff bears the burden of demonstrating that the court has personal jurisdiction over each defendant.”) (citation omitted); Anwar v. Dow Chemical Co., 876 F.3d 841, 847 (6th Cir. 2017) (“Plaintiffs have the burden of establishing that a district court can exercise jurisdiction over the defendant”); Morrill v. Scott Financial Corp., 873 F.3d 1136, 1141 (9th Cir. 2017) (“When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate.”); Polar Electro Oy v. Suunto Oy, 829 F.3d 1343, 1348 (Fed. Cir. 2016) (“The plaintiff bears the burden of establishing minimum contacts”); Grayson v. Anderson, 816 F.3d 262, 268 (4th Cir. 2016) (“a plaintiff must establish facts supporting jurisdiction over the defendant by a preponderance of the evidence”) (citation omitted); Niemi v. Lasshofer, 770 F.3d 1331, 1347 (10th Cir. 2014) (“the plaintiff generally must establish, by a preponderance of the evidence, that personal jurisdiction exists”) (citation and quotation marks omitted); Williams v. Romarm, SA, 756 F.3d 777, 785 (D.C. Cir. 2014) (”[plaintiffs] have the burden of establishing a factual basis for the court’s exercise of personal jurisdiction over [defendant]”); Control Screening LLC v. Technological Application & Production Co., 687 F.3d 163, 167 (3d Cir. 2012) (“The plaintiff bears the burden to prove, by a preponderance of the evidence, facts sufficient to establish personal jurisdiction.”) (citation and quotation marks omitted).  That’s a clean sweep.  Every federal court of appeals imposes the ultimate burden of proof on plaintiffs in personal jurisdiction matters.

Finally, because of what personal jurisdiction represents, we think that the burden of proof should be on the plaintiff as a matter of policy.  Personal jurisdiction is an essential element of due process of law.  “Because ‘[a] state court’s assertion of jurisdiction exposes defendants to the State’s coercive power,’ it is ‘subject to review for compatibility with the Fourteenth Amendment’s Due Process Clause.”  BMS, 137 S. Ct. at 1779 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 918 (2011)).  “The Due Process Clause protects an individual’s liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations.” Burger King, 471 U.S. at 471-72.  The constitution “operates as a limitation on the jurisdiction of state courts to enter judgments affecting rights or interests of nonresident defendants.”  Kulko v. Superior Court, 436 U.S. 84, 91 (1978).  Restrictions on personal jurisdiction “are more than a guarantee of immunity from inconvenient or distant litigation.  They are a consequence of territorial limitations on the power of the respective States.”  Hanson v. Denckla, 357 U.S. 235, 251 (1958).  Given the interests at stake, even if there were no precedent, we think that Due Process considerations mandate that plaintiffs demonstrate that their assertion of personal jurisdiction over defendants is constitutional.

In any event, the peculiar burden of proof ruling in Hammons seems to us to cry out for additional review, which should begin with the en banc Superior Court being given the opportunity to sort out the discrepancies in that court’s panel decisions on this issue.

This post comes only from the Cozen O’Connor side of the blog.

 

Plaintiffs’ lawyers wanted to file a class action premised on the recovery of costs spent monitoring and replacing allegedly defective defibrillators manufactured by St. Jude Medical LLC. And they wanted to file it in Illinois. So they recruited a putative class representative, a union health benefits trust, and they filed their complaint, ASEA/AFSCME Local Health 52 Health Benefits Trust v. St. Jude Medical LLC, in Illinois federal court. But they then ran into a problem. St. Jude is not from Illinois. It is a Delaware LLC with Minnesota headquarters. In the post-Bauman personal jurisdiction world, St. Jude is considered to be at “home” only in those two states, not Illinois. So the Illinois court did not have general jurisdiction over St. Jude. Nor did it have specific jurisdiction. The health benefits trust plaintiff, ASEA, didn’t buy the St. Jude defibrillators in Illinois, nor did its beneficiaries have them implanted there. It didn’t matter that St. Jude marketed and sold defibrillators in Illinois. That fact doesn’t create the connection needed for specific jurisdiction. 2018 WL 3022670, at *4 (N.D. Ill. June 18, 2018). So the Illinois court could not exert personal jurisdiction over St. Jude.

But the plaintiffs’ lawyers thought they had a way around that. St. Jude had been recently acquired by Abbott Laboratories. And Abbott is at “home” in Illinois. It is incorporated and headquartered there. So the plaintiffs’ lawyers asked the court to look to St. Jude’s parent, not St. Jude itself, in determining personal jurisdiction. The problem with that approach, however, was that St. Jude is a limited liability company. The very name of that type of business entity—“limited liability company”—tells you how our legal system treats it. Holders of membership interests in a limited liability company are shielded from liability for the company’s debts and judgments. The only way around that general rule is to successfully assert an “alter ego” theory, generally known as piercing the corporate veil. If ASEA could do that, the court could then ignore St. Jude’s independent existence as a company and treat Abbott as the real defendant, thus presumably creating personal jurisdiction. And, while that approach might sound promising for the plaintiffs’ lawyers, the Illinois court very quickly reminded them of how hard—how very, very hard—it is to succeed on an “alter ego” claim.

Since St. Jude Medical LLC was formed in Delaware, Delaware law applied to the “alter ego” analysis. And Delaware law does not lightly lift the corporate veil. It requires an intensive inquiry into whether the company is in fact a sham that is rife with serious financial improprieties and management manipulation intended to defraud the people with which the company does business. It is only found in rare cases:

Under Delaware law, courts disregard the corporate form only in exceptional cases. Determining whether to do so requires an intensive inquiry which takes into consideration (1) whether the company was adequately capitalized for the undertaking; (2) whether the company was solvent; (3) whether corporate formalities were observed; (4) whether the controlling shareholder siphoned company funds; and (5) whether the company functioned as a façade for the controlling shareholder. In addition to these factors, Delaware’s courts have required an element of fraud or similar injustice in order to pierce the corporate veil.

Id. at *3 (citations omitted). And because an alter ego claim is generally based in fraud, courts often apply a heightened pleading standard.

So pleading an “alter ego” claim is extraordinarily difficult. ASEA did not come close. Rather than plead particulars of a sham financial structure and non-existent management, ASEA pointed to surface level actions and statements by St. Jude’s parent, Abbott, all of which are the types of actions ordinarily seen in the workaday world of a corporate holding structure.

For instance, plaintiff alleged that Abbott itself claimed responsibility for the recall of the defibrillators, issued updates on the recall using the Abbot name, communicated with the FDA using the Abbott name, took over the defibrillator manufacturing facility, advertised that “St. Jude Medical is now Abbott,” shared officers, managers and facilities with St. Jude, and even stated that St. Jude’s operations are controlled by Abbott. Id. These allegations are based on the faulty premise that Abbott’s “control” of St. Jude creates an alter ego claim. It does not. Abbott owns St. Jude. It is expected to control it. “Controlling shareholder” is presumed in the very Delaware test quoted above. And so exertion of control does not satisfy the alter ego inquiry. The real test is whether St. Jude was operated, or controlled, as a sham entity with inadequate capitalization and make-believe management for the purpose of defrauding others. And, as the court held, the plaintiff’s allegations addressed none of this:

These allegations do not call into question St. Jude’s capitalization, solvency, or recognition of corporate formalities. Cf. City of Greenville, Ill. v. Syngenta Crop Prot., Inc., 830 F. Supp. 2d 550, 563 (S.D. Ill. 2011) (piercing the corporate veil where evidence showed that the subsidiary company’s board unanimously rubber-stamped the parent company’s recommendations on a regular basis without discussion and where the subsidiaries employees were sometimes directly managed by employees of the parent company). Nor do they suggest that Abbott was siphoning or diverting funds from St. Jude. At most, the allegations in the complaint suggest that Abbott sometimes spoke on behalf of St. Jude or sometimes represented that it had succeeded St. Jude. See LaSalle Nat. Bank v. Vitro, Sociedad Anonima, 85 F. Supp. 2d 857, 865 (N.D. Ill. 2000) (Nordberg, J.) (“Personal jurisdiction is based on actual evidence of control … rather than on a corporation’s general descriptions. Promotional statements made on a public website do not precisely convey the operative corporate structure.”). Absent more, however, the allegations do not suggest that unfairness or injustice has resulted from the relationship between St. Jude and Abbott, as would be necessary to justify piercing the corporate veil under Delaware law. Doberstein v. G-P Indus., Inc., No. CV 9995-VCP, 2015 WL 6606484, at *4 (Del. Ch. 2015).

Id.

With the plaintiff unable to pierce the corporate (really, LLC) veil, the Illinois court was back to where it started, which is with no personal jurisdiction over St. Jude: “Accordingly, this Court does not have general jurisdiction over St. Jude because it is not “at home” in the state of Illinois. Id. It dismissed the action for lack of personal jurisdiction.

We expect this to be the ordinary outcome in attempts by plaintiffs’ lawyers to establish personal jurisdiction through an alter ego theory in drug and device cases. Not only is such a claim extraordinarily hard to plead and harder to prove, but drug and device cases usually involve large pharmaceutical and medical device companies with well-established, well-advised corporate structures. Under those circumstances, it will be rare that plaintiffs’ lawyers will be able to piece together the type of extraordinary facts necessary to successfully plead and prove an alter ego claim.

Not so long ago the Philadelphia Court of Common Pleas emitted a malodorous opinion exercising personal jurisdiction over a foreign corporation because one of its materials suppliers was in Pennsylvania, even though the quality of that supplied material seemed to have nothing much to do with the injury, which occurred outside Pennsylvania.   That opinion seems to have mislearned the teaching of the SCOTUS BMS opinion.  Beyond that, the less said about it, the better.  But it was interesting to us how that rotten opinion did not address the plaintiff’s alternative argument that the corporate defendant’s registration to do business in Pennsylvania constituted consent to general personal jurisdiction.   Perhaps the court realized it had done enough damage by stretching specific personal jurisdiction beyond the bounds of reason.

Or perhaps the Philly court did not buy the consent argument.  And now we know that is the case because the same court and same judge issued an opinion rejecting the consent via corporate registration argument.  Mallory v. Norfolk So. Ry. Co., No. 1961 8-2 EDA, slip op. (Phila. C.C.P May 30, 2018), is actually a very good personal jurisdiction opinion.  Let’s pause, rub our eyes, take that in, and celebrate.

