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Monday, June 19, 2017

SCOTUS OT16 Symposium: Jurisdiction and Power in Bristol-Meyers Squibb

I read the Court's opinion in Bristol-Meyers Squibb somewhat differently than Howard does. This doesn't strike me as a purposeful availment case; neither "purposive" nor "avail" (nor derivatives thereof) even show up until Justice Sotomayor's dissent. The majority accepts that BMS has various contacts with California, but denies that those contacts are related to the claims at issue, or that there's "any adequate link between the State and the nonresidents' claims." That looks like an argument devoted to the second prong of the specific jurisdiction test, not the first. (Though he's critical of the Court's holding, Adam Zimmerman apparently agrees on this point.)

Given that the modern three-prong test is largely of the Court's own invention, and not part of the preexisting law of personal jurisdiction, it's hard to say that one concept of "related to" is self-evidently correct. But there are four points on which I think the Court's opinion got it right.

  1. In Part II-B, the Court correctly reiterates that jurisdiction is about power, not fairness. Or, to put it another way, what's "fair" or "unfair" about jurisdiction is whether a particular government is fairly empowered to decide the case. What matters isn't the geography of the courthouse or the expense of putting lawyers and witnesses on a plane; a case might be properly heard in Manhattan but thrown out of court right across the bridge in New Jersey. What matters is who gets to decide. (So the majority properly, albeit silently, throws the contrary language in Insurance Corp. of Ireland under the bus.)

  2. On this view of jurisdiction, the ultimate outcome makes some sense. BMS makes allegedly defective pills in New Jersey and sells them in California and Kansas. Let's grant that California can determine whether those California sales were lawful. But where do its officials get power to make the same decision about the Kansas ones? Who put them in charge? Why should BMS have to obey the pronouncements of a California judge, appointed by California officials and retained by California voters, using California rules on procedure, discovery, evidence, or jury trial? Maybe what BMS did in Kansas was okay, maybe not. But why do Californians get to decide? "Why not Bill Gates, or the Pope?"

    The plaintiffs note that BMS sold the same pills in both places, so it's already made itself subject to the liability determinations of California courts. But in an adversary system like ours, the California courts aren't deciding what really happened; they're deciding who made the better showing in a particular legal proceeding, conducted according to particular rules. (That's why our preclusion doctrines have a variety of internal conditions or exceptions; even a favorable California judgment doesn't mean the Kansans would automatically win in Kansas.) So the power to decide whether BMS injured California plaintiffs doesn't automatically confer a power to make the same decision as to Kansans.

    (Note, by the way, that the Court has never really reconciled its holding on out-of-state damages in Keeton, or for that matter its relaxed standard for choice of law in Allstate, with the state-by-state restrictions it came up with in BMW v. Gore. I'm not sure how it would do that if it wanted to, or what the right answer would be.)

  3. The Court is also probably right that its ruling doesn't sound a death-knell for nationwide small-dollar actions. Plaintiffs could have sued BMS where it actually designed and manufactured the pills, or wherever it's incorporated or headquartered. True, they may not be able to sue all of the relevant defendants there. And there'll be many cases that of necessity are spread across multiple states. But that's not really a criticism of the Court's view of sovereign authority. If modern economic relations are so spread among the states that no one state has authority to determine the whole, isn't that an argument for, rather than against, dividing up the cases?

  4. Importantly, the Court explicitly reserves the question of how to handle these cases in federal court. I've argued before that most hard personal jurisdiction cases really belong in federal court; the United States government has undoubted authority to tell the parties what to do, and Article III enables jurisdiction over diversity cases for a reason. This doesn't happen today because Rule 4(k)(1)(A) unwisely forces federal courts to pretend that they're state courts for personal-jurisdiction purposes. As cross-border transactions grow ever more extensive, it'd be better if the energy now focused on the law of state personal jurisdiction were instead focused on reforming the rules for federal courts.

Posted by Stephen Sachs on June 19, 2017 at 03:38 PM in 2016-17 End of Term, Civil Procedure, Constitutional thoughts | Permalink

Comments

I think I need to digest the Court's opinion more to respond to what you say in point #2, except to say that it's somewhat in tension with what you say in point #4 for mass torts.

Mass cases are overwhelming resolved through informal coordination and settlement across borders. And even when a single MDL or statewide MCL is responsible for the coordination, the impact of a multimillion dollar verdict in Fen-Phen or the GMO rice litigation in one state carries more weight across the country than whether a case has to be filed in one court or another, subject to that court's state law. As I noted with Howard, even here, where cases were filed in several different jurisdictions, the parties agreed to informal coordination before a special master in NY. So, in practice, concerns about horizontal federalism interests--including which state tries a case or precludes another, at least for mass tort claims, are somewhat overstated. Because of the stakes involved, cases are rarely tried in any court; they're mediated, coordinated, shared, and sometimes, literally sliced up and served to attorneys around the country as common benefit work to be tried and settled "in a box."

But, as you note in point #4, these are good reasons why these cases belong in federal court, without the limitations of Rule 4(k)(1)(A). (This seemed to be what Justice Breyer was struggling with in the oral argument.) I just don't see any amendments to that rule happening any time soon. And I worry about the practical impact of a decision like this on our already burdened MDL system, which hears almost 40% of all cases now pending in federal court, but is currently the only place where courts can resolve such cases without worrying about personal jurisdiction.

A question for you and others: what about cases involving foreign defendants? Short of filing claims in MDL proceedings first, if that's possible, and then moving to certify a class, how will those cases proceed?

Posted by: Adam Zimmerman | Jun 19, 2017 4:54:11 PM

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