In 2017, the U.S. Supreme Court decided Bristol Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (BMS). This decision could potentially eliminate a large swath of nationwide product liability class actions. Alternatively, BMS might not apply to class actions at all. This article examines the state of the law one year in. It remains unsettled.
‘BMS’ in California State Court
The plaintiffs in BMS alleged they were harmed by the blood-thinner Plavix. The plaintiffs asserted product liability and other claims in what is known as a “mass action.” In a mass action, each plaintiff sues on behalf of himself or herself. A mass action is different from a class action. In a class action, one or several named plaintiffs bring suit on behalf of themselves and “absent” class members.
The BMS case involved eight different state court complaints filed by 86 California residents and 592 residents from 33 other states. The plaintiffs might have chosen to file suit in federal court and enter the nationwide multidistrict litigation (MDL) pending in the District of New Jersey before Judge Freda Wolfson. They chose not to.
The BMS plaintiffs wanted their case to be national in scope but venued in California state court. They sought to realize this goal by joining a non-diverse defendant (which prevented removal based on diversity jurisdiction) and by joining fewer than 100 plaintiffs per case (which prevented removal based on the Class Action Fairness Act of 2005 (CAFA)).
‘BMS’ in the Supreme Court
Formally, the question presented in BMS was whether California’s state courts had personal jurisdiction over claims the non-resident plaintiffs were asserting against Bristol Myers Squibb. The non-resident plaintiffs bought Plavix outside of California, they ingested it outside of California, and they allegedly experienced injury outside of California.
Personal jurisdiction comes in two flavors. The first is called general jurisdiction. A court has general personal jurisdiction when the court is located where the defendant is at home. Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). A defendant is at home where it maintains its headquarters or place of incorporation. Id. The other kind of jurisdiction, specific personal jurisdiction, requires a connection between the defendant, the claim and the forum. The BMS court explained that specific jurisdiction implicates not just the burden on the defendant but federalism concerns, as well.
At the Supreme Court level, it was a given that California lacked general jurisdiction over Bristol Myers, which is a Delaware company headquartered in New York. The question for the justices was whether California had specific jurisdiction over the claims of non-resident plaintiffs. The Supreme Court answered that question with a no. “All the conduct giving rise” to the claims of these plaintiffs, the Supreme Court said, “occurred” outside of California.
BMS grounds its holding in the Fourteenth Amendment, which is a constitutional limit on the exercise of personal jurisdiction in state court. The 8-1 majority opinion by Justice Alito does not decide whether “the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court.” It calls the Fifth Amendment question “open.”
In footnote 4 of her dissent, Justice Sotomayor identifies an additional open question: whether BMS applies to class actions.
Whether ‘BMS’ Applies in Federal Court
Justice Alito’s “open question” about the Fifth Amendment and federal court has gone largely unaddressed in the courts of the Third Circuit. The answer to Justice Alito’s question depends on whether the Fourteenth Amendment operates differently in state and federal court.
The Due Process Clause of the Fourteenth Amendment sets the outer limits of the personal jurisdiction that can be exercised by state. The Due Process Clause of the Fifth Amendment sets the outer limits of the personal jurisdiction that can be exercised by the federal government. Both amendments play a role in federal court, but their role depends on which “subject matter” jurisdiction the federal court exercises.
Most product liability claims are state law claims. To decide state law claims, a federal court exercises its diversity jurisdiction. Generally speaking, Federal Rule of Civil Procedure 4(k)(1) says that service of process in a diversity jurisdiction case is governed by the law of the forum state. Because states are subject to the Fourteenth Amendment, Rule 4(k)(1) means the Fourteenth Amendment applies in federal court. Many courts have held that BMS provides the proper personal jurisdiction analysis for a federal court exercising diversity jurisdiction.
But the judge presiding over the Chinese Drywall MDL reached a different conclusion. He found that BMS’s federalism concerns do not apply to the exercise of jurisdiction by a federal court. In re Chinese-Manufactured Drywall Prods. Liab. Litig., No. 09-2047, 2017 U.S. Dist. LEXIS 197612, at *53-58 (E.D. La. Nov. 28, 2017). Chinese Drywall might best be understood, however, as limited to MDLs.
Whether ‘BMS’ Applies to Class Actions
No circuit court has addressed whether BMS applies to absent class members. And no district court in the Third Circuit has decided the question, though Judge Wolfson in the District of New Jersey stated that “most of the courts that have encountered this issue have found that Bristol-Myers does not apply in the federal class action context.” Chernus v. Logitech, Civil Action No. 17-673(FLW), 2018 U.S. Dist. LEXIS 70784, at *19 (D.N.J. Apr. 27, 2018). In Chernus, Judge Wolfson declined to rule on the question, which was presented on a motion to dismiss. Judge Wolfson held that the proper time to raise the BMS personal jurisdictional objection was on a motion for class certification.
Courts that find BMS inapplicable in the class action context note that BMS was a mass action, not a class action. The judge in Chinese Drywall noted that in a mass action, there must be personal jurisdiction over the claims of the named plaintiffs, who are the “real part[ies] in interest.” Chinese Drywall, 2017 U.S. Dist. LEXIS 197612, at *32-33. But in a class action, a court need only exercise personal jurisdiction over the claims of the named plaintiffs, not absent class members. The Chinese Drywall judge added that Rule 23’s requirements, which include typicality, adequacy of representation, predominance and superiority, provide due process protections for defendants that are lacking in a mass action.
Other courts have come out the other way. U.S. District Judge Martinotti of the District of New Jersey explained that these “courts have found that nothing in Bristol-Myers suggests that it does not apply to named plaintiffs in a federal putative class action.” Horowitz v. AT&T, Civil Action No. 3:17-cv-4827-BRM-LHG, 2018 U.S. Dist. LEXIS 69191, at *44 (D.N.J. Apr. 25, 2018).
The courts that apply BMS to absent class members reason that both named plaintiffs and absent class members are asserting the same claims against defendants. There is no reason, these courts have said, to provide the defendants with one set of protections for claims brought by the named plaintiffs and a different set of protections for claims brought by absent class members.
If it does not apply to absent class members, BMS matters little for nationwide product liability class actions. If BMS does apply to absent class members, class action plaintiffs will find themselves heavily constrained when it comes to forum choice. Nationwide class actions will be able to proceed only where the defendant is at home. And if there are two defendants who are at home in two different places, there will not be personal jurisdiction over the claims of absent class members in a single nationwide case against both defendants.
Additional clarity about the reach of BMS should come in 2019. The D.C. Circuit has accepted an interlocutory appeal in Molock v. Whole Foods Market, No. 18-7162 (D.C. Cir.) to resolve the question whether BMS applies to absent class members in federal court. The Fifth Circuit granted an interlocutory appeal to decide whether BMS applies to absent class members, but given other issues in the case, it is unclear whether the court will rule on the BMS question.
It probably will not happen in 2019, but there can be little doubt that the Supreme Court will ultimately decide the question.
Michael Reed practices at Klafter Olsen & Lesser in Rye Brook, New York. He represents plaintiffs in complex litigation largely focused on wage and hour and consumer matters.