The plaintiff in Mallory was a railway carman in Virginia. He sued his railway employer, which was incorporated and had its principal place of business in Virginia, alleging that exposure to carcinogen caused him to suffer colon cancer.  The defendant was definitely not “at home” in Pennsylvania.  The exposure and injury did not occur in Pennsylvania.  So why was the case in Philadelphia?  Could it be the reputation Philadelphia juries enjoy for flipping million dollar verdicts around like nickels?  Yes, Virginia plaintiffs, there is a Santa Claus, and he sits on a jury in Philadelphia’s City Hall.  Virginia courts and juries, of course, have a very different reputation.

But even putting aside mere predilection, what could possibly be the basis for a Virginia plaintiff to sue a Virginia defendant in Philadelphia for injuries having nothing to do with Philadelphia?  The plaintiff hung jurisdiction on the defendant’s registration to do business in Pennsylvania.  The plaintiff was not merely engaged in wish fulfillment.  Section 5301 of the Pennsylvania Judiciary Act does, unfortunately, provide that qualification as a foreign corporation in Pennsylvania constitutes a sufficient basis for general personal jurisdiction.

The question, then, is whether exercising personal jurisdiction over a corporation that registered to do business in Pennsylvania, without more, comports with due process.  Put another way, whatever the statute says, does foreign corporate registration equal true consent – the kind of consent that can waive constitutional rights?

The Mallory court’s answer seems altogether obvious but, at the same time, remarkable given the court that is doing the answering.  It is actually a rather brave, as well as wise, decision.  The court reviews the Pennsylvania statutory scheme and concludes that the “Defendant’s consent to jurisdiction was not voluntary.”  If a foreign corporation does not register with the Commonwealth, it cannot do business in Pennsylvania.  Moreover, it would be prohibited from seeking any redress with the Commonwealth’s courts (you know – in cases where Pennsylvania jurisdiction actually made sense).  As the Mallory court reasons, “the Legislature imposed a punitive sanction upon those foreign corporations; it matters not if such a sanction is characterized as a carrot rather than a stick, the punitive result is the same.”  Put simply, foreign corporations have no choice but to register in Pennsylvania.  Having no choice is the antithesis of giving consent.  The Mallory court held that a state’s securing of general personal jurisdiction over a foreign corporation via what is essentially mandatory registration is an exercise of coercive power at odds with the SCOTUS BMS decision and due process.

To be sure, there are some old legal chestnuts out there that permitted “state courts to obtain personal jurisdiction over  foreign corporations via mandatory registration statutes” (e.g., Pennsylvania Fire Ins. Co. (1917)), but those cases “are relics of the Pennoyer era, in which a bright-line rule prohibited courts from exercising personal jurisdiction over persons or corporations outside the geographic boundary of the court.”  They have been effectively overruled.  And good thing, too.

By contrast to the Philadelphia court’s crabbed reading of the recent SCOTUS BMS case when it came to specific personal jurisdiction, the Mallory court’s reading of recent SCOTUS precedents on general jurisdiction is insightful and on the mark.  The Mallory court interprets recent SCOTUS cases as teaching that “federalism prevents this Court from exercising general jurisdiction over Defendant simply because Defendant does business in Pennsylvania.”  Thus, “[b]y requiring foreign corporations to submit to general jurisdiction as a condition of doing business here, Pennsylvania’s statutory scheme infringes upon our sister states’ ability to try cases against their corporate citizens.”  Yes, hurray for those sister states, with damages caps and parsimonious jurors.

The reasoning of Mallory in rejecting the consent argument is sound, it should apply to all Pennsylvania cases and, for that matter, cases anywhere.  Indeed, Mallory’s reasoning on the issue far exceeds that of several federal district courts in Pennsylvania, which have fallen for arguments that the Pennsylvania statute could somehow overcome constitutional restraints on general personal jurisdiction.

Now if only the courts here could screw their heads on right about specific jurisdiction.

The federal right-to-try (“RTT”) adventure, which we chronicled here, and here, concluded not long ago with the final passage of S. 204, signed into law on May 30.  The final bill is not materially different from the house draft we analyzed earlier.  The final bill cleaned up some of the previous hastily-drafted language, such as tying the definition of “life threatening” to prior regulations dealing with that subject.  The two provisions of most interest to us – concerning RTT adverse events and immunity from civil suits – had been pretty good before, and stayed that way.  Reporting requirements became slightly less onerous.  A “sense of the Senate” section at the end ensures no resurrection of the Abigail Alliance foolishness regarding a constitutional right to medications.  So it’s done, but our basic skepticism remains unchanged – we don’t think that the entire exercise was worth the candle, given existing FDA compassionate use regulations, and we strongly doubt that many people, if anyone, will be helped.  Right to try was a right-wing shiny object, a distraction from the serious problems stemming from our chaotic approach to health care.

According to something we read recently on the FDA Law Blog, a “New Vermont Law Seeks to Allow Wholesale Importation of Drugs from Canada.”  We view that legislation similarly to RTT.  Canadian drug importation is a left-wing shiny object, also distracting politicians from the country’s serious health care problems.  Think about it.  California alone has a greater population than Canada.  Any large-scale importation of cheaper Canadian drugs to the United States would almost immediately cause shortages in Canada.  Given the current tit for tat, we would expect Canada to react by slapping an export tariff on prescription drugs to force United States consumers to continue paying for the inefficiencies in our health care delivery system.

But putting stupid, unnecessary trade wars to one side, let’s focus on our sandbox – product liability.  What would the product liability effects of the Vermont program, as created by the new legislation, be?

The legislation authorizes the state to design a program whereby, “a State agency that shall either become a licensed drug wholesaler or contract with a licensed drug wholesaler” in order to import prescription drugs from Canada to Vermont – all in supposed compliance with federal law. 18 Vt. S.A. §4651(a)(1).  The arrangement is to “use Canadian prescription drug suppliers regulated under the laws of Canada.”  Id. §4651(a)(2).  While the imported Canadian drugs are supposed to meet FDA “safety, effectiveness, and other” standards, id. §4651(a)(3), there is no requirement that their Canadian labeling be altered.  The Vermont state agency:

Shall . . . (1) become licensed as a wholesaler or enter into a contract with a Vermont-licensed wholesaler; (2) contract with one or more Vermont-licensed distributors; (3) contract with one or more licensed and regulated Canadian suppliers; [and] (4) engage with health insurance plans, employers, pharmacies, health care providers, and consumers. . . .

Id. §4655(1-4).  Nowhere in the statute are the ultimate manufacturers of the Canadian drugs even mentioned.  The statute does not envision any contact between the drug companies and the state importing agency.  How does Vermont expect to handle drug recalls?  Controlled substances?

The statute also raises interesting product liability questions.  This being Vermont, the statute has no provisions creating any sort of immunity from suit.  So it appears to us that, by inserting one of its agencies into the chain of drug distribution, Vermont has exposed itself to product liability suits should any of the drugs it sells cause injury.  Equally important, the statutory scheme probably makes the state the prime target of any such litigation.  In all likelihood, none of the drug manufacturers will be subject to personal jurisdiction in Vermont.  They will not be selling any drugs in Vermont.  They will have labeled their drugs in accordance with Canadian, not American, regulations.  They will have no notice of their drugs being diverted from Canada to Vermont.  In terms of Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), and Daimler AG v. Bauman, 571 U.S. 117 (2014), the drugs will enter Vermont solely by virtue of the conduct of unrelated third persons.

Just as we pointed out flaws with the immunity provisions of various versions of right-to-try statutes, the immunity issues here also implicate the viability of the Vermont program, albeit in a different fashion. With no statutory immunity, and no ability to obtain jurisdiction over drug manufacturers for the Canadian market, the statute paints a great, big target on the back of the state importing agency, as the deepest pocketed potential defendant available to all potential plaintiffs who might take the drugs thereby imported into the state.  Sovereign immunity won’t help, since the Vermont scheme has the state engaging in commerce, not in any traditional governmental role.

Both sides of the political spectrum unfortunately share an affinity for largely meaningless, feel-good prescription drug-related schemes.  Importing drugs from the Great White North, like the Vermont program envisions, would be rife with problems, including saddling states with product liability.  Maybe that is inevitable where states seek to act as commercial entities.

Bexis decided to take a long Memorial Day weekend and to visit a part of the country he’d never seen before.  So adding a day to either side of the holiday, Bexis and his DDL wife took off for El Paso, and the twin national parks, Guadalupe Mountains and Carlsbad Caverns.  Memorial Day was an apt time of year, for another reason, because El Paso is one of the most militarily influenced places around.  “Old Ironsides” − the 1st Armored Division − is only one (the largest) of the units that keeps itself in readiness in the Fort Bliss desert vastness north of town.  We REALLY respect their service, especially after seeing an impressive array of equipment parked in one of the fort’s staging areas while flying out.

Just about all Bexis’ vacations involve hiking – and this was no exception. Guadalupe Peak is the highest point in Texas, and to get to the top requires a three-thousand foot climb, over the course of a little over four miles (each way), but neither altitude nor distance was the most serious issue.

No – heat was.

In these days of global warming, it just so happened that west Texas and southern New Mexico were in the midst of an epic heat wave. 101° was the lowest high temperature on any of the four days in the small (permanent 2010 population, 7) town of Whites City while Bexis was there.  The surrounding areas were just as hot.  So, precautions were necessary:  (1) extra water, 130 ounces per person (still not quite enough); (2) early starts (getting up early and hitting the trail at dawn); (3) freezing water bottles solid and packing the Camelbak with ice; and (4) taking a half-hour “reset” break about 2/3 of the way up to get body temperatures back to as normal as possible.

Guadalupe Peak was really hot – especially when the high clouds vanished on the descent (the immediate reason 130 ounces of liquid per person wasn’t enough).  The other outside trail Bexis hiked, called the Permian Reef, was not quite as bad, due to nearly constant strong winds.  The trails that weren’t hot were underground – Bexis spent six hours and hiked over four miles inside Carlsbad Caverns, including both entering and leaving via the natural entrance (where the bats come out at night).  The line for the elevator was over 1½ hour longs (or so they said), so Bexis hiked out in about half that time.  At a constant 56° temperature, the Caverns were a blessed fifty degrees cooler than the surface – not so hot.

