Jurisdiction and Choice of law Issues in the Indirect Purchaser action

• Pages: 89-116

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CHAPTER IV

JURISDICTION AND CHOICE OF LAW ISSUES

IN THE INDIRECT PURCHASER ACTION

Most indirect purchaser damages cases arise under state law.

While at one time this meant that indirect purchaser actions

frequently proceeded in state court, Congress’s passage of the Class

Action Fairness Act of 2005 (CAFA) now renders federal courts the

predominant forum for such cases.1 Moreover, alleged antitrust

violations of significance frequently give rise to many suits in

different federal courts, leading to MDL proceedings consolidating

and/or coordinating such actions before a single federal judge. That

judge then must manage a collection of actions arising out of a single

alleged violation or series of violations, but asserting violations of

multiple states’ l aws. Those actions take many forms: class actions

seeking certification of a nationwide class and pressing claims under

the laws of the defendants’ residences; class actions seeking

certification of statewide classes pressing claims under the laws of

those states; and individual plaintiffs seeking recovery for purchases

made in a variety of states. Because many such cases involve

defendants from multiple states and countries, the potential

jurisdictional and choice of law issues are critical.

This chapter addresses those issues in two parts. Part A discusses

the basic personal and subject matter jurisdictional questions arising

in indirect purchaser litigation. Part B discusses the basic choice of

law issues that also arise in indirect purchaser litigation, with a

particular focus both on putative nationwide classes seeking to apply

a single state’s laws to in-state and out-of-state purchasers and on

multistate classes (or multiple single-state subclasses) seeking to

apply multiple states’ laws in a single proceeding.

1. As described more fully in part A.2.c of this chapter, under CAFA,

federal jurisdiction may exist over any class action in which: (1) any

plaintiff is diverse from an y defendant; (2) the putative class contains

at least o ne hundred members; and (3) the amount in controversy by

the entire class action is at least $5 million. See 28 U.S.C.

§ 1332(d)(2), (d)(5), (d)(6).

90 Indirect P urchaser Litigation Ha ndbook

A. Jurisdictional Prerequisites and the Availability of a Federal

Forum for State Law Indirect Purchaser Claims

1. Personal Jurisdiction

a. Existence of Personal Jurisdiction

As in any litigation, courts presiding over indirect purchaser

litigation must possess personal jurisdiction over the parties. As to

out-of-state members of a class, courts have personal jurisdiction

over these individuals or entities, even if those class members reside

outside the forum state and have no other connections to it, provided

they receive adequate notice and opt-out rights.2 Because absent class

members need not do anything in response to the lawsuit, due process

does not require that they receive as much protection as those

compelled to act.3

Personal jurisdiction over defendants, however, is not so clear-

cut. Personal jurisdiction takes two forms: “general” and “specific.” 4

Normally, courts have general jurisdiction over defendants with a

“continuous and systematic” pursuit of general business activities in

the forum state, regardless of where the cause of action arises.5

Specific jurisdiction exists for cases that arise from or relate to the

defendant’s actions within the forum state.6 Under either standard,

the court’s exercise of jurisdiction must comport with due process,

which turns on whether “the defendant purposefully established

‘minimum contacts’ in the forum State.”7

Jurisdiction in cases alleging only state law violations turns on

typical and well-established concepts, which generally do not differ

2. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 814 (1985); see also

Gen. Con tracting & Trading Co. v. Interpole, Inc., 940 F.2d 20, 23

n.4 (1st Cir. 1991) (“In the context of personal jurisdiction, it is

settled that the concept of a ‘state’s courts’ includes those federal

courts located within the state.”).

3. Phillips P etroleum, 472 U.S. at 806-11. As discussed further in

part B.2.a of this chapter, the question as to whether a named plaintiff

possesses standing to represent out-of-state class members is a

separate question.

4. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 415-

16 (1984). Importantly, not all states recognize general jurisdiction as

an app ropriate basis on which to exercise personal jurisdiction over

an out-of-state defendant. In these states, personal jurisdiction may be

asserted only if the plai ntiff’s cause of action arises from or is related

to the foreign defendant’s forum activities.

5. Id. at 416.

6. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985).

7. Id. at 474 (quoting citation omitted).