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

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

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

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

In order for a state court to exercise specific jurisdiction, the suit must arise out of or relate to the defendant’s contacts with the forum.  In other words, there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.  For this reason, specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.

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

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

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

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

We have written a lot about personal jurisdiction and class actions, and we have particularly questioned how, after BMS, anyone could proceed with a nationwide class action applying state law in a forum where there is no general personal jurisdiction over the defendant.  We are not the only ones posing this question, but as has so often been the case, Bexis has led the way with two extraordinarily useful posts surveying the cases.  You can review these must-read posts here and here.  You can also get Bexis’ Washington Legal Foundation white paper on the topic here.

The issue is whether a court can exercise specific personal jurisdiction over claims asserted on behalf of out-of-state class members.  Take for example a putative nationwide class action in which a California class representative sues a New York defendant in California in connection with goods purchased in California.  Can this class representative purport to represent absent class members who reside and purchased goods outside California?  We think the answer clearly is no, since those non-Californians cannot establish specific personal jurisdiction over the New York defendant in California.

Most courts agree with us, and judging from our prior posts, the issue is often decided on a motion to dismiss. But is a motion to dismiss the only way to invoke BMS and its limitations on specific personal jurisdiction in a nationwide class action?  If you move fast, you can probably use BMS to oppose class certification, which is what happened last week in another Illinois case, Practice Management Support Services, Inc. v. Cirque du Soleil, Inc., No. 14 C 2032, 2018 WL 1255021 (N.D. Ill. Mar. 12, 2018).  In Practice Management, an Illinois company filed a nationwide class action in Illinois under the Telephone Consumer Protection Act (“TCPA”) against a Canadian company after received a fax advertising a circus performance in Illinois.

The case had been proceeding in federal court for several years, apparently including briefing on the plaintiffs’ motion for class certification, when the Supreme Court decided BMS.  The defendants therefore filed a supplemental brief asserting that BMS “prevents this Court from asserting personal jurisdiction over the Defendants with respect to the claims of putative class members located outside of Illinois” and that the case was therefore relevant to class certification. Id. at *15.

The district court agreed with the defendants, and its marquee holding is that BMS’s limitations on specific personal jurisdiction apply to class actions in federal court.  After citing other district judges who had so found, the district court made this broad ruling:

This Court agrees with these courts. Indeed, it [is] not clear how [Plaintiff] can distinguish the Supreme Court’s basic holding in Bristol-Myers simply because this is a class action.  The Supreme Court has emphasized that “Rule 23’s [class action] requirements must be interpreted in keeping with Article III constraints, and with the Rules Enabling Act, which instructs that the [federal court] rules of procedure ‘shall not abridge, enlarge, or modify any substantive right.’” Amchem Prods. v. Windsor, 521 U.S. 591, 592 (1997) . . .  The Supreme Court held in Bristol-Myers that the Fourteenth Amendment’s due process clause precludes nonresident plaintiffs injured outside the forum from aggregating their claims with an in-forum resident. Bristol-Myers, 137 S. Ct. at 1781.  Under the Rules Enabling Act, a defendant’s due process interest should be the same in the class context.

Id. at *16. This reasoning is essentially bulletproof, and the district court’s holding is bookended by another significant ruling—that the defendants did not waive their personal jurisdiction challenge. Id. at *17.  Remember, the defendants litigated this case in the Illinois federal court for years, and they did not raise personal jurisdiction in their answers.  But here, BMS was a game changer.  The district ruled that a personal jurisdiction challenge would have been futile before BMS and that the defendants “timely raise[d] their personal jurisdiction defense in a motion that timely followed the Supreme Court’s decision.” Id. Because other defendants sued before BMS are surely in a similar position, the district court’s no-waiver holding should not be overlooked.

If you stopped reading here, you would have the gist of Practice Management.  But the plaintiffs made other arguments, too.  They argued that the district court could exercise jurisdiction over a nationwide class under Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985), where the Supreme Court held that courts could exercise personal jurisdiction over absent class member’s claims without violating the class members’ due process rights. Id. at *16.  But that is apples and oranges.  The issue in Practice Management was the defendants’ due process rights.  An absent class member has the right to notice and opt out before being bound to a class judgment.  A defendant whose objection to jurisdiction is overruled is being compelled to answer the out-of-staters’ claims and has no choice.  That’s a big due process difference.

The plaintiffs also argued that BMS left open the question of whether the Fifth Amendment’s due process clause imposed the same restrictions on the exercise of personal jurisdiction by a federal court.  We are aware of a handful of district judges who have bought this argument, and suffice it to say that we do not agree that due process under the Fifth Amendment is fundamentally different from due process under the Fourteenth Amendment when it comes to personal jurisdiction.  In Practice Management, it did not matter:  The TCPA does not authorize nationwide service of process and looks to state law for limitations on personal jurisdiction in any event. Id. at *16.  Thus, BMS applies.

The district court therefore followed BMS and ruled that it did not have jurisdiction over nonresidents’ claims:  “Because these nonresidents’ claims do not relate to defendants’ contacts with Illinois, exercising specific personal jurisdiction over defendants with respect to them would violate defendants’ due process rights.” Id. at *18.

