Amicus Curiae Brief — Bristol-Myers Squibb Co. v. Superior Court of Cal., 137 S. Ct. 827 (2017) (No. 16-466)

Supict.e- Court,

FILED

| MAR ~ 8 2015

No. 16-466 ecaie — — S CLERK

IN THE

Supreme Court of the Anited States

BRISTOL-MYERS SQUIBB COMPANY,

Petitioner,

v.

SUPERIOR COURT OF CALIFORNIA

FOR THE COUNTY OF SAN FRANCISCO, et ail.,

Respondents.

On Writ of Certiorari to the

California Supreme Court

BRIEF OF WASHINGTON LEGAL FOUNDATION

AND ALLIED EDUCATIONAL FOUNDATION

AS AMICI CURIAE IN SUPPORT OF PETITIONER

Richard A. Samp

(Counsel of Record)

Mark S. Chenoweth

Washington Legal Foundation

2009 Massachusetts Ave., NW

Washington, DC 20036

202-588-0302

rsamp@wlf.org

Date: March 8, 2017

TS I I I CIP cae:

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 — WASHINGTON, D. C. 20002

a

QUESTION PRESENTED

The Due Process Clause permits a state court to

exercise specific jurisdiction over a defendant only

when the plaintiff's claims “arise out of or relate to” the

defendant’s forum activities. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472 (1985) (citation omitted).

The question presented is:

Whether a plaintiffs claims arise out of or relate

to a defendant's forum activities when there is no

causal link between the defendant’s forum contacts and

the plaintiffs claims—that is, where the plaintiffs

claims would be exactly the same even if the defendant

had no forum contacts.

TABLE OF CONTENTS

Page

PP ED woo ve weccedodescece Vv

INTERESTS OF AMICICURIAE .............. 1

STATEMENT OF THE CASE ................. 2

SUMMARY OF ARGUMENT .................. 7

EE incu cons sueadus oe0.ke6dnéueewas 10

I. CALIFORNIA COURTS MAY NOT EXERCISE

PERSONAL JURISDICTION OVER BMS IN THE

ABSENCE OF EVIDENCE THAT BMS’s

CALIFORNIA-BASED ACTIVITIES CAUSED

INJURY TO RESPONDENTS ...........---- 10

A. Respondents’ Claims Do Not Arise

out of or Relate to BMS’s Contacts

I Soc hv wea ks ev Oke es 12

B. The California Supreme Court

Relied on Inappropriate Factors in

Determining that BMS’s California

Contacts Were Sufficiently Related

to Respondents’ Claims .......... 18

C. Interstate Federalism Principles

Also Bar Exercise of Personal

Jurisdiction over BMS ............ 21

iv

Page

Il. CALIFORNIA MAY NOT AVOID DAIMLER’S

DUE-PROCESS CONSTRAINTS BY RE-

LABELING ITS ACTIONS AS AN ASSERTION

OF SPECIFIC JURISDICTION .............. 25

Ill. THE CALIFORNIA SUPREME COURT'S TEST

LACKS PREDICTABILITY AND THUS FAILS

TO PROVIDE BUSINESSES WITH GUIDANCE

REGARDING WHERE THEIR CONDUCT MAY

RENDER THEM LIABLE TO SUIT ........... 28

PED cicactedsapdecdetdadeeeace as 33

Vv

TABLE OF AUTHORITIES

Page(s)

Cases:

BNSF Railway Co. v. Tyrrell,

No. 16-405, cert. granted, U.S. __,

2017 WL 125672 (Jan. 13, 2017) .............. 1

Burger King Corp. v. Rudzewicz,

ee i swe piuas 7, 16, 31

Calder v. Jones,

5 a ak a ng 14

Daimler AG v. Bauman,

ED sé. cca wees s'est ein passim

Goodyear Dunlop Tires Operations, S.A. v. Brown,

7 ies ehnocuskeeeee 1, 11, 17

Hansen v. Denkla,

rn I oS ON ens Cae ei 23, 24

Helicopteros Nacionales de Columbia, S.A. v. Hall,

ne nd os oa a bale a vie a's 14, 15, 17

Hertz Corp. v. Friend,

i we aaa kd ae ken wa sb ee bon 28

International Shoe Co. v. Washington,

Se PED dc cccccccacesss 9, 10, 11, 16,

20, 23, 25, 32

J. McIntyre Machinery, Ltd. v. Nicastro,

i Se Se eer 7,10

Keeton v. Hustler Magazine, Inc.,

eS ake 21

Mississippi ex rel. Hood v. AU Optronics Corp.,

ee Se ea be bw aw eee e 29

Novo Nordisk A/S v. Lukas-Werner,

cert. denied, 134 S. Ct. 423 (2013) ............. 1

Rush v. Savuchuk,

I a gc ed a de Oe 20

Shaffer v. Heitner,

on A ae ll

Standard Fire Ins. Co. v. Knowles,

oS Ge a es 29

Walden v. Fiore,

SE Gs UPUED. 0p oc ceccesnecosdcs 8, 15, 16

World-Wide Volkswagen Corp. v. Woodson,

444 U.S. 286 (1980) ............ 7, 10, 22, 23, 24

Statutes and Constitutional Provisions:

