For at least forty years we’ve been hearing that soccer is going to supplant baseball, basketball, or football among America’s top three sports.  It hasn’t happened.  Maybe we heirs of Washington, Jefferson, Ruth, Rice, and Chamberlain have limited enthusiasm for one-nil scores and players diving and mimicking death throes in a cheap effort to extract a penalty kick.


Meanwhile, we have seen boxing subside in the country’s consciousness, bullied out of the way by mixed martial arts (MMA). It’s hard to believe one of those M’s does not stand for mayhem.  Forget about the Marquis of Queensbury’s niceties.  In MMA, the contestants are free to kick, choke, and elbow each other.  Hit a man when he’s down?  That’s not forbidden in MMA. Nope, that’s when the action is just getting started.  Pretty much anything goes in MMA.  
But you cannot use anabolic steroids.  If you test positive, you get suspended.  Rules are rules.  

The plaintiff in In re Lyman Good Dietary Supplements Litigation, 2018 U.S. Dist. LEXIS 131668 (SDNY Aug. 6, 2018), was an MMA fighter who was suspended because he tested positive for a banned substance.  The court employs the short-hand reference “andro” for the banned substance, and so shall we.  The plaintiff claimed that he had unknowingly ingested andro that was present in two dietary supplements that had been labeled to be free of any banned substances. The plaintiff alleged that the manufacturers and sellers of the dietary supplements promised that the products were “safe,” “without the use of banned substances,” “banned substance free,” and in compliance with “strict quality assurance procedures.”  The presence of andro broke such promises, and the plaintiff’s career had suffered a serious bruise. The plaintiff sued the manufacturers, high ranking executives at the manufacturers, and the retailer. The causes of action were interesting, including some you’d expect (breach of warranties, fraud, deceptive practices, false advertising, negligence, and strict liability) and some you wouldn’t (intentional infliction of emotional distress, assault and battery).  The defendants moved to dismiss and ended up winning more than they lost.

The court dismissed the claims for fraud, assault and battery, and intentional infliction of emotional distress.  Fraud claims are subject to heightened pleading requirements, which the complaint didn’t come within a puncher’s chance of satisfying. All we get are general allegations of fraudulent intent, along with generalized motive to earn profits.  That isn’t nearly enough.  The court applied a rear naked choke to the fraud claim and counted it out.  The assault and battery claim was a wild swing and miss.  The plaintiff’s theory was that putting a substance in someone’s body without consent is battery, but there was no case support for that, plus the plaintiff never alleged the requisite intention to inflict injury.  Here comes a reverse guillotine, and watch the court slice off the assault and battery claims.  Lack of intent is also what doomed the claim for intentional (or reckless) infliction of emotional distress.  The court also could identify no alleged outrageous conduct that went “beyond all possible bounds of decency.”  (To be sure, when one is dealing with MMA, it might seem difficult to meet that standard.) 

The court dismissed the claims against the executives, both on the merits and for want of personal jurisdiction.  Suing executives is fairly rare, and there are reasons for that.  Piercing the corporate veil requires a showing that the executives exercised compete domination and disregarded corporate formalities, including use of corporate funds for personal purposes.  At most, the complaint alleged that the individual defendants were high-level officers with wide-ranging authority, but an officer or director is not personally liable for the torts of a corporation merely by reason of occupying an important office.  The complaint utterly failed to allege that the executives used corporate domination to perpetrate a fraud.  In any event, there was no personal jurisdiction over the individuals.  They all had general authority over their corporations, but were not the primary drivers of the particular transactions in New York that gave rise to the litigation.  Hello sleeper hold, and good-bye claims against the individual defendants.  

The retailer prevailed on most of its motions to dismiss.  The claims for implied warranty of fitness for particular purpose, express warranty, and false advertising were carried out of the ring, but the claim of implied warranty of merchantability emerged unscathed.   The only express warranty by the retailer listed in the complaint was a statement in its 10-K annual report that the company used quality control procedures and that it refused to sell products that did not comply with law or were unsafe.  Those representations are pretty general, and the plaintiff did not even claim to have read them or relied upon them prior to purchase.  Nor did the annual report constitute a form of advertisement.  The court granted the plaintiff leave to amend the claim for implied warranty of fitness for particular purpose because, even though the complaint was bereft of any assertions that the plaintiff and the store had any conversations about how the plaintiff would use the supplements to prepare for MMA combat, the plaintiff wanted to add six paragraphs alleging precisely such conversations.  If such conversations did take place, it would not be “outside the realm of reasonable knowledge” that professional competitions require drug testing.   Thus, the particular purpose warranty claim might live to fight again.

The opinion in Lyman Good is solid and clear.  It goes through the different causes of action and defendants one-by one, jab by jab.  It reminds us that MMA is not the only place where rules are rules.

These days, when the subject turns to victorious Philadelphia sports teams, most people think green, and “fly” and “Philly Special.” But we are not most people.  We live firmly and fondly in the past, 2008 to be exact.  So we relished every moment of our beloved Phillies’ Alumni Weekend this past weekend.  We cheered ourselves hoarse as a beloved former centerfielder, under a one-day contract, “retired as a Phillie.”  (Mahalo, “Flyin’ Hawaiian.”) And we, along with 35,000 of our closest friends, wept as the widow of our 2008 ace spoke to the crowd on the occasion of her late husband’s enshrinement on the Phillies’ “Wall of Fame.”   (R.I.P., “Doc.”)  And finally, as the members of the 2008 World Champion Phillies marched out to be honored, we allowed ourselves to be transported back to the ecstatic aftermath of our closer’s final slider in a perfect save season.  For sure, victory is sweet.

As it has been, six times now, in post-BMS personal jurisdiction decisions out of the Essure litigation.  In Hinton v. Bayer Corp., 2018 WL 3725776 (E.D. Mo. July 27, 2018), ninety-four plaintiffs from thirty different states filed a joint complaint in a Missouri state court, alleging that they were injured by the defendant’s birth control device.  The defendant removed the case to the Eastern District of Missouri on the basis of diversity jurisdiction.  Of the ninety-four plaintiffs, only thirteen were Missouri residents.  Some of the non-Missouri residents were not diverse to the defendant; however, the defendant moved to dismiss and sever the claims of the non-Missouri plaintiffs before the court ruled on subject matter jurisdiction (and remanded for lack of complete diversity).   The plaintiffs moved to stay determination of the motions to dismiss pending determination of subject matter jurisdiction, but the court declined, explaining that “addressing [the defendant’s] challenge to personal jurisdiction over the claims of the non-Missouri plaintiffs presents the more straightforward inquiry” under recent precedent, justifying a decision to deviate from the usual course of deciding subject matter jurisdiction ahead of personal jurisdiction. Hinton, 2018 WL 3725776 at *2.   As the court emphasized, “Remanding this case for lack of complete diversity only to have the case removed again later once the non-Missouri plaintiffs are dismissed would be a waste of judicial resources.  Ruling [on] personal jurisdiction first is in the interests of judicial economy and expeditiousness.” Id. (citation omitted).

