Forum Shopping in Mass Tort Litigation: the Impact of Bristol-Myers a Year Later

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Partnering Perspectives | Fall 2018

Forum shopping in mass tort litigation: The impact of Bristol-Myers a year later

By Adam Pollet and Amber Unwala

In the year since the US Supreme Court decided Bristol-Myers Squibb Co. v. Superior Court,1 limiting where plaintiffs can bring claims in an attempt to curb forum shopping in mass tort litigation, courts have grappled with questions that the ruling did not address. This article examines decisions that have attempted to answer those questions and to delineate the potential scope of the ruling. Understanding the framework of the personal jurisdictional defenses afforded by the Bristol-Myers decision could help defeat claims in a multi-plaintiff action on jurisdictional grounds.

1 137 S. Ct. 1773 (2017).

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Takeaway: Since many district courts have already held that The decision Bristol-Myers is applicable to federal court litigation and since In Bristol-Myers, a group of 592 out-of-state plaintiffs joined 86 circuit courts have not yet opined on the issue, defendants facing Californians in a mass tort action in California state court, alleging mass actions arising under state law in federal court should raise injuries caused by Bristol-Myers’ drug Plavix. Since the out-of- a personal jurisdiction defense, arguing, where appropriate, that state plaintiffs did not purchase the drug or suffer their alleged the principles of Bristol-Myers apply in federal court. injuries in California, Bristol-Myers, which is incorporated in Delaware and headquartered in New York, argued that the court lacked personal jurisdiction to hear those plaintiffs’ claims. After the California courts repeatedly held that jurisdiction existed, the Understanding the framework of the personal US Supreme Court reversed. The Court held that due process precluded California’s exercise of specific personal jurisdiction jurisdictional defenses afforded by the Bristol- over the non-residents’ claims. The Court determined that in Myers decision could help defeat claims in a order for a California court to exercise specific personal multi-plaintiff action on jurisdictional grounds. jurisdiction over Bristol-Myers, the suit must “‘arise out of or relate to the defendant’s contacts with the forum.” The majority, joined by all but Justice Sonia Sotomayor, reasoned that “settled principles [of] specific jurisdiction” required the suit Applicability to class actions to “arise out of” Bristol-Myers’ contacts with the state. Therefore, Bristol-Myers was decided in the context of a mass tort action and each plaintiff’s claim must have an adequate link to the forum— did not specifically address whether the same principles should the “mere fact that other plaintiffs” suffered the same injuries from apply in class actions. Several recent decisions, however, have held Plavix in California could not create specific personal jurisdiction that Bristol-Myers is applicable to class actions. In DeBernardis v. for all plaintiffs. In so holding, the Court spawned a host of NBTY, Inc., the district court reasoned that Bristol-Myers applied questions about the opinion’s application in other contexts, to class actions, stating that the federalism concerns expressed such as its applicability to federal cases in general, class actions, by the Court regarding the territorial limitations of state authority and pending litigation. suggest that Bristol-Myers “will apply to outlaw nationwide class actions . . . where there is no general jurisdiction over the Defendants.”5 Relying in part on DeBernardis, a district court in The open questions Illinois held that Bristol-Myers “applies with equal force in the class 6 Applicability to federal court actions action context.” The court stated that “a defendant’s due process interest should be the same in the class context.” Bristol-Myers expressly left open the question of whether the ruling applies at all in federal court. But a majority of lower courts Other courts disagreed. For example, in In re Chinese- have found that it does. For example, in Molock v. Whole Foods Manufactured Drywall Products, the district court found that Market, Inc., the US District Court for the District of Columbia significant procedural and substantive differences between held that the Due Process Clause of the Fifth Amendment restricts mass actions and class actions, such as the additional due a federal court’s specific jurisdiction just as the Fourteenth process safeguards of Rule 23 of the Federal Rules of Civil 7 Amendment does in state court.1 In doing so, the court rejected Procedure, render Bristol-Myers inapplicable to class actions. the “constitutional distinction” because the Supreme Court and Another district court distinguished named and non-named other district courts “have applied Fourteenth Amendment plaintiffs in a class action, finding Bristol-Myers’ principles only 8 personal-jurisdiction standards in Fifth Amendment cases.” applied to non-resident named plaintiffs. Many other federal courts simply applied Bristol-Myers in Takeaway: While no circuit court has analyzed the issue, the their jurisdictional analysis without exploring the issue further, majority of district courts that have considered the issue held suggesting their belief that the principles extend to federal that Bristol-Myers does apply to class actions. Such application court.2 could serve as a potential barrier to nationwide class actions The few courts that declined to apply Bristol-Myers to federal based on state law claims or could at least require a multitude courts generally did so because the controversy arose under of subclasses to address any differences in the scope of liability federal law, for example in a collective action under the Fair under various state laws. Defendants should consider these Labor Standards Act.3 Several others have simply punted the issues in responding to nationwide class actions at both the question for later consideration.4 motion to dismiss and class certification phases.

