Source: https://cumberlandtrialjournal.com/could-minimum-contacts-be-too-much-for-personal-jurisdiction/
Timestamp: 2019-04-21 07:05:09+00:00

Document:
Could “Minimum Contacts” Be Too Much for Personal Jurisdiction?
It appears International Shoe Co.’s precedent regarding the minimum contacts requirement for personal jurisdiction is shifting shape yet again. There are two types of personal jurisdiction: general and specific. The forum court obtains general jurisdiction if the court is within the state of the individual’s domicile, or the “home” of a corporation, and permits the court to hear any claim against the in-state defendant. The court obtains specific jurisdiction over a corporation or individual if they commence “single or occasional acts” in the forum state, or if the corporation’s activity within the state is “continuous and systematic” so as to give rise to the injury made basis of the suit in the forum state. However, the United States Supreme Court recently held that a state lacks specific jurisdiction over a company that does not “develop, create a marketing strategy for, manufacture, label, package, or work on the regulatory approval” for their product in the forum state.
In the altering case, Bristol-Myers Squibb Co., 600 plaintiffs filed a civil action against a pharmaceutical company, Bristol-Myers Squibb (“BMS”), in a California court. Most of the plaintiffs were not California residents, but all alleged injuries related to BMS’s drug called Plavix. The drug was manufactured as a blood thinner to inhibit blood clotting. The group of plaintiffs was composed of 86 California residents and 592 out-of-state residents from 33 other states. Various complaints, by both California residents and nonresidents, were filed in California courts alleging a defective product, and included products liability, negligent misrepresentation, and misleading advertising claims. The out-of-state plaintiffs did not claim they obtained the drug from California sources, nor did they claim they were injured by the drug, or treated for their injuries in California. BMS then filed a Motion to Quash Service of Summons on the out-of-state claims for lack of personal jurisdiction.
The California Superior Court denied the motion because the Court obtained general jurisdiction over BMS because the company engaged “in extensive activities in California.” The California Appellate Court and California Supreme Court examined the suit under Daimler precedent, and found the California courts lacked general jurisdiction but acquired specific jurisdiction over the out-of-state claims against BMS. The California Supreme Court then applied a “sliding scale approach to specific jurisdiction” which allowed specific jurisdiction to defendants with a wide range of forum contacts. In other words, “‘BMS’s extensive contacts with California’ permitted the exercise of specific jurisdiction ‘based on a less direct connection between BMS’s forum activities and plaintiff’s claims than might otherwise be required.’” The United States Supreme Court granted certiorari to decide whether the lower courts violated the Due Process Clause of the Fourteenth Amendment. The Court first discussed the material facts upon which their opinion was founded.
The company was incorporated in Delaware, headquartered in New York, and maintained substantial operations in both New York and New Jersey. The majority of the corporation’s work force (over 50 percent) was employed and physically present in either New York or New Jersey. BMS had connections to California; including 160 employees, 250 sales representatives, a small state-government advocacy office, and five research and laboratory facilities.
Additionally, BMS sold 187 million Plavix pills in California, amounting to $900 million in sales between 2006-2012, which was approximately 1% of the company’s overall sales revenue. However, the company did not: develop the drug, create a marketing strategy for the drug, manufacture, label, package, or work on the regulatory approval of the drug in California; instead, these activities were conducted in either New York or New Jersey.
The nonresident plaintiffs’ claims were not adequately linked to California because they were not prescribed the drug in California, did not purchase the drug in California, and were not injured in California. The Court specifically stated that the “mere fact that other plaintiffs were prescribed, obtained, and ingested [the drug] in California . . . does not allow the State to assert specific jurisdiction over the nonresidents’ claims” even if the nonresidents’ injury sustained was the same as the residents’ injury. The nonresidents’ relationship with the residents’ is insufficient for specific jurisdiction without any adequate link between their injuries and the forum state. Without the occurrence of harmful conduct within California, the nonresident plaintiffs did not suffer any injury in California, and thus California is unable to claim specific jurisdiction.
