“The big one.” “A major victory.” “A game changer.” That’s how many lawyers in the defense bar described Monday’s landmark decision by the U.S. Supreme Court in Bristol-Myers Squibb v. Superior Court of California.
They’re not too far off. In mere hours, a judge in Missouri ended a pivotal trial over Johnson & Johnson’s baby powder because of the court’s decision, granting a mistrial in a courtroom in St. Louis, a venue favored by many plaintiffs.
Even plaintiffs lawyers concede that Bristol-Myers took a hatchet to a lucrative growth area in mass torts: Lawsuits brought on behalf of dozens of individuals in venues considered more favorable to plaintiffs, such as certain state courts in California, Illinois, Missouri and Texas. The court held that plaintiffs in such a case against Bristol-Myers Squibb Co. — referred to as a “mass action” — 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 ruling, like many of the Supreme Court’s prior decisions on jurisdictional matters, tightened the rules on where corporate defendants can be sued.
“It clearly is a game changer for certain of these state courts that have been receptive to the mass actions,” said Scott Solberg, a partner at Eimer Stahl in Chicago. “I don’t think this will be the end of mass actions, but the ones that are filed, unless they’re filed in the defendants’ home court, will have less mass.”
Defense attorneys saw the ruling as reining in a California Supreme Court decision last year that came up with what the U.S. Supreme Court called a “loose and spurious form of general jurisdiction.” But the impact was felt nationwide.
“I’m very concerned this is going to make it much harder to have consolidated nationwide actions,” said Paul Bland, executive director of Public Justice in Washington, which filed an amicus brief in the case. “Where you have a mass tort that affects a lot of people, you may see suits in a whole bunch of different states. For people who live in rural states, where the population is below some threshold, you may see people walk away from those completely.”
The immediate impact is that, under the terms of the justices’ holding, mass actions must be filed in the state where the defendant is headquartered or incorporated. That’s often in New Jersey and New York for pharmaceutical drugs and medical devices, which make up the majority of mass actions. The ruling is expected to have the greatest impact on new cases, rather than existing litigation, with both sides anticipating a flood of motions challenging jurisdiction from the starting gate.
“This decision will help reinforce that both in-house counsel and outside counsel need to have personal jurisdiction on the check list of early litigation strategy items to discuss,” said Timothy Droske, of counsel at Dorsey & Whitney in Minneapolis.
On the plaintiffs’ side, Ken Seeger, a partner at Seeger Salvas & Devine in San Francisco, said he anticipated more mass actions to be filed in New Jersey, New York and other jurisdictions where companies are based. That’s bad for plaintiffs attorneys, who consider those venues to have less of an “even playing field.” Of course, mass actions still could be filed in California and other states as long as they’re brought in a defendant’s home turf or on behalf of residents in those states. But filing a mass action on behalf of one state’s residents is a much smaller case. And that’s what Bristol-Myers is really about, Seeger said.
“The key here is that individual claims may not be valuable enough or may not have the resources behind them enough to conduct the type of discovery necessary and research necessary in these cases,” Seeger said. A nationwide mass action allows lawyers to cobble their manpower and financial resources to fund the litigation. “That’s the key, and that’s why the defendants pushed so hard, why they’re so happy with this decision. It makes it more difficult for plaintiffs lawyers to organize.”
The Bristol-Myers case involved more than 600 plaintiffs who sued over injuries attributed to the blood thinner Plavix. The bulk of the plaintiffs didn’t live in California, and Bristol-Myers is based in New York.
The Supreme Court’s ruling noted that the plaintiffs who didn’t live in California didn’t get Plavix in California, didn’t take it in California and weren’t injured in California.
But, unlike the California Supreme Court’s ruling, the U.S. Supreme Court found research facilities in California were “unrelated to Plavix” and that McKesson Corp., a distributor in California, didn’t have a close enough connection to the claims. “What is needed — and what is missing here — is a connection between the forum and the specific claims at issue,” wrote Justice Samuel Alito.
That makes clear what doesn’t establish specific jurisdiction. But what does? The question leaves a lot of room for debate.
“That kind of question, what kind of connection between the claims and the forum, will be hotly litigated in cases where there is some connection,” said Andrew Pincus, a partner at Mayer Brown in Washington who represented the U.S. Chamber of Commerce in an amicus brief in the case.
For instance, in cases where the product was invented in that state but manufacturing took place elsewhere. Or the product passed through the state on its way to being distributed across the country.
A lot of the answers will depend on the facts of the case. And Seeger insisted that the plaintiffs in Bristol-Myers, unlike those in other mass actions, just didn’t have the facts to support jurisdiction.
“It argued there was McKesson because it’s a California defendant, but it wasn’t the sole distributor and they were not able to show the drugs they took came from McKesson,” he said. “With bad facts like that, it was easy for the Supreme Court to make the decision they did.”
Hunter Shkolnik, the plaintiffs’ attorney in the Bristol-Myers case, disagreed. He said he wasn’t required to establish additional facts regarding McKesson. Now, as the case goes back to the California Supreme Court, he knows what he has to allege.
“The defense bar may be pounding their chest, but they have now given the plaintiffs bar the road map on how to properly plead the case to remain in state court,” said Shkolnik, of New York’s Napoli Shkolnik. “They may be counting those chickens a little too soon.”
Of course, the road map provided by the Supreme Court’s decision isn’t all that clear. It mostly focused on what the plaintiffs did wrong. But lawyers have found some guidance when flipping the Supreme Court’s definition of what doesn’t work into what does.
“In this case, the plaintiffs didn’t purchase, didn’t use and were not injured by the product in the state of California,” said Amy Rubenstein, a partner at Schiff Hardin in Chicago. “So, reading that the other way, perhaps the connection that could be made between the forum and the specific claim at issue would be purchasing the product, using the product or being injured by the product in the forum state.”
CLASS ACTIONS AND MDL
Although limited to mass actions, Bristol-Myers could impact other areas of law — class actions and federal multidistrict litigation, in particular.
Many attorneys predicted that Bristol-Myers could be raised as a jurisdictional defense in class actions, which, unlike mass actions, are brought by representative plaintiffs on behalf of unnamed class members. They note that when referencing the failure of a link to California, the Supreme Court said: “The mere fact that other plaintiffs were prescribed, obtained and ingested Plavix in California does not allow the state to assert specific jurisdiction over the nonresidents’ claims.”
“If a defendant could seek to dismiss some number of claims by people in the class if they’re brought individually on the ground of no specific jurisdiction, the fact they’re rolled up in a class action can’t stop a defendant from doing that,” Pincus said. “It’s an issue that’s going to be litigated heavily.”
The court also left open whether its holding could apply to federal courts, where mass actions usually take the form of multidistrict litigation. In those cases, a federal judicial panel transfers similar individual cases to a single judge. That judge often is in another state from where the plaintiff brought her claims.
“That is going to be the next area of litigation,” Shkolnik said. “Why is it OK for a defendant to drag a plaintiff into federal court where they didn’t file the case, or where the plaintiff doesn’t reside, and maybe drag a case to MDL?”
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