And so the court proceeded to address the defendant’s motion to dismiss the claims of the non-Missouri plaintiffs for lack of personal jurisdiction. The defendant conceded that the court had specific jurisdiction over it regarding the thirteen Missouri plaintiffs, but argued that the court did not have general jurisdiction over it and did not have specific jurisdiction over it with regard to the non-Missouri plaintiffs.  The plaintiffs did not argue that the court had general jurisdiction over the defendant; instead, they argued that the court had specific jurisdiction over the defendant with regard to the claims of all of the plaintiffs because the defendant had conducted “a number of clinical trials” in Missouri and had worked on regulatory approval for the product in Missouri, and because “St. Louis was one of eight cities targeted as part of a broader marketing plan to increase sales and revenue.” Id. at *3.

The court explained that, under BMS, specific jurisdiction depends on “an affiliation between the forum and the underlying controversy, principally [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” Id. (citation to BMS omitted).  In this case, the plaintiffs did not see marketing in Missouri, did not purchase the product in Missouri, were not prescribed the product in Missouri, did not purchase the product in Missouri, and were not injured by the product in Missouri.  “Furthermore, none of the plaintiffs alleged that she participated in a Missouri clinical study or reviewed or relied on” such studies in deciding to use the product. Id. at *4.  As such, the court held, “Even assuming that discovery would prove exactly what Plaintiffs contend happened in Missouri with respect to . . . marketing and clinical trials, the individual plaintiffs’ claims are too attenuated from those activities to provide specific ‘case-linked’ personal jurisdiction.” Id. (citation omitted).   With no “connection between the forum and the specific claims at issue,” id. (citation to BMS omitted), the court held that it did not have jurisdiction over the claims of the eighty-one non-Missouri plaintiffs and dismissed all of those claims.

And so the defendant hit a figurative home run, expanding its already-prominent role in the elimination of litigation tourism in Missouri. We love this string of decisions, we love BMS, and we will keep you posted as its family of progeny continues to grow.

A few weeks ago, we reported on another in a line of Missouri appellate decisions rejecting the ability of Missouri courts to try the claims of non-Missouri residents against non-Missouri manufacturers of baby powder not used in Missouri.  The next day a jury in the same trial court awarded billions in a trial of 22 baby powder users. This was all part of a long saga of litigation tourism to the Show Me State.

It turns out that some plaintiffs prefer to go ever upwards with their baby powder claims in New York state court. We are not talking about New York residents suing in their friendly neighborhood court, we are talking about litigation tourists coming to the Big Apple with hopes of big awards. The problem–for them–is that New York state courts are supposed to apply personal jurisdiction according to the same standards that the Missouri appellate courts and the United States Supreme Court have been lately. We received two very similar decisions from a friend of the blog, Thomas Kurland of Patterson Belknap, that address personal jurisdiction for claims against the manufacturers of baby powder by people with no particular connection to where they were suing. The difference from the baby powder cases from Missouri and New Jersey that we have discussed before is that these plaintiffs claimed mesothelioma from asbestos allegedly in baby powder they had used.

The first case, Hammock v. Avon Prods., Inc., No. 190215/2016, 2018 WL 3601393 (N.Y. Super. Ct. July 27, 2018), has been published and came out a few days before the second, Crozier v. Avon Prods., Inc., No. 190385/2016 (N.Y. Super. Ct. July 31, 2018). The issues and analyses were almost identical, so we will discuss them together and skip pinpoint cites. The plaintiff in Hammock claimed exposure to the decedent from use of baby powder on herself, her children, and patients where she worked over the span of more than 35 years. All of the exposure, and any purchasing the decedent did, occurred in Virginia, where she lived. The plaintiff in Crozier claimed use of baby powder and a related cosmetic product when she was an infant and a teenager.  All use and purchasing of the products was in Texas, Oklahoma, and Kansas.

Both plaintiffs brought suit in New York state court against a number of defendants. We report on the motion in each case of the manufacturer and distributor of the baby powder, Johnson & Johnson Consumer Inc., and its holding company parent. Neither of those entities was incorporated in New York, had its principal place of business in New York, or was registered to do business in New York. The subsidiary did not manufacture or develop the baby powder in New York. Despite these facts, the plaintiff in each case claimed the court could exercise general personal jurisdiction over both entities or, at least, should allow jurisdictional discovery to proceed.

Based on a straightforward application of Bauman, Walden, and BMS, the court rejected both general and specific personal jurisdiction in each case. On general jurisdiction, each plaintiff pointed to “several isolated events that Johnson & Johnson was involved in (including industry meeting that Johnson & Johnson employees attended in the 1970s, four (4) letters sent from Johnson & Johnson representatives to New York-based scientists, and two statements make to the New York Times).” This was clearly not enough, as “isolated” is not a synonym for “continuous” or “systematic,” both of which are required for contacts to establish general personal jurisdiction. While it is not clear that either plaintiff even offered an argument on specific jurisdiction, the court went ahead and addressed that issue anyway. With all alleged exposure in each case hundreds of miles away from New York, “there is no articulable nexus or substantial relationship between the J&J Entities’ New York conduct and the claims asserted.” Holding off on dismissal to allow for jurisdictional discovery was also not in the cards as any discovery either plaintiff could seek would be futile.

We say the plaintiffs were sent packing, but the truth is that we do not know about the substance or disposition of any claims against other defendants—as there appear to be based on the captions. There may be other defendants, maybe even ones over which New York could exercise general personal jurisdiction, who are alleged to be liable for some separate asbestos exposure that allegedly caused the respective plaintiffs’ alleged injuries. While we may be accused of being defense hacks—we were so labeled just yesterday—we do see the difficulty of picking the right place to sue multiple defendants who are not residents of the plaintiff’s state. Suing in New Jersey, for instance, would have allowed the court to exercise jurisdiction over the New Jersey defendants, but maybe not over defendants from New York or somewhere else. Of course, if there really were acts by the defendants that arguable created liability in the states where these plaintiffs used products and live(d), then a Hammock case in Virginia and a Crozier case in Texas might not have been caught in jurisdictional snags. They probably would have been removed to federal courts, however, and been subject to substantive law and procedures the plaintiff lawyers wished to avoid. So, before you say we have something against New York or some other litigation tourism destination, think about whether the plaintiffs who hit the road are looking for a fair venue or a favorable one.

The other day Law 360 published a piece, “Bristol-Myers Unlikely To Shake Up Class Action Landscape,” which opined that, “in the end, the effect of Bristol-Myers on the national class action landscape is likely to be minimal.”  One basis for that conclusion was “[I]t is unlikely that a majority of federal appellate courts will find that Bristol-Myers applies in class action cases.”  To support that proposition, the article states:

To date, an apparent majority of district courts, including in the Eleventh, Fifth, Ninth and District of Columbia Circuits, have held that Bristol-Myers has no application to a class action, as opposed to a mass tort action.

