Wednesday, August 13, 2014

Sliding Scale or Slippery Slope?

Bristol-Myers Squibb v. Superior Court, No. A140035 (D1d2 July 30, 2014)

The case is a coordinated mass tort proceeding concerning alleged defects in Plavix. Most of the plaintiffs are Californians, but a significant minority are not. Defendant BMS moved to quash service from the out of state plaintiffs, arguing that the court lacked personal jurisdiction to the extent that the claims arose from out-of-state injuries. The trial court denied the motion, finding that BMS was subject to general jurisdiction in California. The court here denies a writ, agreeing that there’s personal jurisdiction, but for different reasons.

Until recently, this would have been a pretty simple case. Under the “systematic and continuous” test, BMS is pretty clearly subject to general jurisdiction in California, since it sells its products to millions of Californians every year, including a billion dollars’ worth of Plavix.

That analysis, however, does not survive the U.S. Supreme Court’s recent decision in Daimler AG v. Bauman, --- U.S. ---, 134 S.Ct. 746 (2014), which did away altogether with the systematic and continuous test for general jurisdiction. Under Diamler general jurisdiction exists only in the state where the defendant is “at home.” For corporations, that is generally limited to the corporation’s state of incorporation and the state where the principal place of business is located. For BMS, those states are Delaware and New York, respectively. Thus, the court holds that BMS isn’t subject to general jurisdiction in California.

But that doesn’t end the inquiry, because BMS is still potentially subject to specific jurisdiction in California. That question turns on whether the out-of-state defendants’ claims in this case are sufficiently related to BMS’s contacts in California. As we’ve discussed previously, there
s a split between three different tests to assess relatedness, with the California Supreme Court adopting the most liberal standard in Vons Companies, Inc. v. Seabest Foods, Inc., 14 Cal. 4th 434, 450–52 (1996). The applicable test is flexible and requires only that the cause of action have a “substantial connection” with a defendant’s California activity. Unlike the stricter tests, under Vons, there is no need to establish that a direct, proximate, or but-for causal relationship between defendants’ contacts and plaintiff’s cause of action.

Relying on Vons, the court goes on to explain that there is an inverse relationship between the extent of the defendant’s contacts and the vigor with which the relatedness test should be applied.  If contacts are minimal, plaintiff’s claims should be closely related to defendant’s in-state contacts. But if defendant has extensive contacts, the relationship to the claims needs not be so scrupulous.*

Turning to the facts of this case, the court finds that BMS’s substantial, continuous contact with California, “including regarding the sale of Plavix” was sufficient to establish a substantial connection with the out-of-state plaintiffs’ claims. These out-of-state plaintiffs are alleged to have been injured in exactly the same way as the many California plaintiffs. The alleged injuries thus “occurred in the course of a common effort,” that relates to BMS’s California contacts.

Finally, in apparent dicta, the court notes that the doctrine of pendant personal jurisdiction does not apply here. That doctrine, developed in federal courts, permits a court to exercise personal jurisdiction over a claim that does not satisfy the “relatedness” test, when it is joined with other claims that do. It does not, however, permit a court to exercise claims brought by one plaintiff, just because the defendant is amenable to personal jurisdiction over another plaintiff’s joined claim.


*Is it me, or does this sliding scale” test feel like a backdoor into the pre-Daimler general jurisdiction rule? If a defendant is neither incorporated or headquartered here, but has a daily impact on the lives of most Californians, just how tenuous can the relationship between the claim and the contacts be? 

**NOTE: The Supreme Court appears to have similar concerns. It granted review on November 19, 2014. 

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