On June 19th, 2017 the United States Supreme Court fundamentally changed the rules governing where corporate defendants can be sued and reshaped the definition of jurisdiction.
In Bristol-Myers Squibb Co. v. Superior Court, No. 16-466, the Supreme Court found that California courts could hear only claims by Californians against the company in a lawsuit alleging injuries caused by the company’s blood-thinner, Plavix. That case involved nearly 700 plaintiffs, including 592 from states other than California. Earlier the Supreme Court of California had ruled that claims by non-residents could proceed in California since Bristol-Myers sold Plavix, and many other drugs nationwide. The U.S. Supreme court reversed that ruling. In an 8-1 decision they found that California cannot assert jurisdiction over the nonresidents’ claims.
This decision by the U.S. Supreme Court was not surprising. Corporations have long decried what they term as ‘court shopping’ and accused lawyers of filing their class action suits in jurisdictions that will be most friendly to them. On the surface this decision can be seen as a win for corporations, but it still leaves some large questions about the future of mass tort litigation. How will a class action lawsuit be brought against corporations which are not headquartered in any state? Will plaintiff’s lawyers be required to bring 50 different lawsuits, one per state, against such defendants? Plaintiff’s ability to minimize cost and share discovery and maximize recoveries on claims that may be too small on their own to justify bringing suit will be severely diminished.
More troubling is that the decision was so heavily focused on limiting plaintiff’s rights while ignoring long-standing and disturbing corporate practices. It is no secret that corporations often seek to headquarter themselves in jurisdictions that are lenient toward their misconduct – even as they affect the health and well being of people all over the country. By restricting nationwide class actions to corporate home jurisdictions the ruling allows corporations to essentially ‘forum shop.’
In her lone dissent, Justice Sonya Sotomayor expressed concern for how this new legal landscape will affect ordinary people who have been hurt by corporate misconduct. “I fear the consequences of the Court’s decision today will be substantial,” she writes. If the choices are to do separate state lawsuits or to file in the corporation’s home court, attorneys will find it “difficult to aggregate the claims of plaintiffs across the country whose claims may be worth little alone.”
Sotomayor continues, with some doom in her tone: “the majority appears to concede that this is not, at bottom, a case about fairness but instead a case about power.” She asks – what interests are served by preventing the consolidation of claims and limiting the forums in which they can be consolidated? The effect of the Court’s opinion today is to eliminate nationwide mass actions in any State other than those in which a defendant is “‘essentially at home.’ . . . Such a rule hands one more tool to corporate defendants determined to prevent the aggregation of individual claims, and forces injured plaintiffs to bear the burden of bringing suit in what will often be far flung jurisdictions . . . The effect of today’s opinion will be to curtail — and in some cases eliminate — plaintiffs’ ability to hold corporations fully accountable for their nationwide conduct.”
It would be relevant to add here, as a side note to Justice Sotomayor’s dissent, that her learned colleagues on the Supreme Court found that Bristol-Meyers failed to pass jurisdictional muster even though they have 250 sales representatives in California as well as five R&D facilities, around 160 employees, and a government relations office. Nor did it matter that 187 million Plavix dosages worth over $900 million in revenue were sold in California over a six-year period. The fact that the company used a California-based distributor (McKesson Corp.) was also deemed too tenuous a connection.
Now we will expect plaintiffs’ lawyers to work harder in establishing connections between their claims and jurisdictions where they hope to adjudicate them. We can also expect to see corporations aggressively contest these same connections.
Corporations have been calling for tort reform and this over zealous ruling may provide it in the short term. But litigation morphs and shifts, and in the long-term I expect to see more smaller mass actions in multiple jurisdictions.
Admitted to both the California State Bar and the Florida State Bar, Joseph Saunders has also practiced in the United States District Court and the United States Court of Appeals. His philosophy is to provide aggressive, quality representation and seek fair compensation for individuals and their families who have suffered injury or death at the hands of insurance companies, large corporations, medical providers or governmental entities.