On the Road Again: Does Bristol-Myers Squibb Limit Courts’ Jurisdiction Over Claims by Out-of-State Class Members?

The Court reiterated that there are two bases for personal jurisdiction over corporations: either the corporation must be “at home” in the forum state, typically because it is headquartered or incorporated there (a concept known as “general” jurisdiction), or the claim must arise out of or relate to the defendant’s contact with the forum state (“specific” jurisdiction). In BMS, the California Supreme Court held that specific jurisdiction existed over a nonresident defendant company based on claims that did not arise out of or relate to the defendant’s contacts with the forum state, because the defendant’s “wide ranging” contacts with the state were sufficient to support personal jurisdiction. The U.S. Supreme Court reversed, holding that the Fourteenth Amendment’s due process clause prevented out-of-state plaintiffs from suing BMS for claims unrelated to the defendant’s contacts with California.

The decision was seen as a win for business, because it reduced the risk that a business would have to defend itself in a mass tort action in a distant, “plaintiff-friendly” court handpicked by plaintiff’s counsel. Before BMS, in some jurisdictions (including California) an in-state plaintiff could join other out-of-state claimants as plaintiffs in the proceeding, even if the out-of-state plaintiffs’ claims had no connection to the forum state. This rule gave mass tort plaintiffs significant leverage by forcing defendants to defend potentially hundreds of claims in plaintiff-friendly states.

But BMS left open at least one significant question:  Does its holding apply only to individual, mass proceedings, or does it also apply to class actions? See Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1789 n.4 (2017) (Sotomayor, J., dissenting) (“The Court today does not confront the question whether its opinion here would also apply to a class action in which a plaintiff injured in the forum State seeks to represent a nationwide class of plaintiffs, not all of whom were injured there.”).[1] On the one hand, the fact that a case is a class action does not change the parties’ legal rights and duties; the class action is a procedural device, not a means to reduce the plaintiffs’ obligations that would apply in individual cases. Furthermore, the BMS rationale appears to apply just as well to class actions:  Why should unnamed class members be able to sue a defendant in a forum when possibly thousands of their claims have no connection to that forum? If BMS does not apply to class actions, plaintiffs could continue to “forum shop” for jurisdictions they believe are most likely to result in a high-dollar verdict or a favorable settlement. Plaintiffs’ counsel could find a named plaintiff who resides in the forum state and then seek to certify a nationwide class of people who have no connection to that state.

On the other hand, class actions are fundamentally different from the mass proceeding at issue in BMS. The class certification process is designed to resolve class claims without requiring individual proof from each class member. In a mass proceeding, each plaintiff has formally joined the lawsuit, and individual plaintiffs’ claims are treated individually.

Where Things Stand Now: Conflicting Directions

No federal appellate court has decided whether BMS limits personal jurisdiction over out-of-state defendants for claims by out-of-state class members with no connection to the forum state. Absent clear guidance, district courts have split on whether BMS applies to class actions. Even within a single district—the Northern District of Illinois—courts have issued conflicting opinions.

For example, in Practice Mgmt. Support Servs., Inc. v. Cirque du Soleil, Inc., 301 F. Supp. 3d 840, 861 (N.D. Ill. 2018), the court held that the BMS rationale applied equally to class actions:  “it [is] not clear how [plaintiff] can distinguish the Supreme Court’s basic holding in Bristol-Myers simply because this is a class action.”  The court cited Supreme Court precedent holding that the federal class action rule “shall not abridge, enlarge, or modify any substantive right.”  Id. (internal quotations omitted).

In contrast, in Al Haj v. Pfizer Inc., 338 F. Supp. 3d 815, 818-19 (N.D. Ill. 2018), the court found it “implausible” that the U.S. Supreme Court had intended to cause an “extraordinary sea change” in the “pre-Bristol-Myers consensus.” That consensus held that due process “neither precluded nationwide or multistate class actions nor required the absent-class-member-by-absent-class-member jurisdictional inquiry urged by” the defendant. Id. The court stressed that BMS “does not alter that landscape.”  Id. at 819. The court reasoned that BMS involved “a mass action” and that if the Supreme Court had intended to apply its reasoning to class actions, it would have said so expressly.

Recent Federal Appellate Oral Arguments 

Two appellate courts currently considering whether BMS applies to class actions recently heard oral argument. Molock v. Whole Foods Mkt., Inc., No. 18-7162 (D.C. Cir.); Mussat v. IQVIA, Inc., No. 19-1204 (7th Cir.).

In Molock, the district court ruled that BMS did not prevent federal courts from exercising jurisdiction over defendants regarding the claims of out-of-state class members. The trial court found it persuasive that other courts addressing the issue “focused their analysis on the material distinctions between a class action and a mass tort action.” The court noted that the “additional elements of a class action supply due process safeguards not applicable in the mass tort context. Molock v. Whole Foods Mkt., Inc., 297 F. Supp. 3d 114, 126-27 (D.D.C. 2018).

The oral argument before the D.C. Circuit covered a wide range of issues. Among other things, the panel questioned whether a BMS-based personal jurisdiction challenge should be resolved on a motion to dismiss, or whether it should not be resolved until the court decides whether to certify a class, because until class certification, putative class members are not parties to the litigation whose claims could be “dismissed” by the court.

In Mussat, the district court held that BMS applied to class actions and granted the defendant’s motion to strike the claims of out-of-state class members. The court reasoned that “[f]ollowing the Supreme Court’s lead in Bristol-Myers and applying its core reasoning here, due process, as an ‘instrument of interstate federalism,’ requires a connection between the forum and the specific claims at issue.” Mussat v. IQVIA Inc., No. 17 C 8841, 2018 WL 5311903, at *5 (N.D. Ill. Oct. 26, 2018).

During oral argument before the Seventh Circuit, one judge questioned whether the defendant’s position was inconsistent with the “whole notion of class actions,” because the mass action at issue in BMS was not the same as a class action. Another judge questioned whether the Supreme Court in BMS intended to effect a “dramatic change to the way everyone has understood class actions to work for more than 50 years,” particularly in federal question cases in federal court.

What Does it All Mean? Buckle Up.

During the argument before the D.C. Circuit, one judge aptly summed up the current state of affairs: “[T]here’s no question” that resolution of whether BMS applies to unnamed class members is “going to be a Supreme Court decision.”

In the near term, without a clear directive, businesses should argue that BMS provides a personal jurisdiction defense to class actions and that a court lacks specific jurisdiction over the claims of out-of-state class members in a forum other than the defendant’s “home” state. But given the current conflicting decisions, businesses should also expect appellate litigation either way a trial court rules on this issue.

[1] The Supreme Court majority also expressly left open “the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court.” 137 S. Ct. at 1784.