The Supreme Court’s recent decision in Bristol-Myers Squibb Co. v. Superior Court on jurisdictional limits to lawsuits may have a significant impact on the size and location of class action lawsuits
Bloomberg News is wrapping up 2017 with an examination of the future of class action law in light of Bristol-Myers Squibb v. Superior Court (“BMS”), a case focusing on jurisdictional limits on cases against corporations. “It’s too early to tell how the courts will apply BMS to class actions, but class action litigators are preparing to go to war over where class suits, particularly nationwide suits, can now be filed.” With overweening corporations as the target of most class suits, it seems clear the defense bar will push for a reduction in the scope and size of aggregate actions via what they see as BMS’s proscription of expanded jurisdiction, while plaintiffs will seek to convince courts that BMS is inapposite and should not be held to constrict use of the class action mechanism to obtain judgments for the fraudulent misconduct of the corporate world.
“How are you supposed to manage these complex, large national cases if you can’t do it in a single court?” asks Lieff Cabraser partner Jonathan Selbin. “I would hope the answer is you can still do that. But clearly, that’s what’s at risk here.”
It’s all about jurisdiction, a court’s fundamental power to haul a defendant into court. The Supreme Court was weighing case-based “specific jurisdiction” when it considered BMS, whose underlying issue was the appropriateness of non-Californians bringing drug injury claims against Bristol-Myers Squibb alongside those of California residents in a California state court. And eight of the Court’s nine justices felt that allowing the California court to take the nonresidents’ case relied on a definition of permissible jurisdiction that was too broad. It was this finding that has led to a rift between the defense and plaintiffs’ bars on the ramifications of the case on future class actions.
Some experts feel the impact of BMS will be slight, under the view that most class actions of late end up in federal court anyway. Defense attorneys, however, think the distinction between the federal and state courts is irrelevant, and that the views espoused in the BMS decision point to a diminishment of class aggregate actions across the board. Things are still at the point where a lot of the debate is theoretical — rather than taking place in active cases at bar.
Nevertheless, a pair of other recent Supreme Court cases (Goodyear Dunlop v. Brown and Daimler AG v. Bauman) have been seen as narrowing general jurisdiction to apply only in states where the defendant corporation is incorporated. Selbin notes that seeing these decisions as further restricting class actions “would take an additional leap in logic.” But he further notes, “it’s not that big a step from where they are after Bauman and Bristol-Myers Squibb to saying, ‘You cannot do nationwide class actions except out of the defendant’s home state.’ That would be my fear. It’s not at all clear how they’ll resolve this.”
Selbin expands on the analysis: “It’s an open question whether anything in Bristol-Myers Squibb even applies to a class action filed in federal court, as opposed to one filed in a state court.” But Selbin further notes that the prevalent reading of BMS he’s heard so far is that if you’re not filing your case in the defendant’s home state, “you’d better be sure all of your named plaintiffs have a connection to the forum that allows them to be there.”
Selbin contrasted the line of case law arising from Phillips Petroleum v. Shutts, which BMS noted was not overruled. “There’s a real tension there with the Shutts line of cases,” Selbin said. Those cases “are about choice of law and certainly seem to suggest you can bring multistate class actions against a defendant in a single court that involves absent class members from a whole bunch of different states, and maybe even plaintiffs from a whole bunch of different states.”
The jury, so to speak, is still out. Read the full discussion on Bloomberg Law.