Arguing Class Actions is a monthly column by Adam J. Levitt for the National Law Journal.
Reprinted with permission from the February, 5 2024 edition of the National Law Journal. © 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
At the outset of many class actions, the plaintiff must first clear the personal jurisdiction threshold. Stated more directly, the plaintiff needs to establish that the defendant has “minimum contacts” with the forum in which the court sits, so that the court has the power to make decisions with respect to that defendant. There are two principal means by which to establish personal jurisdiction. First, through the easier of the two, general jurisdiction, a defendant’s contacts with the jurisdiction are so systematic and continuous that they are effectively “at home” in the jurisdiction.Goodyear Dunlop Tires Operations, S.A., v. Brown, 564 U.S. 915, 919 (2011). But often plaintiffs don’t wish to play on the defendant’s home turf; rather, plaintiffs want to be the home team. Insofar as the defendant is not “at home” in that jurisdiction, plaintiffs often turn to the second means—specific jurisdiction, or claims-based personal jurisdiction—where personal jurisdiction hinges on “an affiliation between the forum and the underlying controversy.”Id.(cleaned up).
The Supreme Court applied the specific jurisdiction rule to a mass action involving an alleged defect in Plavix, a blood-thinner sold by Bristol-Myers. InBristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 582 U.S. 255, 259–60 (2017), a group of plaintiffs—most of whom were not California residents—sued Bristol-Myers in California Superior Court. Although none of the non-resident plaintiffs were prescribed Plavix from California physicians or were injured or treated in California, they argued that California was linked to their injuries through a distribution agreement between Bristol-Myers and the drug wholesaler McKesson.Id.at 259–60. The Supreme Court held the link insufficient because “it is not alleged that BMS engaged in relevant acts together with McKesson in California.”Id.at 268. Given the lack of any perceived nexus between Bristol-Myers’ Plavix-related activities in California and the nonresidents’ alleged injuries, the majority concluded that California state court lacked personal jurisdiction over the non-resident plaintiffs’ claims.
In dissent, Justice Sotomayor lamented the practical effects of the majority’s decision: “The majority’s rule will make it difficult to aggregate the claims of plaintiffs across the country whose claims may be worth little alone.”Id.at 269. She also noted that the decision would result in “piecemeal litigation and bifurcation of claims.”Id.On this point, Justice Sotomayor noted that “[a]fter this case, it is difficult to imagine where it might be possible to bring a nationwide mass action against two or more defendants headquartered and incorporated in different States. There will be no State where both defendants are ‘at home,’ and so no State in which the suit can proceed.”Id.at 278.
Beyond Justice Sotomayor’s dissent, the Court’sBristol-Myersdecision, at a minimum, endorses significant paper shuffling. Consider this fact pattern: plaintiffs bring class claims under multiple state antitrust laws in the Southern District of New York against several nonresident defendants alleging that they overpaid for a prescription drug. If some of those plaintiffs are nonresidents, defendants can move to dismiss the state law claims underBristol-Myers. Yet, the case would not end for the defendants. Rather, it would simply encourage those nonresident plaintiffs to refile their claims in other jurisdictions and then move to have them transferred to and coordinated or consolidated in the defendant’s home jurisdiction under 28 U.S.C. § 1404 (the transfer statute), or in the JPML-assigned transferee venue under 28 U.S.C. § 1407 (the multidistrict litigation statute).Bristol-Myers, as applied here, wastes time and judicial resources.
SinceBristol-Myers, federal courts have attempted to ferret out the contours and boundaries of the Court’s decision, none of which creates a one-size-fits-all approach to avoiding aBristol-Myerstrap.
Some courts have held that Bristol-Myers does not categorically apply to class actions, given that the named plaintiffs are the only real parties in interest, unlike in a mass action where every plaintiff is a real party in interest.See Fitzhenry-Russell v. Dr. Pepper Snapple Grp., Inc., 2017 WL 4224723, at *5 (N.D. Cal. Sept. 22, 2017) (“Yet the Supreme Court did not extend its reasoning to bar the nonresident plaintiffs’ claims here, and Bristol-Myers is meaningfully distinguishable based on that case concerning a mass tort action, in which each plaintiff was a named plaintiff.”);Molock v. Whole Foods Mkt., Inc., 297 F. Supp. 3d 114, 125 (D.D.C. 2018) (denying motion to dismiss based on differences between class actions and mass tort actions);Lugones v. Pete & Gerry’s Organic, LLC, 440 F. Supp. 3d 226, 235–36 (S.D.N.Y. 2020) (“[t]he overwhelming majority of federal courts have held that Bristol-Myers applies to claims brought by named plaintiffs in class actions”);Mussat v. IQVIA, Inc., 953 F.3d 441, 447 (7th Cir. 2020) (“the named representatives must be able to demonstrate either general or specific personal jurisdiction, but the unnamed class members are not required to do so.”). However, this remains a minority view; most courts have appliedBristol-Myersto class actions in some capacity.
