Civil Procedure

• Publication year: 2018
• Author: Khai LeQuang & Kristopher R. Wood

Civil Procedure

Khai LeQuang & Kristopher R. Wood

The Doctrine of Pendant Personal Jurisdiction in Light of Bristol-Myers Squibb Co. v. Superior Court

Introduction

California practitioners are familiar with the United States Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of California¹ (hereafter Bristol-Myers). In Bristol-Myers, the court held that a state court cannot exercise specific personal jurisdiction over an out-of-state defendant based on claims that do not arise out of the defendant's contacts with the forum state. This is true even if the plaintiffs asserting those claims are joined with other plaintiffs whose claims provide an independent basis for specific personal jurisdiction over the defendant, and all claims arise out of a common nucleus of facts. In reaching this conclusion, however, the Supreme Court limited its holding to the exercise of personal jurisdiction by state courts and expressly left "open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court."²

This article considers the implication of the Bristol-Myers limitation on the federal doctrine of pendent personal jurisdiction, which is a judge-made exception to the general rule that a plaintiff must establish personal jurisdiction for each claim it asserts. Under the doctrine, if a plaintiff asserts claims against a defendant that all arise out of a common nucleus of operative fact, and the court may exercise personal jurisdiction over the defendant for some claims but not others, the court may, in its discretion, exercise personal jurisdiction as to all the claims. The justifications for deciding the entire dispute in one forum include convenience to the parties, the avoidance of piecemeal litigation, and the overall efficiency of the justice system. In fact, the Bristol-Myers plaintiffs relied on this doctrine in arguing that the exercise of personal jurisdiction by the state court was warranted.

But if Bristol-Myers holds that, at least in state court, claims of out-of-state plaintiffs must have an independent basis for personal jurisdiction, even if the claims arise out of a common nucleus of operative facts with resident plaintiffs, does it implicitly require that, in federal court, every claim by each plaintiff provide a basis for specific personal jurisdiction? Based on the decisions since Bristol-Myers, the answer is less than clear. Some federal courts have taken Bristol-Myers limitation to state court actions at face value and continued to apply the doctrine of pendent personal jurisdiction as if nothing has changed. Other courts, however, have recognized that despite the Supreme Court's statement limiting its holding to state courts, the principles espoused in Bristol-Myers call the continued viability of federal pendent personal jurisdiction into doubt.

Personal Jurisdiction - A Refresher

The Due Process Clauses of the Fifth and Fourteenth Amendments set the limits of both state and federal courts' ability to exercise personal jurisdiction over litigants.³ As a practical matter, in most cases the analysis is the same whether a case is brought in federal or state court, as Federal Rule of Civil Procedure 4(k)(1)(A) permits federal district courts to exercise jurisdiction coextensive with the courts of the states in which they sit.⁴

Whether in state or federal court, there are two bases for the exercise of personal jurisdiction over a defendant—general and specific jurisdiction. General jurisdiction permits plaintiffs to sue defendants for any and all claims, but only "when [the defendants'] affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State."⁵ The paradigmatic examples of relationships giving rise to general jurisdiction are domicile in a state (for an individual defendant) and incorporation or maintenance of the principal place of business in a state (for a corporation).⁶

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Specific jurisdiction, or "case-linked" jurisdiction, on other hand, only permits a court to exercise jurisdiction over a defendant where the claims against the defendant arise from the defendant's purposeful minimum contacts with the forum state to such an extent that the exercise of jurisdiction comports with "traditional notions of fair play and substantial justice."⁷

For purposes of establishing minimum contacts to support specific jurisdiction, the plaintiffs' unilateral actions are of no consequence—only the defendant's purposeful contacts with the forum state provide a basis for personal jurisdiction.⁸ Ordinarily, a plaintiff must establish personal jurisdiction for each claim it asserts and against each defendant.⁹

