Court Strikes Non-Forum Class Members’ Claims in TCPA Class Action under <i>Bristol-Myers Squibb</i>We have been closely watching how courts have applied the Supreme Court’s Bristol-Myers Squibb decision in the class action context, and the early results are mixed. But the Northern District of Illinois made a big step in the right direction when it decided America’s Health and Resource Center, Ltd. v. Promologics, Inc. The court granted the defendants’ motion to strike the class allegations because (among other things) the court lacked personal jurisdiction over non-Illinois members of the alleged class.

Promologics is a TCPA case involving alleged junk faxes. While the case’s discussion is not clear on where the allegedly improper faxes originated, they did not come from Illinois. Instead, they were sent to recipients both inside and outside of Illinois.

In response to the defendants’ B-MS jurisdictional objection, the plaintiffs argued that B-MS does not apply to class actions, and in the alternative, that defendants’ challenge was untimely.

The court dealt swiftly and decisively with the threshold question applying Bristol-Myers Squibb to class actions. Grabbing hold of the Supreme Court’s statement that “due process requires ‘a connection between the forum and the specific claims at issue,’” the court expressed its “belief that Bristol-Myers Squibb applies in equal measure to class actions.” It also quoted the Eastern District of New York’s pithy line from In re Dental Supplies Antitrust Litigation: “The Constitutional requirements of due process do[ ] not wax and wane when the complaint is individual or on behalf of a class.”

The court had little trouble applying B-MS to this class action, but wrestled more with the question of timeliness—and the defendants almost certainly experienced a range of emotions as they read the court’s opinion. As we all know from Civil Procedure 101, defendants must raise personal jurisdiction challenges in their first responsive pleading or else the objection is waived.  The Promologics defendants did not do so because Bristol-Myers Squibb had not then been decided. After that opinion came down, they argued that it changed the law enough to justify giving them a chance to raise it. The court disagreed. It concluded that B-MS merely clarified the law about personal jurisdiction, but did not so fundamentally change the law as to excuse the defendants’ failure to raise a timely objection. “Without an intervening change in the law and without an earlier, controlling authority blockading such efforts, Defendants’ failure to mount a timely challenge to personal jurisdiction constitutes forfeiture of that challenge.”

At this point, things look pretty bleak, but the court “excuse[d] the forfeiture” on its own initiative by noting that courts have the independent power to apply the proper governing law.  Thus, regardless of who raised what issues when, the court found that Bristol-Myers Squibb was the controlling law, and applied it accordingly.

This case helps defendants in three important ways:

First, particularly while we wait for the first appellate court to weigh in on the issue, the more district courts that apply B-MS to class actions the better. Appellate courts will certainly do more than count district court opinions when they decide whether to apply B-MS in the class context, but they will still count cases. And in the task of persuading the first appellate court or another district court, every good case makes the string cite longer and adds another helpful quote to the arsenal available to defendants.

Second, though the passage of time means that fewer pre-B-MS cases are percolating through the system, the court’s willingness to apply B-MS in the face of a finding of forfeiture reminds companies that they may be able to press this argument even if their early case pleadings did not raise it.

Third, note carefully that the court found that B-MS did not radically change the law, a view that defendants should adopt. Instead of treating B-MS as a landmark case, consider that it merely follows on and clarifies personal jurisdiction law going all the way back to International Shoe. Relying on the case in this way puts defendants on the strongest footing to defeat the argument that B-MS does not apply in class actions. There is no special rule for specific personal jurisdiction in class actions or mass actions—there is just one rule for all cases. That is the true rule of B-MS.

Personal Jurisdiction over Non-resident Class Members? District Courts Diverge on Application of Bristol-Myers Squibb to Nationwide Class ActionsFollowing the Supreme Court’s landmark personal-jurisdiction decision in Bristol-Myers Squibb, federal district courts have continued to disagree about whether to apply the court’s holding to cases involving nationwide class actions. Although we believe the argument in favor of applying Bristol-Myers in the class context is overwhelming––after all, how could plaintiffs curtail defendants’ due process rights simply by invoking the procedural device of Rule 23?––the disagreement on this topic will very likely continue to deepen until it ripens into a circuit split that the court can resolve.

In Bristol-Myers Squibb, the Supreme Court held that a California state court was precluded from exercising personal jurisdiction over the defendant with respect to claims asserted by non-resident mass tort claimants. As Justice Sotomayor’s dissent noted, however, the holding of the majority did not explicitly address whether it applied to nationwide class actions.