1 297 F. Supp. 3d 114, 126 (D.D.C. 2018). 5 DeBernardis v. NBTY, Inc., 2018 WL 461228, at *2 (N.D. Ill. Jan. 18, 2018). 2 E.g., In re Dental Supplies Antitrust Litig., 2017 WL 4217115 (E.D.N.Y. Sept. 20, 2017); Greene v. Mizuho Bank, 6 Practice Mgmt. Support Servs., Inc. v. Cirque du Soleil, Inc., 301 F. Supp. 3d 840, 861 (N.D. Ill. 2018). Ltd., 289 F. Supp. 3d 870 (N.D. Ill. 2017). 7 In re Chinese-Manufactured Drywall Prod. Liab. Litig., WL 5971622, at *12-15 (E.D. La. Nov. 30, 2017). See 3 E.g., Swamy v. Title Source, Inc., 2017 WL 5196780, at *2 (N.D. Cal. Nov. 10, 2017). also Fitzhenry-Russell v. Dr. Pepper Snapple Grp., Inc., 2017 WL 4224723, at *5 (N.D. Cal. Sept. 22, 2017). 4 E.g., Weisheit v. Rosenberg & Assocs., LLC, 2018 WL 1942196, at *5 (D. Md. Apr. 25, 2018). 8 Greene, 289 F. Supp. 3d at 874–77.

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Applicability to pending litigation in their own independent analysis. But the cases holding that Bristol-Myers has moved the needle on personal jurisdiction As every civil procedure casebook explains, a defendant must analysis to a new place are more persuasive. either raise a personal jurisdiction defense at the first opportunity or risk waiving it. But for those defendants litigating cases prior Takeaway: Despite the language that Bristol-Myers is based on to the decision in Bristol-Myers who had not previously raised a settled principles of law, defendants now have a new argument personal jurisdiction defense or for whom a court had denied it, with which to raise a personal jurisdiction defense wherever they Bristol-Myers seems to open the door to a new or renewed effort. are in the litigation timeline, if only to preserve the issue for appeal. To excuse any purported waiver or to permit a defendant to re-challenge personal jurisdiction, courts typically must determine that Bristol-Myers constitutes an “intervening change in the law.” Conclusion Many courts have persuasively held that Bristol-Myers does Whether Bristol-Myers fundamentally changed the rules governing constitute an intervening change in the law.9 This is consistent personal jurisdiction or was simply a straightforward application of with Justice Sotomayor’s dissent, which expressed concern settled principles, the decision extends the Court’s recent trend of about the potentially “substantial” consequences of the decision restricting where defendants can be sued. While lower courts and that the Court’s “cases point in the other direction.” The US continue to tackle the outstanding issues with varying conclusions, District Court for the Northern District of Illinois, for instance, defendants now have viable jurisdictional defenses in federal cases specifically held that Bristol-Myers created a new, previously and class actions that were not previously available before unavailable personal jurisdiction defense for unnamed, non- Bristol-Myers. resident class members, and thus the court excused defendants’ previous failure to raise the defense. The US District Court for the Northern District of California found that while Bristol-Myers constituted the latest phase in a trend of incremental changes Despite the language that Bristol-Myers in personal jurisdiction jurisprudence, it was still significant enough to allow reconsideration of a previously denied is based on settled principles of law, motion to dismiss.10 defendants now have a new argument Some other courts have found that Bristol-Myers does not with which to raise a personal jurisdiction constitute an intervening change in the law. These courts often rely on the language in Bristol-Myers, where the Court asserted defense wherever they are in the litigation that its opinion rested on the “straightforward application” of timeline, if only to preserve the issue for “settled principles regarding specific jurisdiction.”11 The majority of these courts simply quoted this language without engaging appeal.

9 Practice Mgmt. Support Servs., 301 F. Supp. 3d at 840; Estate of Fox v. Johnson & Johnson, 539 S.W.3d 48, 52 (Mo. Ct. App. 2017). 10 Artec Grp., Inc. v. Klimov, 2017 WL 5625934, at *1 (N.D. Cal. Nov. 22, 2017). 11 E.g., In re Morning Song Bird Food Litig., 2018 WL 1382746, at *2 (S.D. Cal. Mar. 19, 2018); Sloan v. Gen. Motors LLC, 287 F. Supp. 3d 840, 854 (N.D. Cal. 2018); Atlantica Holdings, Inc. v. Sovereign Wealth Fund Samruk-Kazyna JSC, 2018 WL 922191, at *2 (S.D.N.Y. Feb. 15, 2018); Alvarez v. NBTY, Inc., 2017 WL 6059159, at *5 (S.D. Cal. Dec. 6, 2017).

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About the authors

Adam Pollet is an associate in the Washington DC office and Amber Unwala is an associate in the Washington DC office defends corporations, broker-dealers, investment advisers, and and focuses on an array of business and commercial litigation individuals in enforcement and litigation matters involving the matters, including financial services and securities litigation US Securities and Exchange Commission (SEC), the Financial and SEC enforcement matters. Her work includes counseling Industry Regulatory Authority (FINRA), state regulatory agencies, clients on internal investigations and white collar litigation and numerous federal and state courts. He also represents matters. Amber can be reached at amberunwala@ clients in internal investigations and regulatory examinations eversheds-sutherland.com. and counsels them on various regulatory and compliance matters. Adam can be reached at adampollet@ eversheds-sutherland.com.