While the key inquiry in evaluating the reasonableness of specific jurisdiction is the burden on the defendant,¹⁰ other considerations may be relevant as well, including "the plaintiff's interest in obtaining convenient and effective relief, . . . the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies . . ."¹¹ But the due process inquiry has a dual focus, and territorial limitations to a state's sovereignty are also relevant.¹² As the U.S. Supreme Court observed in World-Wide Volkswagen, "[t]he sovereignty of each State, in turn, implied a limitation on the sovereignty of all of its sister States—a limitation express or implicit in both the original scheme of the Constitution and the Fourteenth Amendment."¹³ Therefore,

Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.¹⁴

Pendent Personal Jurisdiction Principles

As noted, in specific jurisdiction cases, personal jurisdiction must be assessed as to each defendant and each claim. Federal courts, however, have developed an exception to this rule: Under the doctrine of pendent personal jurisdiction, "a court may assert pendent personal jurisdiction over a defendant with respect to a claim for which there is no independent basis of personal jurisdiction so long as it arises out of a common nucleus of operative facts with a claim in the same suit over which the court does have personal jurisdiction."¹⁵ The rationale is that the defendant is properly before the court as to at least one claim (the "anchor claim") and would be forced to litigate in the forum regardless. The defendant therefore will suffer no undue burden in litigating pendent claims before the same court.¹⁶ In such a situation, the interests of "judicial economy, avoidance of piecemeal litigation, and overall convenience of the parties" are all served by the exercise of jurisdiction over the entire controversy.¹⁷ Pendent personal jurisdiction is a discretionary doctrine, meaning a court may but need not exercise jurisdiction over the pendent claims.¹⁸

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Every circuit court to consider the doctrine has either adopted it or approved of it.¹⁹ The doctrine first arose in cases involving at least one claim that provided for nationwide service of process.²⁰ Later, however, circuit courts and federal district courts extended the doctrine, and it now has been applied in cases involving federal claims as the anchor claim and other federal or state law claims as the pendent claims,²¹ as well as in diversity cases with state law claims serving as both the anchor and pendent claims.²²

However, this latter expansion of the doctrine has not been universal, and some courts have declined to apply the doctrine where subject matter jurisdiction is based solely on diversity jurisdiction. The rationale in these cases is that when a court sits in diversity, jurisdiction is coextensive with the state long-arm statutes, and a state court would not have jurisdiction over the pendent claims.²³

Bristol-Myers

In Bristol-Myers, an eight-justice majority reversed the California Supreme Court's ruling that California courts could exercise personal jurisdiction over Bristol-Myers Squibb Co. (hereafter BMS), manufacturer of the drug Plavix, for product liability claims brought by out-of-state plaintiffs, where the plaintiffs were joined with California plaintiffs and all the claims arose out of a common nucleus of facts.²⁴

BMS was incorporated in Delaware, headquartered in New York, and maintained "substantial operations in both New York and New Jersey."²⁵ BMS also engaged in significant activities in California, including the operation of five research facilities, the employment of 250 sales representatives, and the maintenance of a state-government advocacy office.²⁶ However, all of the development, marketing strategy, manufacturing, labeling, packaging and regulatory approval work related to Plavix occurred either in New York or New Jersey.²⁷ The only connection between Plavix and California was that BMS sold Plavix to individuals in California, including some of the plaintiffs in Bristol-Myers.²⁸

BMS challenged personal jurisdiction as to the claims by the out-of-state plaintiffs, and the trial court found general jurisdiction existed over BMS due to its "extensive activities in California."²⁹ While the case was on appeal, the Supreme Court's decision in Daimler³⁰ overruled a finding of general jurisdiction based on similar facts.³¹ The California Court of Appeal acknowledged Daimler but nonetheless found the court had specific jurisdiction over the out-of-state plaintiffs' claims.³² The California Supreme Court affirmed, applying a "'sliding scale approach to specific jurisdiction,'" in which "'the more wide ranging the defendant's forum contacts, the...