The Court concluded by stating the nonresident plaintiffs were capable of joining together in the states that would have general jurisdiction over BMS, such as New York or Delaware, because BMS is incorporated and holds a principal place of business in those states. Additionally, the plaintiffs within one state could combine their suits in their home state, such as the 92 Texan plaintiffs. Lastly, the Court expressly left open the question of whether the Fifth Amendment imposed equivalent restrictions within the federal court.
However, Justice Sotomayor strongly dissented and discussed her substantial concerns for the consequences of the majority opinion. Specifically, she discussed fairness in that a company as big as BMS should be subjected to personal jurisdiction if they have a “nationwide course of conduct that injures both forum residents and nonresidents alike” and this opinion now “make[s] it impossible to bring a nationwide mass action in state court against defendants who are ‘at home’ in different States.” Justice Sotomayor focused on the “big picture” of a “Fortune 500” company advertising and distributing it’s products nationwide, equally utilizing the same commercial channels in each and every state. BMS was given notice of the inefficacy and questionable safety of it’s drug when New England published an article in 2005 and consumers in various states claimed they sustained injuries from the drug. She disagreed with the majority opinion’s focus on the claims origination from the “design, development, manufacture, marketing, and distribution” of the drug, and instead concentrated on BMS’s subjection to the California suit in “identical” claims by nonresidents as by residents. Justice Sotomayor would have affirmed the California Court’s appropriate exercise of specific jurisdiction over the nonresidents’ claims because BMS “purposefully availed” itself in California, the nonresidents’ claims “related to” BMS’s conduct in California, and personal jurisdiction would be reasonable in one state court instead of identical suits in multiple different states. The suit was proper in California because all the plaintiffs, regardless of their residency, alleged the same injury by the same act that related to BMS’s advertising and distribution nationwide, including within the state of California. This direct connection between BMS and California is exactly what International Shoe required. Justice Sotomayor expressed her opinion that plaintiffs should be permitted to “aggregate claims arising out of a single nationwide course of conduct in a single suit in a single State where some, but not all, were injured” because to hold otherwise would be unconstitutional.
Thus far, Bristol-Myers Squibb’s concentration on federalism and the Due Process Clause has made a lasting impression. The Court’s concern was not only assessing the defendant’s burden of litigation, but also the forum State’s interest. When the forum State has “little legitimate interest in the claims in question” the Due Process Clause permits the States divestment of any coercive power. The dissent also expressed the majority’s concern for federalism over fairness. This concern is visible in opinions since Bristol-Myers Squibb. Further implications of this case include attribution to the case for the application of the “but for” test. Ultimately, the new rule is that there must be a connection between the forum state and the specific claims to establish personal jurisdiction over an out-of-state defendant, as indicated by the defendant’s development, manufacturing, labeling, packaging, or working on regulatory approval or marketing strategies for the product at issue, completely regardless of how prominently “at home” the defendant may be within the forum state or the defendant’s general business activities. Alone, the “general exercise of business activities” in a forum State “cannot create an adequate link between the claims” and the forum state. This means “continuous and systematic activities” in the forum state are no longer required, irrespective of how common those activities might be, even for a Fortune 500 company that does business nationwide. Let the “parade of horribles” begin.
 Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); see also Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 915 (2011) (citing Int’l Shoe Co., 326 U.S. at 316) (stating that “state courts may exercise personal jurisdiction over an out-of-state defendant who has ‘certain minimum contacts with [the State] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice’”); Bristol-Myers Squibb Co. v. Superior Court of Cali., San Francisco Cty., 137 S. Ct. 1773, 1775 (2017) (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 918 (2011)) (stating personal jurisdiction is subject to review for compatibility with the Due Process Clause of the Fourteenth Amendment).
 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011).
