Source: https://www.consumerclassdefensecounsel.com/2018/03/02/jurisdiction-issues-dog-multistate-class-actions/
Timestamp: 2019-04-18 22:46:17+00:00

Document:
There is a growing movement to rely on last year’s United States Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Court of California to preclude multistate class actions on jurisdictional grounds. In January of this year, relying on Bristol-Myers, Judge Leinenweber of the Northern District of Illinois rejected a named plaintiff’s attempt to bring a nationwide class action in DeBernardis v. NBTY Inc.
Bristol-Myers addressed whether California state courts possessed personal jurisdiction over the product liability claims of non-California residents who had taken Bristol-Myers Squibb’s prescription drug Plavix and suffered adverse health consequences. While Bristol-Myers Squibb operated certain facilities in California, general jurisdiction in California was lacking because Bristol-Myers Squibb had its principal place of business in New York and was incorporated in Delaware. The Bristol-Myers case was a mass action — as opposed to a class action — with 86 California residents and 592 residents from 33 other states all appearing as named parties to the litigation. Ultimately, the Supreme Court held that the California courts lacked personal jurisdiction over the non-California residents’ claims because their claims lacked any connection to California.
The DeBernardis case was a class action — not a mass action — and involved allegations that a distributor of a dietary supplement made false and misleading representations regarding its potential benefits. In addition to a class of Illinois purchasers seeking relief under the Illinois Consumer Fraud Act, the named plaintiff sought to represent a putative nationwide class with respect to consumer fraud, breach of warranty and unjust enrichment claims.
The defendant moved to dismiss the complaint in its entirety. The principal argument for dismissal was that courts in Illinois lacked personal jurisdiction — based on the Bristol-Myers opinion — over the claims of absent class members who did not have any connection to Illinois.
The plaintiff in DeBernardis attempted to cabin the Supreme Court’s holding in Bristol-Myers to the context of mass tort cases, distinguishing his case on the ground that it was a putative class action that would need to satisfy the requirements of Rule 23. The plaintiff’s counsel cited two recent district court opinions in support of this distinction.
In the first case, Fitzhenry-Russell v. Dr. Pepper Snapple Group Inc., the Northern District of California rejected the argument that the Bristol-Myers rule applied only to state courts, but limited the reach of the decision to mass actions (as opposed to class actions), on the ground that citizenship of class members is “not taken into account for personal jurisdiction purposes” in class actions. In the second case, In re Chinese-Manufactured Drywall Products, the Eastern District of Louisiana followed the Fitzhenry court’s lead, albeit in dicta, and ruled that Bristol-Myers did not apply to class actions, noting that “a class action has different due process safeguards” than mass actions.
After conducting a detailed review of the background to the Supreme Court’s decision last summer, Judge Leinenweber in DeBernardis called the applicability of Bristol-Myers a “close question.” While acknowledging that he understood “the argument that there is a distinction between a mass tort action … and a nationwide class action,” he sided with the defendant and dismissed the claims relating to nonresident putative class members.
Reading the tea leaves in “the Supreme Court’s comments about federalism,” Judge Leinenweber wrote that he believed it “more likely than not” that the Supreme Court would eventually “apply Bristol-Myers Squibb to outlaw nationwide class actions in a forum, such as in this case, where there is no general jurisdiction over the Defendants.” Having dismissed the claims of non-Illinois residents, the court went on to dismiss the claims of the named plaintiff and Illinois class members due to a lack of standing to pursue injunctive relief and a failure to comply with certain Illinois statutory notice requirements.
The DeBernardis decision — and the McDonnell, FitzHenry and Chinese-Manufactured Drywall cases it discusses — highlight the significance of personal jurisdiction requirements in the context of class actions. As illustrated above, the current landscape in federal district courts is divided with respect to applying Bristol-Myers beyond mass actions to class actions. However, a lack of personal jurisdiction with respect to nonresident claims can be a viable defense to preclude multistate class actions, and should be assessed by defense counsel at the outset of any class action on behalf of a purported multistate class.