The article cites: Becker v. HBN Media Inc., ___ F. Supp.3d ___, 2018 WL 3007922, at *2 (S.D. Fla. June 6, 2018) (“The Court is persuaded [that] . . . Bristol-Myers does not apply to class actions”); Sanchez v. Launch Technical Workforce Solutions LLC, 297 F. Supp.3d 1360, 1369 (N.D. Ga. 2018) (“Bristol-Myers simply reaffirms controlling due-process law and does not apply to federal class actions”); Molock v. Whole Foods Market, Inc., 297 F.Supp.3d 114, 126 (D.D.C. 2018) (“the court agrees with Plaintiffs and concludes that Bristol-Myers does not apply to class actions”); In re Morning Song Bird Food Litigation, 2018 WL 1382746, at *5 (S.D. Cal. March 19, 2018) (“the Court finds Bristol-Myers inapplicable to this suit which involves a class action”); Casso’s Wellness Store & Gym LLC v. Spectrum Laboratory Products Inc., 2018 WL 1377608, at *5 (E.D. La. March 19, 2018) (“the Court does not construe Bristol-Myers as barring its exercise of jurisdiction over the purported nonresident plaintiffs’ claims in the instant putative class action”).

As contrary authority, the article cites two cases: DeBernardis v. NBTY Inc., 2018 WL 461228, at *2 (N.D. Ill. Jan. 18, 2018) (“it is more likely than not based on the Supreme Court’s comments about federalism that the courts will apply BMS to outlaw nationwide class actions . . . where there is no general jurisdiction over the Defendants”), and Wenokur v. AXA Equitable Life Insurance Co., 2017 WL 4357916, at *4 n.4 (D. Ariz. Oct. 2, 2017) (“The Court . . . lacks personal jurisdiction over the claims of putative class members with no connection to Arizona”).

We found that sort of odd, as in our last look at this issue – way back on January 26, 2018 – found the caselaw to stand at 12-2 in favor of applying Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), to curtail multi-jurisdictional class actions where the effect of certification would be a class of non-resident plaintiffs suing a non-resident corporate defendant.  None of the cases cited in the 360 article as restricting BMS due process principles was decided at that point, whereas both of the cases extending BMS due process to all state-law litigation had been and therefore were cited in our prior post.

Could the law really have shifted so drastically over the last few months?

The answer is no.

The first thing we need to do is not compare apples and oranges.  This blog is concerned, first and foremost, with product liability litigation.  That means we’re interested mostly in litigation that has its roots in state – not federal – law and is in federal court due to diversity jurisdiction.  Thus, our most recent post was about “the issue of BMS and nationwide class actions under state law.”  Our previous post likewise examined “our prediction . . . that personal jurisdiction would become a major obstacle to nationwide class actions based on state laws.”  The emphasis added in both instances is to underscore that we’re not concerned with class action litigation brought under federal statutes.  We have a separate post examining the caveat in BMS about federal Due Process under the Fifth Amendment.  Our main takeaway from that post is that due process in diversity cases is analyzed under the Fourteenth Amendment as construed in BMS.

Of the six cases cited in the 360 article, 3½ involved federal statutory claims:  Becker, 2018 WL 3007922 (Telephone Consumer Protection Act), Sanchez, 297 F. Supp.3d 1360 (Fair Credit Reporting Act), Casso, 2018 WL 1377608 (Telephone Consumer Protection Act), and Morning Song Bird, 2018 WL 1382746 (RICO & state consumer protection statutes).  So right there, we subtract three of the six from the article’s list because they don’t involve what we care about.  We also chide the court in Morning Song Bird for failing to distinguish between the state and federal claims in its analysis.

By contrast, almost all (but two) of the cases we cited in our prior posts involve state-law causes of action:

In favor of applying BMS to state-law class actions:

DeBernardis v. NBTY, Inc., 2018 WL 461228 (N.D. Ill. Jan. 18, 2018) (consumer protection); LDGP, LLC v. Cynosure, Inc., 2018 WL 439122 (N.D. Ill. Jan. 16, 2018) (consumer protection and common law); McDonnell v. Nature’s Way Products, LLC, 2017 WL 4864910 (N.D. Ill. Oct. 26, 2017) (consumer protection); Wenokur, 2017 WL 4357916 (D. Ariz. Oct. 2, 2017) (insurance); Spratley v. FCA US LLC, 2017 WL 4023348 (N.D.N.Y. Sept. 12, 2017) (economic loss product liability); Plumbers’ Local Union No. 690 Health Plan v. Apotex Corp., 2017 WL 3129147 (E.D. Pa. July 24, 2017) (consumer fraud); Famular v. Whirlpool Corp., 2017 WL 2470844 (S.D.N.Y. June 7, 2017) (consumer protection and warranty); Demedicis v. CVS Health Corp., 2017 WL 569157 (N.D. Ill. Feb. 13, 2017) (consumer fraud); Bauer v. Nortek Global HVAC LLC, 2016 WL 5724232 (M.D. Tenn. Sept. 30, 2016) (economic loss product liability); Matus v. Premium Nutraceuticals, LLC, 2016 WL 3078745 (C.D. Cal. May 31, 2016) (consumer protection); Demaria v. Nissan N.A., Inc., 2016 WL 374145 (N.D. Ill. Feb. 1, 2016) (consumer protection).

Opposed to applying BMS to class actions:

In re Chinese-Manufactured Drywall Products Liability Litigation, 2017 WL 5971622 (E.D. La. Nov. 30, 2017) (product liability); Fitzhenry-Russell v. Dr. Pepper Snapple Group, Inc., 2017 WL 4224723 (N.D. Cal. Sept. 22, 2017) (consumer protection).

So, before we commence any new research of our own, the tally is 11 (2d, 3d 6th, 7th, & 9th Circuits) to 4 (5th, 9th & DC Circuits) in favor of applying a single due process standard to personal jurisdiction questions to all courts applying state law.

The research isn’t hard to do.  Look at all cases that cite BMS and mention “class action,” and separate the wheat (state-law claims) from the chaff (everything else).

We found six additional cases supporting application of BMS due process principles to state-laws class actions not cited in the 360 article.  In an OTC drug case, the court declared:

Nothing in Bristol-Myers suggests that it does not apply to named plaintiffs in a putative class action; rather, the Court reaffirmed a generally applicable principle − that due process requires a “connection between the forum and the specific claims at issue.”  That principle applies whether or not the plaintiff is a putative class representative.