 Id. (citing Int’l Shoe Co., 326 U.S. at 317) (stating personal “jurisdiction could be asserted where the corporation’s in-state activity is ‘continuous and systematic’ and gave rise to the episode-in-suit”).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1778.
 Daimler AG v. Bauman, 134 S. Ct 746, 763 (U.S. 2014) (quoting Int’l Shoe Co., 326 U.S. at 316) (holding that subjecting a German company, with an Argentinian subsidiary, to the general jurisdiction of California courts “would not accord with the ‘fair play and substantial justice’ due process demands” because the injuries took place entirely internationally and the company’s affiliations with California are not sufficient. The company was not incorporated or have its principal place of business in the forum state of California and “[i]f Daimler’s California activities sufficed to allow adjudication of this Argentina-rooted case in California, the same global reach would presumably be available in every other State in which [the company’s] sales are sizable.”); But see Celgard, LLC v. SK Innovation Co., Ltd., 792 F.3d 1373, 1382 (U.S. Ct. App. 2015) (dismissing a case for lack of personal jurisdiction when there was no evidence of defendant’s agents or operators within the forum state, nor evidence of defendant’s knowledge it’s products were marketed in the forum state).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1778. (citing Daimler AG v Bauman, 571 U.S. 746).
 Id. at 1781 (quoting Goodyear, 564 U.S. at 919).
 Id. (citing Goodyear, 564 US. At 931) (stating “[e]ven regularly occurring sales of a product in a State do not justify the exercise over a claim unrelated to those sales.”).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1781 (quoting Goodyear, 564 U.S. at 927) (holding “[a] corporation’s ‘continuous activitiy of some sorts within a state . . . is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.’”) (citations omitted).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1781.
 Id. (stating “[t]his remains true even when third parties (here, the plaintiffs who reside in California) can bring claims similar to those brought by the nonresidents. . . . What is needed –and what is missing here– is a connection between the forum and the forum and the specific claims at issue.”); See also Walden v. Fiore, 571 U.S. 20 (2014) (holding that Nevada did not have specific jurisdiction over a Georgia defendant when the Nevada plaintiffs were injured in Georgia, even if the plaintiffs suffered reasonable harm in Nevada, because the relevant conduct made basis of the suit did not occur in Nevada and the plaintiff’s residency in Nevada alone was not sufficient to authorize jurisdiction).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1783.
 Id. (stating “[t]oday, the Court takes its first step toward a similar contradiction of specific jurisdiction by holding that a corporation that engages in a nationwide course of conduct cannot be held accountable in a state court by a group of injured people unless all of those people were injured in the forum State.”).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1785.
 Id. at 1786 (stating the company “employs over 400 people in California and maintains half a dozen facilities in the State engaged in research, development, and policymaking . . . contracts with a California-based distributor [ ] whose sales account for a significant portion of its revenue [a]nd it markets and sells its drugs . . . in California, resulting in total [drug] sales in that State of nearly $1 billion during the period relevant to this suit.”).
 Id. (stating the “claims against [BMS] concern conduct materially identical to acts the company took in California: its marketing and distribution of Plavix, which it undertook on a nationwide basis in all 50 States.”).
 Id. (stating BMS would be far more burdened if it had to defend itself in separate suits in “as many as 34 different States”).
 Id. (stating “respondents were allegedly injured by this nationwide court of conduct in Indiana, Oklahoma, and Texas, and not California, does not mean that their claims do not ‘relate to’ the advertising and distribution efforts that Bristol-Myers undertook in that State. All of the plaintiffs-residents and nonresidents alike-allege that they were injured by the same essential acts. Our cases require no connection more direct than that.”).
 Id. (citing International Shoe, 326 U.S., at 319, 66 S. Ct. 154).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1789 (stating “‘traditional notions of fair place and substantial justice’” would not be offended by aggregating plaintiffs’ identical claims in a state where some were injured).
