Earlier this year, the Supreme Court decided Daimler AG v. Bauman, 134 S. Ct. 746 (2014), which made it much more difficult to establish general personal jurisdiction over a foreign corporation. In Bauman, the Supreme Court held that a foreign corporation is not subject to general (i.e., “all-purpose”) jurisdiction in a forum state unless the corporation’s activities in the state are so constant and pervasive as to render it “essentially at home” in that state. Bauman, 134 S. Ct. at 751. Bauman also rejected the Ninth Circuit’s corporate “agency theory,” which held that a foreign corporation without any direct contacts with the forum state could still be subject to general jurisdiction based on the contacts of an in-state subsidiary if the subsidiary’s services were “sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation’s own officials would undertake to perform substantially similar services.” Id. at 759 (citations omitted).
When the Bauman decision was first announced, many commentators predicted that the tougher standard for general jurisdiction might have the effect of discouraging form shopping of mass tort cases. Rich Stamp, With Bauman v. DaimlerChrysler, High Court May Have Put Brakes on Forum Shopping, Forbes, Feb. 4, 2014, available at http://www.forbes.com/sites/wlf/2014/02/04/with-bauman-v-daimlerchrysler-high-court-may-have-put-brakes-on-forum-shopping/. In the context of drug and medical device cases, it was suggested that Bauman might make it difficult for drug and medical device plaintiffs’ lawyers to aggregate claims in plaintiff-friendly jurisdictions based on the mere allegation that a defendant-corporation sells its products throughout the country. Drug and Device Law Blog, Sweet Home [Fill in the Blank] – A Sea Change in Personal Jurisdiction? (Apr. 18, 2014), http://druganddevicelaw.blogspot.com/2014/04/sweet-home-fill-in-blank-sea-change-in.html.
Despite these early forecasts, the first California appellate court opinion to address Bauman in the context of a drug and medical device case indicates that forum shopping of drug and medical device cases will likely continue under an expansive specific jurisdiction doctrine.
In Bristol-Myers Squibb Co. v. Superior Court, No. A140035, 2014 Cal. App. LEXIS 690 (Cal. Ct. App. Jul. 30, 2014), Bristol-Myers Squibb Company (“BMS”), a Delaware Corporation with headquarters in New York, was sued in the Superior Court of California for the County of San Francisco by dozens of California residents who were then joined by hundreds of non-resident co-plaintiffs, all of whom had allegedly suffered adverse health consequences from taking the drug Plavix. Based on Bauman, BMS moved to quash service of summons as to the hundreds of out-of-state plaintiffs, but the trial court denied the motion due to BMS’s “continuous and systematic” contacts in California.
BMS filed a writ petition to the California Court of Appeal, and based on Bauman, the appellate court reversed with respect to general jurisdiction, finding that California does not have general jurisdiction over BMS because the plaintiffs had not established that BMS’s contact with California was so exceptional as to render BMS “essentially at home” in California. Id. at *29. However, despite the lack of general jurisdiction, the Court of Appeal’s opinion nevertheless went on to uphold specific jurisdiction over BMS due to BMS’ “extensive physical presence” in California, and the “substantial connection” between the out-of-state plaintiffs’ claims and BMS’s California activities, which the court held met the “minimum contacts” and “relatedness” requirements of International Shoe v. Washington, 326 U.S. 310 (1945) and its California progeny. Id. at *51-58.
The Court of Appeal supported its specific jurisdiction decision by reasoning that the injuries suffered by the California plaintiffs are “the same as those suffered by the [out-of-state-plaintiffs].” Id. at *53. Accordingly, “if BMS is liable to any of the California plaintiffs … then those elements of each of the [out-of-state plaintiffs’] claims may also be established.” Id. In addition, the Court of Appeal held that the “interstate character” of BMS’s business was also “significant” to show the “foreseeable circumstance of causing injury to persons in distant forums.” Id. at *53-54. The court also found that even though the out-of-state plaintiffs’ injuries did not occur in California, BMS’s business activities were part of a “common effort” both within California and throughout the nation, which further supported the “substantial connection” finding. Id. at *54-55.
The Bristol-Squib Myers opinion functions as a judicial endorsement of the continued forum shopping of mass tort cases despite Bauman. Although the opinion includes a recognition of Bauman as constraining general jurisdiction over corporate defendants, it shows that, at least in California, the courts are still willing to uphold personal jurisdiction over corporate defendants by using an ever-expanding concept of specific jurisdiction -- even to allow the joining of claims by out-of-state plaintiffs. Accordingly, at least for the time being, Bauman’s impact on forum shopping is not likely to be nearly as significant as initially thought.