Caseflicks

Supreme Court of the United States • 2017

Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty.

582 U.S. 255 | 2017 U.S. LEXIS 3873 | 137 S. Ct. 1773 | 198 L. Ed. 2d 395 | 26 Fla. L. Weekly Fed. S 671 | 85 U.S.L.W. 4400

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Takeaway

In short, this case requires a claim-specific connection between the forum State and each plaintiff's claim; extensive in-state business and similar claims by forum residents cannot create specific jurisdiction for nonresidents injured elsewhere.

Background

More than 600 plaintiffs sued Bristol-Myers Squibb (BMS) in California state court, alleging that its blood-thinning drug, Plavix, caused them injuries. Eighty-six plaintiffs were California residents, but 592 lived in 33 other States. BMS was incorporated in Delaware, headquartered in New York, and maintained major operations in New York and New Jersey. It also had substantial California business activities, including research facilities, sales representatives, and more than $900 million in California Plavix sales between 2006 and 2012.

The nonresident plaintiffs did not allege that they were prescribed, purchased, ingested, or injured by Plavix in California, or that they received treatment there. Nor had BMS developed, manufactured, labeled, packaged, obtained regulatory approval for, or devised its Plavix marketing strategy in California. Those activities occurred principally in New York and New Jersey.

The California Superior Court initially held that BMS was subject to general jurisdiction because of its extensive California operations. After Daimler rejected that broad view of general jurisdiction, the California Court of Appeal held that general jurisdiction was unavailable but found specific jurisdiction over the nonresidents' claims. The California Supreme Court affirmed under a “sliding scale” approach: BMS's extensive California contacts supposedly allowed a weaker connection between those contacts and the nonresidents' claims. The U.S. Supreme Court reversed.

Issues

Issue #1

Whether California courts could exercise specific personal jurisdiction over the nonresident plaintiffs' Plavix claims.

Holding

No. The Fourteenth Amendment barred California from exercising specific jurisdiction because the nonresidents' claims lacked a sufficient connection to California.

Reasoning

The Court distinguished general jurisdiction from specific jurisdiction. General jurisdiction permits a court to hear any claim against a corporation only where it is essentially “at home,” ordinarily its State of incorporation or principal place of business. Specific jurisdiction, by contrast, is claim-specific: the suit must arise out of or relate to the defendant's contacts with the forum State.

Due process requires an affiliation between the forum and the underlying controversy, usually an in-state activity or occurrence connected to the particular claim. A defendant's extensive but unrelated contacts with a State cannot substitute for that claim-specific link. This limitation protects defendants from a State's coercive authority and also reflects the territorial limits that federalism places on state-court power.

California's sliding-scale theory improperly relaxed the required connection merely because BMS had wide-ranging California operations. In the Court's view, that approach was a “loose and spurious” form of general jurisdiction: it would allow unrelated in-state activity to support litigation over claims that did not arise from that activity.

The nonresident plaintiffs had no relevant California connection. They did not obtain Plavix, ingest it, suffer injury, or receive treatment in California. BMS's California research was unrelated to Plavix, and the fact that California residents asserted similar claims did not create a forum connection for the nonresidents' separate claims. The necessary link must run between the forum and each claim at issue, not between the forum and other plaintiffs with similar claims.

Issue #2

Whether Keeton v. Hustler Magazine and Phillips Petroleum Co. v. Shutts supported jurisdiction over the nonresident plaintiffs' claims.

Holding

No. Neither precedent authorized California to hear claims involving no California injury and no claim-specific California connection.

Reasoning

Keeton involved a libel claim tied to the defendant's circulation of defamatory material in New Hampshire. The circulation allegedly caused injury in the forum, including injury to readers there, so New Hampshire could adjudicate the full scope of that claim, including damages suffered elsewhere. Here, by contrast, the nonresidents alleged no injury in California and no relevant Plavix-related conduct affecting them there.

Shutts concerned the due process rights of absent, nonresident plaintiffs in a Kansas class action. It addressed what procedures allowed those plaintiffs' claims to be included, not whether Kansas had personal jurisdiction over an out-of-state defendant. Because BMS challenged jurisdiction over itself, Shutts did not resolve the issue.

Issue #3

Whether BMS's contract with California-based distributor McKesson supplied the required basis for specific jurisdiction.

Holding

No. The bare fact that BMS used a California distributor for nationwide distribution did not establish a claim-specific California connection.

Reasoning

Personal jurisdiction must be established as to the particular defendant, and a defendant's relationship with a third party alone is insufficient. The plaintiffs did not allege that BMS and McKesson jointly undertook relevant conduct in California or that BMS was derivatively liable for McKesson's California conduct.

The record also did not show that the Plavix taken by the nonresident plaintiffs passed through McKesson or any California distribution channel. Without evidence connecting the distributor's California activity to the particular claims, BMS's distribution contract could not support jurisdiction.

Issue #4

Whether the Court's Fourteenth Amendment ruling also established the limits of personal jurisdiction in federal court.

Holding

The Court did not decide that question and expressly left open whether the Fifth Amendment imposes the same limits on federal courts.

Reasoning

The decision concerned the due process limits on a state court's exercise of specific jurisdiction under the Fourteenth Amendment. The Court noted that the plaintiffs could pursue consolidated litigation in States where BMS was subject to general jurisdiction, such as Delaware or New York, and might be able to sue in their respective home States.

The Court declined to resolve whether a federal court's exercise of personal jurisdiction under the Fifth Amendment is subject to the same claim-specific restrictions. That question therefore remained open after the decision.

Dissents

Justice Sotomayor

Reasoning

Justice Sotomayor viewed the case through the traditional three-part specific-jurisdiction inquiry: purposeful availment, a claim that arises out of or relates to the defendant's forum conduct, and reasonableness. BMS plainly purposefully availed itself of California's substantial pharmaceutical market by operating facilities, employing hundreds of people, marketing Plavix, and making nearly $1 billion in California Plavix sales.

In her view, the nonresidents' claims sufficiently related to BMS's California conduct because all plaintiffs alleged injury from the same nationwide marketing and distribution campaign for the same drug. The fact that the nonresidents were injured elsewhere did not erase the connection between their claims and materially identical conduct that BMS undertook in California.

Justice Sotomayor regarded jurisdiction as fair and reasonable. BMS was already defending identical California residents' claims in the same action, while a consolidated proceeding reduced costs, shared discovery, and made modest individual claims more practical to pursue. California also had an interest in efficiently resolving residents' claims and regulating both BMS and California-based distributor McKesson.

She argued that Walden addressed purposeful availment rather than the separate relatedness requirement and therefore did not control this case. She instead read Keeton to show that a defendant engaging in a nationwide course of conduct may fairly face liability in one State for injuries occurring in multiple States.

Justice Sotomayor warned that the majority's rule would sharply limit nationwide mass actions in state court, force plaintiffs into piecemeal litigation, and give corporate defendants another means to prevent aggregation of small claims. In her view, neither fairness nor the Constitution required those consequences.