Another recent thing Bexis encountered that wasn’t so hot was the long-awaited personal injury opinion out of the Philadelphia Court of Common Pleas in the Pennsylvania version of Pelvic Mesh Litigation.  See In re Pelvic Mesh Litigation, 021400829, slip op. (Pa. C.P. Phila. Co. May 18, 2018).  We knew the result would be adverse, as a one-page order to that effect (mentioned here) had issued back in December.  But the reasoning in the Pelvic Mesh opinion?

We grade it as poor – or maybe dreadful (on the Harry Potter grade scale).

This is Pennsylvania, after all – home of the bizarre corporate registration statute, 42 Pa. C.S.A. §5301, which uniquely imposes “general” jurisdiction on foreign corporations registering to do business in the Commonwealth.  That approach, jurisdiction by “consent,” is how pro-plaintiff federal courts have been allowing litigation tourism after Daimler AG v. Bauman, 571 U.S. 117 (2014).  See, for example, our post here about Bors v. Johnson & Johnson, 208 F. Supp.3d 648 (E.D. Pa. 2016), which permitted that unconstitutional ruse to succeed.

But, no, Pelvic Mesh doesn’t go the consent route.  See Pelvic Mesh, slip op. at 3 (“plaintiffs conceded that the court lacked general jurisdiction”).  Rather, the entire jurisdictional “hook” in Pelvic Mesh is that the target defendant contracted with other entities, and those other entities – not the target defendant – engaged in manufacturing operations in Pennsylvania.  Specifically, evidence was developed that:

[B]etween 2001 and 2015, [a Pennsylvania company] knitted the mesh used in all of the [eight types of mesh devices]. [The Pennsylvania company] was not involved in the manufacturing of [one other mesh device]. . . .  [T]his Court granted the Motion to Dismiss in part and denied the Motion to Dismiss in part.  This Court sustained personal injury over cases involving non-Pennsylvania plaintiffs implanted with the [eight types of] pelvic mesh devices, but found lack of personal jurisdiction over cases in which the non-Pennsylvania plaintiff was implanted with the [other] pelvic mesh device.

Pelvic Mesh, slip op. at 5 (record citations omitted).  The Pennsylvania entity knitted the “mesh according to specifications set forth by the Moving [that is to say, non-Pennsylvania] Defendants.  Id. at 4 (record citation omitted).

Under Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”), case-linked personal jurisdiction must “arise out of or relate to the defendant’s contacts with the forum.”  Id. at 7 (quoting BMS). Pelvic Mesh held that sufficient contacts existed because:

Moving Defendants purposefully availed themselves of the privilege of doing business in Pennsylvania by reaching out to a Pennsylvania-based corporation . . . to fulfill its manufacturing needs. . . .   [A]n integral portion of the manufacturing process of the [eight types of] pelvic mesh devices occurs in Perkasie, Bucks County, Pennsylvania. . . .  Since a portion of the manufacturing process of the [eight types of] pelvic mesh devices occurs in Pennsylvania this Court’s exercise of specific personal jurisdiction comports with traditional notions of fair play and substantial justice.

Pelvic Mesh, slip op. at 9.  That’s essentially it.  The “relevant acts” of the non-Pennsylvania defendants consist entirely of “contracting with” a separate Pennsylvania company.  Id.  Conversely, the non-Pennsylvania plaintiffs “received a medical device that was manufactured, in part, in Bucks County Pennsylvania.”  Id. at 10.  Nothing more.

In particular, there is no causal link at all.  Nothing in the Pelvic Mesh opinion suggests that the Pennsylvania entity’s knitting process created any particular manufacturing defect, or that the non-Pennsylvania moving defendants knitting-related specifications created some sort of design defect.  Nor is there any indication that any plaintiff was actually injured as a result of any manufacturing process that took place in Pennsylvania – however the defect or duty might be described.

Since plaintiffs (the party with the burden of proof) adduced no causation-related evidence during jurisdictional discovery, Pelvic Mesh fell back on the vague manufacturing defect pleadings in the litigation’s master complaint:

A review of the Master . . . Complaint reveals that it contains a manufacturing defect claim. . . .  [T]he manufacturing defect claim alleges that the [Pennsylvania entity], along with the other named defendants, “deviated materially from their design and manufacturing specifications . . .”  The existence of this manufacturing defect claim grants this Court specific personal jurisdiction because, as detailed above, [the Pennsylvania entity] is involved in the manufacturing process.  The fact that other non-Pennsylvania plaintiffs have subsequently abandoned their manufacturing defect claim at the summary judgment state or at trial is irrelevant.

Pelvic Mesh, slip op. at 11-12 (record citations omitted).

Even by Philadelphia CCP standards, that’s pretty weak.  “‘[M]inimum contacts’ analysis looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.”  Walden v. Fiore, 571 U.S. 277, 134 S. Ct. 1115, 1123 (2014) (emphasis added).  BMS specifically dealt with the “last ditch” argument that the defendant allegedly contracted with separate, in-state entity – and rejected it:

[A]s we have explained, the requirements of International Shoe must be met as to each defendant over whom a state court exercises jurisdiction.  In this case, it is not alleged that [defendant] engaged in relevant acts together with [an in-state entity] in California.  Nor is it alleged that [defendant] is derivatively liable for [the in-state entity’s] conduct in California.  And the nonresidents have adduced no evidence to show how or by whom the Plavix they took was distributed to the pharmacies that dispensed it to them.  The bare fact that BMS contracted with a California distributor is not enough to establish personal jurisdiction in the State.

BMS, 137 S. Ct. at 1783 (citations and quotation marks omitted).

Without any causation-related evidence, courts are simply looking at “contacts with persons who reside there.”  Walden, supra, see id. at 1122-23 (distinguishing prior decision on lack of causation evidence).  As the record stood in Pelvic Mesh, there’s no difference between that case and the last-ditch argument rejected in BMS about the defendant having contracted with an in-state third party.  No jointly engaged in “relevant act” exists in this record.  The “specifications” that the Pennsylvania entity followed remain unrelated to the plaintiffs’ injuries (which have to do with cutting the mesh, not knitting it, Pelvic Mesh, at 11).  No derivative liability is asserted – indeed, the Pennsylvania entity in Pelvic Mesh was statutorily immune from suit.  Id. at 10-11.  The “specifications” in Pelvic Mesh are thus no more relevant than it would have been in BMS to show that the distributor there (presumably) distributed products that carried the manufacturer’s purportedly defective labeling.

We have always thought that the “arise out of or relate to” language of the case-linked prong of personal jurisdiction contained enough “give” that in a proper manufacturing or design-related case, evidence of in-state manufacturing or design activities could support personal jurisdiction, where those contacts were relevant to the plaintiff’s injuries. Take a pacemaker, for example.  If the battery were defective, and the device failed, then manufacture of the battery in the forum state would be a sufficient jurisdictional contact – provided that’s why the device failed.  If the source of the device’s failure, however, was a defect in the pacemaker leads, then where a non-defective, non-causal battery was made becomes irrelevant to the jurisdictional analysis.

That’s the legal vice in Pelvic Mesh.  No evidence whatever ties the in-state manufacturing of a third party to any injury suffered by the litigation tourist plaintiff (who is not out of court, but can sue in her home state).  Parsing the manufacturing (or other process) without regard for causation, leads to the possibility of a defendant being sued just about anywhere, which is precisely what both Bauman and BMS hold is a constitutional no-no.  One sentence of conclusory boilerplate in a complaint can’t change the analysis, because jurisdictional motions are not limited to the pleadings (why the plaintiffs in Pelvic Mesh were allowed two rounds of jurisdictional discovery).

Nor should Pelvic Mesh’s concentration on a boilerplate manufacturing defect claim end the jurisdictional analysis, because – although not even mentioned in the opinion – jurisdiction over one claim does not necessarily confer jurisdiction over other, factually distinct claims.  As we discussed earlier this year:

Assuming there can be personal jurisdiction based on contractual relationships with third parties not named as defendants, there is a more basic flaw in these opinions. Just because there is specific jurisdiction over one claim (e.g., design defect), that is insufficient to find specific jurisdiction over all claims (e.g., warning claims, breach of warranty claims, and the laundry list of other claims that is usually appended to complaints against the pharmaceutical industry).

So it’s unlikely that a manufacturing defect claim – even if supported by the actual evidence – can supported design- or warning-based claims based on other facts unrelated to the moving defendants’ contract with a Pennsylvania third party.

But putting all the legalisms aside, there’s a larger practical vice to Pelvic Mesh’s grasping at any in-state jurisdictional straw it can find.  A third-party contractual relationship of the sort relied on by Pelvic Mesh to allow litigation tourists from all over the country to sue in Philadelphia is something that targeted defendants can, and will, change.  While decisions like Pelvic Mesh might mean lots of jobs for attorneys in Philadelphia (and lots of annoyance for Philadelphia citizens forced to serve on juries in such cases), in the future there won’t be much work for the folks who live in “Perkasie, Bucks County, Pennsylvania,” when defendants shift their manufacturing processes to places without Pennsylvania’s extreme pro-plaintiff tendencies.

In 1965, when Pennsylvania adopted strict liability, it had 29 electoral votes, to the combined 25 electoral votes of Virginia and North Carolina.  Now, the roles are reversed, with Pennsylvania having only 20 electoral votes to the combined 28 of Virginia and North Carolina – which have never adopted strict liability.  Over the years, Pennsylvania’s pro-plaintiff product liability law, in tandem with Philadelphia’s pro-plaintiff court system, have caused the Perkasies of the Commonwealth to lose a lot of manufacturing jobs to places like Virginia and North Carolina.  Fortunately for Perkasie, we think that Pelvic Mesh is so weakly reasoned that it should be reversed on appeal, even in Pennsylvania.

A case from Alabama this week got us to thinking about two topics on which we write a lot — innovator liability and personal jurisdiction. We thought the most interesting part of Bexis’ recent post on innovator liability was its suggestion that innovators sued over the use of generic drugs should consider objecting to jurisdiction.  After all, it is one thing to say that an innovator manufacturer can be potentially liable for a generic manufacturer’s warnings under state tort law.  It is a fundamentally different question whether the innovator manufacturer can be subject to personal jurisdiction in that state under the U.S. Constitution.  The plaintiff’s use of the generic drug cannot alone support specific personal jurisdiction over the innovator for the simple reason that the innovator did not make or sell the drug.