Predictably, the majority’s silence on this issue has divided lower courts: “Whether Bristol-Myers extends to class actions is a question that has divided courts across the country.” See Chavez v. Church & Dwight Co., Inc., No. 17 C 1948, 2018 WL 2238191 at *10 (N.D. Ill. May 16, 2018), which dismissed claims of absent class members arising outside of the forum state.

While no circuit court has considered the issue, some federal district courts have applied Bristol-Myers Squibb to class actions:

  • Plumber’s Local Union No. 690 Health Plan v. Apotex Corp., Civ. A. No. 16-665, 2017 WL 3129147, at *9 (E.D. Pa. July 24, 2017) (dismissing non-Pennsylvania claims for certain defendants)
  • Spratley v. FCA US LLC, No. 3:17-CV-0062, 2017 WL 4023348, at *7–8 (N.D.N.Y. Sept. 12, 2017) (dismissing claims of out-of-state plaintiffs who had “shown no connection between their claims and Chrysler’s contacts with New York”)
  • In re Dental Supplies Antitrust Litig., No. 16 Civ. 696 (BMC)(GRB), 2017 WL 4217115, at *9 (E.D.N.Y. Sept. 2017) (“The constitutional requirements of due process does not wax and wane when the complaint is individual or on behalf of a class. Personal jurisdiction in class actions must comport with due process just the same as any other case.”)
  • Maclin v. Reliable Reports of Texas, Inc., No. 1:17-CV-2612, 2018 WL 1468821 (N.D. Ohio Mar. 26, 2018) (“[T]he Court cannot envisage that the Fifth Amendment Due Process Clause would have any more or less effect on the outcome respecting FLSA claims than the Fourteenth Amendment Due Process Clause, and this district court will not limit the holding in Bristol–Myers to mass tort claims or state courts.”)
  • Roy v. FedEx Ground Package Sys., Inc., No. 3:17-CV-30116-KAR, 2018 WL 2324092, at *9 (D. Mass. May 22, 2018) (rejecting argument that Bristol-Myers Squibb should be limited to cases originally filed in state court but finding the exercise of jurisdiction appropriate on the facts of the case)
  • In re Nexus 6P Prods. Litig., No. 17-cv-02185-BLF, 2018 WL 827958 at *5–6 (N.D. Cal. Feb. 12, 2018) (allowing plaintiffs to re-plead complaint to allege jurisdiction in a manner consistent with Bristol-Myers)
  • McDonnell v. Nature’s Way Prods., LLC, No. 16 C 5011, 2017 WL 4864910 at *4–5 (N.D. Ill. Oct. 26, 2017) (dismissing claims “brought on behalf of non-Illinois residents or for violations of Florida, Michigan, Minnesota, Missouri, New Jersey, New York, and Washington law without prejudice”)
  • Wenokur v. AXA Equitable Life Ins. Co., No. CV-17-00165-PHX-DLR, 2017 WL 4357916 at *4 n.4 (D. Ariz. Oct. 2, 2017) (“The Court also notes that it lacks personal jurisdiction over the claims of putative class members with no connection to Arizona and therefore would not be able to certify a nationwide class.”)

One court has decided to hold the question open until class certification: Chernus v. Logitech, Inc., No.: 17-673(FLW), 2018 WL 1981481 (D.N.J. April 27, 2018), which recognized division in district court opinions regarding Bristol-Myers, found the balance weighing against applying it in the class context, then stated “no class has been certified, and therefore, to determine whether this Court has specific jurisdiction over Defendant with respect to the claims of the unnamed class members prior to class certification would put the proverbial cart before the horse.”

Some other courts have reached the opposite result. Several California district courts, for example, have opined that the Supreme Court’s holding in Bristol-Myers Squibb should be limited to mass tort cases based on the rationale that in such cases each plaintiff is named as an individual party and is a real party in interest:

  • Fitzhenry-Russell v. Dr. Pepper Snapple Group, Inc., No. 17-CV-00564 NC, 2017 WL 4224723 (N.D. Cal. Sept. 22, 2017)
  • Sloan v. General Motors LLC, 287 F. Supp.3d 840 (N.D. Cal. Feb. 7, 2018).
  • In re Morning Song Bird Foot Litig., No. 12-CV-01592 JAH-AGS, 2018 WL 1382746 (S.D. Cal. Mar. 19, 2018)

A few district courts outside of California have ruled similarly:

  • Molock v. Whole Foods Market, Inc., 297 F. Supp. 3d 114 (D.D.C. 2018)
  • Sanchez v. Launch Technical Workforce Solutions, LLC, 297 F. Supp. 3d 1360 (N.D. Ga. 2018)
  • Casso’s Wellness Store & Gym, L.L.C. v. Spectrum Lab. Prods., Inc., No. 17-2161 2018 WL 1377608 (E.D. La. March 19, 2018)
  • In re Chinese-Manufactured Drywall Prods. Liab. Litig., 2017 WL 5971622 (E.D. La. Nov. 30, 2017)

