Supreme Court Clarifies Specific Jurisdiction and Ends Forum Shopping Spree
The Supreme Court has put an end to a jurisdictional contrivance used by the plaintiffs’ bar to shop for a friendly state forum, even if neither the plaintiff, nor the defendant, nor the actionable conduct took place in those states. In last month’s Bristol-Myers Squibb Company v. Superior Court decision, the Court ruled that out-of-state plaintiffs could not piggyback on the claims of in-state plaintiffs to assert jurisdiction over an out-of-state defendant. In doing so, the Court rejected the notion that plaintiffs’ counsel can exploit the claims of a handful of in-state plaintiffs as a hook to bring a nationwide lawsuit against an out-of-state corporation in the plaintiffs’ preferred forum.
As the International Shoe Company famously learned, a corporation can be forced to appear in state court if it maintains certain minimum contacts with that state. If the corporation is incorporated or has its principal place of business in a state, then the courts of that state can exercise general jurisdiction over the corporation. An out-of-state corporation, however, is only subject to a state court’s so-called specific jurisdiction if the lawsuit arises out of or relates to the corporation’s contacts with that state.
At issue in Bristol-Myers Squibb was whether the products liability claims of 86 California residents against Bristol-Myers Squibb (a Delaware corporation headquartered in New York) gave California courts specific jurisdiction over Bristol-Myers Squibb for similar claims brought by 592 residents of other states. All of the plaintiffs claimed to have been injured by the drug Plavix, manufactured by Bristol-Myers Squibb. The 592 non-California residents did not claim that they that purchased Plavix in California, were prescribed Plavix by California doctors, were injured by Plavix in California, or were treated for their injuries in California. Instead, they claimed the California courts had jurisdiction over their claims because those claims were similar to the claims brought by the California resident plaintiffs.
The California Supreme Court agreed, holding that, although the state of California could not exercise general jurisdiction over Bristol-Myers Squibb, the state did have specific jurisdiction over the particular product liability claims. The California court held that specific jurisdiction must be analyzed using a “sliding scale approach,” with jurisdiction more readily found where the out-of-state defendant’s contacts with the forum are more extensive. Because Bristol-Myers Squibb had extensive contacts with the state of California, generally, the California court held that specific jurisdiction could be established “based on a less direct connection between BMS’s forum activities and plaintiffs’ claims than might otherwise be required.”
The U.S. Supreme Court, however, disagreed and reversed this decision. The Supreme Court first observed that the California court’s “sliding scale approach” was inconsistent with the Supreme Court’s precedent and conflated general and specific jurisdiction. The Court then held that “[t]he mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims.” Whether specific jurisdiction exists must be analyzed on a plaintiff-by-plaintiff basis.
As the Supreme Court recognized, plaintiffs can always choose to bring a nationwide lawsuit against a corporation in a state court with general jurisdiction over the corporation. Indeed, this is one of the reasons a company may choose to incorporate in a particular state. But plaintiffs can no longer use specific jurisdiction as an excuse to bring a nationwide lawsuit in whatever venue they prefer.