Bristol-myers Squibb Co. v. Superior Court of California for the County of San Francisco: U.s. Supreme Court Rejects California's "sliding Scale" Test for Asserting Specific Jurisdiction Over Non-residents' Claims
| Publication year | 2017 |
| Author | Cliford Zatz and Josh Foust |
Cliford Zatz and Josh Foust
Clifford J. Zatz is a partner in the Washington, DC office of Crowell & Moring LLP. He has litigated product liability, toxic tort, environmental, wrongful death, breach of contract, intellectual property, and cases of emerging risks, such as online defamation and cyber security, in the courts of more than twenty states.
Josh Thomas Foust, a counsel at Crowell & Moring, is a member of the firm's Litigation and Mass Tort, Product, and Consumer Litigation groups. Based in San Francisco, Josh focuses his practice on class action defense, consumer fraud and false advertising actions, complex commercial litigation, and financial services and securities litigation, in California and many other jurisdictions.
On June 19, 2017, the U.S. Supreme Court issued the latest in a series of decisions clarifying the constitutional limits on where corporations may be sued outside their "home" forums. In Bristol-Myers Squibb Co. v. Superior Court of California for the County of San Francisco, No. 16-466, the Court held, 8-1, that California state courts had no jurisdiction to hear the claims of non-California residents against Bristol-Myers Squibb Co. (BMS), a Delaware corporation headquartered in New York. Writing for the majority, Justice Samuel Alito held that BMS's sales of its drug Plavix to California consumers, however extensive, were not enough to create personal jurisdiction, given that (1) the non-resident plaintiffs did not claim to have suffered injury in California, and (2) all the conduct giving rise to their claims occurred outside California.
The Court's opinion reverses a controversial 2016 decision by the California Supreme Court, which had applied a flexible "sliding scale" in finding that BMS was subject to specific personal jurisdiction—that is, jurisdiction over the plaintiffs' claims "arising from" or "relating to" its California contacts. The decision thus confirms that California and its sister states may not expansively construe the scope of specific jurisdiction to circumvent the constitutional limits on general jurisdiction announced in the Court's 2014 decision in Daimler AG v. Bauman.
Bristol-Meyers Squibb arose out of a series of eight complaints filed against BMS in California state court. Of the more than 600 plaintiffs, only eighty-six were California residents. The complaints levied a variety of California-law claims against BMS for injuries allegedly caused by its blood-thinning drug Plavix.
But BMS did not develop Plavix in California, create its marketing strategy in California, or manufacture and label the drug in California; all those activities took place in either New York or New Jersey. (BMS had five research facilities in California, but none was involved in developing Plavix). And while BMS did employ about 250 sales representatives in California, none of the 592 non-resident plaintiffs bought Plavix, was prescribed Plavix, or was injured by Plavix in California.
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BMS moved to quash service of summons on the non-resident plaintiffs' claims for lack of personal jurisdiction. The trial court denied the motion, finding that California state courts had general jurisdiction over BMS by virtue of its "extensive activities in California." After the U.S. Supreme Court issued its landmark decision in Daimler AG v. Bauman narrowing the scope of general jurisdiction, however, the trial court changed course. It held instead that these contacts subjected BMS only to specific jurisdiction.
The California Supreme Court agreed. The 4-3 majority ruled that BMS was subject to specific jurisdiction based on its "extensive contacts with California"—in particular, its sales of 187 million Plavix pills to California consumers.1 The majority reached this conclusion by applying a so-called "sliding scale approach": "the more wide-ranging the defendant's forum contacts," it explained, "the more readily is shown a connection between the forum contacts and the claim."2
Under this more flexible rubric, the fact that BMS had sold and marketed Plavix to consumers both within and outside California permitted the exercise of specific jurisdiction "based on a less direct connection between BMS's forum activities and [the non-resident] plaintiffs' claims than might otherwise be required."3 In so reasoning, the majority put great weight on the fact that "[b]oth the resident and nonresident plaintiffs' claims [were] based on the same allegedly defective product and the [same] assertedly misleading marketing and promotion of that product."4 In the majority's view, the parallel allegations of the resident and non-resident plaintiffs were part and parcel of a "common nationwide course of distribution"—thus satisfying the requirement that the plaintiffs' claims have a "substantial nexus" with BMS's California contacts.5
Three justices dissented. They argued that the claims of the non-resident plaintiffs "in no sense arise from BMS's marketing and sales of Plavix in California."6 In disregarding this requirement...
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