This past term, the U.S. Supreme Court decided two matters in which it unequivocally held that state courts’ ability to assert personal jurisdiction over out-of-state defendants is limited under both general and specific jurisdictional theories. The opinions in BNSF Railway Co. v. Tyrrell  (“BNSF Railway”) and Bristol-Myers Squibb Co. v. Superior Court  (“BMS”) reaffirm and cement the Court’s earlier personal jurisdiction rulings in Daimler AG v. Bauman, Walden v. Fiore and Goodyear Dunlop Tires Operations S.A. v. Brown . Essentially, the U.S. Supreme Court has announced that it meant what it said: a plaintiff cannot sue a defendant in a state court jurisdiction that is unconnected to the defendant’s alleged wrongful conduct and not where the defendant is “at home.” Such a line of confirmatory decisions issued over a relatively short time period is unusual and speaks to the sea change brought about by the earlier decisions in Daimler, Walden and Goodyear, which some state courts seemed hesitant to accept at face value.
Meeting Specific Personal Jurisdiction Standards
BMS reversed a 4-3 opinion by the California Supreme Court holding that California had specific personal jurisdiction over Bristol-Myers for claims brought by out-of-state plaintiffs for injuries allegedly sustained and caused by their use of the prescription medication Plavix . The California Supreme Court held that California had specific personal jurisdiction over Bristol-Myers for the claims of 592 non-California residents, despite the fact that none of those plaintiffs were prescribed or ingested Plavix in California; none of the alleged injuries occurred or were diagnosed in California; Bristol-Myers was not “at home” in California; and none of the research or development of Plavix occurred there, “nor was any work related to its labeling, packaging, regulatory approval, or its advertising or marketing strategy performed by any of its employees in” California. Id. at 879.
To find jurisdiction against this backdrop, the California Supreme Court used a “substantial connection” or “sliding scale approach to personal jurisdiction,” where “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.” Id. at 889 (internal quotations marks omitted). Using that “sliding scale,” the California Supreme Court held that California had specific personal jurisdiction over the claims brought by out-of-state residents because, among other generalized points of “connection” to California, Bristol-Myers operated five R&D research and laboratory facilities there, employing approximately 164 people; had nearly 250 sales representatives in the state; sold approximately 187 million Plavix pills in California during the relevant time frame; and engaged in a coordinated, single, nationwide marketing and distribution campaign.
In reversing the California Supreme Court’s decision, the U.S. Supreme Court’s 8-1 opinion held that California’s sliding scale approach, “which resembles a loose and spurious form of general jurisdiction,” “is difficult to square with our [specific personal jurisdiction] precedents.” BMS, slip op. at 7. The U.S. Supreme Court reiterated that “[i]n order for a state court to exercise specific jurisdiction, ‘the suit’ must ‘arise out of or relate to the defendant’s contacts with the forum.’” Id. at 5 (quoting Daimler, 134 S. Ct. at 754) (internal brackets omitted) (emphasis in original). More particularly, specific jurisdiction requires “‘an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.’” Id. at 5-6 (quoting Goodyear, 564 U.S. at 919) (internal brackets omitted).
The Supreme Court determined that all of Bristol-Myers’ general connections to California—for example, its R&D facility, the number of Plavix pills sold and the number of people it employed in California—were “not enough,” even when aggregated, to support jurisdiction over the claims of out-of-state plaintiffs concerning out-of-state activities. See BMS, slip op. at 8 (stating “[n]or is it sufficient—or even relevant—that BMS conducted research in California on matters unrelated to Plavix.”). The BMS opinion highlights that the specific jurisdictional analysis needs to focus on the defendant’s conduct in the forum—and for nonresidents who did not purchase, ingest or experience injuries from Bristol-Myers products in California, “all the conduct giving rise to the nonresidents’ claims occurred elsewhere.” Id. at 8-9. The Court also rejected arguments that the nonresident defendant’s relationships with various third parties in the forum state—including both other injured plaintiffs and its own nationwide distribution partners—sufficed to establish jurisdiction. Id. (citing Walden, 134 S. St. at 1123, 1124); see also id. at 8 (“The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California—and allegedly sustained the same injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the nonresidents’ claims.”); and id. at 12 (“the bare fact that BMS contracted with a California distributor is not enough to establish personal jurisdiction in the State.”)
BNSF Railway’s Overreaching Theory on General Jurisdiction
Whereas BMS both illustrated and reinforced the effect of Daimler and Walden in limiting states’ exercise of specific jurisdiction, the BNSF Railway opinion dealt with overreaching theories of general jurisdiction. BNSF Railway reviewed the Montana Supreme Court’s decision that Montana courts had general jurisdiction over BNSF Railway Company (“BNSF”) for claims brought under the Federal Employers’ Liability Act (“FELA”) for on-the-job injuries sustained by two nonresidents while working for BNSF outside of Montana. The Montana Supreme Court based its ruling on language in the FELA and on its finding that BNSF’s extensive presence in Montana served to establish jurisdiction under a Montana rule allowing for jurisdiction over entities “found within” the state. The Montana Supreme Court further held that Daimler was inapplicable because it did not involve a FELA claim against a railroad defendant.
In an 8-1 ruling, the U.S. Supreme Court rejected the Montana Supreme Court’s reasoning and reversed because, despite BNSF’s presence and activities within the state, its connections with Montana were not “so ‘continuous and systematic’ as to render [it] essentially at home in” Montana. BNSF Railway, slip op. at 10 (quoting Daimler, 134 S. Ct. at 761). The Supreme Court held, pursuant to Daimler, that Montana courts lacked general personal jurisdiction over BNSF because BNSF was neither incorporated in nor had its principal place of business in Montana. Thus, applying Montana’s law providing for general jurisdiction over defendants “found within” the state to BNSF was inconsistent with the Due Process Clause of the Fourteenth Amendment. Id. at 10-11. The BNSF Railway opinion confirmed, consistent with Daimler, that even a corporation operating nationwide is exceedingly unlikely to be deemed “at home” outside of its state of incorporation and principal place of business, and clarified that states cannot overcome that limitation on their jurisdictional authority via legislation or rule. Id. at 10. Indeed, the facts that BNSF had “over 2,000 miles of railroad track and more than 2,000 employees in Montana” was not sufficient to render it at home there. Id. at 11.
The key takeaway from both BMS and BNSF Railway is that the limits on personal jurisdiction, both general and specific, laid out in Daimler, Walden and Goodyear are here to stay. Without some connection to a state, plaintiffs will no longer be able to shop nationwide for the most favorable state forum and file there en masse. Barring exceptional circumstances, plaintiffs will now be required to file their claims in either their own home states or the defendants’ home states. That requirement will likely lead to an uptick in cases being filed in, or removed to, Federal Court (where mass torts may still be consolidated into multidistrict litigation), or filed in state court in Delaware, where more than 60% of all publicly traded companies in the U.S. are incorporated, including 66% of the Fortune 500. Further, many other “magnet” jurisdictions that previously attracted out-of-state plaintiffs can expect a marked decline in new filings.
1. BNSF Railway Co. v. Tyrrell, No. 16-405, slip op. (May 30, 2017)
2. Bristol-Myers Squibb Co. v. Superior Court, No. 16-466, slip op. (June 19, 2017) (“BMS”)
3. Daimler AG v. Bauman, 134 S. Ct. 746 (2014), Walden v. Fiore, 134 S. Ct. 1115 (2014) and Goodyear Dunlop Tires Operations S.A. v. Brown, 564 U.S. 915 (2011)
4. Bristol-Myers Squibb Co. v. Superior Court, 377 P.3d 874 (Cal. 2016)