The Other Shoe Drops
Defense Digest, Vol. 24, No. 1, March 2018
By J. Bruce McKissock, Esq. & Nicolai A. Schurko, Esq.*
For years, when a serious accident or injury occurred and multi-party litigation resulted, plaintiffs enjoyed great leeway in selecting what they viewed as the most favorable forum. As long as a plaintiff identified just one defendant that routinely conducted business in a certain state or identified some aspect of the accident that related to that state, personal jurisdiction would in most cases be deemed proper. In some instances, this was true even when the involved defendant was headquartered and conducted the majority of its business elsewhere and when conduct leading to the accident occurred elsewhere.
By way of example, Pennsylvania has historically been a frequent forum for major aviation cases as most manufacturers and servicers of aviation equipment and components have at least some ongoing commercial dealings with clients and companies based in Pennsylvania and several significant players in the global aviation industries have manufacturing facilities in Pennsylvania. Pennsylvania’s courts would regularly find that a company’s relatively minimal participation in aviation business that flowed through Pennsylvania constituted “transacting business” or other sufficient contact sufficient to confer personal jurisdiction, as enumerated in this Commonwealth’s long-arm statute, 42 Pa.C.S. § 5322. Similarly, California, Texas, Florida, Illinois and New York have been easily accessible forums because significant numbers of aircraft and aircraft components are sold, serviced and distributed in those jurisdictions, even if the entities that conduct that business are not incorporated or headquartered there. The same was true in the context of the trucking, industrial equipment and pharmaceutical industries, with companies that conduct business on a national basis. Parties would frequently find themselves dragged into distant jurisdictions favored by plaintiffs based on minimal commercial dealings in that forum state.
In 2014, the United States Supreme Court began to restructure this landscape with its ruling as to general personal jurisdiction in Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014), holding that a corporate entity had to be “at home” in the forum state for the exercise of general personal jurisdiction to be proper. “At home” was defined as either a defendant’s state of incorporation or the state in which that defendant maintained its principal place of business, with the potential for finding the defendant at home elsewhere limited to “exceptional cases” only. Importantly, the Court expressly rejected the exercise of general jurisdiction in every state in which a national corporation engaged in substantial and continuous business.
In response to Daimler, it appears that the plaintiffs’ bar became more creative in its pleadings, finding and focusing on some purported activity by each defendant in the forum state that supposedly related to an accident or a product at issue. Our office has encountered recent aviation cases in which courts continue to support an expansive application of long-arm statutes via findings that even the most tangential in-forum activity tying a product or event to alleged harm to the plaintiff allows for the exercise of specific jurisdiction over corporate defendants. Similarly, entities within the pharmaceutical industry were facing high-exposure cases filed in forum states where the plaintiffs were not residents and where the pharmaceutical product at issue was neither purchased nor consumed/used, but where the defendant pharmaceutical company did market the subject product to other individuals. In short, while Daimler had allowed many defendants to avoid being subjected to general jurisdiction claims in adverse forums, those defendants continued to find themselves hauled into unfavorable jurisdictions under the guise of specific jurisdiction.
On June 19, 2017, the United States Supreme Court “dropped the other shoe” with its opinion in Bristol-Myers Squib Co. v. Superior Court of California, 137 S.Ct. 1773 (2017), providing strict due process requirements for the exercise of specific jurisdiction, parallel to those that had been created under the “at home” test for general jurisdiction in Daimler. In Bristol-Myers Squib, a class of hundreds of plaintiffs, who mostly resided outside of California, alleged injuries as a result of ingesting the Bristol-Meyers Squibb drug Plavix. Bristol-Meyers raised lack of personal jurisdiction as a defense, and the California Superior Court initially ruled that, although California courts lacked general jurisdiction over Bristol-Meyers (a corporation existing under the laws of Delaware with a principal place of business in New York), California courts could still exercise specific jurisdiction over all of the hundreds of claims. The California Superior Court held this was the case even for those claims involving plaintiffs who lived outside of California and who did not purchase nor ingest Plavix in California. On appeal, the United States Supreme Court reversed and held that California could not exercise specific personal jurisdiction over the non-resident plaintiffs. In doing so, the Supreme Court issued a clear standard for specific personal jurisdiction.
Writing for the majority, Justice Alito emphasized that “[s]pecific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.” If a state has no “legitimate interest” in particular claims, a defendant should not be forced to “submit to the coercive power” of the state with respect to those claims. There must be an “[a]ffiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.” When such an affiliation is lacking, specific jurisdiction may not be exercised regardless of the extent of the defendant’s unrelated activities in the state.
The Bristol-Myers Squib opinion has already had a huge impact on the landscape of national multi-party litigation within the pharmaceutical industry. In the wake of the clarified specific personal jurisdiction standard, Johnson and Johnson has successfully argued lack of specific personal jurisdiction to overturn two substantial jury verdicts—one $72 million verdict in the Missouri court system and one $417 million verdict in the California court system—in cases where non-residents claimed cancer-related injuries after using Johnson & Johnson’s talc powder products. Likewise, Judge Arnold New of the Philadelphia County Court of Common Pleas is currently deciding the issue of whether 90-plus pelvic mesh cases currently pending before it should be permitted to proceed under the holding of Bristol-Myers Squib.
Though the application of the Bristol-Myers Squib opinion has predominantly been applied in the context of pharmaceutical products liability cases, thus far, its holding will likely have far reaching effects on the issue of specific personal jurisdiction in cases involving a host of industries that regularly face multi-party product liability litigation. Indeed, Bristol-Myers Squib, especially when read in conjunction with Daimler, will mark another milestone in the rapidly changing framework where plaintiffs can seek recourse for their alleged injuries.
*Bruce is senior counsel and chair of our Aviation and Complex Litigation Practice Group. He can be reached at 215.575.4553 or firstname.lastname@example.org. Nicolai, an associate in our Philadelphia, Pennsylvania office, can be reached at 215.575.2701 or email@example.com.
Defense Digest, Vol. 24, No. 1, March 2018. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2018 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact firstname.lastname@example.org.