U.S. Supreme Court Narrows Scope of Specific Jurisdiction over Non-Resident Defendants in State Courts
On 19 June 2017, the U.S. Supreme Court (the Supreme Court) adopted an interesting decision narrowing the scope of personal specific jurisdiction in U.S. civil procedural law. Specific personal jurisdiction is a concept in U.S. civil procedure according to which a court’s jurisdiction arises from the defendant having certain minimum contacts with a forum state.
The case at hand involved a products liability claim brought before Californian courts by a group of 600 plaintiffs, the vast majority of whom were non-Californian residents. The plaintiffs alleged in their pleadings to have all suffered substantially same injuries as a consequence of ingesting a particular drug manufactured and distributed nationally by Bristol-Myers Squibb (Bristol-Myers), a pharmaceutical company incorporated in Delaware with its primary place of business in the states of New York and New Jersey. The non-Californian residents did not claim to have obtained the drug in California, or that they were treated or suffered their injuries in that state.
Bristol-Myers motioned to have the service of summons set aside for lack of personal jurisdiction. The motion was, however, initially denied by the Superior Court of California which found personal general jurisdiction (i.e., jurisdiction that arises out of the defendant’s substantial connection with the forum state). The Californian court indeed found that Bristol-Myer had sufficiently extensive activities in California to assert jurisdiction. However, following the Supreme Court’s holding in Daimler AG v. Bauman (in which the Supreme Court found that the only courts that can exercise personal general jurisdiction over a company are those of the state where the company is either incorporated or has its principal place of business), the Californian Court of Appeals overturned the finding of general jurisdiction (since Bristol-Myers did not meet the relevant criteria). The Court of Appeals instead found personal specific jurisdiction. This ruling was then confirmed by the Supreme Court of California which reaffirmed the finding of specific jurisdiction, applying a “sliding scale approach” which was satisfied in part due to the similarity of the claims of the non-residents, and on the basis of other activities Bristol-Myers engaged in in that state.
The Supreme Court reversed the California Supreme Court and denounced its “sliding scale approach” as resembling “a loose and spurious form of general jurisdiction” in conflict with precedent. In reaching its decision, the Court argued that settled case law on the issue requires that specific jurisdiction cannot be found without identifying an adequate link between the state and the non-residents claims. In particular, the Supreme Court found that the fact that non-resident plaintiffs joined resident plaintiffs in a single claim, and suffered injuries that were substantially the same, does not suffice for Californian courts to assert specific jurisdiction over non-Californian residents, nor is it sufficient that Bristol-Myers conducted extensive activities in California on matters unrelated to the drug. What is needed is a direct connection between the forum and the specific claim at issue.
Although the facts of this case are purely U.S.-centric, this decision by the Supreme Court might nonetheless be relevant for transnational and international litigators. In fact, there are several reasons why this case is interesting from a transnational law perspective since there are a number of important implications for international businesses operating in the United States and subject to potential litigation. Indeed, a company not subject to general jurisdiction in any state, such as an international company, will not have to face consolidated claims by plaintiffs who have suffered injuries in different states. Similarly, if the injury is caused by the collective conduct of two separate businesses with separate “domiciles“, there would not be a forum with jurisdiction to bring a consolidated action against both parties. It seems therefore that those companies will have to defend claims piecemeal, in the respective state courts where the injury in question has occurred (Note: If a consolidated action by all plaintiffs is brought regardless, a company may still waive their right to squash the claim on the basis of lack of jurisdiction and proceed in that single forum).