Two Circuit Courts of Appeals Consider Jurisdiction Over Non-Forum Class Members
The Seventh Circuit and District of Columbia Circuit Courts of Appeals recently considered an issue that has been debated by class action lawyers on both sides of the “v” for several years: whether the Supreme Court’s decision on personal jurisdiction in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017) (“BMS”), applies to class actions and, if so, how. The Court in BMS held that a California state court lacked specific personal jurisdiction over claims in a mass tort case filed by non-California residents when the plaintiffs suffered no harm in California. Following that decision, defendants have argued that trial courts lacked personal jurisdiction over putative class members, or over claims alleged on their behalf, where there is an insufficient connection to the forum.
The cases significantly impact key strategic decisions whether and when to challenge the pleadings. In addition, even if an initial motion to dismiss is not filed, a defendant should still preserve the defense to raise either in opposition to class certification or in assessing the propriety and viability of a nationwide class settlement.
In Mussat v. IQVIA, Inc., 2020 WL 1161166 (7th Cir. Mar. 11, 2020), the plaintiff filed a putative nationwide class action under the Telephone Consumer Protection Act. The district court granted the defendants’ motion to strike the class definition insofar as it alleged a nationwide class. The Seventh Circuit agreed to hear an appeal from this ruling under Fed. R. Civ. P. 23(f), and held that BMS did not apply to a nationwide class action in federal court under a federal statute. The Court wrote that “[o]nce certified, the class as a whole is the litigating entity, and its affiliation with a forum depends only on the named plaintiffs.” Slip op. at 5 (citation omitted). The Seventh Circuit noted that the Supreme Court had repeatedly adjudicated nationwide class action cases without addressing the BMS question and that it was applying “settled principles of personal jurisdiction.” Slip op. at 7. The Seventh Circuit also noted that absent class members are not treated as parties for ordinary diversity jurisdiction purposes, or in determining venue. The Seventh Circuit analogized class actions to situations where an executor, administrator, or trustee sues in a representative capacity, and courts analyze personal jurisdiction only with respect to the representative.
In Molock v. Whole Foods Market Group, Inc., 2020 WL 1146733 (D.C. Cir. Mar. 10, 2020), the plaintiff employees sued to bring a nationwide class action for alleged lost wages. The district court denied a motion to dismiss based on BMS and an interlocutory appeal was allowed. The D.C. Circuit, in a 2-1 decision, ruled that the question of whether and how BMS applies to class actions is premature prior to a decision on class certification because, until a class is certified, putative class members are not parties. The majority relied on Supreme Court precedents that recognized putative class members cannot be bound by decisions made or actions taken in a putative class suit that has not yet been certified as a class action. As a result, the majority did not directly address the jurisdictional issue. The Molock decision could portend an argument by defendants that, at class certification, the scope of any certified class should be limited to claims arising out of harm in jurisdictions where a named plaintiff was harmed. The argument could be posed that a class action must be litigated in a manner that ultimately leads to a binding outcome on the absent class members, which logically requires personal jurisdiction over the absent class members and the claims asserted on their behalf.
The dissenter, Judge Silberman, would have ruled in favor of Whole Foods. He viewed the argument as focusing not on whether there was personal jurisdiction over the absent putative class members, but rather seeking dismissal of those claims alleged by the named plaintiffs that related to injuries occurring outside the District of Columbia. If adjudication of the scope of the class in this respect is postponed until the class certification stage, a defendant can be subjected to unduly burdensome. Judge Silberman would have reached the merits of the BMS issue and held that a named plaintiff cannot pursue claims of putative class members with no connection to the forum state. His reasoning included that: (1) personal jurisdiction must be analyzed on a claim-to-claim basis; (2) Rule 23 cannot be treated differently than a mass action on this issue; and (3) Congress has limited federal district courts’ exercise of personal jurisdiction to that of a state court where the district court is located. The dissenting judge also would have concluded that absent class members are parties for purposes of personal jurisdiction over a defendant.
Defendants will still need to make strategic decisions in deciding whether and how to litigate this issue. One strategic decision is whether to present the question in an initial motion as an issue of personal jurisdiction over the absent class members themselves, or over a certain portion of the claims asserted by the named plaintiff against the defendant (i.e., the “out-of-state” claims), or both. Another strategic consideration is whether to plead the lack of jurisdiction as defense and raise it in opposition to a class certification motion. In other words, defendants could raise it later in the case to oppose certification or impact a class action settlement later in the litigation.
BMS’s application to nationwide class actions is likely to continue to percolate up in other appellate courts and potentially make its way to the Supreme Court. While not a class case, the Supreme Court has granted certiorari in Ford Motor Co. v. Bandemer, Case No. 19-369, to address whether a plaintiff’s substantive claims must arise out of a defendant’s forum contacts in order to generate specific jurisdiction over the defendant.