The practical impact of this ruling is that this class action is now limited to Illinois only. In the portion of the order that we have not discussed, the district court granted class certification.  But instead of a class of fax recipients from anywhere, the district court redefined the class to include Illinois residents who received faxes in Illinois.  Maybe that is small consolation, but it is consolation nonetheless, and by raising their challenge when they did, the defendants created a published order on personal jurisdiction that will help us all.  We will be sure to thank them when the circus is over.

With a little luck on our part, by the time you read this we will be vacationing in a sunnier clime.  Our beachfront cottage is an Oddjob’s hat-toss away from where Ian Fleming wrote the James Bond novels.  Mind you, we are not pretending to be serving On Her Majesty’s Secret Service.  If anything, with the secluded location of our holiday, the absurd luxury, and our ever-expanding girth, we are more appropriately cast as a Bond villain.  That suits us just fine.  More than one plaintiff lawyer has called us Dr. No. And more than once, we have reached under our desk, probing for a trap-door button that would plunge an opponent into the piranha pool.



The judge in today’s case, Livingston v. Hoffman-LaRoche Inc., No. 17C-7650-MEA (N.D. Ill. March 7, 2018), pushed the button, holding that there was no personal jurisdiction.  Livingston was yet another Accutane case, with allegations of bowel injury.  We have written frequently on the aggregated forms of this litigation in both the federal and New Jersey court systems.  The Livingston case is different.  To be sure, the Livingston opinion last week was largely an obvious application of the SCOTUS Bauman and BMS cases, but there was a scary threat lurking just off-stage.  More on that later.  Moreover, anything good on jurisdiction from Illinois is noteworthy.

 

The history of the Livingston case is more complicated than the plot of The World is Not Enough.  The case was originally filed in Cook County, Illinois – a fabulous pro-plaintiff jurisdiction.  The case was then removed.  Then it was remanded — nine years ago.  The case sat in state court with little happening.  The generics got out on Pliva v. Mensing in the meantime, but by then the branded defendant could no longer remove the case because of the one-year bar.  Then the plaintiff lawyers did the defense a great favor (not the last) by taking their one dismissal in Illinois, which allowed them to refile within a year.  The plaintiff eventually did refile in Cook County, and the branded defendant removed.  That’s the case in our sights today.  The case was initially assigned to a different judge, but then it got reassigned to the same federal judge who remanded a long time ago.  The defendant would have been entitled to view that as a bad sign.  But it wasn’t.

So much for foreshadowing.  Here are the facts, at least the ones that matter for this decision.  The plaintiff took Accutane to treat his acne in Wisconsin in 1999 and in Ohio in 2004.  In 2005, the plaintiff had a surgical procedure to remove his colon.  The gravamen of the plaintiff’s lawsuit is that Accutane made this surgery necessary.  More specifically, the plaintiff claimed that the product was defectively designed and was accompanied by inadequate warnings.  But we are getting ahead of ourselves.  The plaintiff moved to Illinois in 2007. There, he was prescribed a generic version of the drug that allegedly caused him the earlier harm, and the plaintiff asserted that his Illinois doctor committed malpractice.  It is because the plaintiff lived in Illinois that he filed his lawsuit there, even though the manufacturer of branded Accutane was not “at home” in Illinois and the branded prescription and the alleged injury occurred outside of Illinois.


It is thus no surprise that the branded defendant moved to dismiss for lack of personal jurisdiction.  The plaintiff filed no opposition.  The Livingston court references a reply brief filed by the defendant.  Presumably, that reply brief was one of those short, triumphal papers pointing out that the plaintiff’s silence amounts to a concession, so a ruling for the defendant should be compulsory and easy.  And, in fact, the dismissal for want of personal jurisdiction was compulsory and easy.  We’ve seen a report on this case in one of the major online legal publications, and for some reason that report focused on general jurisdiction.  That aspect of the decision is certainly the least interesting part.  The manufacturer of Accutane was not incorporated in Illinois and did not locate its headquarters there.  To our mind,  Bauman makes that a no-brainer.
No, for us there are two angles to the decision that are much more interesting.  First, the Livingston court followed what seems to be the emerging consensus rule for federal courts faced with simultaneous issues of subject matter jurisdiction (is there diversity?  is there fraudulent joinder?) and personal jurisdiction (can this particular defendant be sued by this particular plaintiff here?).  Plaintiffs would prefer the district court to handle the subject matter jurisdiction issue first, conclude that the defendant had not met the difficult test for fraudulent joinder, and then remand the case to state court without ever getting to personal jurisdiction.  Defendants would prefer the federal court to look at personal jurisdiction, find it does not exist, and then dismiss the case without ever getting to subject matter jurisdiction.  It turns out the defendants are right and the plaintiffs are wrong (you’re not exactly surprised to hear us say this, are you?) for a simple reason — literally a simple reason: the personal jurisdiction issue is simple, and the fraudulent joinder issue is not.  That is what the Livingston court concluded, alluding to the “enormous judicial confusion” engendered by the fraudulent joinder doctrine, while viewing the personal jurisdiction issue as being “straightforward” and not presenting “a complex issue of law.”  As addressed above, the general jurisdiction prong of personal jurisdiction truly was simple here: no incorporation or headquarters means no general jurisdiction.
The specific jurisdiction prong was almost as simple, though we are mindful that some plaintiff lawyers and some courts now seem determined to make it much less simple.  (We recently read of a court from one of the very worst jurisdictions deciding to tackle the subject matter jurisdiction issue first, because the plaintiffs had successfully muddied the personal jurisdiction waters.  We don’t recall the judge’s name.  Perhaps Blofeld?)  As SCOTUS set forth in Walden v. Fiore, to support the exercise of specific personal jurisdiction, “the defendant’s suit-related conduct must create a substantial connection with the forum state.”  Here, the plaintiff’s Accutane prescription and treatment occurred outside of Illinois.  Predictably, the plaintiff alleged that the branded defendant “marketed, distributed, and sold” Accutane all over the United States, including Cook County.  The answer to that is: So what?  That conduct played no role in the plaintiff’s injury.  What about the fact that the plaintiff does currently reside in Illinois?  Again, Walden supplies the refutation: “[T]he plaintiff cannot be the only link between the defendant and the forum.  Rather, it is the defendant’s conduct that must form the necessary connection with the forum state that is the basis for its jurisdiction over him.”  Go back and read the facts of the Walden case, and you will understand how the plaintiff’s residence, absent some connection to the defendant’s conduct, cannot unilaterally establish specific personal jurisdiction.  End of story.  Push the button. Cue the piranhas.



