May 4, 2017, Trial News
Specific jurisdiction over a drugmaker debated at SCOTUS
Last week, the U.S. Supreme Court heard oral arguments about whether a state can exercise specific jurisdiction over a drugmaker for nonresidents’ products liability claims. Hundreds of consumers alleged they suffered adverse health effects from taking Plavix, a blood thinner manufactured by Bristol-Myers Squibb Co. In August, the California Supreme Court ruled that a local court could assert specific jurisdiction over Bristol-Myers for the California residents’ and out-of-state residents’ claims, which the drugmaker appealed.
Last week, the U.S. Supreme Court heard oral arguments about whether a state can exercise specific jurisdiction over a drugmaker for nonresidents’ products liability claims. Hundreds of consumers alleged they suffered adverse health effects from taking Plavix, a blood thinner manufactured by Bristol-Myers Squibb Co. In August, the California Supreme Court ruled that a local court could assert specific jurisdiction over Bristol-Myers for the California residents’ and out-of-state residents’ claims, which the drugmaker appealed. (Bristol-Myers Squibb Co. v. Super. Ct. of Calif., No. 16-466 (U.S. oral arg. Apr. 25, 2017).)
The state high court found that Bristol-Myers’s business activities in the state created specific jurisdiction for the plaintiffs’ claims, including strict liability, negligence, and false or misleading advertising. Even though most of the plaintiffs are not California residents, the court held that it was reasonable to include their claims with the residents’ claims and that the three-prong test for specific jurisdiction had been satisfied, as Trial News previously reported.
Bristol-Myers petitioned the Supreme Court for certiorari on whether exercising specific jurisdiction in these circumstances violates the Fourteenth Amendment’s Due Process Clause. In its petition, the drugmaker questioned the California Supreme Court’s “sliding scale” approach to how related the company’s contacts and activities within the state were to the plaintiffs’ claims. The sliding scale test did not rest on causation; rather, the wide-ranging activities of Bristol-Myers—such as a nationwide campaign of marketing and distribution of Plavix through a California-based company—created sufficient activity directed at the state to exercise specific jurisdiction.
Bristol-Myers argued that the sliding scale approach blurred the lines between general and specific jurisdiction, with the latter requiring a causal connection between a defendant’s actions and a plaintiff’s injuries that was not present here. The California Supreme Court had found general jurisdiction inapplicable because Bristol-Myers’s activities in the state were not sufficient to render it “at home” under current U.S. Supreme Court case law.
The plaintiffs countered that the nationwide nature of the defendant’s conduct and the fact that their claims are the same and all arise out of activities in California weighed in favor of jurisdiction—and that bringing plaintiffs from different states together in such situations is efficient. They argued against a bright-line causation test, noting this is not required under Supreme Court jurisprudence. The plaintiffs concluded that California’s exercise of jurisdiction over all the claims was fair and reasonable. The American Association for Justice filed an amicus brief in support of the plaintiffs, in which it noted that affirming the California Supreme Court’s finding of jurisdiction would “serve the interests of both parties and of justice” by allowing “uniform adjudication of shared facts among similarly situated plaintiffs.”
Oral argument focused on concerns about federalism, predictability, and fairness if the nonresidents’ claims were to be litigated in California court, with much of the discussion centering on the fairness aspect. Justice Elena Kagan asked, “What is the unfairness here, given that there is another suit that’s going to be going forward in California, and what [they] want is just for additional claims of the exact same kind to be joined to that suit?”
Washington, D.C., attorney Neal Katyal, who argued on Bristol-Myers’s behalf, noted the presence of procedural and substantive law hurdles, as well as the risk of plaintiffs choosing forums they perceived as more advantageous than their home states.
Katyal rejected the plaintiffs’ stance that coordinating all the claims in California would increase judicial efficiency. He pointed out that both procedural and substantive law differences between California and the other 33 states in which the nonresident plaintiffs live would make coordinating the cases complicated and likely lead to disparate results.
Katyal also argued that the uncertainty of where and under what law any consumer could bring claims against the company impacted fairness and predictability. But Kagan downplayed the idea that allowing the out-of-state plaintiffs to sue in California would undermine predictability for Bristol-Myers since it markets Plavix nationwide and should expect to be open to liability in any state as a result.
When asked how an out-of-state plaintiff’s claim could fairly confer jurisdiction in California, Thomas Goldstein of Bethesda, Md., who argued for the plaintiffs, explained that the nationwide nature of Bristol-Myers’s conduct with regard to Plavix is relevant: The drugmaker knew that despite manufacturing Plavix in its home state of New Jersey, it would be “exploiting” the California market when it contracted with McKesson Corp., a California-based company that distributed millions of pills across the United States. Goldstein stressed that Bristol-Myers should not be able to hand off its responsibility for the drug simply by letting another company handle distribution outside New Jersey.
As to any federalism concerns, the Court questioned how California’s interest in adjudicating the nonresidents’ claims could supersede the interests of those residents’ home states in doing the same. Goldstein contended that a key feature of this case is McKesson’s role in distributing more than 180 million Plavix pills across the country. Even though it is not possible to determine exactly which plaintiffs received pills from that distribution channel, McKesson is a California corporation with its principal place of business in the state and any pills it distributed came out of California.
Goldstein also denied that framing the case as specific jurisdiction through the sliding scale test was a way to circumvent the Court’s limitation of general jurisdiction in the wake of its 2014 decision in Daimler AG v. Bauman (134 S. Ct. 746). The basis of all the plaintiffs’ claims is the same, he argued—and directly related to Bristol-Myers’s conduct within California. “This point about nonmutual offensive collateral estoppel is a big deal,” he said. “And that is when you have the identical claim, identical legal theory, identical operative facts . . . the premise of this case is that it’s all the same.”