Al Haj v. Pfizer Inc., 2018 WL 1784126, at *6 (N.D. Ill. April 13, 2018).  In Chavez v. Church & Dwight Co., 2018 WL 2238191 (N.D. Ill. May 16, 2018), a food-related, consumer fraud action, the court determined that “[n]othing in Bristol-Myers suggests that its basic holding is inapplicable to class actions; rather, the Court announced a general principle − that due process requires a ‘connection between the forum and the specific claims at issue.”  Id. at *10 (citation and quotation marks omitted).  Chavez also rejected the notion that absent class members should simply be ignored:

Further, the Court is unpersuaded by the reliance of some district courts on the fact that the citizenship of unnamed class members is disregarded for purposes of determining diversity − that is, subject matter − jurisdiction.  The question here is not whether this Court has subject matter jurisdiction, but whether, consistent with due process, this Court may exercise specific personal jurisdiction over a defendant with regard to claims that have no connection with this state beyond their similarity to claims asserted by other plaintiffs who are residents of this state.

Id. at *11. See Hickman v. TL Transportation, LLC, 2018 WL 3388307, at *7 & n.2 (E.D. Pa. July 12, 2018) (“Plaintiffs have not presented any reason for distinguishing Bristol-Myers from this [state-law] action”; distinguishing federal-law class actions); In re Samsung Galaxy Smartphone Marketing & Sales Practices Litigation, 2018 WL 1576457, at *2 (N.D. Cal. March 30, 2018) (dismissing non-resident named plaintiffs under BMS); Anderson v. Logitech, Inc., 2018 WL 1184729, at *1 (N.D. Ill. March 7, 2018) (“[A] nationwide class action is not significantly different from a mass tort suit involving a multitude of individual claims.  The putative nationwide class action claims are stricken.”); Howe v. Samsung Electronics America, Inc., 2018 WL 2212982, at *4 (N.D. Fla. Jan. 5, 2018) (“Rule 23 does not expand a court’s personal jurisdiction over a defendant.  Absent a statute providing otherwise, a defendant who is not subject to personal jurisdiction on an individual claim also is not subject to jurisdiction on a class-action claim.”).

What about additional courts refusing to apply BMS to state-law class actions?

Zero, zilch, nada.

Beyond the 3½ cases in the 360 article, we found nothing – at most, plaintiffs managed to delay consideration of personal jurisdiction until some later time, such as class certification.  E.g., Blitz v. Monsanto Co., 2018 WL 1785499, at *2 (W.D. Wis. April 13, 2018).

So the tally now stands at 17 (from the 2d, 3d 6th, 7th (lots), 9th & 11th Circuits) to the same 4 (5th, 9th & DC Circuits).

Moreover, even as to federal statutory class actions, it’s breakeven, at best for class action plaintiffs seeking to evade BMS.  Our additional results are:

Pro-BMS:  Practice Management Support Services, Inc. v. Cirque du Soleil, Inc., 301 F. Supp.3d 840, 864-66 (N.D. Ill. 2018); Garcia v. Peterson, No. CV H-17-1601, 2018 WL 3496740, at *8 (S.D. Tex. July 20, 2018); America’s Health & Resource Center, Ltd. v. Promologics, Inc., 2018 WL 3474444, at *4 (N.D. Ill. July 19, 2018); Jackson v. Bank of America, N.A., 2018 WL 2381888, at *6-7 (W.D.N.Y. May 25, 2018); Horowitz v. AT&T, Inc., 2018 WL 1942525, at *15-16 (D.N.J. April 25, 2018).  That’s five additional cases.

Anti-BMSGarcia v. Peterson, ___ F. Supp.3d ___, 2018 WL 3496740, at *8 (S.D. Tex. July 20, 2018); Tickling Keys, Inc. v. Transamerica Financial Advisors, Inc., 305 F. Supp. 3d 1342, 1350-51 (M.D. Fla. 2018); Morgan v. U.S. Xpress, Inc., 2018 WL 3580775, at *5-6 (W.D. Va. July 25, 2018); Weisheit v. Rosenberg & Assocs., LLC, 2018 WL 1942196, at *5 (D. Md. April 25, 2018).  Four more cases.

We strongly agree, however, with the second premise of the 360 article, that BMS might not have much additional overall effect because it is already “extremely difficult” for plaintiffs to pursue multi-state class actions under the predominance criteria of Rule 23.  Indeed, the recent opinion in Langan v. Johnson & Johnson Consumer Cos., ___ F.3d ___, 2018 WL 3542624 (2d Cir. July 24, 2018), underscores precisely that point:

We are not convinced that the district court here undertook the requisite considered analysis of the variations in state law and the potential need for subclasses that might result from those variations. Although both parties submitted complicated and conflicting summaries of the state consumer protection laws in eighteen states, the district court’s analysis consisted of one paragraph.  In that paragraph, it is our view that the district court did not sufficiently engage with [defendant’s] arguments about reliance, instead concluding that “it appears” that none of the states’ high courts have insisted on reliance. The other identified differences − including whether intent to deceive is required, and whether causation can be presumed − were not discussed. . . .  We believe that more precise and greater depth of analysis is required to comport with the “close look” required by the precedent.  Accordingly, we remand the case to the district court to conduct a more thorough analysis.

Id. at *8 (citations omitted).

The practical difference is, however, significant.  Dismissal for lack of personal jurisdiction is a Rule 12 motion, which may be made before a defendant has to incur the time and expense of discovery.  Application of BMS to class actions is largely a legal question, so we on the defense side have an obligation to our clients to try to get rid of as much of a case as possible as early as possible.  So even if the net result wouldn’t be much different, we’d rather not have to wait until Rule 23 comes into play.

We’ve heard that we should welcome some new subscribers, who aren’t that interested in drug and device litigation, per se, but have been attracted by our coverage of personal jurisdiction issues relating to tort litigation generally.  Thanks for joining.  Here is a brief description of our available personal jurisdiction resources.

First, we maintain a personal jurisdiction “cheat sheet.”  Because we don’t believe in doing the other side’s work for them, a cheat sheet contains only decisions with favorable results for defendants.  The current cheat sheet contains a complete list of decisions rejecting so-called “jurisdiction by consent” going back to the 1950s.  The cheat sheet is updated at least monthly with new, favorable cases.  The current cheat sheet also lists decisions since Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”), that deny personal jurisdiction under its “arising from”/”related to” test.

There is a second cheat sheet, no longer maintained, that includes all favorable decisions on a corporation not being “at home” for purposes of general jurisdiction.  Since this issue is essentially settled, we ceased updating it when BMS was decided.

There’s much more.  Under our “state-by-state research” tab, located at the top of the blog’s home page, readers can find personal jurisdiction research under the “procedural law” heading inside the tab.  We have a 50-State Survey on General Jurisdiction Through Consent by Registration To Do Business that was first published on 12/18/2017 and has been maintained since then.  If you need to know about the current status of this question in any jurisdiction, this post is a good place to start.

