TEST

Forum Shopping in the Golden State

In pharmaceutical, medical device, and other mass tort litigation, plaintiffs’ attorneys commonly collect cases from plaintiffs across the country and file them together in a single preferred jurisdiction. In pharmaceutical and medical device litigation, that jurisdiction is frequently California state court. The fact that California is a frequent home to lawsuits from out-of-state plaintiffs whose claims have no meaningful connection to the state is a strong indication that plaintiffs’ attorneys perceive a litigation advantage there. This practice of filing suit in the forum perceived as most favorable—even when the claims have little or no connection to that forum—is commonly known as “forum shopping.”

Two years ago, when the United States Supreme Court decided Daimler AG v. Bauman, 134 S. Ct. 746 (2014), the eventual demise of forum shopping seemed likely, if not inevitable. In Daimler, the Supreme Court held that a corporate defendant could only be subject to general jurisdiction in a state where its affiliations “are so continuous and systematic as to render [it] essentially at home in the forum State.” Id. at 761 (internal citations and quotation marks omitted). Daimler rejected as “unacceptably grasping” the idea that a corporate defendant could be subject to general jurisdiction in every state in which it “engages in a substantial, continuous, and systematic course of business.” Id. at 760–62. In other words, under Daimler, a corporate defendant that sells a product nationwide generally can only be subject to general jurisdiction in its place of incorporation and principal place of business. Id. at 760. Thus, because Daimler rejected the framework of general jurisdiction that made it easy for plaintiffs in pharmaceutical and medical device litigation to forum shop, change seemed on the horizon.

In August 2016, however, in a 4-3 decision that effectively erased the bounds of personal jurisdiction set out in Daimler, the California Supreme Court held that California courts could exercise personal jurisdiction over claims brought by non-California residents against a corporate defendant that was neither headquartered nor incorporated in California. Bristol-Myers Squibb Co. v. Superior Court (Anderson), 377 P.3d 874 (Cal. 2016). In Anderson, the non-California (“non-resident”) defendant was Bristol-Myers Squibb (“BMS”), a global pharmaceutical company incorporated in Delaware and headquartered in New York, and the BMS product at issue was Plavix, a prescription drug used to help prevent strokes, heart attacks, and other cardiovascular problems by inhibiting blood clots. Plavix was not researched, developed, manufactured or designed in California; nor were its marketing, packaging, and regulatory materials prepared in California. Id. at 879. Thus, when eight separate complaints were filed in San Francisco Superior Court by or on behalf of 678 plaintiffs—86 of whom were California residents and 592 of whom were residents of other states—BMS moved to quash service of the summons for the 592 non-resident plaintiffs based on lack of personal jurisdiction. Id. at 878. The trial court denied the motion, and BMS petitioned the Court of Appeal for a writ of mandate. Id. at 879. The Court of Appeal denied the writ and BMS appealed to the California Supreme Court. Id.

The California Supreme Court affirmed the Court of Appeal. The Court applied Daimler to hold that California’s courts lacked general jurisdiction over BMS because BMS was neither incorporated nor had a principal place of business in California and therefore could not be considered “at home in [the] state for purposes of general jurisdiction” (377 P.3d at 883), but concluded that California courts could nonetheless exercise specific jurisdiction over BMS on claims of non-California residents alleging injuries that neither occurred nor were treated in California. Id. at 894. In so ruling, the California Supreme Court appeared to apply a “sliding scale” approach to specific jurisdiction; which does not require a direct relationship between a plaintiff’s claim and the defendant’s forum contacts, nor does it require that the defendant’s forum contacts be directed toward the plaintiff. Thus, using the “sliding scale” approach, the Court reasoned that because BMS purportedly had 5 offices in California with around 400 employees, including 250 sales employees, marketed and sold Plavix to residents of California, distributed Plavix using a California distributor (who was also a co-defendant), and conducted research on other products in its California research facilities, its contacts with California were sufficiently wide ranging to justify the assertion of specific jurisdiction over the non-resident plaintiffs’ Plavix claims. Id. at 886–87. According to the California Supreme Court, because BMS had sold nearly one billion dollars of Plavix to Californians and the claims of California-resident plaintiffs were based on the same alleged wrongs as the claims of the non-resident plaintiffs, the sales of Plavix in California were “substantially connected” to the non-resident plaintiffs’ claims to support the exercise of specific jurisdiction over the non-resident plaintiff claims. Id. at 886–889.

Under the reasoning of Anderson, plaintiffs are bound to argue that any plaintiff can sue any corporate defendant in California so long as the defendant’s product is sold nationwide and an in-state resident is also a plaintiff. This is particularly troubling in the context of mass tort litigation because it suggests that plaintiffs can use the procedural tool of joinder to forum shop for the California venues they perceive as most favorable. It also allows plaintiffs to join with non-resident defendants to defeat diversity jurisdiction and avoid removal.

Forum shopping is not unique to California. Other courts, however, have reigned in expansive assertions of personal jurisdiction post-Daimler. For example, here in Cook County in a case involving 502 Plavix plaintiffs—486 of whom were non-Illinois residents—the Circuit Court granted BMS’s motion to dismiss the non-Illinois plaintiffs based on lack of personal jurisdiction. In re Plavix Related Cases, 2014 WL 3928240, *10 (Ill. Cir. Cook Co. Aug. 11, 2014). The Illinois court declined to follow Anderson, holding that the California Court of Appeal reached its decision to exercise specific jurisdiction over BMS in cases brought by non-California residents by applying a California legal doctrine (the “sliding scale” approach to personal jurisdiction) that was “contrary to Illinois law.” Id. at *8; see also In re Testosterone Replacement Therapy Products Liab. Litig. Coordinated Pretrial Proceedings, 164 F. Supp. 3d 1040, 1049 (N.D. Ill. 2016), adhered to in part on reconsideration, No. 14 C 1748, 2016 WL 861213 (N.D. Ill. Mar. 7, 2016) (holding that the contacts giving rise to jurisdiction over a resident plaintiffs claims were inadequate to confer jurisdiction over a non-resident plaintiff’s claims).

BMS is seeking review of the Anderson decision before the United States Supreme Court. Until the Supreme Court clarifies the standard for specific jurisdiction, however, we will likely continue to see a disproportionate number of out-of-state plaintiffs filing cases in the Golden State.

* Associate, Sidley Austin. J.D. 2010, Fordham University School of Law.