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Jun 22, 2017

United States Supreme Court Clarifies Scope of Specific Personal Jurisdiction in State Court

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On Monday, June 19, 2017, the Supreme Court clarified the limits of specific personal jurisdiction in state courts, holding that a connection between a defendant’s contacts with the forum and the claims at issue remains essential in establishing whether a state court has such jurisdiction. The Court reversed a decision from the California Supreme Court, rejecting that court’s “sliding scale approach” to specific jurisdiction. Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., No. 16-466 (June 19, 2017). Writing for the Court, Justice Alito analyzed whether plaintiffs’ claims sufficiently arose out of or related to defendant’s forum activities to create specific jurisdiction, and concluded that there was no adequate link between the claims and the forum. In so doing, the Supreme Court more clearly delineated the potential reach of specific personal jurisdiction in state courts.

Plaintiffs, most of whom were not Californian residents, sued Bristol-Myers Squibb (“BMS”) in California state court, alleging that its drug Plavix caused serious side effects. BMS is incorporated in Delaware, headquartered in New York, and sells Plavix nationwide, including in California. However, BMS did not develop or manufacture the drug in California, and, as the Court noted, “the nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California.”

The trial court held that BMS was subject to California’s general jurisdiction because the company had “wide-ranging, continuous, and systematic activities in California.” The California Court of Appeal reversed, holding that the state court did not have general jurisdiction (which requires a company to be “essentially at home” in that forum, which typically requires that the company is either incorporated in the state or has its principal place of business there), but affirmed the decision on the alternative ground that the nonresident plaintiffs could establish specific personal jurisdiction over BMS (which requires that the suit arise out of or relate to the defendant’s contacts with the forum). That decision was then affirmed by the California Supreme Court, which applied a “sliding scale approach” to analyze specific jurisdiction, and held that what that court referred to as BMS’s “wide ranging” contacts with California created a “substantial nexus” between the nonresident plaintiffs’ claims and BMS’s activities in the state.

The Court noted that the “primary concern in assessing personal jurisdiction is the burden on the defendant” (internal quotation marks omitted). The Court held that California’s Supreme Court’s “sliding scale approach” would have allowed “the strength of the requisite connection between the forum and the specific claims at issue [to be] relaxed if the defendant has extensive forum contacts that are unrelated to those claims.” The Court determined that this approach found no basis in its jurisprudence, and characterized it as a “loose and spurious form of general jurisdiction.” Plaintiffs cited to Keeton v. Hustler Magazine, Inc., 465 U. S. 770 (1984) and Phillips Petroleum Co. v. Shutts, 472 U. S. 797 (1985), but the Court disagreed that either of these supported their proposed test, noting that those cases concerned either “the scope of a claim involving in-state injury and injury to residents of the State,” as opposed to the nonresident plaintiffs at issue in the instant case, or the power of a State to “entertain the claims of nonresident class members,” not its “authority to exercise jurisdiction over an out-of-state defendant.”

Finally, the Court held that neither BMS’s unrelated contacts in California (such as research not related to Plavix) nor the fact that other (i.e. resident) plaintiffs were allegedly injured in California could overcome that concern and create specific jurisdiction in this action brought by nonresident plaintiffs. Rather, the Court held that a “connection between the forum and the specific claims at issue” was needed, and no such connection was alleged by the nonresident plaintiffs.

In her dissent, Justice Sotomayor expressed concern that the Court was limiting specific jurisdiction, following the Court’s clarification of the scope of general jurisdiction, most recently in Daimler AG v. Bauman (2014) and BNSF Railway Co. v. Tyrrell (2017). Justice Sotomayor opined that the nonresident plaintiffs’ claims could be heard by the California state courts because BMS “purposefully avail[ed] itself of the privilege of conducting activities within the forum State,” the nonresidents’ claims “relate[d] to” BMS’s in-state conduct and the “exercise of jurisdiction over the nonresidents’ claims [was] reasonable.”

Importantly, the Court expressly reserved the question of how the principle it clarified here might apply to actions in federal court: “we leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court.” For now, the Court has reaffirmed that state courts may not exercise specific personal jurisdiction over an out-of-state defendant unless an adequate link exists between the forum and the specific claim at issue; when “there is no such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.”

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