A defendant seeking to avail itself of this argument should do so at the outset of the litigation because, unlike subject matter jurisdiction, a personal jurisdiction defense may be waived by a defendant. One federal court has already ruled that a defendant waived its potential personal jurisdiction defense — based on the rationale of Bristol-Myers — despite the fact that the defendant filed its motion to dismiss before the Supreme Court’s decision was released and immediately raised its jurisdictional defense in a reply brief.
Importantly, the Supreme Court’s Bristol-Myers decision addresses specific jurisdiction: The court expressly noted that a forum might be permitted to exercise personal jurisdiction over nonresidents’ claims in situations where it possesses general jurisdiction over the defendant.
General jurisdiction is broad, allowing a court to hear any claim against a defendant regardless of the connections between the claim and the forum, whereas specific jurisdiction requires a much tighter connection between the defendant’s contacts with the forum and the circumstances giving rise to the plaintiff’s claim. Even where a court applies the rationale of Bristol-Myers to a class action, it may still be possible for national class actions to proceed in states where a given defendant is considered “at home” under longstanding principles of general jurisdiction (e.g., a corporation’s state of incorporation or principal place of business).
Given the recency and prominence of the Bristol-Myers opinion, we expect lower courts will continue to grapple with the intersection between personal jurisdiction and class action litigation. With a split of authority already developing at the district court level just six months after the Supreme Court’s decision, class action practitioners should expect that the federal courts of appeal will begin to weigh in short order.
 137 S.Ct. 1773 (June 19, 2017).
 2018 U.S. Dist. LEXIS 7947 (N.D. Ill. Jan. 18, 2018).
 Bristol-Myers, 137 S.Ct. at 1778.
 DeBernardis, 2018 U.S. Dist. LEXIS 7947, at *5 (citing McDonnell v. Nature’s Way Products LLC, 2017 U.S. Dist. LEXIS 177892 (N.D. Ill. Oct. 26, 2017)).
 2017 U.S. Dist. LEXIS 177892, at *9-10.
 DeBernardis, 2018 U.S. Dist. LEXIS 7947, at *5.
 Id. (citing Fitzhenry-Russell v. Dr. Pepper Snapple Group Inc., 2017 U.S. Dist. LEXIS 155654 (N.D. Cal. Sept. 22, 2017)), and In re Chinese-Manufactured Drywall Products, 2017 U.S. Dist. LEXIS 197612 (E.D. La. Nov. 30, 2017).
 2017 U.S. Dist. LEXIS 155654, at *13.
 2017 U.S. Dist. LEXIS 197612, at *31-33, 37.
 Compare In re Dental Supplies Antitrust Litig., 2017 U.S. Dist. LEXIS 153265, at *37 (E.D.N.Y. Sept. 20, 2017) (rejecting distinction between mass actions and class actions as flawed because the “constitutional requirements of due process does not wax and wane when the complaint is individual or on behalf of a class”) with Feller v. Transamerica Life Ins. Co., 2017 U.S. Dist. LEXIS 206822, at *47-48 (C.D. Cal. Dec. 11, 2017) (holding that the reasoning of Bristol-Myers “does not reach so far as to bar the [claims of] nonresident unnamed class members”); cf. Swamy v. Title Source Inc., 2017 U.S. Dist. LEXIS 186535, at *4-6 (N.D. Cal. Nov. 10, 2017) (refusing to extend Bristol-Myers rule to collective actions).
 However, the extent to which a defendant could waive a federal court’s lack of personal jurisdiction when the issue relates to a lack of a connection between an absent plaintiff’s claim and the forum (as opposed to between the defendant and the forum) is debatable.
 Alvarez v. NBTY Inc., 2017 U.S. Dist. LEXIS 201159, at *9-11 (S.D. Cal. Dec. 6, 2017).
 137 S.Ct. at 1784 (“Our decision does not prevent the California and out-of-state plaintiffs from joining together in a consolidated action in the States that have general jurisdiction over [the defendant]”).

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