Whole Foods Market has asked a federal appeals court to rule on a simmering debate: Whether a landmark U.S. Supreme Court decision limiting personal jurisdiction in mass torts should also apply to class actions.
In a Jan. 28 opening brief, Whole Foods attorney Gregory Casas called on the U.S. Court of Appeals for the D.C. Circuit to address a “novel issue of constitutional due process” on which district courts have failed to agree. The question is whether the Supreme Court’s 2017 ruling in Bristol-Myers Squibb v. Superior Court of California, which was in a mass-tort action, also applies to class actions. So far, more than a dozen court decisions, most ruling on motions to dismiss based on lack of personal jurisdiction, have weighed in on the matter. Judges are split, and no federal appeals court has ruled on the issue.
“At bottom, Bristol-Myers established that a defendant who is not at home in a given state should not be subjected to suit in that state by individuals from other states,” wrote Casas, a shareholder at Greenberg Traurig in Austin. “This is true regardless of whether the nationwide suit takes the form of a mass tort or class action.”
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The Washington Legal Foundation and the U.S. Chamber of Commerce filed amicus briefs this month supporting Whole Foods. The Chamber, which filed with the Business Roundtable, cautioned that the lower court decision, if upheld, would invite “untrammeled forum shopping” by the plaintiffs’ bar and “impose serious, unjustified burdens on the business community and the courts.”
“This case raises an important question of first impression in this circuit: Whether, in a class action, a court must find that the defendant is subject to personal jurisdiction with respect to all class members’ claims, or only with respect to the named plaintiffs’ claims,” wrote Nicole Saharsky, a Washington, D.C., partner at Mayer Brown, in the Chamber’s brief. “In sum, the district court’s rule would create a new way for plaintiffs’ lawyers to forum shop, allowing them to file a limitless number of claims in a desired forum so long as the claims are brought in a class action and one named plaintiff can establish specific personal jurisdiction over the defendant.”
A similar appeal before the U.S. Court of Appeals for the Ninth Circuit involves a case now in settlement negotiations, and the Fifth Circuit is reviewing a related issue, said Richard Samp, chief counsel at the Washington Legal Foundation. On Jan. 25, the Seventh Circuit agreed to take up interlocutory review of a class certification order based on Bristol-Myers, but plaintiffs have yet to file their opening brief.
The D.C. Circuit “permitted appeal of this particular issue in the district court order because this is the issue that district courts have disagreed about and the one that needs to get resolved,” Samp said.
Casas declined to comment.
A lawyer for the plaintiffs, Matthew Wessler of Washington’s Gupta Wessler, whose response brief is due March 29, said in an emailed statement: “Whole Foods is trying to use Bristol-Myers to erect an unprecedented rule that federal courts cannot exercise jurisdiction over unnamed class members, but we’re confident that the D.C. Circuit will reject Whole Foods’ effort to extend the Supreme Court’s decision in Bristol-Myers and use it to radically reshape class-action law and overturn decades of settled practice.”
The issue has been ripe for dispute since Bristol-Myers, an 8-1 decision that built on prior Supreme Court precedents in tightening the rules on where plaintiffs can sue corporate defendants. The U.S. Supreme Court held that most of the 600 plaintiffs in a mass action against Bristol-Myers over its blood thinner Plavix had failed to establish specific jurisdiction because there wasn’t enough of a link between their claims and California, where they brought their lawsuit. The decision, which defendants called a “game changer,” has put a wrench into several high-profile mass torts, such as cases alleging Johnson & Johnson’s baby powder caused women to get ovarian cancer.
In a footnote to her dissent, Associate Justice Sonia Sotomayor noted that the majority’s opinion failed to address its impact on nationwide class actions.
The case before the D.C. Circuit involves seven current and former Whole Foods employees in the District of Columbia and five other states who alleged that the Texas-based grocery store chain failed to pay bonuses under a “gainsharing” incentive program, which compensated employees for keeping their departments under budget. The case, filed in 2016, alleges the wrongdoing was nationwide, despite Whole Foods firing employees at nine of its 457 stores. The case brings claims on behalf of a nationwide class of employees of Whole Foods, which has been acquired by the online retail giant Amazon.
On March 15, U.S. District Judge Amit Mehta, citing Bristol-Myers, dismissed two lead plaintiffs who had no connection to the District of Columbia but allowed the nationwide class to go forward. In so doing, Mehta disagreed with Whole Foods that Bristol-Myers governed the claims of the absent class members who did not live in the District of Columbia. He cited a handful of other decisions, including U.S. District Judge Eldon Fallon’s 2017 ruling in the multidistrict litigation over Chinese drywall that found Bristol-Myers did not apply to class actions, which are distinguishable from mass actions. Most importantly, unlike mass actions, class actions involve absent class members and must comply with Rule 23 of the Federal Rule of Civil Procedure, which adds “due process safeguards not applicable in the mass tort context.”
“In light of these key distinctions, and because defendants have not presented persuasive authority to the contrary, the court joins the other courts that have concluded that Bristol-Myers does not require a court to assess personal jurisdiction with regard to all non-resident putative class members,” Mehta wrote.
In its motion last year to certify the dismissal order for interlocutory appeal, Whole Foods noted that nine cases had ruled alongside Mehta’s holding but that seven others sided with the defendants. Many of the decisions supporting Whole Foods are in the Northern District of Illinois, including the case now on appeal before the Seventh Circuit.
Christopher Regan, of Regan Zambri Long in Washington, D.C., representing the plaintiffs in their opposition to interlocutory appeal, questioned Whole Foods’ math on the district court decisions. Applying Bristol-Myers to class actions, he wrote, would have an “absurd result.”
“Defendant’s motion strives to paint the court’s decision as a difficult one,” he wrote.