 Id. at 1776 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294 (1980) (stating “[a]t times, ‘the Due Process Clause, acting as an instrument of interstate federalism, may . . . divest the State of its power to render a valid judgment.’”); See also Andrew v. Radiancy, Inc., Case No. 6:16-v-1061-Orl-37GJK, 2017 WL 2692840, at *6 (June 22, 2017) (citing Bristol-Myers Squibb Co., 2017 WL 2621322, at *8) (stating “[t]he law is clear that, when specific jurisdiction is at issue, the Court must disregard forum contacts that are not connected to the plaintiff’s causes of action.”).
 Bristol-Myers Squibb Co., 137 S. Ct. at 1776 (citing World-Wide Volkswagen Corp. v. Woodson 444 U.S. 286, 292 (1980).
 Id. (discussing the assessment of the defendant’s litigation burden includes consideration of “the more abstract matter of submitting to the coercive power of a State that may have ‘little legitimate interest in the claims in question.’”).
 Id. at 1788 (Justice Sotomayor dissenting) (stating “[t]he majority’s animating concern, in the end, appears to be federalism: ‘[T]erritorial limitations on the power of the respective States,’ we are informed, many today do-trump even concerns about fairness to the parties.”) (citations omitted).
 See Andrew v. Radiancy, Inc., Case No. 6:16-v-1061-Orl-37GJK, 2017 WL 2692840, at *1 (June 22, 2017) (dismissal for lack of personal jurisdiction by the Middle District of Florida for claims against a salesman and a parent company of a business that manufactured a hair removal device because the salesman was a resident of New Jersey and did not specifically direct his conduct towards Florida, and the parent company was a Nevada corporation with its principal place of business in Pennsylvania).
 See Cortina v. Bristol-Myers Squibb Co., No. 17-cv-00247-JST, 2017 WL 2793808, at *4 (N.D. Cali. June 27, 2017) (quoting Bristol-Myers Squibb Co., 137 S. Ct. at 1787 (2017)) (stating “that the United States Supreme Court recently held . . . that the fact that a defendant had research and laboratory facilities, sales representatives, and sales and marketing operations in the forum state was insufficient to justify the exercise of specific jurisdiction in the absence of an ‘adequate link between the State and the nonresidents’ claims’” but when the defendants’ conduct clinical drug trial activities throughout the forum state, and the drug is sold and marketed throughout the state, the plaintiffs’ resulting injuries satisfy the “but for” test, which is “sufficient to confer jurisdiction.”); Dubose v. Bristol-Myers Squibb Co., No. 17-cv-00244-JST, 2017 WL 2775034, at *4 (N.D. Cali. June 27, 2017) (holding when the defendants’ conduct clinical drug activities, and advertise and market the drug, throughout the forum state, the “but for” test’s satisfaction invokes specific jurisdiction).
See Jordan v. Bayer Corp., No. 4:17-CV-865(CEJ), 2017 WL 3006993, at *4 (E.D. Mo. July 14, 2017) (quoting Bristol-Myers Squibb Co., 137 S. Ct at 1780-81) (stating without an affiliation between the forum and the underlying controversy, ‘specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the state’” and holding the state of Missouri could not have personal jurisdiction “as to the claims of the non-Missouri plaintiffs” because the “defendants did not develop, manufacture, label, package, or create a marketing strategy” for the drug in Missouri, the conduct giving rise to the claims occurred outside of Missouri, and “general exercise of business activities in the state cannot create an adequate link between the claims and the Missouri forum.”).
 Int’l Shoe Co.,326 U.S. at 317.
 2017 WL 3006993, at *4.
 Bristol-Myers Squibb Co.,137 S. Ct at 1789 (Justice Sotomayor dissenting) (stating “[t]he majority chides respondents for conjuring a ‘parade of horribles,’ . . . but says nothing about how suits like those described here will survive its opinion in this case. The answer is simple: They will not.”).

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