Given the importance of this issue and the divergent approaches taken by the federal district courts, it is clear that the appellate courts—and ultimately the U.S. Supreme Court—will eventually have to resolve the split. In fact, we may soon have the first federal circuit decision on this issue. The District of Columbia in the Molock case has recently certified the question of “whether the jurisdictional limits proscribed in Bristol-Myers Squibb extend to unnamed, nonresident members of a putative nationwide class in federal court” to the D.C. Circuit. See Molock v. Whole Foods Market Group, Inc., No. 16–cv–02483 (APM), 2018 WL 2926162 (June 11, 2018). It remains to be seen whether that interlocutory appeal will be accepted by the D.C. Circuit, but this is a case to watch.

In the meantime, defendants facing nationwide class action lawsuits should consider at the outset of the case whether to argue that the court lacks personal jurisdiction over the defendant with respect to claims asserted by non-resident putative class members (at least in venues that are not the defendant’s “home” jurisdiction). In some courts, this argument may be successful; it may serve to limit the aggregate value of the class claims, and potentially reduce the amount of discovery pain that class counsel can inflict. Even where not successful, there is value in preserving the argument by raising it in the answer and perhaps in an early motion to strike class allegations, before raising it again in opposition to class certification. No matter the precise procedures used, defendants will likely want to be in a position to benefit if the appellate courts ultimately determine that Bristol-Myers does apply equally to nationwide class actions. After all, personal jurisdiction is a waivable defense. While there may well be strategic reasons to waive the defense in a given case, that waiver should be a carefully considered, conscious choice. Inadvertent waiver by failure to preserve the argument is another thing entirely.

The Supreme Court’s decision last summer in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017), is my pick for “2017 Class Action Practitioners’ Case of the Year”––and it’s not even a class case.

One of the most exciting areas in the class action arena is personal jurisdiction. Stifle that yawn. The Supreme Court’s recent decisions in this area could have a major effect on the scope of class actions where the claims sound in state law. Plaintiffs’ lawyers have long sought to bring class actions in the most plaintiff-friendly venues. As a general proposition, a plaintiff would prefer to cram a big nationwide class of claims into the most favorable venue instead of having to bring either several single-state class actions in several venues or a nationwide class in a less-favorable venue. Where plaintiffs are successful, this kind of forum shopping makes class cases all the more difficult for defendants: Not only do defendants have to face the high stakes of a large number of aggregated claims in one action, they also have to fight all those claims in a hostile venue.

The Supreme Court’s recent decision in Bristol-Myers Squibb, has given defendants a powerful new argument against this tactic. Bristol-Myers Squibb involved a mass action in which nearly 600 plaintiffs who did not live in California joined their claims with California residents’ claims. The defendant challenged personal jurisdiction, but the California courts found specific jurisdiction to exist. By an 8-1 vote, the United States Supreme Court reversed, holding that the California courts could not exercise personal jurisdiction over the defendant as to claims of non-resident defendants who could not satisfy the well-settled test for specific jurisdiction. As a result, the plaintiffs face the choice of either bringing their nationwide class in a forum where the defendant is subject to general jurisdiction (i.e., state of incorporation of principal place of business, thanks to the Supreme Court’s recent Daimler decision) or limiting the class to those plaintiffs whose claims involve the kind of minimum contacts necessary to support the exercise of specific jurisdiction.

As mentioned above, Bristol-Myers Squibb is not a class action case––but that is likely of no consequence. The decision rests on the constitutional due process rights of defendants, and, under the Rules Enabling Act, the purely procedural class action rules cannot abrogate those rights. (We’ll address this point further in a future post, along with looking at how lower courts have applied Bristol-Myers Squibb in the class context.)

Practically speaking, Bristol-Myers Squibb should curb the most blatant forum shopping in diversity cases. Defendants should use it to channel more litigation to the jurisdictions where defendants are incorporated or headquartered or where the plaintiffs reside. The case may also lead to an increase in single-state class cases, which is a potential downside—but defendants can waive personal jurisdiction as a defense to permit consolidation where appropriate. The increase in state-specific suits may also make removal under diversity or CAFA easier, as plaintiffs will be less free to use joinder to defeat diversity jurisdiction and will likely run afoul of the no-similar-case rule of 28 U.S.C. § 1332(d)(4)(A)(ii). We also predict an uptick in multidistrict-litigation petitions, which both plaintiffs and defendants can perceive as an advantageous way of consolidating geographically dispersed litigation.