How does any of this relate to the aforementioned case from Alabama? Well, what if an enterprising plaintiff argued that a prescription drug manufacturer is subject to personal jurisdiction in the forum state because the manufacturer submitted a New Drug Application for its product to the FDA.  Seems like a strained proposition, but that is what the plaintiff argued in Blackburn v. Shire U.S., Inc., No. 2:16-cv-963, 2018 U.S. Dist. LEXIS 78724 (N.D. Ala May 10, 2018).  Innovator liability was not at issue in Blackburn, but innovator manufacturers are all NDA holders.  Thus, if the Blackburn plaintiffs are correct and merely submitting an NDA can result in personal jurisdiction in distant forums, then innovators will not get very far with the jurisdictional challenges that Bexis has suggested.

Fortunately, the district court in Blackburn faithfully applied the law and properly rejected NDA-based personal jurisdiction.  The plaintiff took a prescription drug and sued five different companies with “Shire” in their names over allegedly inadequate warnings after developing a kidney injury. Id. at **1-2.  The district court dismissed three of the defendants for lack of personal jurisdiction, but the plaintiff later moved to reinstate one of them, the holder of the drug’s NDA. Id. at **3-4.  According to the plaintiff, the court could exercise specific jurisdiction because the defendant, “as the NDA holder” for the drug, “placed [the drug] into the stream of commerce to reach Alabama consumers, such as himself.” Id. at *16.

The issue was specific jurisdiction, and the district court started by quoting BMS:

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.  In other words, 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.  For this reason, specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.

Id. at *15 (quoting Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1773, 1780 (2017) (emphasis in original).  As a general rule, it is not sufficient that a defendant might have predicted that its goods would reach the state.  Rather, the defendant must have “targeted” the forum and “purposefully availed itself of the privilege of conducting activities within the forum.” Id. at **15-16 (citations omitted).

The plaintiff did not dispute that the defendant had not actually manufactured or sold the drug. Instead, the plaintiff contended that the defendant, as the NDA holder, should be deemed a “manufacturer” for jurisdictional purposes.  The district court had little difficulty rejecting these “semantics.” First, the plaintiff argued that the defendant established sufficient minimum contacts when it sought permission from the FDA to manufacture, market, and sell the drug in Alabama and other states.  But merely seeking permission from the FDA or submitting an NDA “does not rise to the level of targeting Alabama or invoking the benefits and protections of its laws (especially when none of these activities occurred within Alabama or were directed at Alabama).” Id. at *17

Second, the plaintiff argued that the defendant purposefully availed itself to Alabama by crafting a “defective label that it knew would be purchased by Alabama residents.”  But this is just a version of “the defendant might have predicted its product would be sold in the state,” which is not sufficient to establish personal jurisdiction. Id. at *17. Third, the plaintiff argued that the that the actions of the entities that actually sold the drug should be attributed to the defendant under some sort of alter ego theory, but the plaintiffs’ proposed amended complaint did not allege any facts supporting such a theory. Id. at *17-18.

There are other aspects to the order, but jurisdiction over the NDA holder is what caught our eye. Although we are not fond of saying that an argument “proves too much,” we think that statement applies here.  If merely submitting an NDA creates personal jurisdiction in Alabama, then it would arguably create personal jurisdiction in any state within the FDA’s regulatory reach, i.e., within the United States and its territories.  “NDA holder jurisdiction” would therefore be a form of universal jurisdiction that the Supreme Court condemned in Bauman.  It does not fly.  So for now, Bexis’ advice to innovators remains sound.  Innovators and NDA holders can and should consider challenging personal jurisdiction in cases where they did not make and did not sell the drug at issue.

Once again we find ourselves in the position of creating new defenses to a novel, plaintiff-side cause of action.  This time, we’ve been doing a lot of thinking about innovator liability – the theory that would hold branded manufacturers liable for injuries allegedly caused by the ingestion of (preemption-immune) generic drugs on some kind of attenuated inadequate warning theory – since even before the California Supreme Court’s T.H. v. Novartis, Inc., 407 P.3d 18 (Cal. 2017), decision late last year.  If your company or your clients are concerned about being a target of such theories, here are some ideas we’ve come up with that might help.

Direct Preemption

In T.H., the “major, and ultimately most important, consideration under California law is the foreseeability of physical harm.”  407 P.3d at 29 (citations and quotation marks omitted).  What did T.H. have to say about “foreseeability” in deciding to create a new negligence duty on non-manufacturing branded manufacturers?  The manner in which T.H. construed “foreseeability” was much different than in the normal negligence case:

[A branded drug manufacturer] could reasonably have foreseen that deficiencies in its [product’s] label could mislead physicians about the safety of [the drug’s] generic bioequivalent, which was legally required to bear an identical label.

A brand-name pharmaceutical manufacturer has a duty under federal law to draft, update, and maintain the warning label so that it provides adequate warning of the drug’s potentially dangerous effects. . . .  [T]his category of manufacturers may use the “changes being effected” . . . regulation to “add or strengthen a contraindication, warning, precaution, or adverse reaction” immediately upon filing a supplemental application, without waiting for FDA approval.

The duty for a manufacturer of generic drugs, on the other hand, is to ensure that its warning label is identical to the label of the brand-name drug. . . .

What a brand-name manufacturer thus knows to a legal certainty is that any deficiencies in the label for its drug will be perpetuated in the label for its generic bioequivalent.

Id. (numerous regulatory citations omitted) (emphasis added).

T.H. thus grounded its duty (to be distinguished from breach) analysis, not on the likelihood that the defendant would have violated some common-law obligation, which is the usual way foreseeability is analyzed – but on the likelihood that the defendant would be compliant with its federal obligations under the FDCA.  Indeed, T.H. suggests that, but for this federal overlay, it would not have recognized a new duty at all.  Id. at 31 n.2 (were there “parity between NDA [branded] holders and ANDA [generic] holders with respect to submission of . . . safety-related labeling changes based on newly acquired information,” that could “justify reweighing of the [duty] factors and some reconsideration of the brand-name manufacturer’s duty in this category of cases”).

There is a second element to T.H.’s foreseeability analysis, and that also involves compliance (as opposed to violation) with legal obligations:

A brand-name manufacturer will also be aware that although the warnings communicated in its drug label are designed for physicians . . . it is often the pharmacist who actually decides whether the patient receives the brand-name drug or its generic bioequivalent.  Moreover, many insurance companies require the substitution of a generic drug for the brand-name drug as a matter of course. . . .  Accordingly, it is entirely foreseeable that the warnings included (or not included) on the brand-name drug label would influence the dispensing of the generic drug, either because the generic is substituted by the pharmacist or the insurance company after the physician has prescribed the brand-name drug, or because the warning label on the generic drug is legally required to be identical to the label on the brand-name drug.

Id. at 29-30.

The same unusual reliance on compliance with – rather than violation of – federal and other legal requirements governing the marketing of prescription drugs occurred in Rafferty v. Merck & Co., 92 N.E.3d 1205 (Mass. 2018):

[I]n the vast majority of such cases, the duty to warn would be limited to the manufacturer of the product − even if the plaintiff were to bring a general negligence claim − because the risk of harm arising from an inadequate warning would be foreseeable to a manufacturer only with respect to users of its own product, not the users of another product. . . .  Moreover, apart from any duty arising from the risk of foreseeable injury, only in rare cases could a plaintiff contend that his or her injury was caused by the inadequate warning given for another product.

But this case presents an exception to the usual pattern. Because the Hatch–Waxman amendments to the act require that the warning label of a generic drug be identical to the warning label of its brand-name counterpart . . . duty to warn claims involving generic drugs are potentially viable as general negligence claims, although not as products liability claims.  With generic drugs, it is not merely foreseeable but certain that the warning label provided by the brand-name manufacturer will be identical to the warning label provided by the generic manufacturer, and moreover that it will be relied on, not only by users of its own product, but also by users of the generic product.

92 N.E.3d at 1214-15 (once again omitting a passel of regulatory citations) (emphasis original).  And again the branded defendant’s compliance with the FDCA was the basis for this unique extension of duty to a non-manufacturer:

Federal labeling requirements for generic drugs present precisely the kind of “special circumstance” where a consumer would rely on the warnings created by someone other than the manufacturer of the product causing the injury. . . .  Where a brand-name drug manufacturer provides an inadequate warning for its own product, it knows or should know that it puts at risk not only the users of its own product, but also the users of the generic product.  Consequently, this is the rare (perhaps the only) type of case involving a manufactured product where the requirements of general negligence may be satisfied even where the requirements of products liability are not.

Id. at 1215 (emphasis added).

Plainly, innovator liability amounts to the imposition of a singular and burdensome form of non-manufacturing negligence liability predicated on the branded defendant’s compliance with its obligations under the FDCA – specifically the Hatch-Waxman requirement that it allow generic manufacturers to copy its labeling word-for-word.

Basing liability expressly on a branded manufacturer’s compliance with federal law should give rise to impossibility preemption.  This observation goes back to the oldest FDCA preemption case on the books, McDermott v. Wisconsin, 228 U.S. 115 (1913), where a state’s attempt to prohibit a product because its label complied with the FDCA, rather than with state law, was held preempted.  Even in 1913, it was “well settled that the state may not, under the guise of exercising its police power or otherwise, . . . enact legislation in conflict with the statutes of Congress passed for the regulation of the subject, and if it does, to the extent that the state law interferes with or frustrates the operation of the acts of Congress, its provisions must yield to the superior Federal power given to Congress by the Constitution.” Id. at 131-32 (citations omitted) (emphasis added).

The modern way of expressing the proposition recognized in McDermott is that “state and federal law conflict where it is ‘impossible for a private party to comply with both state and federal requirements.’” PLIVA, Inc. v. Mensing, 564 U.S. 604, 618 (2011) (quoting Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995)).  “Even in the absence of an express pre-emption provision, the Court has found state law to be impliedly pre-empted where it is ‘impossible for a private party to comply with both state and federal requirements.’” Mutual Pharmaceutical Co. v. Bartlett, 570 U.S. 472 (2013) (quoting English v. General Electric Co., 496 U.S. 72, 79 (1990)).

That’s, frankly, pretty blatant here, since (as just demonstrated) compliance with federal law is the sine qua non of extending a warning-related duty to the non-manufacturing, branded-drug defendant in both T.H. and Rafferty.  Since innovator liability is explicitly based on the fact of the branded manufacturer’s compliance with what Hatch-Waxman requires, it cannot avoid being preempted, because the entire theory flows from the premise that meeting FDCA requirements about allowing generic use of its labels equals foreseeability, indeed “certainty.”

