Personal Jurisdiction: Where Defendants Can Be Sued

With all the hype around the end of the Supreme Court’s term, the Court’s latest opinion on personal jurisdiction has gotten less attention. But this decision deserves at least an honorable mention. The case, Bristol-Myers Squibb Co. v. Superior Court of Cal.,¹ explains the constitutional limits of specific jurisdiction and continues to narrow where corporate defendants can be sued. This should be fascinating, at least for litigators and corporate defendants.

Background on the BMS Mass Litigation

The case arose out of a massive series of lawsuits against Bristol-Myers Squibb (BMS), which makes a prescription blood thinner called Plavix. Over 600 plaintiffs from across the country banded together to bring claims against BMS (as well as a few others) in California state court. California was an interesting choice for some of these plaintiffs: BMS is not based out of California in the traditional sense; BMS did not develop the drug there; nor did it manufacture, label, package or work on the regulatory approval of the drug in California. It did market the drug there, and sold millions of dollars’ worth of Plavix in California.

Can’t Sue Me Here

BMS moved to dismiss the claims brought by the non-residents (the vast majority of the litigants). BMS essentially admitted that it could be sued in California, but only by California residents. Residents of other states, it argued, could not bring their claims against it in California because California’s courts lacked personal jurisdiction over their cases.

So before even getting to the merits of the case, the issue of personal jurisdiction was heavily (and no doubt expensively) litigated. After traveling up and down the California appellate courts for several years, the case resolved in the California state Supreme Court, which said the suit could continue in California state courts because California had specific jurisdiction over the nonresidents’ claims.

The California Supreme Court had found personal jurisdiction over BMS under the theory of specific jurisdiction. To justify its decision, the California court used a “sliding scale,” under which “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.”² In other words, the more a corporate defendant does business in the state, the more likely it is that the claim is related to the defendant’s contacts with the forum state. Using this test, the California Supreme Court held that BMS’s extensive contacts with California were sufficient to allow the court to exercise jurisdiction over it. In addition, the residents and non-residents’ claims were so similar that the simple difference that the nonresident plaintiffs were not actually injured in California was not enough to allow BMS to slide out of the lawsuit in California.

BMS asked the U.S. Supreme Court to intervene, and it granted certiorari “[t]o decide whether the California courts’ exercise of jurisdiction in this case violates the Due Process Clause of the Fourteenth Amendment.”³

The U.S. Supreme Court Talks About Specific Jurisdiction

The Court said yes, finding jurisdiction in this case did violate due process in an 8:1 decision (with Justice Sotomayor as the lone dissenter). The Court’s opinion, written by Justice Alito, began by recounting the familiar differences between general and specific jurisdiction that they try to hammer home in law school. “A court with general jurisdiction may hear any claim against that defendant, even if all the incidents underlying the claim occurred in a different State.”⁴ So general jurisdiction is available in only a few forums. For a corporate defendant, that will be the place/s where the corporation is at home.

Specific jurisdiction, on the other hand, focuses on the connection between the forum and the underlying case: “In order for a state court to exercise specific jurisdiction, ‘the suit’ must ‘arise out of or relate to the defendant’s contacts with the forum.’”⁵ This latter form of jurisdiction was central in the Court’s decision.

The U.S. Supreme Court disapproved of the California approach, primarily because the California Supreme Court had found specific jurisdiction “without identifying any adequate link between the State and the nonresidents’ claims.”⁶ The “sliding scale” approach was not enough to meet constitutional standards. In order for specific jurisdiction to be constitutionally permissible, there must be an actual connection between the forum and the specific claims at issue. It was going too far to let plaintiffs who were not California residents and who did not claim to have suffered injuries in the State to sue an out-of-state corporate defendant in state court—just because the defendant did a variety of business in California.

Justice Sotomayor dissented. In her view, the majority’s decision elevated form over substance. There was nothing fundamentally unfair about subjecting BMS to suit in California. In fact, it was going to face suit there no matter what (against the California plaintiffs). Justice Sotomayor thought that nothing in the Court’s precedents compelled the result the majority reached, and that the result would make it harder to bring mass class action suits in the future.

Practically speaking, the reach of this new decision is somewhat narrow, since mass class-action is a small percentage of litigation. But the opinion is a good reminder of the constitutional limits on personal jurisdiction, particularly where an out-of-state corporate defendant is involved. If the court’s personal jurisdiction over the defendant is based on specific jurisdiction, this case teaches that the lawsuit must arise out of or relate to the defendant’s contacts with the forum state. Simply showing that the out-of-state defendant does a lot of business in the state is not enough for specific jurisdiction to attach; the lawsuit itself must be related to these contacts, and that must be true for each plaintiff.

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¹582 U.S. ___ (2017).

²Id. at 3 (quoting 1 Cal. 5th at 806).

³Slip. op. at 4.

⁴Id. at 5.

⁵Id.

⁶Id. at 8.