Throwing a lifeline to Bristol-Myers as it tries to wriggle out of mass tort claims against its Plavix blood-thinner in California, the US Supreme Court agreed to review the state supreme court’s ruling taking jurisdiction over out-of-state plaintiffs.
In September the California Supreme Court ruled that its state courts can take “specific jurisdiction” over mass tort claims by out-of-state plaintiffs against Bristol-Myers Squibb (BMS) arising from the company’s national marketing and sales campaigns. Bristol-Myers Squibb Company v. Bracy Anderson, S221038, Super. Ct. JCCP No. 4748 (Sept. 29, 2016).
Bristol-Meyers Squibb (BMS) desperately wants the US Supreme Court to reverse the state court, and to apply a 2014 US Supreme Court ruling Daimler AG v. Bauman, 134 S. Ct. 746, that states may take “general jurisdiction” only over companies that are “at home” in the state. However, that case involved a California product-defect suit involving a German-manufactured vehicle that overturned in Poland and injured a Polish driver and passenger.
In contrast, BMS has 400 employees in California, has a registered agent for service of process and marketed and sold more than 180 million Plavix pills to distributors in California alone, generating sales revenue of $1 billion from 2006-2012.
The Trump factor
“Chief Justice Roberts has leaned left in high-profile rulings and away from his original conservative view the last two years and kept things in line,” said Mark A. York, Senior Consultant for Mass Tort Nexus. “Roberts may continue that path and it will be a 5 -3 ruling for the plaintiffs. But even if he goes right and there’s a 4-4 split, if it’s prior to Trump’s pick for a new Justice, the California court ruling stands, and BMS is out until the next chance comes in another case.”
“This may be a moral compass decision for Roberts at this point and a view down the road of what’s coming even if there is a conservative Trump appointee. If Trump successfully appoints a Justice who pulls the straight conservative line and Roberts goes right, then non-resident Plavix cases are done in California. But there will probably be a clarification of the original Daimler ruling as to how it applies to all parties who are US entities. If Roberts stays left on this, then non-resident cases will be able to proceed in state courts. But if he leans right, then the state court MDLs are up in the air,” York added. “I also noticed that there are several Amici filings supporting Bristol Myers including the US Chamber of Commerce, which shows that BMS is using leverage from outside the pharma-medical industry for support.”
At issue are eight complaints alleging identical facts filed in San Francisco in March 2013 by 86 Californians, and 592 residents of 33 other states. The resident plaintiffs allege the same acts by BMS in the state as the non-residents do, and BMY admits that it is subject to specific personal jurisdiction with respect to the claims of California plaintiffs.
“All the plaintiff’s claims arise out of BMS’s nationwide marketing and distribution of Plavix” that took place in California, says the brief in opposition by Thomas C. Goldstein and Charles H. David of Goldstein & Russell PC in Bethesda, MD.
Mass actions are different
While BMS marketed Plavix as safer than aspirin, it caused the plaintiffs to have heart attacks, strokes, internal bleeding, blood disorders or death.
“Mass actions are fundamentally different from traditional litigation, raising distinct questions about fairness to the litigants and to the states themselves. This is particularly true of mass actions where – as in this case – the non-resident defendant is indisputably subject to the personal jurisdiction of the forum’s courts for some plaintiffs; all the plaintiffs bring essentially identical claims; and the non-resident defendant will inevitably be a party to the litigation of the claims of the non-residents,” the plaintiffs argue.
“In such a case, there is no inherent unfairness to the non-resident defendant, and the nation’s judicial systems operate far more efficiently by adjudicating the indistinguishable claims together.”
The question presented is whether the Constitution immunizes BMS from the personal jurisdiction of the state courts regarding the claims of non-resident plaintiffs arising from the identical factual allegations of resident plaintiffs.
BMS attempts to manufacture a conflict in the courts that must be resolved.
- But for Cause. The Fourth, Ninth and Tenth Circuits and the highest courts in Arizona, Massachusetts and Washington arguably conclude that a plaintiff cannot establish personal jurisdiction over a defendant unless he shows that he would not have suffered an injury but for the defendant’s forum-related conduct.
- Proximate Cause or Foreseeability. The First, Third, Sixth, Seventh and Eleventh Circuits, as well as the Oregon supreme Court, have not settled on a precise standard, but arguably say that a plaintiff’s injuries must be proximately caused by the defendant’s forum-state contacts.
- No Causal Connection. The California, Texas, District of Columbia supreme courts and the Federal District found jurisdiction — paraphrasing here — where there is a substantial nexus or connection between the defendant’s forum activities and the plaintiff’s claim.
But the California court held it did have specific jurisdiction based on a three-part test:
- Whether the defendant has purposefully directed its activities at the forum state.
- Whether the plaintiffs’ claims arise out of or are related to these forum-directed activities.
- Whether the exercise of jurisdiction is reasonable and does not offend traditional notions of fair play and substantial justice.
Satisfying test 1, “BMS purposefully availed itself of the benefits of California” by marketing and advertising Plavix in California, selling 187 million Plavix pills in California from 2006-2012 resulting in sales revenue of $918 million, employing 250 sales representatives in California, contracting with McKesson, based in San Francisco, to be its pharmaceutical distributor, operating research and laboratory facilities in California, and even having an office in the state capital to lobby the state.
Satisfying test 2, BMS had extensive activities in California, including by marketing and promoting Plavix in the state, conducting research and development in California and targeting California as part of a nationwide campaign. “Because of the defendants‘ relationship with the forum, it is not unfair to require that they answer in a California court for an alleged injury that is substantially connected to the defendants’ forum contacts,” the court ruled.
Satisfying test 3, BMS had adequate notice that it was subject to suit in California. “BMS embraced this risk by coordinating a single nationwide marketing and distribution effort and by engaging in research and development in California. In that regard, BMS was on notice that it could be sued in California by nonresident plaintiffs. In fact, our courts have frequently handled nationwide class actions involving numerous nonresident plaintiffs.”
No date has been set for oral argument yet.