There are undoubtedly numerous other precedents expressing the same concept, but even the most anti-preemption courts recognize that tort law cannot penalize compliance with federal law.  Take the Seventh Circuit in Bausch v. Stryker Corp., 630 F.3d 546 (7th Cir. 2010), one of the most virulently anti-preemption decisions we can think of.  Bausch was adamant that preemption (express, in that case) precludes “claims that the [product] at issue ‘violated state tort law notwithstanding compliance with the relevant federal requirements.”  Id. at 552 (quoting Riegel v. Medtronic, Inc., 552 U.S. 312, 330 (2008)) (emphasis original in Bausch).  Innovator liability, which equates “foreseeability” with the branded defendant’s “compliance with the relevant federal requirements,” is worse than even the claims Bausch recognized would be preempted, because state-law innovator liability exists because of, not merely “notwithstanding,” a defendant’s FDCA compliance.

Lack of Personal Jurisdiction

Next, we invite you to consider personal jurisdiction in innovator liability cases in light of Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”).  In a prescription drug product liability case, BMS held that there was no specific jurisdiction over a plaintiff’s claim just because the same defendant allegedly sold the same drug 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.”

BMS, 137 S. Ct. at 1781 (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.  “Nor is it sufficient − or even relevant − that [the defendant] conducted [activities] in California on matters unrelated to [its product].  What is needed − and what is missing here − is a connection between the forum and the specific claims at issue.”  Id.  It was dispositive in BMS that “all the conduct giving rise to the [plaintiffs’] claims occurred elsewhere.”  Id.

Now, consider the conduct alleged to give rise to innovator liability.  It is not the sale of any product, let alone sale of the product that allegedly injured the plaintiff in the jurisdiction where the plaintiff brings suit.  Rather:

Plaintiffs further allege that [the branded defendant] knew or should have known that [the drug] was of questionable efficacy . . ., that [the drug] carried serious risks of side effects for [persons such as plaintiff], and that federal law required [defendant] to report this information to the FDA and to update the warning label − something [it] could have done unilaterally.  Instead, [the branded defendant] falsely represented that [the drug] was safe and effective and would not cause serious side effects in newborns, and it intended for pregnant mothers and their physicians to rely on these representations.

T.H., 407 P.3d at 26.  See Rafferty, 92 N.E.3d at 1212 (similar allegations that the branded defendant “not changed its label” to include a relevant risk that it was warning about overseas).

Under BMS, where does the “case-linked” conduct of 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.  That’s what BMS was all about, only BMS involved the same product, not a bioequivalent generic.  Further, since a branded defendant did not sell the injurious product, there’s not even an arguable basis for “stream of commerce” jurisdiction in innovator liability cases.

Rather, the alleged failure to warn, the alleged knowledge of undisclosed risks, and the alleged failure to bring this information to the attention of the FDA (or to consumers) occurred, if at all, at the principal place of business of the defendant.  Unless the branded defendant in an innovator liability case has the misfortune of being “at home” in the state permitting that theory, there is no basis for “case linked” personal jurisdiction under BMS, because no case-linked conduct occurred that also constituted the necessary “purposeful availment” of the jurisdiction where the plaintiff was allegedly injured by ingesting a generic drug resided.  Further, Daimler AG v. Bauman, 571 U.S. 117 (2014), teaches that there can be no general personal jurisdiction under the same facts, unless the branded defendant was either incorporated or had its principal place of business in the state where suit is brought.

No case-linked jurisdiction due to lack of case-related in-state conduct, combined with the defendant not being “at home” for general jurisdiction purposes, means that there can’t be personal jurisdiction over a branded defendant sued for no reason other than the plaintiff being injured in a state recognizing innovator liability.  Branded defendants should raise personal jurisdiction as a defense – remember, personal jurisdiction is waivable.

This jurisdictional insight is the reason we invited the guest post a few weeks ago by Blank Rome’s Terry Henry.  He was the first person (other than Bexis) whom we saw articulate this argument – and he got around to writing about it before we did.

The second act of the personal jurisdiction defense to innovator liability occurs when the plaintiff is forced to bring suit in the state where the defendant is “at home.”  That sets up choice of law as another hoop for plaintiff to jump through. Historically, almost all states have limited product liability (even under fraud-based theories) to the manufacturer of the product that allegedly produced the plaintiff’s harm.  Fewer, but still quite a few, states have product liability statutes that expressly impose this requirement (sometimes referred to as “product identification”).  Think back to how plaintiffs, during the brief period that West Virginia rejected the learned intermediary rule, attempted (with some success) to claim that West Virginia “public policy” overrode any other choice of law principles and precluded reliance on the differing law of a plaintiff’s home state?   We described that situation here.  Well, that same “public policy” exception to choice of law analysis, see Restatement (Second) of Conflict of Laws §187(2)(b) (1971) (discussing this aspect of the law), can be utilized by branded defendants to argue that allowing innovator liability would offend the law of the defendant’s “home” state, thus rendering the theory entirely unavailable.  If there’s a statutory basis for this home state public policy, then so much the better, but even states without such statutes (Pennsylvania is one of those) probably have long-established precedent saying something like this:

The underlying purpose of [strict liability] is to ensure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves. . . .  [T]he burden of injuries caused by defects in such products should fall upon those who make and market the products and the consuming public is entitled to the maximum of protection.

Miller v. Preitz, 221 A.2d 320, 334-35 (Pa. 1966).  That’s a pretty solid iteration of state “public policy” that product liability is intended to be borne by manufacturers of injurious products.

So consider raising personal jurisdiction as an issue against plaintiffs making innovator liability claims. There’s more than one way to skin a cat.

Setting up a Prophylactic Preemption Defense

The potential scope of innovator liability is so massive that it may require branded companies to reconsider how they carry out certain aspects of their business.  We’re sure most such companies review their warnings in strict compliance with FDA requirements and guidance concerning analysis of signals from medical literature and adverse events, with full recognition that, first, overwarning is a bad thing and, second, voluntarily reported adverse events, by themselves aren’t proof of causation.

If innovator liability catches on, then potential defendants might want to consider changing those time-honored practices at two critical moments:  (1) when entry of generic products into the market is imminent, and (2) when a decision is made to sell the new drug application of a drug having generic counterparts.  When #1 happens, the commercial considerations that reinforce strict compliance with FDA warning standards weaken, because a significant loss of market share is inevitable.  When #2 happens, the potential defendant is about to lose any control over drug labeling, since only NDA holders can file NDA supplements.  Number 2 would, of course, be in addition to any indemnification or similar provisions in the contract selling the NDA.

In those situations, companies that fear being targeted by innovator liability might want to pull every possible “signal” or statistical anomaly they can find in their data and submit these purported “risks” to the FDA for its independent evaluation − even if, objectively, the company does not believe that the data otherwise justify a “changes being effected” labeling change of the sort mentioned in T.H. or Rafferty.  Let the FDA be the one to say “no.”  If the FDA doesn’t like this, let the agency take regulatory steps to prohibit innovator liability.

Why?

The FDA saying “no” – that the scientific data at the time the supplement was submitted was insufficient to justify a warning change – sets up a “clear evidence” preemption defense.  In Cerveny v. Aventis, Inc., 855 F.3d 1091 (10th Cir. 2017), which we discussed here, the court held:

We conclude that the rejection of a [submission to the FDA] may constitute clear evidence that the FDA would have rejected a manufacturer-initiated change to a drug label. Our case provides a perfect example. . . .  Under the standard that would have applied to a change proposed by [the manufacturer], the FDA concluded that warnings were unjustified for risks [at issue in this case].  That conclusion controls here, and the FDA’s denial constitutes clear evidence that the FDA would not have approved the [plaintiffs’] desired warning.

Id. at 1105.  Indeed, the big preemption fight in Cerveny wasn’t even about whether an FDA rejection was preemptive “clear evidence,” but rather focused on whether an FDA citizen’s petition filed by a non-NDA holder should be given the same effect as an FDA rejection of a manufacturer’s NDA supplement.  The scientific standards for both are the same, and Cerveny said that’s enough for preemption.  Id.

Some states disagree, and only give preemptive effect to FDA rejection of manufacturer-filed submissions.  Notably, Massachusetts is in this category.  See Reckis v. Johnson & Johnson, 28 N.E.3d 445, 459-60 (Mass. 2015) (holding that FDA decision rejecting additional warning language proposed by defendant would preempt claims, but not FDA rejection of a third-party citizen’s petition).  California trial court decisions provide a solid basis for a Cerveny-like preemption argument.  See In re Incretin-Based Therapies Products Liability Litigation, 142 F. Supp.3d 1108, 1122-23 (S.D. Cal. 2015), rev’d on other grounds, ___ F. Appx. ___, 2017 WL 6030735 (9th Cir. Dec. 6, 2017) (as to Buckman preemption); Risperdal & Invega Product Liability Cases, 2017 WL 4100102, at *10-11 (Cal. Super. March 16, 2017), reconsideration denied, 2017 WL 4479317 (Cal. Super. July 24, 2017); In re Byetta Cases, 2015 WL 7184655, at *13-14 (Cal. Super. Nov. 13, 2015).  Since the strategy we’re recommending that branded manufacturers consider involves manufacturer-submitted supplements, the distinction drawn in Reckis would be irrelevant.

Thus, if a branded company is staring down the barrel of extensive innovator liability for injuries caused by products it did not make, and thus received no profit from manufacturing, it may be time to reconsider, at certain critical periods, whether to err on side of extreme caution concerning possible emergent risks, and let the FDA decide.  If the FDA says no warning is justified at those times, then the company can assert a “clear evidence” preemption defense against future plaintiffs (innovator liability or otherwise) claiming the opposite.

*          *          *          *

To our in-house readers:

Do these arguments interest you?  Well, Bexis has put together a detailed presentation on these – and several other − ideas for combatting/ameliorating innovator liability.  The dog and pony show takes about an hour, and if you’d like Bexis to pay you a visit and discuss innovator liability with your in-house legal team (invite your outside counsel, too, if you’d like) send an email and we’ll try to set something up.

