Thursday, July 31, 2014
A recent opinion from the California Court of Appeals perhaps illustrates the extent to which defendants have been emboldened by the United States Supreme Court's decision striking down personal jurisdiction in Daimler AG v. Bauman.
In Bristol-Myers Squibb Co. v. Superior Court of San Francisco County, No. A140035 (Cal. App. July 30, 2014), BMS filed a petition for writ of mandate to reverse the trial court's ruling upholding personal jurisdiction. The court set the scene:
Defendant Bristol-Myers Squibb Company (BMS) has been sued by dozens of California residents in a coordinated proceeding before the San Francisco Superior Court. They allege defects in Plavix, a drug BMS manufactures and sells throughout the country. Jurisdiction over BMS as to these plaintiffs is conceded. The question presented is whether California also has jurisdiction over BMS regarding identical Plavix defects claims brought by hundreds of non-resident co-plaintiffs, the real parties in interest here (RPI), in the same coordinated proceeding, consistent with the Due Process Clause of the Fourteenth Amendment.
The trial court had upheld general jurisdiction over the non-residents' claims against BMS because:
[I]t had sold in the state nearly $1 billion worth of Plavix between 2006 and 2012 and 196 million Plavix pills between 1998 and 2006, had been registered with the California Secretary of State to conduct business since 1936, maintained an agent for service of process in Los Angeles, operated five offices in California that employed approximately 164 people, employed approximately 250 in-state sales representatives, owned a facility in Milpitas employing 85 people that was used primarily for research, operated other facilities that were used primarily for research and laboratory activities in Aliso Viejo, San Diego and Sunnyvale, and had a small office in Sacramento that was used by the company’s Government Affairs group.
Despite these extensive contacts with California, the appellate court concluded that after Daimler, California could not exercise general jurisdiction over BMS because it was not "at home" in the forum.
All was not lost for the non-resident plaintiffs, however. Turning to specific jurisdiction, the court relied on Keeton v. Hustler Magazine to show that "the doctrine of specific jurisdiction can apply to the claims of a non-resident against a non-resident." Further, the court noted that although the United States Supreme Court has not yet defined "what it means for a suit to 'arise out of' or 'relate' to a defendant’s contacts with the State," California has adopted the “'substantial connection' test, under which the relatedness requirement is satisfied if 'there is a substantial nexus or connection between the defendant’s forum activities and the plaintiff’s claim.'”
The court held that there was a "substantial connection" between BMS' extensive contacts with California and the non-residents' claims of injury involving Plavix:
BMS has “deliberately exploited” the relevant market in the State (Keeton, supra, 465 U.S. at p. 781) for many years, having sold over 196 million Plavix pills in California between 1998 and 2006 and nearly $1 billion worth of Plavix between 2006 and 2012.
Further, plaintiffs allege BMS’s Plavix sales in California have led to injuries to California residents that are the same as those suffered by the RPI.
Finally, the court held that BMS had not satisfied its burden of showing that California's exercise of specific jurisdiction was unreasonable.
Hat tip: Levi Wilkes (St. Thomas J.D. Candidate 2015)