We have another tab for “General Research,” which includes links to all of the blog’s posts that contain legal research (as opposed to posts about individual cases, or other miscellaneous posts such as the one you are reading right now).  There are a lot of personal jurisdiction posts on various subjects:

Personal Jurisdiction – Arising out of/Relating to test (1/22/2018)

Personal Jurisdiction – Burden of proof (7/2/2018)

Personal Jurisdiction – Claim-by-claim analysis (1/11/2018)

Personal Jurisdiction − Class actions – (1/26/2018)

Personal Jurisdiction − Class actions – (11/20/2017)

Personal Jurisdiction – Consent by registering to do business (7/23/2018)

Personal Jurisdiction – Consent by registering to do business (3/5/2015)

Personal Jurisdiction – Discovery from third-parties (6/23/2016)

Personal Jurisdiction – Dormant commerce clause (2/22/2018)

Personal Jurisdiction – Dormant commerce clause (7/5/2016)

Personal Jurisdiction – Fifth Amendment/federal causes of action (2/19/2018)

Personal Jurisdiction – Litigation tourism (10/20/2017)

Personal Jurisdiction – Stream of commerce theory (3/12/2018)

Personal Jurisdiction – Waiver (4/23/2018)

With this research, always note the date of the post.  Unlike our cheat sheets, and our 50-state survey, these jurisdictional research posts are not updated.

Finally, in our “Topic” list, there is a listing for “Personal Jurisdiction.”  This will take you to a chronological list of every one of our personal jurisdiction posts.  The blog has been around for over ten years, so working through this topic is a little like drinking from a fire hose.  There are 96 posts under this topic, including all of those listed above.  Most of them are discussions of individual cases, and they often cover more than one topic.  Here is a list of them with individual links.

Another Missouri Talc Verdict Is Wiped Out On Personal Jurisdiction (7/12/2018)

Personal Jurisdiction through Alter Ego Fails in Illinois (6/29/2018)

New Philly Opinion Rejects Personal Jurisdiction Via Corporate Registration Consent (6/13/2018)

Yo, Canada! Oy, Vermont! (6/11/2018)

Hot and Not So Hot (6/4/2018)

No Jurisdiction Over NDA Holder Who Did Not Make The Drug (5/16/2018)

Some Ideas About Innovator Liability (5/10/2018)

Pinnacle Hip – Fifth Circuit Legal Rulings (5/7/2018)

A Ray of Hope for Innovator Liability (4/20/2018)

Post-BMS: Jurisdiction over Subsidiary ≠ Jurisdiction over Parent (4/9/2018)

You Can Use BMS To Oppose Class Certification, Too (3/22/2018)

N.D. Illinois Dismisses Accutane Case for Lack of Personal Jurisdiction (3/14/2018)

Third Time Not Quite the Charm (3/6/2018)

California Superior Court Refuses to Allow Discovery in Aid of “Litigation Tourism” in Consolidated Xarelto Litigation (2/16/2018)

Missouri Federal Court Rejects Effort to Limit the Effect of BMS (2/1/2018)

Ending The Year With Another Good Personal Jurisdiction Decision (12/29/2017)

More of What You Will See on Personal Jurisdiction Following BMS (11/21/2017)

MDL Direct Filing & Personal Jurisdiction (10/16/2017)

Lucky Seven – Multi-Plaintiff Misjoinder Fails in Illinois Post-BMS (10/9/2017)

Talcum Plaintiffs Can’t Show Personal Jurisdiction In Show Me State (9/8/2017)

Oral Argument before the Fifth Circuit Starts in a Couple of Hours on the Writ of Mandamus Filed in the Pinnacle Hip Implant Litigation (8/4/2017)

New Favorable Risperdal Decisions (8/16/2017)

Personal Jurisdiction Moves Front and Center in the Pinnacle Hip Implant MDL (8/8/2017)

Post-BMS Personal Jurisdiction is Pretty Straightforward (7/18/2017)

What You Will See On Personal Jurisdiction Following BMS (7/13/2017)

California Is At It Again On Personal Jurisdiction (7/7/2017)

Breaking News − Bristol-Myers Squibb Slams The Door On Litigation Tourism (6/19/2017)

Supreme Court Resolves Longstanding Hague Convention Service Issue (6/9/2017)

Breaking News − Personal Jurisdiction – The Sound of One Shoe Dropping (5/30/2017)

Supreme Court Expands Forum-Shopping Crackdown (5/29/2017)

Briefing Completed in Half-Billion-Dollar Verdict in Pinnacle MDL (5/12/2017)

The Other Supreme Court 4/25 Personal Jurisdiction Argument (5/1/2017)

Supreme Court 4/25 Personal Jurisdiction Argument (4/27/2017)

Guest Post – Eighth Circuit FINALLY Hears Litigation Tourism Issue (4/18/2017)

Solicitor General Urges Supreme Court to Reverse California’s Ill-Conceived Version of “Specific Jurisdiction” (3/16/2017)

More on Missouri – What To Expect and Not To Expect After Norfolk Southern v. Dolan (3/6/2017)

Litigation Tourism Ended In Missouri (3/1/2017)

Breaking News – Supreme Court Takes BMS Personal Jurisdiction Case (1/19/2017)

Alter Ego and Agency – A Different Spin on Jurisdiction (12/23/2016)

Amicus Briefs Not So Friendly to California Supreme Court’s Dreadful BMS Personal Jurisdiction Decision (11/23/2016)

M.D. Tenn. Bids Adieu to Out-of-State Class Reps (11/2/2016)

Misjoined Plaintiffs Can’t Be Used to Forum Shop (11/1/2017)

M.D. Pa. Finds No Specific Personal Jurisdiction over Parent Company (10/4/2016)

Pennsylvania’s Long Arm Overreaches the Constitution and Bauman (9/30/2016)

Hotel California Stays Open: Another Look At Specific Jurisdiction in BMS (9/16/2016)

Breaking News – California High Court Expands “Specific” Personal Jurisdiction To Recreate “Exorbitant” Personal Jurisdiction Rejected by Daimler v. Bauman (8/29/2016)

Television, Personal Jurisdiction, and Whether Corporate Knowledge Can be Imputed from Internet Drivel (8/24/2016)

Bauman Jurisdictional Limits Dismember Three More Misjoined Multi-Plaintiff Complaints (7/25/2016)

Zofran MDL Jurisdictional Analysis Bounces Non-Missouri Plaintiffs (5/11/2016)

Breaking News – No General Jurisdiction by Consent in Delaware (4/19/2016)

Bauman Personal Jurisdiction In-House Counsel Checklist (4/4/2016)

Breaking News – No Circuit Split (Yet) Over Post-Bauman General Jurisdiction by Consent (3/18/2016)

MDL Decision Debunking the Pendent Jurisdiction Fallacy Post-Bauman (3/8/2016)

Personal Jurisdiction and Choice of Law (2/23/2016)

Another No Show For Personal Jurisdiction In The Show Me State (9/18/2015)

California Dreaming: The Bite of Bauman, the Perfume of Preemption, the Stink of Stengel (8/19/2015)

Missouri Court Applies Bauman; Merely Doing Business Did Not Show Enough for Personal Jurisdiction (7/15/2015)

Check-Out Time at the Hotel California? (6/26/2015)

