Personal Jurisdiction Post-Daimler - As Plaintiffs Test Exceptions to Daimler's Narrow Path, All Eyes on Appellate Courts.

• Author: Moldoveanu, Susanna M.

IN July of 2015, the Defense Counsel Journal published a report of the Supreme Court's watershed personal jurisdiction decision in Daimler AG v. Bauman and the immediate aftermath. (1) Here, we provide an update on the continued impact of Daimler, including two important pending appeals to watch: (1) the appeal of the California Supreme Court's decision in In re Bristol Myers Squibb, which is now under certiorari review at the U.S. Supreme Court; and (2) Robinson v. Pfizer, now pending in the Eighth Circuit Court of Appeals.

1. The Supreme Court's Personal Jurisdiction Precedent and Daimler AG v. Bauman

   Personal jurisdiction is a concept grounded in the Due Process Clause of the Fourteenth Amendment. Soon after the Fourteenth Amendment's passage in 1868, the Supreme Court held in 1878 in Pennoyer v. Neff that a court's authority "is necessarily restricted by the territorial limits of the State in which it is established." (2) More than 60 years later, the Supreme Court issued its landmark opinion of International Shoe, which remains the touchstone authority today. (3) In International Shoe, the Court clarified that a court may exercise personal jurisdiction over a non-resident defendant, but only if the defendant has "certain minimum contacts with [the State] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" (4)

   International Shoe laid the groundwork for the two categories of personal jurisdiction we know today: specific jurisdiction and general jurisdiction.

   Specific jurisdiction, as the name suggests, is based on a connection between the forum and the specific cause of action. As explained by the Supreme Court in International Shoe, personal jurisdiction arises in this instance where the defendant's activities in the state "ha[d] not only been continuous and systematic, but also g[a]ve rise to the liabilities sued on." (5) In International Shoe, the defendant had engaged in business in the state, and"[t]he obligation which is here sued upon arose out of those very activities," making it "reasonable and just... to permit the state to enforce the obligations which [the defendant] ha[d] incurred there." (6)

   More recently, the Supreme Court in Goodyear explained that specific jurisdiction exists only in two instances: (1) where a defendant engages in continuous activity in the state "and that activity gave rise to the episode-insuit," or (2) where the defendant commits "'single or occasional acts' in a State [that are] sufficient to render [it] answerable in that State with respect to those acts, though not with respect to matters unrelated to the forum connections." (7) Lower courts are split in how they determine whether a plaintiff's claims "arise out of or relate to" a defendant's forum contacts. (8)

   General jurisdiction, on the other hand, is not grounded in the contacts underlying the cause of action, but rather functions as a form of "all-purpose" jurisdiction. Over the years, lower courts applying this general jurisdiction test were quite lenient, essentially permitting the exercise of general jurisdiction any time a corporation did business continuously in a state. (9) In 2011, the Supreme Court clarified that the test for general jurisdiction is whether the defendant's "affiliations with the State are so 'continuous and systematic' as to render [it] essentially at home in the forum State." (10) Following Goodyear, however, lower courts were still not entirely clear about what "at home" means. (11)

   In 2014, the Supreme Court resolved this question definitively in Daimler AG v. Bauman. (12) In Daimler, the Supreme Court made clear that a defendant is "at home"--and thus is only subject to general personal jurisdiction--in (1) the state of its principal place of business, or (2) state of incorporation, except in the "exceptional case." (13) "Although the placement of a product into the stream of commerce 'may bolster an affiliation germane to specific jurisdiction,'... such contacts 'do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant.'" (14)

   Commentators deemed Daimler a sea change. (15) As the Fifth Circuit has explained, following Daimler, "[i]t is, therefore, incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.'" (16)

   Daimler has also provided strong support for removal.

   Under the Supreme Court's Ruhrgas decision, where a district court has before it "a straightforward personal jurisdiction issue presenting no complex question of state law, and the alleged defect in subject-matter jurisdiction raises a difficult and novel question," the court may properly address the personal jurisdiction issue before proceeding to subject matter jurisdiction. (17) Accordingly, when plaintiffs file suit in a state-court jurisdiction where personal jurisdiction is lacking (but where diversity may be defeated by joinder of non-diverse plaintiffs), defendants may remove, requesting the court consider the question of personal jurisdiction before deciding fraudulent joinder.

   Once improper defendants are dismissed for lack of personal jurisdiction, complete diversity exists, as does subject matter jurisdiction. Since Daimler was decided, numerous courts have followed this reasoning, dismissing the out-of-state plaintiffs and retaining jurisdiction over the remaining, in-state, diverse plaintiffs. (18)

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