Sure, it was enjoyable to read In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Product Liability Litigation, ___ F.3d ___, 2018 WL 1954759 (5th Cir. April 25, 2018) (“Pinnacle Hip”), to see plaintiffs’ counsel hoisted on their own petard of improper and prejudicial evidence and arguments.  But there’s more to Pinnacle Hip than “Lanier-on-a-spit,” as it has been described in these parts.  Indeed, blogging plaintiffs’ attorney Max Kennerly, dropped a comment to our first Pinnacle Hip post (which we published – we scrub only spam, not opposing views) asserting that “the rest of the opinion was a huge win for plaintiffs.”

We largely disagree with Max’s comment, and this post explains why.

Initially, we note that the defendant in Pinnacle Hip was swimming decidedly upstream in all of its legal arguments, since it was opposing a jury verdict entered against it and seeking entry of judgment as a matter of law in its favor.  2018 WL 1954759, at *2.  That means all the trial evidence is construed in the plaintiffs’ favor.  Id. at *3 (“JMOL is warranted only if a reasonable jury would not have a legally sufficient evidentiary basis to find for the nonmovant.”) (citations and quotation marks omitted).

Design Claims

The first claim addressed in Pinnacle Hip was design defect.  See 2018 WL 1954759, at *3-9.  The defendant raised several arguments, all unsuccessfully.  First, the defendant argued that plaintiff had failed to satisfy the Texas alternative design requirement because that alternative that the plaintiffs offered – a “metal on plastic” (“MoP”) hip implant – was really a “different product” from the defendants’ metal-on-metal design (“MoM”), and thus cannot serve as a design alternative.  This is an argument we have featured several times on the blog.  In Pinnacle Hip, the conclusion was that “based on the record, that MoP is a viable alternative design to MoM.”  Id. at *4.

While we would have liked to win this, on the facts, this distinction between alternative product and design is more difficult for the defense than in the cases we’ve discussed in our prior posts, which usually involve not using the product at all, or using some other product that is much less suited for the use in question.  Our classic example of alternative cause abuse is Theriot v. Danek Medical, Inc., 168 F.3d 253 (5th Cir. 1999), a Bone Screw case in which the supposed “alternative” was a different type of surgery not using the product at all.  That’s distinct from redesigning one part of a device system to use a different material, as indeed, Pinnacle Hip pointed out.  2018 WL 1954759, at *9.  Pinnacle Hip reaffirmed that similar-use products that “fail[] to perform the discrete kinds of functions for which the alleged defective was designed” or with a “wide disparity in price” cannot be considered alternative designs.  Id. at *4, *7.  However , the risk/utility defect test “contemplates that a proposed alternative design might reduce a product’s utility . . . without rendering the alternative an entirely different product.”  Id. at *5.  That means some variation has to exist without “moot[ing] the entire defect test.”  Id.

Construing the record to favor plaintiffs, Pinnacle Hip resulted in another point on the uncertain, “practically impossible to settle in the abstract,” id., at *4, line between different design and different product.  While we’d like to have won, Pinnacle Hip does not move the line itself in any lasting fashion prejudicial to the defense.  The ultimate holding was that a “cross-linked” MoP is not sufficiently different from the defendant’s MoP design to be considered a different product.  2018 WL 1954759, at *6 & n.13.  The underlying principle that the distinction between product and design seeks to protect is preventing automatic liability against whole classes of products – cigarettes, motorcycles, birth control pills, or pedicle screw fixation devices – for simply being what they are and having certain inherent risks.  That principle remains intact after Pinnacle Hip.

The defendants also lost a preemption argument – that design defect claims “’stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives’ reflected in the MoM-related regulations of the FDA.”  2018 WL 1954759, at *7.  According to the defendants, because the plaintiffs were seeking “categorical” liability, that all MoMs should be “banned outright,” there should be preemption. Id. at *8.  But that’s not what the Fifth Circuit found was what happened:

[I]t is not the case that plaintiffs’ theory reached all possible MoMs.  All would agree that, despite the sweeping language with which plaintiffs presented their case, their claims were impliedly limited to presently available technologies and the adverse health effects they allegedly engender.

Id.  But the record showed that “[t]he FDA effectively withdrew all MoMs from the market . . . and left open a single door in the form of PMA.”  Id.  On this set of facts, it could not be said that banning something that the FDA had already essentially removed from the market, save for an alternative that has not yet produced an FDA-approved product, was an interference with “the FDA’s regulatory objectives.”  Id.

While losing a preemption argument is not something we would recommend, this particular type of preemption argument has never been successful that we are aware of, so it’s no great loss.  We’ve advocated at some length that the Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996), decision be overturned.  But that argument is predicated on changes to 510(k) clearance created by Congress in 1990.  In Pinnacle Hip, “MoMs were sold before 1976 and have traditionally been treated as pre-amendment class III devices.”  2018 WL 1954759, at *8.  So Pinnacle Hip doesn’t affect even the distinctions that we draw from Lohr.  The preemption argument rejected in Pinnacle Hip would require the complete reversal of Lohr, even on Lohr’s facts, to succeed.

By far the better preemption argument, based on current law, with respect to 510(k) design defect claims, is that they amount to “major changes” that require prior FDA review, and probably an entirely new supplemental submission, before they could be implemented.  That should put design defect claims at odds with the “independence principle” in PLIVA, Inc. v. Mensing, 564 U.S. 604 (2011), and Mutual Pharmaceutical Co. v. Bartlett, 570 U.S. 472 (2013), resulting in preemption of all design claims that could make a difference in a product liability action.  That argument, which does not depend on Lohr either way, was not addressed at all in Pinnacle Hip.

Finally, the defendants in Pinnacle Hip also lost on their Restatement (Second) of Torts §402A, comment k (1965), argument, which was that Texas law holds all prescription medical products, including medical devices, to be “unavoidably unsafe” within the meaning of comment k, so that those “unavoidable” risks can only be warned about and not treated as design defects.  Pinnacle Hip was unwilling to expand Texas’ application of comment k from prescription drugs to include prescription medical devices.  2018 WL 1954759, at *9.  That places Pinnacle Hip in a distinct minority position, since literally hundreds of cases, and the Third Restatement, apply limits on design defect claims equally to all types of prescription medical products.  Bexis’ book collects these cases.  Drug & Medical Device Product Liability Deskbook §2.02[2] at pp. 2.02-13 to -16 n.14 (for the proposition that “almost all courts have extended the unavoidably unsafe product exception to medical devices”).  However, as the Fifth Circuit correctly pointed out, not many of those opinions are under Texas law.

The further discussion of case-by-case versus across-the-board comment k application in Texas, 2018 WL 1954759, at *9, is more troubling, as the trend in Texas courts (in drug and vaccine prescription product cases) has favored the “blanket” approach.  Pinnacle Hip complained, in a footnote, that “Texas caselaw offers almost no guidance on how to go about that case-by-case inquiry.”  Id. at *9 n.22.  There is good reason for that lack of precedent – because Texas law has not employed tests that require such inquiry.  See Reyes v. Wyeth Laboratories, 498 F.2d 1264, 1273 (5th Cir. 1974) (applying comment k without case-by-case analysis to a vaccine; holding that the only viable claim was inadequate warning); Gonzalez v. Bayer Healthcare Pharmaceuticals, Inc., 930 F. Supp.2d 808, 817-18 (S.D. Tex. 2013) (applying comment k to prescription drug without case-by-case analysis); Woodhouse v. Sanofi-Aventis United States LLC, 2011 WL 3666595, at *3-4 (W.D. Tex. June 23, 2011) (holding, without further analysis, that “comment k applies to products such as [defendant’s prescription drug]”); Holland v. Hoffman-La Roche, Inc., 2007 WL 4042757, at *3 (N.D. Tex. Nov. 15, 2007) (“Prescription drugs are not susceptible to a design defect claim where, as here, the drug is ‘accompanied by proper directions and warning.’”) (quoting comment k); Carter v. Tap Pharmaceuticals, Inc., 2004 WL 2550593, at *2 (W.D. Tex. Nov. 2, 2004) (“Under Texas law, all FDA-approved prescription drugs are unavoidably unsafe as a matter of law”); Hackett v. G.D. Searle & Co., 246 F. Supp.2d 591, 595 (W.D. Tex. 2002) (“under Texas law and comment k of the Restatement, Defendants can only be held strictly liable if the drug was not properly prepared or marketed or accompanied by proper warnings”).  Contra: Adams v. Boston Scientific Corp., 177 F. Supp.3d 959, 965 (S.D.W. Va. 2016) (refusing to apply comment k across-the-board in medical device case) (applying Texas law).  The comment k portion of Pinnacle Hip is where we think that Max is on the firmest ground.  The decision made Texas law worse.  This issue will ultimately be won in Texas appellate courts or perhaps before the Texas legislature, where it would be quite simple to extend the warning related presumption of §82.007 to all medical devices approved or cleared by the FDA.

Warning Claims

As to warning claims (which Texas law calls “marketing defects”), the defendants lost on adequacy as a matter of law.  Pinnacle Hip, 2018 WL 1954759, at *10.  Unfortunately, defendants usually lose on this ground, so it’s big news – and trumpeted on this blog – when a defendant wins a judicial holding that its warning is adequate as a matter of law.  No surprise there.  In Pinnacle Hip, that discussion ended:

Not until after the FDA issued its proposed rule in 2013 did defendants specifically warn about the metallosis, pseudotumors, and tissue necrosis − the sorts of conditions that plaintiffs maintained caused their revision surgery.

Id. at 11.  As defense counsel, we interpret the Fifth Circuit’s observation as an invitation to seek an adequacy as a matter of law ruling as to post-2013 claims (if there are any) in the litigation.

In the causation discussion pertaining to the warning claims, Pinnacle Hip of course followed the learned intermediary rule.  It discussed the role of “objective” evidence of causation:

At the threshold, the parties debate the relevance, under Texas law, of “objective evidence” − that is, evidence “that a different warning would have affected the decision of a reasonable doctor.” . . . Here, plaintiffs proffered objective evidence in [expert] testimony that, if the full risks of MoM were known to physicians, “they would run to [a different product].”

2018 WL 1954759, at *11 (citations omitted).  As we’ve discussed before, “objective” expert testimony about what “reasonable physicians” would have done is usually disallowed in learned intermediary cases.