Other courts have reasoned that, when a class action is based on federal question jurisdiction,Bristol-Myersis inapplicable.See Sloan v. Gen. Motors LLC, 287 F. Supp. 3d 840, 859 (N.D. Cal. 2018) (“[W]here a federal court presides over litigation involving a federal question, the due process analysis does not incorporate the interstate sovereignty concerns that animated Bristol-Myers and which may be ‘decisive’ in a state court’s analysis.”);see also, e.g.,Mussat, 953 F.3d at 441 (finding that, to support class certification, the named representatives must be able to demonstrate either general or specific personal jurisdiction, but the unnamed class members are not required to do so). This outcome makes sense, particularly when the federal claim at issue provides for nationwide service of process or broad venue provisions.E.g.,15 U.S.C. § 22; 7 U.S.C. § 25(c). But it leaves federal cases involving state law claims (or state court actions asserting federal claims) subject to decentralization underBristol-Myers.
Finally, some courts have endorsed a “pendent personal jurisdiction” approach, where a court may nonetheless exercise pendent jurisdiction over state law claims asserted by nonresident plaintiffs.E.g., In re Takata Airbag Prod. Liab. Litig., 524 F. Supp. 3d 1266, 1277 (S.D. Fla. 2021). But pendent personal jurisdiction is somewhat controversial, with some courts having questioned its propriety and survival post Bristol-Myers.E.g.,Greene v. Mizuho Bank, Ltd., 289 F. Supp. 3d 870, 874–75 (N.D. Ill. 2017) (“[E]ven if the doctrine [of pendent personal jurisdiction] at one time permitted the court to exercise personal jurisdiction over a claim like [the plaintiff’s] it no longer does in light ofBristol-Myers.”).
Yet, the closest solution toBristol-Myersmay be from the Supreme Court itself. Last year, inMallory v. Norfolk Southern Railway Co., 143 S. Ct. 2028 (2023), the Court held that an out-of-state company’s registration with a state’s secretary of state to do business amounted to that company’s consent to the state’s jurisdiction. As the Court observed, “Our precedents have recognized, too, that ‘express or implied consent’ can continue to ground personal jurisdiction—and consent may be manifested in various ways by word or deed.”Id.at 2039. Indeed,MallorydistinguishedBristol-Myers’ due process concerns “when an out-of-state defendant submits to suit in the forum State.”Id.at 2043. Put simply, companies should not be able to have it both ways. Companies cannot, on the one hand, benefit from the public trust of citizens of a given state to peddle their defective wares, devices, services, while, on the other, seek to evade jurisdiction in that very state when those citizens seek recompense for those companies’ bad acts.
Other states also have registration statutes similar to the one at issue inMallory—as well as states that do not—and now have clarity from the Court that such laws would be enforced if they were enacted. As a result,Malloryappears at least to temper Justice Sotomayor’s concern that post Bristol-Myerslarge corporations would steer litigation to their home turf or fracture collective litigation (mass or class) across multiple fora. So, at least for now, plaintiffs have more control over where they file and secure home-court advantage than one might have imagined shortly afterBristol-Myers. Obviously, however, with the high stakes of the jurisdictional decision in class action cases in the post Bristol-Myers Squibbworld in which we live, this will continue to be a developing question and an ongoing debate well into the foreseeable future, as litigants on both sides of the fence attempt to have courts better define the contours of the analysis—since the consequences for each side, depending on the situational outcome, are potentially momentous.
Thank you to DiCello Levitt Partner, Matt Perez, for contributing to this column.
Adam J. Levitt is a founding partner of DiCello Levitt, where he heads the firm’s class action and public client practice groups. He can be reached at [email protected]