Hunton Retail Law Resource

Since the U.S. Supreme Court’s 2014 decision in Daimler AG v. Bauman, 134 S.Ct. 746 (2014), numerous courts across the country have applied its holding to narrow the permissible bounds of the exercise of general jurisdiction over companies in jurisdictions without a connection to the specific claims in the case. On August 29, 2016, in Bristol-Myers Squibb v. Superior Court, No. S221038 (Calif. 2016), the California Supreme Court left many wondering what Daimler may mean for the exercise of specific jurisdiction in cases involving nationwide courses of business conduct affecting both resident and nonresident plaintiffs. 

In Bristol-Myers, the court took on the question of whether Bristol-Myers’s nationwide marketing and distribution efforts should be subject to specific personal jurisdiction in California for the personal injury claims of nearly 600 nonresident plaintiffs who brought suit in the state, despite having purchased and used Bristol-Myers’s blood thinner drug, Plavix, outside of California. While the court’s decision once again explicitly confirmed Daimler’s general personal jurisdiction mandate that nationwide companies cannot automatically be held subject to suit in every jurisdiction in which they do business, it potentially opened the door for a loophole the U.S. Supreme Court did not contemplate in its Daimler decision.

Background

In March 2012, 678 individual plaintiffs filed suit in eight separate complaints against Bristol-Myers claiming that Plavix caused them a variety of serious injuries, including 18 deaths. The eight cases were then joined together and assigned to a coordination trial judge in the San Francisco Superior Court. Of the 678 plaintiffs, only 86 were California residents. Bristol-Myers, a Delaware corporation, is headquartered in New York with substantial operations in New Jersey. The company moved to dismiss the nonresident plaintiffs’ claims against it, arguing that it was not subject to general personal jurisdiction in California, nor was it subject to specific personal jurisdiction for the nonresident plaintiffs’ claims because those plaintiffs’ claims did not arise in California. Following an appellate court’s 2014 post-Daimler decision holding that specific jurisdiction existed over the nonresident plaintiffs’ claims, Bristol-Myers appealed to the California Supreme Court.

Opinion

The California Supreme Court agreed that Bristol-Myers was subject to specific personal jurisdiction because its extensive contacts with California in the course of the design, marketing and distribution of Plavix put it on notice that it could be sued in California for claims arising from use of the drug. Specifically, the court seized on Bristol-Myers’s “common nationwide course of distribution,” noting 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, which allegedly caused injuries in and outside the state. Thus, the nonresident plaintiffs’ claims bear a substantial connection to [Bristol-Myers’s] contacts in California.” Other circumstances cited by the court to justify the exercise of specific jurisdiction over Bristol-Myers for the nonresident plaintiffs’ claims include:

• The nationwide marketing, promotion and distribution of Plavix was associated with a California-based distributor and representatives.
• Bristol-Myers maintains research and laboratory facilities in California, which the court found relevant to plaintiffs’ claims that Plavix was negligently developed and designed, despite the court’s own acknowledgment that “there is no claim that Plavix itself was designed and developed in these facilities.”
• Bristol-Myers “embraced” the risk of suit in numerous states by “coordinating a single nationwide marketing and distribution effort.”
• California public policy favors the exercise of personal jurisdiction in this case because coordination of mass tort claims promotes efficiency in the judicial system, as well as because many of the resident California plaintiffs claimed severe medical conditions and their claims could be stalled if the nonresident plaintiffs sued Bristol-Myers in different forums.

Significantly, the court analyzed the facts with repeated reference to the accompanying California plaintiffs’ claims. As the court itself noted, the idea of handling nonresident plaintiffs’ claims in large, multi-plaintiff cases like class actions is not unprecedented. It is unclear (but unlikely) whether the court would reach the same result in a case that involved only the claims of nonresidents.

Good News for Retailers

Still, Bristol-Myers did bring some more straightforward and welcome news for companies in the retail industry:

• No general personal jurisdiction over Bristol-Myers in California. Despite finding that specific personal jurisdiction existed over Bristol-Myers for the nonresident plaintiffs’ claims, the California Supreme Court held that Bristol-Myers was not subject to general personal jurisdiction in California. The court noted that while Bristol-Myers’s contacts with California were undoubtedly substantial (and relevant to the specific jurisdiction analysis), they fell far short of the paradigms offered by the Supreme Court in Daimler.
• No consent by registration in California. The California Supreme Court joined a growing number of high-profile courts – including the Second Circuit and the Supreme Court of Delaware – to hold in recent months that registration to do business in a state is insufficient to constitute consent to general personal jurisdiction. For nationwide retailers doing business in multiple states across the country, this is an encouraging trend.

Looking Ahead

We expect that the California Supreme Court’s decision in Bristol-Myers will be appealed to the U.S. Supreme Court, given the potential tension between the specific personal jurisdiction analysis in Bristol-Myers and the personal jurisdiction mandates set forth by the Court in Daimler. The Hunton & Williams Retail Industry Team will continue to monitor and report on any developments in the case.