“. . . [T]he U.S. Supreme Court has made clear that a plaintiff may not sue a corporate defendant in a State unless his claims arise in that State or else it is the corporation’s home State. Today’s decision indicates that some state courts are still not getting the message. It cries out for further review.”
—Richard Samp, WLF Chief Counsel
WASHINGTON, DC—The California Supreme Court today issued a decision that largely jettisons constitutional limits on the authority of state courts to exercise personal jurisdiction over out-of-state defendants, ruling 4-3 that they may be sued in California based on claims lacking a connection with the State. The decision marked a setback for Washington Legal Foundation (WLF), which filed an amicus brief in the case, Bristol-Myers Squib v. Superior Court, arguing that a 2014 U.S. Supreme Court decision, Daimler AG v. Bauman, had cut back significantly on state courts’ power to assert jurisdiction over out-of-state corporations in cases of this sort.
The case involves 659 unrelated plaintiffs from across the country who filed a products liability suit in California state court, alleging they were injured after taking Plavix, a drug manufactured by defendant Bristol-Myers Squibb (BMS). Only 84 of the plaintiffs are California residents; the other 575 live in 33 other States, and their claims are not connected to any California conduct.
BMS does a substantial amount of business in California, but California is neither its principal place of business nor where it is incorporated. The U.S. Supreme Court Daimler decision held that, under those circumstances, a corporation may not be sued unless the claim being sued on has a substantial connection with the State. The California court nonetheless ruled today that the 575 nonresident plaintiffs could sue BMS in California. It held that the nonresidents’ claims should be deemed to have a sufficient connection with California because BMS has several offices in California and because its California Plavix sales gave rise to tort claims similar to the tort claims being asserted by the nonresident plaintiffs in this case.
The ruling, if it survives U.S. Supreme Court review, largely eviscerates the Daimler decision. As WLF pointed out in its brief, virtually every company that operates nationwide will be subject to nationwide forum shopping by the plaintiffs’ bar (including suits in all 49 States in which the plaintiff does not reside) if jurisdiction can be based on sales made to consumers who are unrelated to the plaintiff.
Upon hearing the Court’s decision, WLF issued the following statement by Chief Counsel Richard Samp: “Plaintiffs’ lawyers constantly seek to consolidate national lawsuits in friendly forums, but the Due Process Clause significantly limits the power of a State to hale nonresidents into its courts. In its seminal 2014 Daimler v. Bauman decision, the U.S. Supreme Court made clear that a plaintiff may not sue a corporate defendant in a State unless his claims arise in that State or else it is the corporation’s home State. Today’s decision indicates that some state courts are still not getting the message. It cries out for further review.”
WLF is a public-interest law firm and policy center that regularly litigates in support of civil justice reform, to ensure that unwarranted lawsuits do not drive up costs for all consumers.