More Plaintiffs Go Home (Eventually and Based on Bauman) (4/17/2015)

We’re Not in Kansas: No General Jurisdiction After Bauman (4/10/2015)

Breaking Bauman News from California (11/19/2014)

Breaking News: Win On Post-Bauman Personal Jurisdiction Avoids Fraudulent (Mis)Joinder Pitfalls (11/11/2014)

Daimler (Bauman) As a Removal Tool in Multi-Plaintiff Cases 10/23/2014)

Personal Jurisdiction, Preemption, Pleadings and Proximate Cause (10/7/2014)

Interesting Cases Sent By Users (Part 1) Personal Jurisdiction (8/14/2014)

Hotel California: You Can Check Out Anytime You Like, But . . . (8/8/2014)

Sweet Home [Fill in the Blank] − A Sea Change In Personal Jurisdiction? (4/18/2014)

An OxyContin Decision That Addresses Everything from Negligence Per Se Claims to Personal Jurisdiction (4/8/2014)

Breaking News – Two New Supreme Court Decisions (1/14/2014)

No D.C. Personal Jurisdiction = No Loose D.C. Statute of Limitations = No Case (11/06/2013)

Breaking News – A TwoFer (10/29/2013)

Another Homework Failure By Plaintiffs (5/15/2012)

More Comments on Personal Jurisdiction (7/19/2011)

Personal Jurisdiction 2.0 (7/14/2011)

The Supreme Court Reins in “Stream of Commerce” Personal Jurisdiction (6/28/2011)

SG Takes Defense Side In Brown Personal Jurisdiction Case (11/19/2010)

Defense Personal Jurisdiction Briefs Filed (11/12/2010)

Personal Jurisdiction – A Primer (10/21/2010)

As all these posts demonstrate, we have devoted a great deal of time and effort to helping our defense-side readers understand personal jurisdiction and then use it to help win their cases and try to rein in rampant litigation tourism by plaintiffs.  We even identified Bauman as a case to watch, before it ever went to the Supreme Court:

In any event, we may not be waiting long for an answer.  In Bauman v. DaimlerChrysler Corp., ___ F.3d ___, 2011 WL 1879210 (9th Cir. May 18, 2011), the Supreme Court’s bête noir, the Ninth Circuit, allowed the exercise of general jurisdiction over a foreign corporation on a dumbed-down agency test based solely on the defendant’s “right to control” its wholly-owned American subsidiary.  Id. at *11-12.  The result in Bauman is little different than what the Supreme Court rejected in Brown, in that a defendant doing no business in a jurisdiction is exposed to suit there over anything and everything, and would be equally exposed to litigation anywhere its subsidiary operates, which is everywhere it sells products.

If the unanimous Court in Brown meant what it said about general personal jurisdiction, then Bauman is wrongly – badly wrongly – decided.  We expect a certiorari petition in Bauman.  We won’t give odds on the Court’s accepting the appeal, as another long snooze may be in the offing, but if it does, our money would be on reversal.

(Emphasis added).  Now there’s a bet that paid off, big-time.

Personal jurisdiction is right up there with Daubert and preemption as one of the biggest pro-defense developments of our legal careers.  You can bet we’re going to keep thinking and writing about it.

We’ve already unloaded on Hammons v. Ethicon, Inc., ___ A.3d ___, 2018 WL 3030754 (Pa. Super. June 19, 2018), where the court made a virtually unprecedented holding that a defendant challenging personal jurisdiction on Due Process grounds had the burden of proof in the course of allowing a litigation tourist from Indiana to stay in Pennsylvania, based on “contacts” that had no causal relationship to that plaintiff’s injuries.  Hammons involved high profile mass tort litigation, and we’re sure the story there is far from over.

Now there’s Webb-Benjamin, LLC v. International Rug Group, LLC, ___ A.3d ___, 2018 WL 3153602 (Pa. Super. June 28, 2018), a small commission dispute case involving a single event in Canada.  Heck, the non-resident defendant was not even registered in Pennsylvania until after the events in question.  Id. at *1.  In Webb-Benjamin, another panel of the same court has ruled that a corporation’s mere act of registering to do business in Pennsylvania subjected it to general personal jurisdiction, supposedly because registration equals “consent” and consent is a separate basis for personal jurisdiction not subject to the Due Process analysis.

Webb-Benjamin relied almost exclusively on Bors v. Johnson & Johnson, 208 F. Supp.3d 648 (E.D. Pa. 2016) (which we criticized here), and an asbestos case following Bors, Gorton v. Air & Liquid Systems Corp., 303 F. Supp.3d 278 (M.D. Pa. 2018). Webb-Benjamin, 2018 WL 3030754, at *4.  Thus,

Guided by the reasoning in Bors and Gorton, we conclude that [Bauman] does not eliminate consent as a method of obtaining personal jurisdiction.  Accordingly, pursuant to 42 Pa. C.S.A. §5301, Pennsylvania may exercise general personal jurisdiction over [plaintiff’s] claims against [defendant].

Id. at *5.

The analysis in Webb-Benjamin and the two district court cases is fairly simple.  First, the aforementioned §5301(a) “qualification as a foreign entity under the laws of this Commonwealth” is a “sufficient basis . . . to exercise general personal jurisdiction over such person.”  Second, registration is a form of “consent” to personal jurisdiction.  Third, “consent” is distinct ground for general personal jurisdiction not subject to the ordinary general jurisdiction tests enunciated in Daimler AG v. Bauman, 571 U.S. 117 (2014).  That’s simple, but also simply wrong.

First, the statute says what it says.  But a state statute cannot trump federal Due Process – that’s what the Supremacy Clause is all about.  Thus, Judge New recognized that to interpret the state’s registration statute in this fashion renders it unconstitutional as applied to a non-resident corporation being sued by a non-resident plaintiff over activities outside the state of Pennsylvania:

Under the current state of Pennsylvania law, the only way foreign corporations such as Defendant can avoid Pennsylvania courts’ assertion of general jurisdiction over them is for those corporations to avoid doing business in Pennsylvania.  Faced with this Hobson’s choice, a foreign corporation’s consent to general jurisdiction in Pennsylvania can hardly be characterized as voluntary.  In light of the Supreme Court’s repeated admonishment that the Due Process Clause prohibits a state from claiming general jurisdiction over every corporation doing business within its borders, it logically follows the Due Process Clause also prohibits a state from forcing every corporation doing business within its borders to consent to general jurisdiction.

Mallory v. Norfolk Southern Railway Co., 2018 WL 3025283, at *5 (Pa. C.P. Phila. Co. May 30, 2018) (citations omitted).  The United States Supreme Court has repeatedly stated that a corporate defendant must be “at home” in order to justify general jurisdiction – not merely that it conduct “continuous and substantial” business.  E.g., BSNF Railway. v. Tyrrell, 137 S.Ct. 1549 (2017); Daimler AG v. Bauman, 571 U.S. 117 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011).

