The California Supreme Court ruled that state courts can take “specific jurisdiction” over mass tort claims by out-of-state plaintiffs against Bristol-Myers Squibb because of the company’s in-state marketing campaigns, sales and research.
It distinguished a 2014 US Supreme Court ruling Daimler AG v. Bauman that states may take “general jurisdiction” only over companies that are “at home” in the state.
The ruling allows claims to proceed in Bristol-Myers Squibb Company v. Bracy Anderson, S221038, Super. Ct. JCCP No. 4748 (Sept. 29, 2016). It clears the way for lawsuits by 86 Californians and 592 plaintiffs from 33 other states against Plavix, a drug used to inhibit blood clotting, to be tried together in California.
The plaintiffs allege that the drug caused bleeding, bleeding ulcers, gastrointestinal bleeding, cerebral bleeding, rectal bleeding, heart attack, stroke, hemorrhagic stroke, subdural hematoma, thrombotic thrombocytopenic purpura, and 18 deaths. They charge that the Bristol-Myers engaged in negligent and wrongful conduct in the design, development, manufacture, testing, packaging, promoting, marketing, distribution, labeling, and sale of Plavix.
According to the complaints, the defendants promoted the drug to consumers and physicians by falsely representing that it provided greater cardiovascular benefits, while being safer and easier on a person‘s stomach than aspirin, but defendants knew those claims were untrue.
Separately, 261 Plavix lawsuits are pending in multidistrict litigation (MDL) before U.S. District Judge Freda L. Wolfson in the District of New Jersey. The United States Judicial Panel on Multidistrict Litigation created the MDL on December 8, 2015.
The 74-page opinion upheld rulings in two lower courts and focused on the difference between “general jurisdiction” and “specific jurisdiction.”
United States Supreme Court ruled in Daimler AG v. Bauman 571 U.S. ___ (2014), on the limits of general jurisdiction involving out-of-state defendants and plaintiffs. General jurisdiction requires that a defendant must be “at home” in a state — by being incorporated and having its principal place of business in a state. “The corporation‘s activities must be so continuous and systematic as to render [it] essentially at home in the forum State,” the US Supreme Court held.
Daimler held that California courts did not have general jurisdiction over Argentinian plaintiffs suing DaimlerChrsyler, a German company, over a dispute in Argentina.
In the Plavix case, Bristol-Myers (BMS) argued it was incorporated in Delaware, headquartered in New York City, and maintained operations in New Jersey. The California high court agreed that it did not have general jurisdiction over the company, even though it was registered to do business and California and has an agent for service of process.
But the California court went on saying it did have specific jurisdiction based on a three-part test:
- Whether the defendant has purposefully directed its activities at the forum state.
- Whether the plaintiffs’ claims arise out of or are related to these forum-directed activities.
- Whether the exercise of jurisdiction is reasonable and does not offend traditional notions of fair play and substantial justice.
Satisfying test 1, “BMS purposefully availed itself of the benefits of California” by marketing and advertising Plavix in California, selling 187 million Plavix pills in California from 2006-2012 resulting in sales revenue of $918 million, employing 250 sales representatives in California, contracting with McKesson, based in San Francisco, to be its pharmaceutical distributor, operating research and laboratory facilities in California, and even having an office in the state capital to lobby the state.
Satisfying test 2, BMS had extensive activities in California, including by marketing and promoting Plavix in the state, conducting research and development in California and targeting California as part of a nationwide campaign. “Because of the defendants‘ relationship with the forum, it is not unfair to require that they answer in a California court for an alleged injury that is substantially connected to the defendants’ forum contacts,” the court ruled.
Satisfying test 3, BMS had adequate notice that it was subject to suit in California. “BMS embraced this risk by coordinating a single nationwide marketing and distribution effort and by engaging in research and development in California. In that regard, BMS was on notice that it could be sued in California by nonresident plaintiffs. In fact, our courts have frequently handled nationwide class actions involving numerous nonresident plaintiffs.”
California has a clear interest
BMS argued that the claims of non-resident plaintiffs had no connection to and did not suffer any injury in California. But the court ruled that the proper focus is on the defendant and whether the corporation has created contacts in the forum state.
California has a clear interest in trying the mass tort cases together to promote efficient adjudication of California residents‘ claims. “Because mass tort injuries may involve diverse injuries or harm not amenable to the efficiency and economy of a class action, they present special problems for the proper functioning of the courts and the fair, efficient, and speedy administration of justice. Without coordination, those who win the race to the courthouse [and] bankrupt a defendant early in the litigation process would recover but effectively shut out other potential plaintiffs from any recovery,” the court ruled.
“Balancing the burdens imposed by this mass tort action, and given its complexity and potential impact onthe judicial systems of numerous other jurisdictions, we conclude that the joint litigation of the nonresident plaintiffs‘ claims with the claims of the California plaintiffs is not an unreasonable exercise of specific jurisdiction over defendant BMS.”