By Jen Dlugosz on September 2, 2016
This week the California Supreme Court ruled that Bristol-Myers Squibb (“BMS”) is subject to personal jurisdiction of the California courts on the basis of specific jurisdiction. See Bristol-Myers Squibb Co. v. Superior Court (Anderson), S221038, slip op. (Cal. Aug. 29, 2016). This decision upheld the Court of Appeals decision that found that BMS’s activities in California were “insufficient to subject it to general jurisdiction in the state but that, given the nature of the action and BMS’s activities in California,” California courts may properly exercise specific personal jurisdiction over BMS in this matter.
Plaintiffs brought suit against BMS and McKesson Corporation in March 2012 as a result of adverse consequences from ingesting Plavix, a pharmaceutical drug. The plaintiffs consisted of 86 California residents and 592 non-residents. BMS moved to quash service of summons, alleging that the court lacked personal jurisdiction over it to adjudicate the claims of the 592 non-resident plaintiffs.
BMS is incorporated in Delaware and is headquartered in New York, and maintains substantial operations in New Jersey. BMS has approximately 6,475 employees in the New York and New Jersey area, which make up 51-percent of its national workforce. BMS did not research and develop Plavix in California, nor did it manufacture the drug in California. However, BMS has research and laboratory facilities in California and employs 250 sales representatives in the state.
The court first analyzed whether BMS could be subject to general jurisdiction. The court held that under the United States Supreme Court’s “at home rule” for general jurisdiction, general jurisdiction could not be asserted over BMS, as its activities in California “fall far short” of meeting the standards for general jurisdiction. Plaintiffs argued that because BMS had long been registered to do business in California, general jurisdiction is appropriate. The Court disagreed, stating that, “a corporation’s appointment of an agent for service of process, when required by state law, cannot compel its surrender to general jurisdiction for disputes unrelated to its California transactions.”
While the court refused to find BMS subject to general jurisdiction, it held that BMS was subject to specific jurisdiction. The court reviewed three factors to make this determination: (1) whether BMS “purposely directed” its activities at the forum state; (2) whether the plaintiffs’ claims arose out of or are related to these forum-directed activities; and (3) whether the exercise of jurisdiction is reasonable in light of “traditional notions of fair play and substantial justice.”
With regard to the first factor, the Court held that there was “no question” that BMS purposely availed itself in California. The court took into account that BMS markets and advertises Plavix in California, employs people in California, has an office in the state capital for lobbying purposes, purposefully promoted Plavix sales and had nearly $1 billion in sales in California over six years.
The court also found that second element of specific jurisdiction was met. The court emphasized that BMS had a single nationwide marketing and distribution effort. Under California’s “sliding scale approach” to specific jurisdiction “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.”
Finally, the court held that BMS failed to carry its burden and show that the exercise of personal jurisdiction over it in this matter is unreasonable. The court found that while some burdens may be imposed by litigating the claims in California, the alternative would be to litigate the 592 non-resident claims in various other forums, which is far more burdensome. Further, the court took into account that co-defendant McKesson Corporation is a California resident and California courts have an interest in adjudicating those claims.
The court was careful to note that this decision does not subvert Daimler’s holding and “does not render California an all-purpose forum for filing suit against BMS for any matter, regardless of whether the action is related to its forum activities.” The court reiterated that specific jurisdiction is decided on a case-by-case basis and is a fact specific inquiry.
While the California Supreme Court attempts to classify this decision as a fact-specific decision, based on the Court’s reasoning, it seems as though any large company with a nationally marketed product and employees in the state could be subject to specific personal jurisdiction in the state of California.