Case Bulletin – US Supreme Court Issues Ruling on Jurisdictional Limits
On June 19, 2017, the U.S. Supreme Court restricted the jurisdictional reach of state long-arm statutes when it struck down a decision by the California Supreme Court allowing out-of-state residents to join a class action lawsuit against Bristol-Meyer Squib filed in California. Previously, the California high court ruled in favor of permitting approximately 600 non-Californians to bring suit against Bristol-Myers Squibb in California state court due to injuries allegedly suffered from use of the blood-thinning drug Plavix, finding that the state’s courts had specific jurisdiction to hear their claims. The California court ruled that due to Bristol-Myers’ extensive contacts with California, such as its marketing and distribution of the drug, as well as research and development facilities located there, California had had specific personal jurisdiction over the non-residents’ claims.
The U.S. Supreme Court disagreed and reversed the ruling of the California Supreme Court ruling holding that those activities and contacts were not sufficient to establish jurisdiction. The Supreme Court, in an 8-1 opinion, sided with arguments from the drug company and the federal government that the California Supreme Court’s ruling created a broadened stance on jurisdiction, creating unpredictability for defendants, who could now face lawsuits in any states that their commerce touches. Notably, the Court addressed how this threat becomes a significant issue for foreign corporations who could be dragged into court nearly anywhere their products are sold based on the decision of the California Court. The government had sided with the drug company during briefing and oral arguments for public policy reasons.
Justice Alito, writing for the majority, stated that “[t]he relevant plaintiffs are not California residents and do not claim to have suffered harm in that state . . . . [i]n addition … all the conduct giving rise to the nonresidents’ claims occurred elsewhere. It follows that the California courts cannot claim specific jurisdiction.” The Supreme Court said that the fact that other plaintiffs were prescribed and took Plavix in California does not allow the state to assert specific jurisdiction over the non-residents’ claims. Further, the Supreme Court did not find it sufficient or relevant that Bristol-Myers conducted research in California on issues not related to the drug at issue. The Supreme Court stated that “[w]hat is needed — and what is missing here — is a connection between the forum and the specific claims at issue”. Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty ., 137 S. Ct. 1773, 1781 (2017).
Justice Sonia Sotomayor was the lone dissenter. Justice Sotomayor’s dissent revolved around the idea that the majority’s decision will make it difficult to aggregate the claims of plaintiffs nationwide whose claims may be worth little on their own. “It will make it impossible to bring a nationwide mass action in state court against defendants who are ‘at home’ in different states, and it will result in piecemeal litigation and the bifurcation of claims.” Id. at 1784. Justice Sotomayor continued that there is nothing unfair about subjecting a “massive” corporation to face suits in a state court for a “nationwide pattern of conduct that allegedly injures both residents of that state and non-residents.” Id. at 1785-86.