Personal jurisdiction, “represents a restriction on judicial power . . . as a matter of individual liberty.”  Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982).  A mere state statute cannot change federal constitutional law.  “By wrapping general jurisdiction in the cloak of consent, Pennsylvania’s mandated corporate registration attempts to do exactly what the United States Supreme court prohibited.”  Mallory, 2018 WL 3025283, at *6.  Indeed, the same Pennsylvania statute expressly recognizes Due Process limitations.  See 42 Pa. Cons. Stat. §5308 (“tribunals of this Commonwealth may exercise jurisdiction under this subchapter only where the contact with this Commonwealth is sufficient under the Constitution of the United States”); 42 Pa. C.S.A. §5307 (jurisdiction only extends “to the extent permitted by the Constitution of the United States”).

Nor does Webb-Benjamin’s step two accurately state the law.  The Pennsylvania statute itself treats registration and consent as separate means of obtaining general jurisdiction.

(a) General rule. − The existence of any of the following relationships . . . shall constitute a sufficient basis . . . [for] general personal jurisdiction. . . .

(i) Formation under or qualification as a foreign entity under the laws of this Commonwealth.

(ii) Consent, to the extent authorized by the consent.

(iii) The carrying on of a continuous and systematic part of its general business within this Commonwealth.

42 Pa. C.S. §5301(a)(1-3) (emphasis added).  On its face, the statute plainly distinguishes between registration and consent.  They are different bases for jurisdiction.  Webb-Benjamin improperly merges subsections (a)(i) and (a)(ii).

Nor does the United States Supreme Court currently (as opposed to 100 years ago) consider registration to do business as a form of consent.  Generally, the Court has dispensed with “the fiction[] of implied consent to service on the part of a foreign corporation” in favor of “ascertain[ing] what dealings make it just to subject a foreign corporation to local suit.”  Shaffer v. Heitner, 433 U.S. 186, 202-03 (1977).

We initially upheld these [corporate registration] laws under the Due Process Clause on grounds that they complied with Pennoyer’s rigid requirement of either “consent,” or “presence.”   As many observed, however, the consent and presence were purely fictional.

Burnham v. Superior Court, 495 U.S. 604, 617-18 (1990) (citations omitted).

Further, in Insurance Corp. of Ireland, the Court listed the currently recognized ways by which a defendant could “consent” to personal jurisdiction in the forum:  (1) “submi[ssion] to the jurisdiction of the court by appearance”; (2) “parties to a contract may agree in advance to submit to the jurisdiction of a given court”; (3) “a stipulation entered into by the defendant”; (4) “agreements to arbitrate”; (5) “a judgment in personam may be rendered in a cross-action against a plaintiff in its courts”; (6) “waive[r] if not timely raised”; and (7) “fail[ure] to comply with a pretrial discovery order.”  456 U.S. at 705-06.  Corporate registration to do business is conspicuously absent from this list.  See also J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873, 880-81 (2011) (more recent discussion of consent likewise omitting corporate registration).  Registration is not consent.  To the contrary, a state may not “requir[e] the corporation, as a condition precedent to obtaining a permit to do business within the State, to surrender a right and privilege secured to it by the Constitution.”  Koontz v. St. Johns River Water Management District, 570 U.S. 595, 607 (2013) (quoting Southern Pacific Co. v. Denton, 146 U.S. 202, 207 (1892)).

To conduct any business in Pennsylvania, however slight, a foreign corporation must register. 15 Pa. C.S. §412(a).  All 50 states and the District of Columbia have similar laws.  E.g., T. Monestier, “Registration Statutes, General Jurisdiction, & the Fallacy of Consent,” 36 Cardozo L. Rev. 1343, 1363-64 n.109 (2015) (string cite of all 50 states’ registration statutes).  Thus, if an authorizing statute was sufficient to create general jurisdiction – whether called “consent” or anything else – a corporation could constitutionally be subjected to general jurisdiction in every state where they conducted business, whether or no not the business was “continuous and substantial” – indeed even if they actually did no business at all (recall that the defendant in Webb-Benjamin only registered after the events at suit).  That result is incompatible with Bauman, which held that to “approve the exercise of general jurisdiction in every State in which a corporation engages in a substantial, continuous, and systematic course of business” would be “unacceptably grasping.”  571 U.S. at 138 (quotation marks omitted).  Since Webb-Benjamin’s “consent” theory does not even require “continuous and substantial” corporate activity as a predicate to general jurisdiction, Due Process does not allow theories of jurisdiction that would expose a corporation to suit for anything in any state:

[T]he same global reach would presumably be available in every other State. . . .  Such exorbitant exercises of all-purpose jurisdiction would scarcely permit out-of-state defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.

Id. at 139 (citation and quotation marks omitted).  “A corporation that operates in many places can scarcely be deemed at home in all of them.”  Id. at 139 n.20.  “[I]n-state business . . . does not suffice to permit the assertion of general jurisdiction.”  Tyrell, 137 S. Ct. at 1559.

Unlike Webb-Benjamin, almost every other appellate court in the country has read the Supreme Court’s decisions in BSNF, Bauman, and Goodyear to mean what they say, and has recognized the handwriting on the wall against expansive jurisdiction by consent theories.  We’ll start with Genuine Parts Co. v. Cepec, 137 A.3d 123 (Del. 2016), since:  (1) Delaware knows something about corporate law, and (2) until Bauman, Delaware law had recognized precisely the same consent theory of jurisdiction as Webb-Benjamin.  No longer.  Cepec understood that general jurisdiction by consent merely by means of registration to do business is incompatible with Bauman:

An incentive scheme where every state can claim general jurisdiction over every business that does any business within its borders for any claim would reduce the certainty of the law and subject businesses to capricious litigation treatment as a cost of operating on a national scale or entering any state’s market.  [Bauman] makes plain that it is inconsistent with principles of due process to exercise general jurisdiction over a foreign corporation that is not “essentially at home” in a state for claims having no rational connection to the state.  The foreign corporation in this case does not have its principal place of business in Delaware; nor is there any other plausible basis on which Delaware is essentially its home.  Hence, Delaware cannot exercise general jurisdiction over it consistent with principles of due process.

137 A.3d at 127-28 (footnote omitted)

General jurisdiction by consent was likewise rejected in State ex. rel. Norfolk Southern Railway Co. v. Dolan, 512 S.W.3d 41, 51-53 (Mo. 2017).  The court first observed, citing Cepec, that “a broad inference of consent based on registration would allow national corporations to be sued in every state, rendering [Bauman] pointless.”  Id. at 51.  It therefore refused to interpret its statute to raise such constitutional questions.  “The plain language of Missouri’s registration statutes does not mention consent to personal jurisdiction for unrelated claims.”  Id. at 52. Accord State ex rel. Bayer Corp. v. Moriarty, 536 S.W.3d 227, 232-33 (Mo. 2017) (following Dolan in prescription medical product case).

