In Bristol-Myers, CA Supremes Find Contacts Insufficient For General Jurisdiction, But Expand the Scope of Specific Jurisdiction

Merton Howard 
Merton Howard
August 30, 2016

Non-resident companies across the United States have been anxiously awaiting the California Supreme Court’s decision in Bristol-Myers Squibb Company v. Superior Court (San Francisco) regarding the reach of the state’s personal jurisdiction statute.  In an opinion authored by Chief Justice Cantil-Sakauye, a 4-3 majority held that Bristol-Myers Squibb (BMS) is subject to jurisdiction in California on suits by non-resident plaintiffs injured outside the state, but limited its holding to claims based on specific jurisdiction only.

The underlying actions, some 592 consolidated claims by non-resident plaintiffs, had been challenged by BMS via a Motion to Quash for lack of personal jurisdiction.  BMS argued that the company is incorporated in Delaware, headquartered in New York City, and maintains substantial operations in New Jersey.  Furthermore, BMS claimed that none of the at-issue complaints contained any claims that the non-resident plaintiffs‘ injuries occurred in California or that they had been treated for their injuries here.  As such, it believed neither specific nor general personal jurisdiction could be exercised over it for claims by non-resident plaintiffs.

After some procedural back and forth on the applicability of general jurisdiction in light of the United States Supreme Court’s decision in Daimler AG v. Bauman (2014) 571 U.S. ___ [134 S.Ct. 746] (Daimler), the Court of Appeal for California heard the BMS cases on transfer, and held that it was specific personal jurisdiction, and not general, which California had the right to exercise over BMS.  It was this decision that the State Supreme Court yesterday affirmed.

In reaching its decision, the Court first made clear that this is not a case for application of general jurisdiction.  The Court confirmed that the U.S. Supreme Court‘s “at home” rule for general jurisdiction over a corporation, as articulated in Daimler, defeated the non-resident plaintiffs‘ claim of general jurisdiction.  Under Daimler, BMS may be regarded as being at home in Delaware, where it is incorporated, or perhaps in New York and New Jersey, where it maintains its principal business centers.  The court held that “although the company‘s ongoing activities in California are substantial, they fall far short of establishing that it is at home in this state for purposes of general jurisdiction.”  In so deciding, the Court weighed a number of factors like drug sales, locations of facilities, and number of California employees versus those in other states.

Notwithstanding this limitation, the Court went on to find that in the instant cases, BMS was subject to specific personal jurisdiction because: 1) BMS has purposely availed itself of the privilege of conducting activities in California, invoking the benefits and protection of its laws; 2) BMS‘s forum contacts, including its California-based research and development facilities, are substantially connected to the non-resident plaintiffs‘ claims because those contacts are part of the nationwide marketing and distribution of Plavix, a drug that gave rise to all the plaintiffs‘ claims; and 3) BMS failed to carry its burden of showing that the exercise of personal jurisdiction over it in this matter is unreasonable.  The key issue here, and in the dissent, is that the majority found the nationwide marketing and the California research facilities – even those unconnected to Plavix – sufficient to meet the nexus requirement for specific jurisdiction.

Justice Werdegar’s dissent, in which Justices Chin and Corrigan concurred, agreed that general jurisdiction did not apply, but disagreed that the nexus requirement was satisfied by the facts relied on by the majority sufficient to allow application of specific jurisdiction in this case.   Justice Werdegar explained that the majority is sanctioning California to “regularly adjudicate disputes arising purely from conduct in other states, brought by non-residents who suffered no injury here, against companies who are not at home here but simply do business in the state.  Such an aggressive assertion of personal jurisdiction is inconsistent with the limits set by due process.”

We suspect that a number of non-resident companies are similarly dismayed by this expansive interpretation of specific personal jurisdiction.  Now it is up to the State’s lower courts to find the boundaries of this expanse.