Calif. Supreme Court decision clarifies boundaries in exercising specific jurisdiction – What will this mean for Essure?
SAN DIEGO, CALIF., Sept. 2 2016 — A ruling made by the California Supreme Court Monday means out-of-state residents who brought claims against Bristol-Myers Squibb and its blood thinner Plavix can be heard in California state court. It also paves the way for more mass torts to be heard in the state, as it clarified the issue of specific jurisdiction in these types of litigation.
The California Supreme Court’s 4-3 decision extends specific jurisdiction “to the maximum extent permissible” under law, allowing residents to sue corporations in California state courts even if those companies are not headquartered in the state, so long as specific jurisdiction applies.
In order for specific jurisdiction to apply, the majority justices wrote a company must “purposefully direct” its activities at residents in the forum state, and litigation that results from the alleged injuries must arise out of those activities.
In the case of Plavix, the court said because Bristol-Myers Squibb marketed and advertised Plavix in California, employed sales reps in the state, contracted with a California-based distributor and operated research and development facilities in the state, specific jurisdiction applied.
The court also said because all plaintiffs’ claims were based on the same allegedly defective product and allegedly misleading marking and promotion of that product, the nonresident plaintiffs’ claims still bore a substantial connection to Bristol-Myers’ activities in California.
More than 650 people who say they were harmed as a result of taking the blood thinning drug Plavix filed eight separate lawsuits in San Francisco in March 2012, all alleging the pharmaceutical company “negligently designed and manufactured Plavix, failed to disclose material information in its advertising and promotion of Plavix and fraudulently and falsely advertised and promoted the product.”
Plaintiffs in the lawsuits alleged having suffered different injuries as a result of taking Plavix, including gastrointestinal bleeding, heart attacks, stroke and even death.
Of the 678 individuals involved in the lawsuits, only 86 were residents of California, while the remaining 592 were out of state, including 92 from Texas and 71 from Ohio. The remaining 429 non-California residents lived in 31 other states throughout the country.
Bristol-Myers contested the California court did not have jurisdiction to hear nonresident cases after the U.S. Supreme Court handed down a decision in 2014 in Daimler AG v. Barbara Bauman, which narrowed the scope of general jurisdiction.
In its 2014 decision, the U.S. Supreme Court clarified that in order to exercise general jurisdiction – which enables a court to hear a case against a defendant regardless of the subject of litigation – over a corporation, its contacts with the state “must be so extensive as to render the company essentially ‘at home’ in the state.”
Though general jurisdiction did not apply to the Plavix lawsuits, the majority of justices agreed specific jurisdiction did.
The court’s decision does not stop other defendants from arguing that specific jurisdiction does not apply in their case, as it would be reviewed on a case-by-case basis.
The state high court’s decision could have a substantial effect on current and future litigation, with many attorneys arguing it solidifies the state’s future as a center for mass torts.
“The Bristol-Myers decision is consistent with the California legislature’s intent to allow courts to exercise jurisdiction to the broadest extent not inconsistent with the constitution of California or the U.S.,” Attorney Martin Hood of Hood National Law Group said Friday. “It also prevents corporations from hiding in favorable jurisdictions from the harms their products allegedly cause.”
The decision may also have a bearing on the future of Essure litigation. The non-surgical female sterilization device was first researched and designed by a California company before being bought by pharmaceutical giant Bayer Healthcare, which continued to market the device in California.
“Even under the dissenting opinion, California would be an appropriate forum for Essure claimants,” said Hood.
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