Chemerinsky: SCOTUS takes on when state courts can assert jurisdiction over out-of-state parties
Major changes in a basic area of constitutional law are unusual. It’s even less common for those changes to occur with few noticing. Yet the law of personal jurisdiction—when a court can exercise jurisdiction over an out-of-state defendant—has changed significantly in recent years. Bristol-Myers Squibb Co. v. Superior Court of California, argued April 25, may see the court continue to restrict personal jurisdiction with significant consequences for multistate litigation.
The traditional understanding
The U.S. Supreme Court long has held that due process limits the ability of courts in a state to exercise jurisdiction over out-of-state defendants. We all learned in law school that in International Shoe Co. v. Washington (1945), the court held that unless a defendant consents to litigation in a state, a court can exercise personal jurisdiction only if the defendant has “minimum contacts” with that state. It does not matter whether the litigation is in state or federal court; personal jurisdiction requires that the defendant have minimum contacts with the state where the case is being heard.
Through numerous cases over many years, the Supreme Court clarified the test for minimum contacts. Two different ways of finding minimum contacts emerged: general jurisdiction and specific jurisdiction. General jurisdiction was thought to exist when the defendant had systematic and continuous contacts with the state. Specific jurisdiction was based on the defendant’s contacts with the state giving rise to the cause of action. If neither existed, due process prevented a court from forcing the defendant to appear.
The law changes
In recent years, the court has significantly narrowed the availability of both general and specific jurisdiction. As to general jurisdiction, in Goodyear Dunlop Tires Operations, S.A. v. Brown (2011), the high court said that a court may assert jurisdiction over a foreign corporation “to hear any and all claims against” it only when the corporation’s affiliations with the state in which suit is brought are so constant and pervasive “as to render [it] essentially at home in the forum state.”
The court continued: “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.”
In Daimler AG v. Bauman (2014), the court reaffirmed that general jurisdiction exists only over a defendant who is “home” within a state. The case involved 22 residents of Argentina who filed suit in federal court in California, naming DaimlerChrysler as defendant. Their complaint alleged that Mercedes–Benz Argentina, an Argentine subsidiary of Daimler, collaborated with state security forces during Argentina’s 1976–1983 “Dirty War” to kidnap, detain, torture, and kill certain MB Argentina workers, among them, plaintiffs or people closely related to plaintiffs. Based on those allegations, the plaintiffs asserted claims under the Alien Tort Statute and the Torture Victim Protection Act of 1991, as well as under California and Argentina law.
The plaintiffs asserted personal jurisdiction—and the San Francisco-based 9th U.S. Circuit Court of Appeals found it existed—based on the California contacts of Mercedes–Benz USA, another Daimler subsidiary, one incorporated in Delaware with its principal place of business in New Jersey. MBUSA distributes Daimler-manufactured vehicles to independent dealerships throughout the United States, including California. The 9th Circuit concluded that this was sufficient for “continuous and systematic contacts” with California.
The Supreme Court unanimously reversed. Justice Ruth Bader Ginsburg, writing for the court, explained: “Even if we were to assume that MBUSA is at home in California, and further to assume MBUSA’s contacts are imputable to Daimler, there would still be no basis to subject Daimler to general jurisdiction in California, for Daimler’s slim contacts with the State hardly render it at home there.”
At the same time, the court has limited specific jurisdiction. In Walden v. Fiore (2014), the court held that specific jurisdiction exists based only on contacts the defendant creates with the forum state. Gina Fiore and Keith Gipson, Nevada residents, were stopped by a DEA agent in Atlanta and found to have $97,000 in cash. Fiore and Gipson explained that they were professional gamblers and the money was their stake and winnings. Anthony Walden, the DEA agent, seized the cash and advised Fiore and Gipson that their funds would be returned if they proved a legitimate source for the cash. Fiore and Gipson returned home to Nevada without their money. After eight months, their money was returned to them.
Fiore and Gipson sued Walden in federal court in Nevada. Walden moved to dismiss for lack of personal jurisdiction, but the 9th Circuit found that there was specific jurisdiction over him because it was foreseeable that the effects of his actions would be felt in Nevada, the place where Fiore and Gipson lived.
The Supreme Court, in an opinion by Justice Clarence Thomas, unanimously reversed the 9th Circuit decision. The court explained: “our ‘minimum contacts’ analysis looks to the defendant’s contacts with the forum state itself, not the defendant’s contacts with persons who reside there.” The court said: “But the plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant’s conduct that must form the necessary connection with the forum state that is the basis for its jurisdiction over him.” Because Walden had no contacts with Nevada, personal jurisdiction over him did not exist there.
Bristol-Myers Squibb Co. v. Superior Court
Bristol-Myers Squibb Co. was sued in California Superior Court by several hundred individuals from 33 states (including 86 from California) for injuries from the Bristol-Myers drug Plavix, a medication used to prevent heart attacks and strokes in people who are at high risk for them. There is no dispute that Bristol-Myers has extensive contacts with California: It markets and promotes its drugs in California and distributes them to pharmacies in California to fill prescriptions. Until the recent changes in the law, this would be enough for systematic and continuous contacts and general jurisdiction. But Bristol-Myers is based on the east coast and cannot be said to be “home” in California. The parties and the lower courts agreed that there is not general jurisdiction.
There also is no dispute that Bristol-Myers can be sued in California by those who reside there and took Plavix there. Bristol-Myers, though, objects to non-California residents being able to sue in that state for the injuries they incurred elsewhere. Bristol-Myers argues that “specific jurisdiction requires a causal connection between the defendant’s forum contacts and the plaintiff’s claim.” It says that “specific jurisdiction requires that a defendant’s forum contacts be a proximate cause of the plaintiff’s claim.”
By contrast, the plaintiffs contend that personal jurisdiction over Bristol-Myers in California is “fair and reasonable.” The company is being sued by California residents for harms from Plavix; allowing out-of-state plaintiffs to be part of the suit is more efficient and imposes no inconvenience on Bristol-Myers. The plaintiffs contend that the causal requirement urged by Bristol-Myers would create a significant new restriction on personal jurisdiction.
The court’s ruling could be very important for litigating mass torts and more generally for multidistrict litigation. Many amicus briefs were filed by business groups who would prefer to force plaintiffs to bring multiple actions in different states. By contrast, amicus briefs by consumer groups urge the court to allow personal jurisdiction in circumstances like this to make litigation more efficient for those who have been injured.
The Supreme Court’s recent decisions narrowing personal jurisdiction have very much favored business. We’ll see in Bristol-Myers Squibb Co. v. Superior Court whether that trend continues and whether the court further restricts personal jurisdiction over out-of-state defendants.
Erwin Chemerinsky is Dean and Distinguished Professor of Law, and Raymond Pryke Professor of First Amendment Law at the University of California, Irvine School of Law. He is an expert in constitutional law, federal practice, civil rights and civil liberties, and appellate litigation. He’s the author of seven books, including The Case Against the Supreme Court (Viking, 2014).