On this point, however, Fifth Circuit law, has not been as favorable as other courts.  In Thomas v. Hoffman-LaRoche, Inc., 949 F.2d 806, 812 (5th Cir. 1992), the court actually allowed expert testimony on what a “reasonable” physician might have done – but that case was under Mississippi law.  See Ackermann v. Wyeth Pharmaceuticals, Inc., 526 F.3d 203, 212 (5th Cir. 2008) (suggesting that Thomas would not apply to Texas law).  We’ve been aware of the brief Texas Supreme Court passing reference to “objective” evidence in Centocor, Inc. v. Hamilton, 372 S.W.3d 140, 171 (Tex. 2012) (plaintiffs “presented no objective evidence”), but felt no reason to let the other side know it was there.

Now it’s been discovered, however.  The Fifth Circuit allowed such evidence to be admissible, 2018 WL 1954759, at *12 (“objective evidence is at least relevant”), but did not find it decisive in situations where the plaintiff would otherwise have suffered dismissal.  Critically, Pinnacle Hip did not allow unsupported “expert” testimony about what an objectively “reasonable physician” would have done be enough to let plaintiffs survive when they didn’t have prescriber testimony – which would have been the equivalent of allowing a heeding presumption in Texas, something the Fifth Circuit rejected outright in Ackerman, 526 F.3d at 212-13.

Relevance, however, does not imply sufficiency.  In the [learned intermediary] context, causation entails two distinct factual predicates:  first, that the doctor would have read or encountered the adequate warning; and second that the adequate warning would have altered his treatment decision for, or risk-related disclosures to, the patient.  Centocor addressed only the latter, suggesting a jury might be allowed to presume a particular physician would respond “reasonably” to fuller disclosure.  But that presumption must yield to contrary subjective testimony by the treating physician, and Centocor fails to explain how objective evidence would apply to whether that doctor would have read or encountered the warning in the first instance.  When considered for the limited purpose intimated in Centocor, objective evidence would have little bearing on any of [these] plaintiffs’ claims.

Pinnacle Hip, 2018 WL 1954759, at *12 (footnotes omitted) (emphasis original).  Thus, where the plaintiffs had no testimony from their prescribing physicians, those claims continue to fail, and some “expert” claiming otherwise cannot change the result.  Id. (granting JMOL in no-prescriber testimony cases).  Likewise, any “objective” testimony “must yield to contrary subjective testimony by the treating physician.” Id.  So plaintiffs cannot create questions of fact with expert testimony where the prescriber has affirmatively testified that a different warning would not have changed what s/he did.

Only what the Fifth Circuit described as “mixed bag” prescriber testimony (the prescriber said different things in different parts of his testimony) cases got to the jury in Pinnacle Hip, id. at *13, and those have always been harder cases for the defense anyway.  At best, for plaintiffs, paying some expert to opine that a “reasonable” physician would have heeded a warning won’t save any plaintiff who lacked a plausible warning causation case in the first place.  At worst, Pinnacle Hip means more plaintiff-side noise at trial in cases already going to trial on warning causation.  All in all, the defense side is better off after Pinnacle Hip than where it had been in the Fifth Circuit with only the Thomas precedent.  We definitely don’t agree with Max here.

Personal Jurisdiction

In Pinnacle Hip, the manufacturer’s parent corporation was held potentially liable because of the amount of guidance and control permitted by an inference from the facts (based on a “clear error” standard).  2018 WL 1954759, at *15.  Those facts allowed the court to conclude that more than a “passive parent-subsidiary relationship” existed as to this product.  Id. at *16.  To us that’s “big whoop” for two reasons.  First, the “clear error” standard does not apply at the district court level where jurisdictional motions are initially decided.  Second, and more important going forward, the plaintiffs proceeded under a “stream of commerce” theory where the Fifth Circuit had previously “embraced [the] more expansive” (Brennan) side of the 4-4 split in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987).  Pinnacle Hip, 2018 WL 1954759, at *15.  As we’ve discussed, that broad “stream of commerce” jurisdictional theory is probably toast after Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017).  Pinnacle Hip did not even cite BMS in its discussion of personal jurisdiction, so we guess that this argument wasn’t raised.  In light of the BMS precedent, the Pinnacle Hip jurisdictional holding should be treated as something of a “one-off” applicable to this MDL, but not to future litigation where BMS will stand front and center.

Miscellaneous Claims

Pinnacle Hip includes the Fifth Circuit’s full-throated reaffirmance of our favorite Erie principle:

[T]hat debate [about what a Texas court might do] is beside the point.  When sitting in diversity, a federal court exceeds the bounds of its legitimacy in fashioning novel causes of action not yet recognized by the state courts.  Here, despite ample warning, the district court exceeded its circumscribed institutional role and expanded Texas law beyond its presently existing boundary.

2018 WL 1954759, at *17 (footnote, citations, and quotation marks omitted) (emphasis added).  The court therefore threw out the spurious invention of an “aiding and abetting” cause of action that had no reasonable predicate in Texas law.  Id.

The court did allow two arguably weird theories against the parent corporation – all product liability theories imposing liability against a non-manufacturing parent under a theory not also cognizable against the manufacturing subsidiary are likely to be weird − to survive.  One of those, so-called “nonmanufacturer seller” was tied to statutory exceptions to immunity for nonmanufacturers.  Id. at*18.  The court held, instead, that the parent was only held liable for old-fashioned design or warning liability, after the record (again, construed in favor of plaintiffs as verdict winners) established one of statutory exceptions from nonmanufacturer immunity.  Id. That’s a little peculiar to non-Texas lawyers, but since Texas has this statute, it must mean something.

The other oddball claim that survived is one of those “last refuge of a scoundrel” theories, negligent undertaking” (a/k/a “Good Samaritan”) liability.

Texas caselaw reveals no precise control threshold a parent must cross before undertaking a duty to its subsidiary’s customers.  Texas courts have made clear that mere possession of “the authority to compel” a subsidiary is not enough − the parent “must actually” exercise that authority in a manner relevant to the undertaking inquiry.

Pinnacle Hip, 2018 WL 1954759, at *19 (footnote omitted).  Based on the stringent standard for interpreting record evidence, the court let this one slide.  Id.  Not good, but not likely to arise very often.

But there’s more afoot than just these three theories. Two years ago, we awarded In re DePuy Orthopaedics, Inc., 2016 WL 6268090 (N.D. Tex. Jan. 5, 2016), our ranking as the number six worst decision of that year, chiefly because of the large number of unprecedented theories under Texas law that this opinion permitted:

(1) extending negligent misrepresentation beyond “business transactions” to product liability, unprecedented in Texas; (2) ignoring multiple US Supreme Court decisions that express and implied preemption operate independently (as discussed here) to dismiss implied preemption with nothing more than a cite to the Medtronic v. Lohr express preemption decision; (3) inventing some sort of state-law tort to second-guess the defendant following one FDA marketing approach (§510k clearance) over another (pre-market approval), unprecedented anywhere; (4) holding that the learned intermediary rule does not apply whenever a defendant “compensates” or “incentivizes” physicians to use its products, absent any Texas state or appellate authority; (5) imposing strict liability on an entity not in the product’s chain of sale, contrary to Texas statute (§82.001(2)); (6) creating a claim for “tortious interference” with the physician-patient relationship, again utterly unprecedented; (7) creating “vicarious” breach of fiduciary duty for engaging doctors to serve as expert witnesses in mass tort litigation also involving their patients, ditto; and (8) construing a consulting agreement with a physician as “commercial bribery” to avoid the Texas cap on punitive damages, jaw-droppingly unprecedented.

While only item (5) was at issue in Pinnacle Hip, the Fifth Circuit’s invocation of Erie conservatism bears ill for all of the other judicial flights of fancy that have been allowed during the course of the Pinnacle Hip litigation.

Constitutionality of Punitive Damages Cap

For completeness, plaintiffs also lost their constitutional challenge to the Texas statute capping punitive damages at twice compensatory damages.  “Plaintiffs’ cross-appeal is meritless, and we dispose of it by footnote.”  Pinnacle Hip, 2018 WL 1954759, at *1 n.4.  That footnote went further, and characterized those constitutional claims as “frivolous.”  Id. at *23 n.72.  No matter what the constitutional challenge, a punitive damages cap “need only survive rational-basis review,” which it did in Pinnacle Hip “by injecting predictability into exemplary damages awards and preempting potentially unconstitutional awards.”  Id. (citations omitted).

Conclusion

When all is said and done, we view Max’s characterization of Pinnacle Hip as a “huge win for plaintiffs” as mostly overblown hyperbole, perhaps worthy of inclusion in the closing arguments that the Fifth Circuit held warranted a new trial.  The Fifth Circuit did some damage to comment k, but all the rest of the legal holdings were trivial, fact-bound, not likely to be useful in future cases, or some combination of those.  The forceful reiteration of conservative principles of Erie predictions of state law leave us hopeful that the Pinnacle Hip MDL will see some Fifth Circuit-mandated clean up – or, if not, perhaps the appellate court’s not-so-veiled Parthian, parting shot may have to be fired in earnest:

[D]efendants, despite their serious critiques of the district judge’s actions in this case and related MDL proceedings, see In re DePuy Orthopaedics, Inc., 870 F.3d 345, 351 (5th Cir. 2017) (finding “grave error”), have not asked us to require these cases to be reassigned to a different judge under “this court’s supervisory power to reassign,” United States v. Stanford, 883 F.3d 500, 516 (5th Cir. 2018).  We express no view on the issue but note that reassignment is both “extraordinary” and “rarely invoked.”  Id. (citation and internal quotation marks omitted).

Pinnacle Hip, 2018 WL 1954759, at *27, n.83.  Obviously, the Fifth Circuit in Pinnacle Hip was uncomfortable with the prospect of overruling the JPMDL’s assignment of this MDL, but this final footnote stands as a clear warning that, if further provoked (such as by continuing consolidated trials, or resort to other prejudicial evidence that the court noted but did not rule on), it will consider doing so.

As soon as Daimler AG v. Bauman, 571 U.S. 117 (2014), we made a point of warning defendants that personal jurisdiction was waivable.  Waiver was in the second paragraph of our Bauman Personal Jurisdiction In-House Counsel Checklist – before the checklist itself:

Personal jurisdiction defenses, however, are waivable.  They have to be pleaded and asserted at the outset of the litigation, or else the other side will argue – more persuasively, the more time that has passed – that a defendant has slept on its rights while other parties and the judicial system itself have expended valuable time and effort litigating in the plaintiffs’ forum of choice.  Thus, corporate defendants have to act quickly to evaluate and raise Bauman-based jurisdictional defenses at the outset of the case.