But there is one additional, potentially interesting aspect of this opinion.  The physician who prescribed the generic version of the drug was, in fact, a citizen of Illinois.  Again, the court regarded this as a big fat So-what:  “The claim against the local doctor did not mention the manufacturer of Accutane, involved the generic product only, “comprises different time periods, and entails different injuries.”  Swell.  But we must admit that as we read the final portion of the Livingston opinion, we were haunted by a spectre.  It is very, very nice that the bottom line of Livingston is that the prescription of a generic drug in Illinois did not create personal jurisdiction over the brand defendant. For a moment, though, a terrible dread wormed its way into our brain-pan.  We alluded above to the fact that Illinois is the home of some awful personal jurisdiction opinions.  Illinois has also been crazy-bad on the issue of innovator liability.  One might have feared that an Illinois court might contrive to find a way to merge innovator liability with the “arise out of”/”related to” prong of specific jurisdiction and thereby keep the case in Illinois. If a branded company can be on the hook for injury allegedly caused by a generic, why not require the branded company come to the forum where the generic was consumed.  An utterly crazy syllogism is at work there.  But Illinois is the one jurisdiction batty enough (well, along with California) to throw out all of tort and jurisdictional law on grounds of foreseeability and misplaced judicial compassion.  Such an outrageous opinion would have made the judicial sky fall. Mercifully, that did not happen in the Livingston case.  Indeed, now defendants have a precedent to argue that it never should.


We offer a tip of the cyber-cap to the winning lawyers, a defense all-star team including longtime friend-of-the-blog Michael Imbroscio (Covington), as well as Colleen Hennessey (Peabody), and Sherri Arrigo (Donohue Brown).

Not all personal jurisdiction cases coming out of Pennsylvania are bad.  To be sure, an ED Pa judge’s recent embrace of the consent theory to get around Bauman was bad news – almost as bad as Philadelphia 76ers soon-to-be superstar Ben Simmons’s foot injury.  Happily, a much better opinion arrived last week:  Baker v. Livanova PLC et al., No. 1:16-cv-00260 (M.D. Pa. Sept. 29, 2016).  The author was Judge John E. Jones, the same judge who presided over the intelligent design case a couple of years ago.  Judge Jones has a reputation for being smart and trying to get things right, and the Baker decision won’t hurt that reputation one bit.

Baker is a putative class action, seeking medical monitoring based on an allegation that a heater-cooler system for regulating blood temperature during open heart surgeries exposed patients to a nasty bacterium.  In addition to suing companies that the court calls “Sorin” and “Sorin USA,” the plaintiffs also sued the parent company, LivaNova PLC, which is incorporated and headquartered in the United Kingdom.  The issue was whether there was personal jurisdiction over LivaNova.  (Sorin and Sorin USA did not contest personal jurisdiction.)  The plaintiffs said there was specific jurisdiction over LivaNova based on: (1) LivaNova’s contacts with Pennsylvania regarding the heater-cooler system, (2) LivaNova functioned as the alter ego of its subsidiaries, and (3) the almost ancient case of Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), placed distributors on the jurisdictional hook.  Note that general jurisdiction was not at issue, so the lovely Bauman case does not make even a cameo appearance. Then again, neither does the Walden case, which was decided by SCOTUS around the same time as Bauman and which says very important things about specific jurisdiction.  But even without discussing Walden, Judge Jones addresses plaintiffs’ argument correctly and coherently.  You might even say that the Baker case has an intelligent design.

Continue Reading M.D. Pa. Finds No Specific Personal Jurisdiction over Parent Company