June 13, 2018
There has been much written about several cases from the United States Supreme Court which appear to narrow the “liberality” afforded Plaintiffs in products liability cases who claim exposure to products manufactured by out-of-state Defendants, or sold ‘into’ the state by out-of-state distributors.Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017); Daimler AG v. Bauman, 134 S. Ct. 746 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 546 U.S. 915 (2011).Recent experience suggests that, unfortunately, these recent cases have had limited application in some jurisdictions.Moreover, even if the “right facts” come along that appear to support dismissal, pursuit of the defense early in the litigation may expose the Defendant to similarly ‘early’ discovery about the extent of its sales into the forum state.
First, let us review briefly the recent U.S. Supreme Court holdings.There are traditionally two bases upon which a Defendant may be “hailed into court” in a jurisdiction where the Plaintiff resided outside that jurisdiction”:general jurisdiction and specific jurisdiction.
The concept behind general jurisdiction is that the Defendant’s contacts with the forum state are so pervasive that it is “at home” in that state and may be sued there regardless of whether the Plaintiff’s alleged exposure took place there or resulted from products made or sold there.For general jurisdiction to apply, that is, for the Defendant to be “at home” in the forum state, only two things matter.The Defendant must either have been incorporated in the forum state, or it must have its principal place of business there.Proof of the fact of incorporation is a relatively ‘mechanical’ exercise.The existence of a “principal place of business” can, at times, be subject to dispute, particularly where the company has major ‘home office’ functions separated among two or more locations.However, those instances are relatively few in number.
The second basis, specific jurisdiction, presents greater challenges for the Defendant seeking to extricate itself on jurisdictional grounds.This category derives from the nature of the parties’ respective activities that brought them into contact with the jurisdiction.From the Defendant’s perspective, the Courts ask whether it was “fair” to force an out-of-state Defendant (obviously such because if it were ‘in-state’ it would be subject to general jurisdiction) to answer in the Courts of the forum state.Here, the Courts are looking to insure that a “forum-shopping” Plaintiff is not merely using the subject forum for its own purposes, such as taking advantage of favorable law or a supposedly more generous jury pool.This is where the limitation of constitutional concepts of Due Process of Law derived from the Fourteenth Amendment to the U.S. Constitution, and related provisions of State Constitutions, come into play.The U.S. Supreme Court has always looked at the nature of the Defendant’s contacts with the forum state to determine if it “purposefully availed itself” of the benefits of doing business there.For decades, the Court, and the highest courts in many states, had basically said that if the Defendant had placed its products into the “stream of interstate commerce” such that it could reasonably anticipate them making their way into any one of multiple state jurisdictions,it was subject to in personam jurisdiction in any state where its products were sold.International Shoe Co. v. Washington, 326 U.S. 310 (1945).More recently, however, the Court has narrowed its analysis of what constitutes “purposeful availment” in those cases.Now, it looks for a relationship between the Defendant, the conduct complained-of, the product that was sold that supposedly caused harm, and the Plaintiff’s use of the product.
In a recent mass-tort case brought in California, Bristol-Meyers, supra, the Plaintiffs were from out-of-state and used Defendant’s products out-of-state.The Defendant did have sales staff that specifically targeted the forum state, but there was no connection between the Plaintiffs’ use of the product out-of-state, and any particular sale that might have occurred in the forum state.Defendant ultimately won a dismissal as a result of the Supreme Court’s decision.
This decision was thought to be a major turning point in the Court’s jurisprudence and a boon for mass tort Defendants who often find themselves having to appear in jurisdictions that have little to do with the Plaintiff or her claims, except that the Plaintiff’s attorney deems them to be ‘favorable.’
In most jurisdictions, if either class of Defendant were to move for a dismissal, it will most likely expose itself to early discovery from the Plaintiff as to the nature of its business activities in the forum state.This could result in affording the Plaintiffs’ attorney a “free shot” at obtaining sales records and other documents that could be useful in other cases.One way around this is for the Defendant to present affidavits at the earliest opportunity as to the lack of either sales themselves, or sales/promotional staff, in the specific states and worksites involved.That may just be enough to either convince Plaintiff to dismiss the case against that Defendant, or to win a contested Motion to Dismiss.
Please feel free to contact us if you have cases where you believe jurisdictional issues need to be analyzed.