U.S. Const., amend. XIV

(Due Process Clause) ...............5. 7, 10, 16

Class Action Fairness Act (CAFA) ........... 3, 29

28 U.S.C. §1332(d)(11)(B)(i) .............. 3

INTERESTS OF AMICI CURIAE

Washington Legal Foundation (WLF) is a non-

profit public-interest law firm and policy center with

supporters in all 50 states.’ WLF devotes a substantial

portion of its resources to defending free enterprise,

individual rights, a limited and accountable

government, and the rule of law.

To that end, WLF has appeared frequently in

this Court in cases involving personal jurisdiction

issues, to support defendants seeking to avoid being

subject to a court’s coercive powers when assertion of

jurisdiction does not comply with traditional notions of

fair play and substantial justice. See, e.g., BNSF

Railway Co. v. Tyrrell, cert. granted, U.S. __, 2017

WL 125672 (Jan. 13, 2017); Goodyear Dunlop Tires

Operations, S.A. v. Brown, 564 U.S. 915 (2011); Novo

Nordisk A/S v. Lukas-Werner, cert. denied, 134 S. Ct.

423 (2013). WLF also filed briefs in support of

Petitioner in the California Supreme Court and at the

certiorari petition stage.

The Allied Educational Foundation (AEF) is a

nonprofit charitable and educational foundation based

in Tenafly, New Jersey. Founded in 1964, AEF is

dedicated to promoting education in diverse areas of

study, such as law and public policy, and has appeared

as amicus curiae in this Court on a number of

occasions, including in BNSF Railway Co. v. Tyrrell.

' Pursuant to Supreme Court Rule 37.6, amici curiae state

that no counsel for a party authored this brief in whole or in part;

and that no person or entity, other than amici and their counsel,

made a monetary contribution intended to fund the preparation or

submission of this brief. All parties have consented to the filing;

letters of consent have been lodged with the Court.

2

In its seminal decision in Daimler AG uv.

Bauman, 134 S. Ct. 746 (2014), the Court made clear

that the courts of a State lack personal jurisdiction

over a corporate defendant unless its activities within

the State give rise to the claims being asserted or

unless the corporation is “at home” within the forum

State. Daimler further clarified that a corporation,

even one that conducts substantial business in all 50

States, should be deemed “at home” in no more than

one or two of the States. Amici are concerned that the

rationale of the California Supreme Court, unless

overturned by this Court, would essentially negate

Daimler as an effective check on _ state-court

jurisdiction over out-of-state corporate defendants.

Amici are further concerned that the decision below

deprives businesses of adequate means to structure

their conduct with some minimum assurance as to

where that conduct will and will not render them Liable

to suit.

STATEMENT OF THE CASE

Like many corporations that sell products

nationwide, Petitioner Bristol-Myers Squibb Co.

(“BMS”) sells a large number of products in California.

For example, BMS’s Plavix sales in California between

2006 and 2012 totaled nearly $1 billion. This case

addresses whether those substantial sales are

sufficient to justify California’s exercise of jurisdiction

over claims filed by nonresidents who allege that their

purchase and use of Plavix—and their alleged injury

from such use—all occurred outside California.

A State’s exercise of personal jurisdiction over a

corporation based on business activity within the State

3

that is not directly related to events giving rise to the

litigation is often referred to as an exercise of “general

jurisdiction.” Daimler made clear that a State may not

exercise general jurisdiction over a corporation when,

as here, the corporation is neither incorporated in nor

has its principal place of business within the State (nor

is otherwise effectively “at home” in the State), even

when the corporation has substantial sales within the

State. This case addresses whether nonresidents may

nonetheless invoke the California courts’ personal

jurisdiction over such a corporation by citing those very

same substantial sales as the basis for “specific

jurisdiction.”

