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Back to the Future for California Jurisprudence

08.31.16 | INSIGHTS

By Andy Downs
Shareholder, San Francisco Office, 415.352.2716

Once upon a time, the California Supreme Court was at the forefront of expanding tort liability. About 30 years ago, things shifted and the court became substantially more balanced, if not defense-oriented. That trend has ended. If those who forget history are doomed to repeat it, then that is the situation in California today because the boundaries of personal jurisdiction and tort liability have once again been expanded.

As most lawyers learned in the first weeks of law school, a court cannot exercise jurisdiction over a non-resident defendant unless the defendant has sufficient contacts with the state either generally or in connection with the particular claims being litigated. In Bristol-Myers Squibb Co. v. Superior Court (No. S221038, 8/29/2016), the California Supreme Court expanded the borders of specific jurisdiction, holding the California courts could exercise jurisdiction over a non-resident defendant for claims made by non-resident plaintiffs involving activities wholly outside of California, simply because the non-resident claims were based upon the same facts as were the claims of California-resident plaintiffs. In the court’s view, the non-resident plaintiffs’ claims bore a substantial connection to the defendant’s contacts in California because of the common allegations regarding product defects and misleading marketing applicable to both resident and non-resident plaintiffs.

Bristol-Myers Squibb was sued by 678 plaintiffs who claimed to have suffered injury due to taking Plavix, a prescription drug used to inhibit blood clotting. Only 86 of those 678 plaintiffs live in California. The remainder live elsewhere. Bristol-Myers challenged the exercise of jurisdiction over it by the California courts for the claims of the 592 non-resident plaintiffs. Both the trial court and the Court of Appeal concluded the California courts had jurisdiction over Bristol-Myers for all 678 plaintiffs. The California Supreme Court agreed.

There are two facets to personal jurisdiction over a defendant. The first is general jurisdiction, where the defendant is effectively resident in the jurisdiction so that it can be sued there even for events occurring wholly elsewhere. The second is specific jurisdiction. There, the claims against the non-resident defendant must arise out of or be related to the defendant’s activities in the state.

The California Supreme Court, relying on recent United States Supreme Court cases, concluded there was no general jurisdiction over Bristol-Myers, but specific jurisdiction was present even though none of Bristol-Myers alleged activities with respect to the non-resident plaintiffs occurred in California. The court concluded Bristol-Myers’ conduct was a “single, coordinated, nationwide course of conduct directed out of BMS’s New York headquarters and New Jersey operations center and implemented by distributors and salespersons across the country.” Based on that conclusion, the court found specific jurisdiction existed for the claims of the non-resident plaintiffs. The court rejected the defense’s argument that its California contacts needed to have some “substantive relevance” to the claims alleged by the non-resident plaintiffs. The court also found Bristol-Myers’ conduct of research in California on other drugs, but not Plavix, was a further basis for specific jurisdiction.

As the dissent comments, this decision weakens the boundary between general jurisdiction (where a defendant’s presence is so prevalent it can be sued by a non-resident for something that happened entirely out of state) and specific jurisdiction.

The holding in Bristol-Myers may not survive in the long term because personal jurisdiction exercised by state courts over non-resident defendants is a matter of federal constitutional law. The U.S. Supreme Court may well be inclined to grant review of this decision. The greater long-term concern for defendants and their insurers should be what this opinion says about the views of the California Supreme Court regarding tort law.

The majority in this 4-3 decision consisted of the four most recent (and youngest) justices to join the court, while the three most senior justices dissented. From the early 1960s to the mid-1980s California was on the cutting edge of expanding tort law. It then took several steps in the pro-defense direction about 30 years ago and has been gradually turning towards plaintiff views for the past five to ten years. Bristol-Myers may be a sign the pace of returning to an expansive and pro-plaintiff view of tort law is increasing.

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