But just suppose that somebody didn’t listen to us.  Perhaps not recognizing the significant changes in personal jurisdiction practice (if not necessarily in constitutional Due Process doctrine itself) wrought by Bauman and Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), a defendant might not plead a personal jurisdiction defense, thinking it futile – as indeed it likely was under prior practice in most places.  Or even if personal jurisdiction was one of those 28 boilerplate defenses included at the end of every answer to a complaint, perhaps the defendant didn’t file a motion to dismiss under Fed. R. Civ. P. 12(b)(1) at the outset of the litigation….

Now the defendant has seen the light and wants to raise personal jurisdiction as a potentially dispositive defense (in the current forum, anyway).  Plaintiff raises waiver.  Is the defendant out of luck?

It’s not a good situation to be in, but it’s not hopeless, at least not in all jurisdictions.  Today we’re discussing arguments against waiver that have succeeded in Bauman/BMS personal jurisdiction decisions.

In Gucci America, Inc. v. Weixing Li, 768 F.3d 122 (2d Cir. 2014), decided not long after Bauman, the plaintiffs’ waiver argument failed even though the defendant “appeared in the district court and did not argue there that the court lacked personal jurisdiction.”  Id. at 135.  In between Bauman was decided.  “While arguments not made in the district court are generally waived, a party cannot be deemed to have waived objections or defenses which were not known to be available at the time they could first have been made.”  Id. (citations and quotation marks omitted).  Bauman’s enforcement of the “at home” test for general jurisdiction meant that the world had changed:

[A] defendant does not waive a personal jurisdiction argument − even if he does not make it in the district court − if the “argument that the court lacked jurisdiction over the defendant would have been directly contrary to controlling precedent in this Circuit.  Prior to Daimler [which we call Bauman because there are a lot more Mercedes-Benz cases], controlling precedent in this Circuit made it clear that a [defendant] with a branch in New York was properly subject to general personal jurisdiction here.  Under prior controlling precedent . . . through the activity of its New York branch, [defendant] engaged in a “continuous and systematic course of doing business”. . . .  Therefore, we conclude that [defendant] did not waive its personal jurisdiction objection.

Id. at 135-36 (citations and quotation marks omitted).  We believe that the same thing can be said about BMS and case-linked personal jurisdiction – both as to disapproving California’s sliding scale and as to the insufficiency of relationships with in-state distributors.  Accord Strauss v. Credit Lyonnais, S.A., 175 F. Supp.3d 3, 14 (E.D.N.Y. 2016); In re LIBOR-Based Financial Instruments Antitrust Litigation, 2015 WL 4634541, at *31 (S.D.N.Y. Aug. 4, 2015); 7 West 57th Street Realty Co., LLC v. Citigroup, Inc., 2015 WL 1514539, at *5-7 (S.D.N.Y. March 31, 2015) (all following Gucci).  “It was only after the Supreme Court issued its decision in [Bauman] that the scope of [the] ‘at home’ test was appreciated.” Klieman v. Palestinian Authority, 82 F. Supp.3d 237, 243 (D.D.C. 2015).  Thus, the worse any given jurisdiction’s personal jurisdiction law was before Bauman and/or BMS, the more likely it is that futility precludes waiver.

As similar defense to waiver – based on BMS as the intervening decision − prevailed recently in Practice Management Support Services, Inc. v. Cirque du Soleil, Inc., ___ F. Supp.3d ___, 2018 WL 1255021 (N.D. Ill. March 12, 2018) (which we discussed for other reasons, here), where the defendant had not initially raised personal jurisdiction against “unnamed, nonresident class members,” either in “their answer” or while “litigating this case for many years.”  Id. at 17.  Citing precedent from around the country, Practice Management held that the defendants nonetheless “raise[d] their personal jurisdiction defense in a motion that timely followed [BMS].”  Id.

[A] party cannot be deemed to have waived objections or defenses which were not known to be available at the time they could first have been made, especially when it does raise the objections as soon as their cognizability is made apparent. . . .  [A] party can be excused for failing to raise a defense where the defense, if timely asserted, would have been futile under binding precedent.  Like [other] cases, the Court finds that raising a personal jurisdiction defense as to unnamed, nonresident class members would have been “futile” prior to [BMS]. The Court therefore finds that the defense was not then available” to defendants and declines to find it forfeited.

Id. (citing, and in some cases quoting: Hawknet, Ltd. v. Overseas Shipping Agencies, 590 F.3d 87, 92 (2d Cir. 2009); Bennett v. City of Holyoke, 362 F.3d 1, 7 (1st Cir. 2004); Glater v. Eli Lilly & Co., 712 F.2d 735, 738 (1st Cir. 1983); Holzsager v. Valley Hospital, 646 F.2d 792, 795-96 (2d Cir. 1981)).  See Feller v. Transamerica Life Insurance Co., 2017 WL 6453262, at *4 (C.D. Cal. Dec. 11, 2017) (no waiver because “it is not clear that [defendant] would have had a viable basis for challenging personal jurisdiction with respect to their claims” before BMS).

But be careful – this “dramatic new development” exception to waiver comes with a limited shelf life, and BMS is rapidly approaching its first anniversary.

Practice Management also found it proper to excuse any waiver on an alternative ground, that it would be contrary to “proper construction of governing law” to allow a questionable waiver to preserve litigation that – after BMS – was now clearly barred by Due Process limits on personal jurisdiction.

[E]ven if defendants had waived this defense, the Court finds that it would be appropriate to excuse the forfeiture. . . .  [T]he court retains the independent power to identify and apply the proper construction of governing law, even where the parties fail to advert to the applicable rule in their own briefing.  Given the Supreme Court’s clear holding in [BMS] concerning the proper framework for analyzing personal jurisdiction in cases like this one . . ., exercising the court’s discretion to excuse the forfeiture [is] warranted.

Id. (quoting and following Greene v. Mizuho Bank, Ltd., ___ F. Supp.3d ___, 2017 WL 7410565, at *6 (N.D. Ill. Dec. 11, 2017)).  See Levine Hat Co. v. Innate Intelligence, LLC, 2017 WL 3021526, at *3 (E.D. Mo. July 17, 2017) (excusing technical waiver; “federal courts will generally deem a Rule 12(b)(2) motion timely if the defendant’s previously-filed answer expressly includes the lack of personal jurisdiction as an affirmative defense”).  So if your jurisdictional argument is good enough, and the plaintiff’s jurisdictional argument is the opposite, a sympathetic court can find grounds to avoid a claimed waiver.

Another useful case for defeating waiver arguments is Hinrichs v. General Motors of Canada, Ltd., 222 So.3d 1114 (Ala. 2016).  First, Hinrichs turns the waiver argument around, holding that the plaintiff had himself waived the waiver argument by not asserting it clearly or timely.  Id. at 1120.  See In re Plavix Related Cases, 2014 WL 3928240, at *6 (Ill. Cir. Aug. 11, 2014) (“Plaintiffs also fail to specifically identify what Defendants did that resulted in waiver.  Plaintiffs have thus waived their waiver argument”).  So even if the defendant wasn’t on its toes, if the plaintiff wasn’t either, the plaintiff may waive a waiver argument.

Second, Hinrichs excused the defendant’s three-year (until after the U.S. target defendant declared bankruptcy) delay because of the plaintiffs’ procrastination in actually pursuing his supposed claim.

[Plaintiff] repeatedly sought extensions of the trial court’s scheduling order and took no action to pursue his claims against [defendant] during this period.  When it appeared that the trial court would not further amend its scheduling order, [defendant] filed its motion reasserting its defense to personal jurisdiction. . . .  [Plaintiff] cannot point to [defendant’s] having at any time caused the trial court to address a potentially dispositive issue that would have been moot had its defense of lack of personal jurisdiction been later sustained.

Id.  Thus, due to the plaintiff’s own dilatory conduct in pursuing any claim against what had been a secondary defendant, that defendant “did not waive its defense of lack of personal jurisdiction.”  Id.  See Statek Corp. v. Coudert Bros. LLP, 2018 WL 834227, at *12 (D. Conn. Feb. 12, 2018) (no waiver of personal jurisdiction while action was stayed by bankruptcy).

The dilatory plaintiff scenario occurs with startling frequency, especially in MDL situations where weak plaintiffs seek to lie low and do nothing while hoping for a settlement.  Another frequent source of plaintiff-side dilatory conduct of not pursuing pleaded claims is asbestos, where many defendants languish until something (usually a settlement; sometimes a bankruptcy) causes the plaintiff finally to pay attention to a low level defendant with an inchoate personal jurisdiction defense.

Finally, as we already mentioned, a number of decisions (all authored by the same judge) considered the BMS decision an “other paper” that restarted the 30-day period for removal under 28 U.S.C. §1446(b)(3).  Douthit v. Janssen Research & Development, LLC, 2017 WL 4224031, at *6 (S.D. Ill. Sept. 22, 2017):

Correctly, defendants attest BMS conclusively established the Due Process Clause prohibits non-[resident] plaintiffs from filing claims against defendants in [this] state[‘s] courts.  The Court agrees with defendants and finds plaintiffs’ argument unfounded.  When a different case resolves a legal uncertainty concerning the existence of original federal jurisdiction, removal is allowed on that basis.

Id. (citation and quotation marks omitted).  Accord Braun v. Janssen Research & Development, LLC, 2017 WL 4224034, at *6 (S.D. Ill. Sept. 22, 2017); Bandy v. Janssen Research & Development, LLC, 2017 WL 4224035, at *6 (S.D. Ill. Sept. 22, 2017); Pirtle v. Janssen Research & Development, LLC, 2017 WL 4224036, at *6 (S.D. Ill. Sept. 22, 2017); Roland v. Janssen Research & Development, LLC, 2017 WL 4224037, at *5 (S.D. Ill. Sept. 22, 2017); Woodall v. Janssen Research & Development, LLC, 2017 WL 4237924, at *6 (S.D. Ill. Sept. 22, 2017) (all by Herndon, C.J.).  While that ruling was favorable to those defendants which acted in time after BMS, it is not going to help anyone now, since the thirty days have long since run.

While there are ways around a possible waiver of personal jurisdiction, defendants really don’t want to have to go there.  First of all, there are plenty of cases going the other way – we’re just not going to do the plaintiffs’ research for them.  Second, defense counsel never wants to be in a position of having to explain an adverse ruling on waiver to their client.  Third, after Bauman and BMS, it’s really a lot more fun for our side to be challenging personal jurisdiction on the merits.