The U.S. Supreme Court has overturned rulings made by three California courts that concluded they had specific jurisdiction over lawsuits brought by out-of-state residents against a company not incorporated or headquartered there.
And reverberations from the decision will likely be felt in Cook County courtrooms, say observers.
On June 19, the court released an 8-1 decision in favor of drugmaker Bristol-Myers Squibb, which was sued by more than 600 plaintiffs in San Francisco County Superior Court over its prescription blood thinner Plavix. The plaintiffs did not allege they purchased Plavix in California, only that BMS had enough business ties to the state that the courts there could exercise jurisdiction over their claims.
Only Justice Sonia Sotomayor voted to affirm the California courts’ rulings.
“The relevant plaintiffs are not California residents and do not claim to have suffered harm in that state,” Justice Samuel Alito wrote for the majority.
“In addition… all the conduct giving rise to the nonresidents’ claims occurred elsewhere. It follows that the California courts cannot claim specific jurisdiction.”
The group of plaintiffs in the mass action consisted of 86 California residents and 592 residents of 33 other states. The decision will limit the number of out-of-state plaintiffs that can join in-state plaintiffs in mass actions, and could force plaintiffs attorneys to file these types of cases in the specific jurisdictions in which corporations can be deemed “at home," said attorney Timothy Droske, a partner at the firm of Dorsey & Whitney in Minneapolis.
“This case is another example of a marked trend by the Court since its decision in Daimler AG v. Bauman (in 2014) to reign in the scope of personal jurisdictions over corporate defendants,” Droske said.
Indeed, that has been the case this year, with the court limiting jurisdiction in two recent decisions. On May 30, the court ruled Montana courts were wrong to accept two cases of railroad workers suing their employer over injuries not sustained in the state.
Just eight days earlier, the court had ruled for a company that fought to have a patent case against it moved to its home jurisdiction. The case had been filed in U.S. District Court for the Eastern District of Texas, traditionally a magnet for patent claims.
BMS is incorporated in Delaware and headquartered in New York, with more than 50 percent of its workforce employed in New York and New Jersey. It also has five facilities in California and employs approximately 410 employees in the state.
Plavix wasn’t developed in California, and the company did not develop a marketing strategy for it there. It also did not make the drug in the state.
Nevertheless, out-of-state residents joined with in-state plaintiffs to sue over alleged side effects. The San Francisco Superior Court, an appeals court and the state Supreme Court all ruled against the company, which had moved to quash service of summons on the nonresidents’ claims.
The state Supreme Court’s reasoning “is difficult to square with our precedents,” Alito wrote.
“In order for a court to exercise specific jurisdiction over a claim, there must be an ‘affiliation between the forum and the underlying controversy, principally [an] activity or an occurrence that takes place in the forum State,’” he added.
“When there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.”
Sotomayor wrote that she fears the consequences of the opinion will make it difficult for plaintiffs across the country to combine their claims.
“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,” she wrote in her dissent.
Droske said he was struck that the court reached a near-unanimous decision. Sotomayor was the lone dissenter in the Daimler AG case too.
“Justice Sotomayor’s fear… may prove to be correct, but that has not dissuaded both the liberals and conservatives on the bench from reigning in personal jurisdiction’s reach,” he said.
James Beck, a Philadelphia attorney who handles complex personal injury and product liability litigation for Reed Smith LLP, said the decision will be felt in courtrooms across the country, and those in Cook County will likely not be exempt.
"Filings will be different," he said in response to questions from The Cook County Record. "You can expect more cases filed against Illinois corporations by out-of state because such plaintiffs will be less able to file suit against those companies elsewhere. There should be a big drop in out-of-state plaintiffs suing out-of state corporations."
He noted that simply because a corporation has ties to Illinois or does business in Chicago should no longer be enough to justify bringing a case against them and many others in mass actions in Cook County courts or such venues as the U.S. DIstrict Court for the Northern District of Illinois.
In a blog post published on JDSupra.com, Beck noted the decision should put a big dent in "litigation tourism" - essentially forum shopping using personal jurisdiction to rope in a variety of defendant corporations for injuries related to asbestos exposure, for instance.
"The result in BMS means that the era of big mass torts, filed by plaintiffs anywhere against anyone over anything, is (to paraphrase Bill Clinton) over," Beck wrote. "There will be still be mass torts, but as BMS pointed out at the end of the opinion, they will either be defendant-specific - filed in the target defendant’s state of incorporation or principal place of business – or limited to plaintiffs from the state where the litigation is situated.
"... Plaintiffs will have to get used to the radical proposition that defendants have constitutional rights, too."
Executive director of Illinois Lawsuit Abuse Watch (I-LAW) Travis Akin said the ruling was welcome news and one that would hopefully "lead to fewer out of state claims being filed in the nation’s worst court jurisdictions.”
Akin said the decision could impact Madison County, the busiest asbestos court in the country, with approximately 90 percent of plaintiffs being out-of-state residents..
"Plaintiff friendly court jurisdictions such as Cook County continue to attract lawsuits from all across the country," Akin said. "Personal injury lawyers look to game the system in places like Cook County because they believe their cases will have a better outcome in these ‘Judicial Hellhole’ jurisdictions.
"This ruling could prove to be a powerful tool in stopping the kind of venue abuse we see all of time in Cook County."