Supreme Court Decision in BMS Limits Where Companies Can Be Sued
The U.S. Supreme Court’s decision delivered this week in Bristol-Myers Squibb v. Superior Court of California (BMS) reaffirmed the Court’s commitment to limiting state courts’ jurisdiction over national class actions. Adhering to the rationale underlying its recent decisions in BNSF Railway Co. v. Tyrrell and Daimler AG v. Bauman, the Court, in a 8-1 decision, left little doubt that the days of plaintiffs seeking to bring nationwide class actions – in cherry-picked, plaintiff-friendly jurisdictions where the defendant does not reside – are over.
The BMS case involved claims against pharmaceutical company Bristol-Myers Squibb Company alleging that its manufactured drug, Plavix, had damaged plaintiffs’ health. Plaintiffs were individuals from 33 different states, including 86 from California. Although the company was incorporated in Delaware and headquartered in New York, plaintiffs filed their class action in California on behalf of all plaintiffs, including those residing outside of California. Despite the facts that Bristol-Myers Squibb neither developed nor manufactured Plavix in California, Plaintiffs argued that specific jurisdiction existed because of the company’s “extensive contacts” with the state. The California Supreme Court agreed, concluding that the company’s “wide ranging” contacts with the state were sufficient to confer specific jurisdiction over all plaintiffs’ claims.
The Supreme Court granted certiorari, and roundly rejected the California Supreme Court’s rationale, concluding that the “settled principles regarding specific jurisdiction control this case” and holding that California courts lacked specific jurisdiction to entertain the nonresidents’ claims. Although the Court acknowledged that Bristol-Myers Squibb contracted with a California company to distribute Plavix nationally, it held that alone was insufficient to provide a basis for personal jurisdiction. The Court observed that the nonresident plaintiffs did not purchase, were not prescribed, did not ingest, and were not injured by Plavix in California. “The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents,” the Court explained, “does not allow the State to assert specific jurisdiction over the nonresidents’ claims.” Interestingly, the Court also noted in dicta that whether the Fifth Amendment imposes similar restrictions on the exercise of personal jurisdiction by a federal court “remains open.”
What forum options remain for class action plaintiffs after BMS? The Court noted that class actions could still be brought in states where the defendant resides. And plaintiffs from the same states could also still probably sue together in their respective states. But what this decision clearly forbids is filing lawsuits on behalf of nationwide classes in jurisdictions where the defendants do not reside or where the specific claims made are not sufficiently connected to plaintiffs’ chosen forum.