These products liability actions involve

allegations that consumers from across the nation

suffered injuries after taking Plavix, a drug approved

by the Food and Drug Administration for use in

preventing dangerous blood clots. A total of 661

plaintiffs—86 California residents and 575

nonresidents—joined together to file eight separate

complaints against BMS in March 2012 in San

Francisco Superior Court.* The 575 nonresident

plaintiffs claim no contacts with BMS’s California

activities or with California generally. Moreover,

although BMS derives substantial revenue from

California sales, those sales represent but a small

* The decision by plaintiffs’ lawyers to file eight separate

complaints (each with fewer than 100 plaintiffs) was not

coincidental. Had any of the complaints included 100 or more

plaintiffs, BMS’s right to remove that complaint to federal court

under the Class Action Fairness Act (CAFA) would have been

beyond question. See 28 U.S.C. § 1332(d)(11)(B)G@) (authorizing

removal of a “mass action” in which the monetary claims of “100 or

more persons are proposed to be tried jointly.”).

4

fraction of BMS’s overall sales, and California is not

the State in which BMS is incorporated (Delaware), not

the State in which it maintains its principal place of

business (New York), and not even one of the States in

which Plavix is manufactured.

The California Supreme Court nonetheless held

that California could maintain personal jurisdiction

over BMS with respect to the claims not only of the 86

California residents (an issue that BMS does not

contest) but also with respect to the 575 nonresident

plaintiffs (the “Respondents’”).

When the case first came before the California

Court of Appeal, it summarily denied BMS’s writ

petition (seeking review of the superior court's

conclusion that it could exercise general jurisdiction

over BMS based on the company’s substantial business

activity in California). Following the 2014 Daimler

decision, the California Supreme Court directed the

appeals court to address the merits of BMS’s petition.

It did so and concluded that although Daimler

precluded assertion of general jurisdiction over BMS

with respect to the claims of the nonresident

defendants, California courts could still assert specific

jurisdiction over BMS. Pet. App. 9la-146a.

A sharply divided California Supreme Court

affirmed. Pet. App. la-90a. The four-justice majority

recognized that the Due Process Clause bars California

courts from exercising specific jurisdiction over BMS

unless Respondents can demonstrate that their claims

“arise out of or are related to [BMS’s] forum-related

activities.” Pet. App. 20a-2la. While it did not assert

that the claims of Respondents “arise out of’ any of

5

BMS’s California-based activities, the majority

concluded that BMS’s activities were sufficiently

“related to” those claims to warrant the exercise of

personal jurisdiction. Jd. at 25a-35a.

The majority held that, in order to satisfy the

“related to” requirement, “the defendant’s activities in

the forum state need not be either the proximate cause

or the ‘but for’ cause of the plaintiffs injuries.” Jd. at

22a. Instead, in accord with prior California Supreme

Court case law, the majority held that it is sufficient to

demonstrate “a substantial nexus or connection

between the defendant's forum activities and the

plaintiffs «‘aims.” Jd. at 2la. It elaborated:

Under the substantial connection test, the

intensity of forum contacts and the

connection of the claim to those contacts

are inversely related. The more wide

ranging the defendant’s forum contacts,

the more readily is shown a connection

between the forum contacts and the

claim. Thus, a claim need not arise

directly from the defendant's forum

contacts in order to be sufficiently related

to the contact to warrant the exercise of

specific jurisdiction. Indeed, only when

the operative facts of the controversy are

not related to the defendant’s contact

with the state can it be said that the

cause of action does not arise from that

contact.

Id. at 22a (citations omitted).

6

The majority acknowledged that Respondents

were not injured by Plavix in California, were not

treated in California, were not prescribed Plavix by

California doctors, and did not have their prescriptions

filed by California pharmacists. It further

acknowledged that BMS neither developed nor

manufactured Plavix in California, and that the

distribution chain for the Plavix supplied to

Respondents did not pass through California. The

majority based its “substantial connection” finding on

evidence that BMS: (1) extensively marketed Plavix to

California residents as part of a nationwide marketing

program; (2) contracted with McKesson Corp. (a

California corporation) to distribute Plavix and hired

several hundred salespersons within the State; and (3)

maintains facilities in California that research and

develop other BMS products (but not Plavix). ZJd. at

32a.

Justice Werdegar, joined by Justices Chin and

Corrigan, dissented. Pet. App. 46a-87a. She

concluded, “[T]he record contains no _ evidence

connecting the Plavix taken by any of the nonresident

plaintiffs to California.” Id. at 47a (emphasis in

original). She argued that the majority's conclusion

that California could exercise jurisdiction over BMS in

connection with Respondents’ claims was based on a

specific-jurisdiction standard that conflicts with the

standard adopted by this Court and numerous other

appellate courts. Jd. at 5la-77a. She warned that the

decision interferes with rational business planning by

undermining the ability of businesses to predict the

types of litigation to which they expose themselves

when they decide to undertake activities within a

State. Id. at 79a-80a.

