New Case Involves Specific Jurisdiction on Out-of-State Company

In January, I wrote about the U.S. Supreme Court’s decision in Daimler AG v. Bauman, limiting the exercise of general jurisdiction over a foreign company being sued in California when the claims presented did not occur in the state nor did the foreign company have substantial contacts with the state.

It did not take long for the Daimler decision to make an impact here in California. Bristol-Myers Squibb Co. v. Superior Court of San Francisco, (Court of Appeal Number A140035)(Opinion filed July 30, 2014), was a case where a non-resident pharmaceutical company was being sued by both resident and non-resident plaintiffs. The central issue presented was whether California state courts could exercise personal jurisdiction over the non-resident company based on the claims of the non-resident plaintiffs.

Bristol-Myers Squibb Co. v. Superior Court of San Francisco, (Court of Appeal Number A140035)(Opinion Filed July 30, 2014)

On March 12, 2012, 84 California residents and 575 non-residents sued Bristol-Myers Squibb (BMS) in state court in San Francisco alleging that they or their spouses suffered adverse consequences as a result of taking the drug Plavix. BMS is incorporated in Delaware and headquartered in New York. BMS moved to quash service of the summons brought by the non-resident plaintiffs citing lack of personal jurisdiction. The trial court denied BMS’s motion and concluded that it could exercise personal jurisdiction over BMS based on the claims of the non-resident plaintiffs under a general jurisdiction theory. BMS filed a petition for writ of mandate appealing the trial court’s ruling, which the Court of Appeal for the First Appellate District denied.

On the same day that BMS’s petition was denied, the U.S. Supreme Court issued its decision in Daimler, limiting the application of general jurisdiction. The California Supreme Court then granted BMS’s petition for review and transferred the matter back to the court of appeal.

BMS Was Not Subject to General Jurisdiction in California Even Though It Had $1 Billion in Sales in California

The court of appeal held that California did not have general jurisdiction over BMS based on the allegations of the out-of-state plaintiffs after the Supreme Court’s ruling in Daimler. However, the court of appeal nonetheless, held that it was proper for the trial court to exercise specific jurisdiction over BMS. Interestingly, the court of appeal found that California had specific jurisdiction over BMS even though the trial court did not address the issue of specific jurisdiction. The court cited the fact that BMS had extensive, longstanding business activities in California, including sales of over 196 million Plavix pills between 1998 and 2006 and nearly $1 billion of revenue between 2006 and 2012, five offices and facilities, hundreds of California-based employees and sales representatives, and the maintenance of an agent for service of process.

Post-Daimler, as Bristol-Myers Squibb illustrates, California courts may be reluctant to exercise general jurisdiction over non-resident corporate defendants even though the facts show substantial business connections with the state. Although Daimler’s holding limiting general jurisdiction would likely lead to less forum shopping by plaintiffs, Bristol-Myers Squibb also shows that if the claims are sufficiently related to the defendant corporation’s California business connections, the courts may independently find jurisdiction to allow the litigation to proceed via specific jurisdiction.