Following on the heels of BNSF Railway Company v. Tyrrell last month, the Supreme Court, by an 8-1 margin in Bristol-Myers Squibb v. Superior Court of California, has reaffirmed the jurisdictional holding of its 2014 Daimler AG v. Bauman opinion. By reversing the California Supreme Court’s use of a “sliding scale” to find jurisdiction over out-of-state purchasers of the prescription drug Plavix, the Court emphasized that, under the 14th Amendment, a corporate defendant may only be subject to the general jurisdiction of the courts sitting in either its state of incorporation or principal place of business.

In Daimler, the Court stated that a corporate defendant may only be considered “at home” for the purposes of a general jurisdiction analysis in its state of incorporation or where it operates its principal place of business. That decision was largely perceived as an attempt to curtail forum shopping by reigning in state courts’ abilities to exercise general jurisdiction over out-of-state corporate defendants. The unusual facts of Daimler, however, had left some lingering doubts about its general applicability, and lower courts were split on how to apply its holding. Some courts chose to follow a bright-line rule limiting general jurisdiction to only the state of incorporation and principal place of business, while others found more creative ways to exercise jurisdiction (e.g., by holding that registering to do business in the state constituted consent to jurisdiction, or by expansive interpretations of specific jurisdiction).

The California Supreme Court fell into the latter category. The eight complaints at issue were filed in San Francisco Superior Court on behalf of 678 purchasers of Plavix, which was manufactured and marketed by Bristol-Myers Squibb Co. (BMS). Of the plaintiffs, 86 were residents of California and 592 were residents of other states. BMS is a Delaware corporation headquartered in New York. While it maintains five offices and four research facilities in California, BMS did not develop or manufacture Plavix in the state. That work was done primarily in New York and New Jersey. Accordingly, BMS moved to dismiss the claims of the non-California plaintiffs for lack of personal jurisdiction. Ultimately, the California Supreme Court held that because BMS engaged in nationwide marketing and distribution efforts, a “substantial nexus” existed between the similar claims of the California and out-of-state plaintiffs, which was sufficient to subject BMS to California’s general jurisdiction.

The Supreme Court granted certiorari and reversed. In so doing, Justice Alito, writing for the eight-justice majority, took the opportunity to reinforce the bright-line rule governing general jurisdiction over corporate defendants. The Court rejected the “sliding scale” approach used by the California court as an impermissible use of specific jurisdiction absent any clear connection between BMS’s activities in California and the injuries alleged by the out-of-state plaintiffs. The Court noted that its holding does not leave plaintiffs without recourse because the non-California plaintiffs may still pursue their claims in Delaware, New York, or their own home states (the place of injury).

BMS provides new certainty for corporations by limiting the ability of plaintiffs to shop for a favorable, yet unconnected, forum. However, the ruling likely will result in more dispersed litigation across multiple jurisdictions, particularly if the law of the corporation’s home state is viewed as less favorable to the plaintiffs.

Ballard Spahr’s Product Liability and Mass Tort Group has substantial experience defending single-plaintiff and consumer class actions, including economic loss, warranty, and consumer fraud cases.

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