Supreme Court Further Curbs Plaintiffs' Venue Shopping With Bristol-Myers Ruling -- Update
June 19 2017 - 7:11PM
Dow Jones News
By Jess Bravin
WASHINGTON -- The Supreme Court on Monday dealt a blow to
consumer plaintiffs by limiting where lawsuits against companies
with business in multiple states can be heard.
By an 8-1 vote, the court said California courts could hear only
claims by Californians against Bristol-Myers Squibb Co., whose
blood thinner Plavix allegedly created a substantial risk of heart
attack, stroke and other injuries.
The ruling was one of a series this term limiting so-called
forum shopping, where plaintiffs' attorneys file suit in a state or
federal court they believe will be sympathetic to their claims.
An attorney for the plaintiffs declined to comment.
"We are hopeful that this decision will provide litigants more
certainty regarding where lawsuits can be heard," Bristol said in a
statement. "At its core, this decision was about basic principles
of federalism and fairness in our legal system."
The Plavix suit involved nearly 700 plaintiffs, including 86
Californians, alleging product liability and other claims under
California state law. There was no dispute over the Californians'
ability to sue in their own state courts, but Bristol, which is
incorporated in Delaware and conducted its Plavix business from New
York and New Jersey, argued the nonresidents were a different
story.
The California Supreme Court allowed the suit to proceed in
state court, observing the plaintiffs had similar claims, that the
drug was marketed nationwide and that Bristol had sold more than
180 million Plavix pills in the state, generating more than $900
million in sales.
Justice Samuel Alito, writing for the high court, said that
wasn't enough.
Companies have long complained that plaintiffs in certain cases
seek out venues where they believe they are most likely to receive
favorable rulings, even when the cases involved may have only a
tenuous connection to the area.
Monday's ruling could provide a boost to companies by limiting
the opportunities for such forum-shopping, as the tactic is known.
It could limit plaintiffs' ability to stray far from a jurisdiction
where the company does business or where the plaintiffs have a
relatively direct interaction with the company or its product.
Consumers groups, however,have warned that cutting back too
sharply on plaintiffs' ability to sue could give big companies more
ways to avoid responsibility for harm they cause.
At issue was the definition of jurisdiction, which refers to a
court's legal authority over a claim or party. Courts have "general
jurisdiction" over certain parties, such as companies based in
their state, which allows them to hear any claim. They also may
have "specific jurisdiction" to hear particular claims, such as
those arising over an incident within their state.
In 2014, the Supreme Court narrowed the scope of general
jurisdiction against corporate defendants, but the California court
found specific jurisdiction based on Bristol's unrelated operations
in its state.
Justice Alito called that "a loose and spurious form of general
jurisdiction" that fell outside the high court's precedent.
"The nonresidents were not prescribed Plavix in California, did
not purchase Plavix in California, did not ingest Plavix in
California, and were not injured by Plavix in California," he
wrote. "The mere fact that other plaintiffs were prescribed,
obtained, and ingested Plavix in California -- and allegedly
sustained the same injuries as did the nonresidents -- does not
allow the state to assert specific jurisdiction over the
nonresidents' claims."
Only Justice Sonia Sotomayor dissented.
"There is nothing unfair about subjecting a massive corporation
to suit in a state for a nationwide course of conduct that injures
both forum residents and nonresidents alike," she wrote.
In May, the court ruled that Montana state courts couldn't hear
employee-injury claims against the BNSF Railway unit of the Omaha,
Neb.-based Berkshire Hathaway Inc., because the plaintiffs were
neither residents of the state nor injured there, and the company
itself, with headquarters in Fort Worth, Texas, was based out of
state. The Montana Supreme Court had found jurisdiction because the
railway runs through the state and employs thousands of people
there.
Also last month, the U.S. Supreme Court narrowed the number of
places patent-infringement suits could be brought, holding
unanimously that a corporation is deemed to reside only in the
state in which it is incorporated.
(END) Dow Jones Newswires
June 19, 2017 19:56 ET (23:56 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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