Similarly, the Illinois Supreme Court, in Aspen American Insurance Co. v. Interstate Warehousing, Inc., 90 N.E.3d 440 (Ill. 2017), rejected the proposition that corporate registration creates general jurisdiction:

[T]hat a foreign corporation registered to do business in Illinois is subject to the same duties as a domestic one in no way suggests that the foreign corporation has consented to general jurisdiction. . . .  [T]hat a foreign corporation has registered to do business under the Act does not mean that the corporation has thereby consented to general jurisdiction over all causes of action, including those that are completely unrelated to the corporation’s activities in Illinois.

Id. at 447-48.  Accord Campbell v. Acme Insulations, Inc., ___ N.E.3d ___, 2018 WL 2305692, at *4 (Ill. App. May 18, 2018) (“Nor does the fact that [defendant] has a registered agent for service of process in Illinois show that it consented to jurisdiction in this State”) (following Aspen).

In the otherwise unfortunate Bristol-Myers Squibb Co. v. Superior Court, 377 P.3d 874 (Cal. 2016), reversed, 137 S. Ct. 1773 (2017), the California Supreme Court likewise held that “a corporation’s appointment of an agent for service of process, when required by state law, cannot compel its surrender to general jurisdiction for disputes unrelated to its California transactions.”  Id. at 798.  See also Am Trust v. UBS AG, 681 F. Appx. 587, 589 (9th Cir. 2017) (consent to jurisdiction not required of corporations registering to do business) (applying California law).  The same conclusion governs Wisconsin law.  In Segregated Account of Ambac Assurance Corp. v. Countrywide Home Loans, 898 N.W.2d 70 (Wis. 2017), the court overturned lower court precedent, cautioning that it “generally avoids interpreting statutes in a way that places their constitutionality in question,” which was precisely basing general jurisdiction on corporate registration would do:

The shade of constitutional doubt that Goodyear and [Bauman] cast on broad approaches to general jurisdiction informs our assessment of this court’s older cases. . . .  Significantly, the [Bauman] Court cautioned that “cases decided in the era dominated by Pennoyer’s territorial thinking should not attract heavy reliance today.”  134 S.Ct. at 761 n.18 (citation omitted). . . .  [W]e  instead give preference to prevailing due process standards when interpreting a contemporary statute for the first time. . . .  [S]ubjecting foreign corporations to general jurisdiction wherever they register an agent for service of process would reflect the “sprawling view of general jurisdiction” rejected by the Supreme Court.

Id. at 82.  Accord Figueroa v. BNSF Railway Co., 390 P.3d 1019, 1021-22 (Or. 2017) (“we conclude that appointing a registered agent to receive service of process merely designates a person upon whom process may be served.  It does not constitute implied consent to the jurisdiction of the Oregon courts.”); Magill v. Ford Motor Co., 379 P.3d 1033, 1038 (Colo. 2016) (corporate registration cannot support general jurisdiction where defendant’s in-state contacts “pale in comparison to the significant contacts that were deemed ‘slim’ in” Bauman).

So that’s seven state high courts rejecting general jurisdiction based on considering registration to do business as “consent” since Bauman – to zero in favor.

Appellate authority in other jurisdictions is in accord with the above decisions.  The Second Circuit in Brown v. Lockheed-Martin Corp., 814 F.3d 619 (2d Cir. 2016) (applying Connecticut law), refused to “err[] in casually dismissing related federal due process concerns” and became the first post-Bauman appellate decision to reject “consent” based on mere registration to do business as a basis for general personal jurisdiction.  Id. at 636.  “[T]he history of such statutes suggests that assent only to specific jurisdiction is what the statute required.” Id. at 637. So-called “consent” jurisdiction, if generally conferred by registration to do business raises the same constitutional concerns that drove the result in Bauman:

In any event, we can say that the analysis that now governs general jurisdiction over foreign corporations − the Supreme Court’s analysis having moved . . . to the more demanding “essentially at home” test . . . − suggests that federal due process rights likely constrain an interpretation that transforms a run‐of‐the‐mill registration and appointment statute into a corporate “consent” − perhaps unwitting − to the exercise of general jurisdiction by state courts.

Id.  “If mere registration and the accompanying appointment of an in state agent – without an express consent to general jurisdiction – nonetheless sufficed to confer general jurisdiction by implicit consent, every corporation would be subject to general jurisdiction in every state in which it registered, and [Bauman’s] ruling would be robbed of meaning by a back‐door thief.”  Id. at 640.  See also Wal-Mart Stores, Inc. v. Lemaire, 395 P.3d 1116, 1120 (Ariz. App. 2017) (“there is no need to base personal jurisdiction solely upon a murky implication of consent to suit − for all purposes and in all cases − from the bare appointment of an agent for service.  We therefore agree with those decisions holding that registration statutes do not imply consent to general jurisdiction.”); Magwitch, LLC v. Pusser’s West Indies, Ltd., 200 So.3d 216, 218 (Fla. App. 2016) (registration cannot create general jurisdiction; old law “has yielded to the two-prong analysis for long-arm jurisdiction set forth in recent decades by the Supreme Court”); Dutch Run Mays Draft, LLC v. Wolf Block LLP, 164 A.3d 435, 444-45 (N.J. App. Div. 2017) (court could not “agree business registration rises to consent to submit to the general jurisdiction in the forum,” given Bauman’s “clear narrow application of general jurisdiction”); Stisser v. SP Bancorp, Inc., 174 A.3d 405 (Md. App. 2017); Salgado v. OmniSource Corp., 2017 WL 4508085, at *5 (Tex. App. Oct. 10, 2017) (having a “registered agent in Texas . . . [alone] is not enough to subject a nonresident defendant to general jurisdiction”) (unpublished); Northern Frac Proppants, II, LLC v. 2011 NF Holdings, LLC, 2017 WL 3275896, at *16 (Tex. App. July 27, 2017) (“general jurisdiction contacts are not established by showing that foreign business entities . . . were registered to do business in Texas, and had registered agents for service of process in Texas”) (unpublished); Gulf Coast Bank & Trust Co. v. Designed Conveyor Systems, LLC, 717 F. Appx. 394, 398 (5th Cir. 2017) (rejecting “other outdated view[s] of general jurisdiction”; no general jurisdiction by reason of corporate registration) (applying Louisiana law).

There are literally dozens of trial court level decisions in numerous other states that also reject corporate registration as a basis for general jurisdiction when a corporate defendant is not “at home” under Tyrell/Bauman.  For prior decisions, see our 50-state survey on jurisdiction by consent.  For future decisions (not divided by state) see our post-BMS jurisdictional cheat sheet.

With WebbBenjamin, those of us who defend cases in Pennsylvania now have to cope with loopy Superior Court decisions on both general and specific jurisdiction.  Pennsylvania’s prior reputation as a hotbed of litigation tourism remains well and fairly earned.  Expect multiple appeals to the Pennsylvania Supreme Court, and perhaps even higher, to the United States Supreme Court.

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.