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LITIGATION: Forum Shopping Thinned by Recent U.S. Supreme Court Ruling

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In a blow to the plaintiffs’ bar, the U.S. Supreme Court recently issued an opinion that could curtail the ability of plaintiffs to forum shop their claims. The 8-1 decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, et al. (June 19, 2017, No. 16-466) ___ U.S. ___ [137 S.Ct. 1773] (Bristol-Myers) held that California courts lacked specific jurisdiction over Bristol-Myers Squibb Co. (BMS), a pharmaceutical company, to entertain claims brought by 592 out-of-state plaintiffs. The opinion was authored by Justice Samuel Alito with Justice Sonia Sotomayor the only justice to dissent.

Bristol-Myers involved eight separate lawsuits brought by 86 California residents and 592 residents from 33 other states all alleging that one of BMS’ drugs, Plavix, had damaged their health. All eight lawsuits asserted state law claims against BMS, a company incorporated in Delaware, headquartered in New York, and with substantial operations in New York and New Jersey. BMS’ California contacts essentially consisted of five research laboratories, approximately 250 sales representatives, and a small state-government advocacy office in Sacramento.

The trial court denied BMS’ motion to quash service of summons on the nonresidents claims, finding that the California courts had general jurisdiction over BMS “[b]ecause [it] engages in extensive activities in California.” The Court of Appeal initially upheld the trial court’s decision but subsequently changed its decision and found that the California courts had specific jurisdiction (and no general jurisdiction) following the U.S. Supreme Court’s decision in Daimler AG v. Bauman (Jan. 14, 2014, No. 11-965) ___ U.S. ___ [134 S.Ct. 746].

This subsequent decision by the California appellate court was affirmed by a divided California Supreme Court. As noted in the opinion, the majority of the California Supreme Court applied a “sliding scale approach” in which “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.” Accordingly, the majority found that “BMS’ extensive contacts with California” permitted the exercise of specific jurisdiction “because the claims of the nonresidents were similar in several ways to the claims of the California residents (as to which specific jurisdiction was uncontested)” and that “[b]oth the resident and nonresident plaintiffs’ claims are based on the same allegedly defective product and the assertedly misleading marketing and promotion of that product.” The dissenting justices reasoned that the nonresidents’ claims “in no sense arise from BMS’ marketing and sales of Plavix in California,” and they found that the “mere similarity” of the residents’ and nonresidents’ claims was not enough.

After granting certiorari, the U.S. Supreme Court held that the California Supreme Court’s “sliding scale approach” did not comport with “settled principles of specific jurisdiction.” Specifically, the U.S. Supreme Court found that there was no adequate link to support the finding of specific jurisdiction over BMS in relation to the non-residents’ claims. In other words, “[w]hat is needed is a connection between the forum and the specific claims at issue.” The Court was especially troubled given that the “relevant plaintiffs are not California residents and do not claim to have suffered harm in that State.”

Justice Alito further noted that the decision “will not result in the parade of horribles” since there were still a number of viable forums available to plaintiffs such as those States that have general jurisdiction over BMS (i.e. New York, New Jersey, or Delaware) or in the plaintiffs’ respective home States.

Bristol-Myers should hamper plaintiffs’ ability to “forum shop” and sue corporations in any particularly plaintiff-friendly state, such as California. If a corporation has no California contacts that would allow for general jurisdiction (such as place of incorporation or having a principal place of business), then in order for their claims to survive any jurisdictional challenge, plaintiffs must show a connection between the harm alleged and the activity within the state.

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