7

SUMMARY OF ARGUMENT

As the Court has repeatedly reminded, the

Fourteenth Amendment's Due Process Clause imposes

strict limits on the authority of a state court to exercise

personal jurisdiction over out-of-state defendants. See,

e.g., J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S.

873, 881 (2011) (plurality) (“[T]hose who live or operate

primarily outside a State have a due process right not

to be subjected to judgment in its courts as a general

matter.”). Those limitations serve both to protect

litigants from inconvenient or distant litigation and to

recognize limits on the sovereignty of each State with

respect to affairs arising in other States. World-Wide

Volkswagen v. Woodson, 444 U.S. 286, 293 (1980). The

decision below threatens to obliterate those limitations

by subjecting out-of-state defendants to the jurisdiction

of California courts based on nonresidents’ claims

lacking any connection to California.

The Due Process Clause permits a state court to

exercise specific jurisdiction over a defendant only

when the plaintiffs claims “arise out of or relate to” the

defendant’s forum activities. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472 (1985). The California

Supreme Court employs a “substantial nexus or

connection” test, under which the “arise out of or relate

to” requirement is deemed satisfied so long as the

defendant’s forum contacts are sufficiently intense,

even when those contacts are largely unrelated to the

plaintiffs’s claims. In applying its “substantial nexus

or connection” test here, the court explicitly disclaimed

any requirement that the defendant’s activities in the

forum State be the “proximate” cause, or even the “but

for” cause, of the plaintiffs’ injuries. Pet. App. 22a.

8

That test cannot be squared with this Court’s

personal-jurisdiction decisions. The Court’s decisions

have never suggested that the exercise of specific

jurisdiction is appropriate when, as here, the only

relationship between the plaintiffs’ claims and the

defendant's forum activities is a similarity of subject

matter, and when none of those forum activities played

any role in bringing about the plaintiffs’ alleged

injuries. As the Court stated categorically in a recent

specific-jurisdiction case, for a court to exercise

personal jurisdiction consistent with due process, “the

defendant’s suit-related conduct must create a

substantial connection with the forum State.” Walden

v. Fiore, 13848. Ct. 1115, 1121 (2014) (emphasis added).

The connection cannot be deemed “substantial” unless

the defendant’s forum activities are at least a but-for

cause of the plaintiffs injuries.

Respondents have not pointed to any “suit-

related conduct” by BMS that is connected to

California. Indeed, if the conduct to which

Respondents point—principally, BMS’s substantial

general business activity within California—suffices to

create specific jurisdiction with respect to the

nonresident Respondents’ claims, then the due-process

limitations imposed by Daimler on the scope of general

jurisdiction will be rendered a dead letter.

To assist with the due process analysis, the

Court has identified two strands of personal

jurisdiction: general jurisdiction (assertions of

jurisdiction in a State in which the defendant is “at

home” and thus answerable to any and all claims) and

specific jurisdiction (assertions of jurisdiction in a State

based on a close relationship between the defendant’s

9

in-state activities and the claims asserted). Daimler,

134 S. Ct. at 754. But the rationale underlying both

strands is identical: due process permits a defendant to

be haled into a court only if doing so is consistent with

“traditional notions of fair play and substantial

justice.” International Shoe Co. v. Washington, 326

U.S. 310, 316 (1945).

Daimler held that subjecting a corporation to the

general jurisdiction of a State’s courts simply because

it “engages in a_ substantial, continuous, and

systematic course of business” within the State violates

due process because it offends traditional notions of

fair play and substantial justice. 134 S. Ct. at 761.

Subjecting that same corporation to personal

jurisdiction does not cease to offend traditional notions

of fair play and substantial justice simply because the

state court has re-labeled its action as an assertion of

“specific jurisdiction” and (employing a “sliding scale”

standard) has pointed to an insignificant relationship

between the defendant’s in-state activities and the

claims asserted. Unless Daimler’s limits on subjecting

a corporation to jurisdiction wherever it is “doing

business” apply to both strands of personal jurisdiction,

the important constitutional protections afforded out-

of-state corporate defendants by Daimler will be

meaningless.

Adopting the due-process requirement urged by

BMS—a showing of a causal link between the

defendant's forum contacts and the plaintiffs’

claims—has the added virtue of simplicity. This Court

has repeatedly advocated the adoption of clear

jurisdictional rules that can be applied consistently.

The sliding-scale approach adopted by the California

10

Supreme Court is unduly complicated and provides

corporations with little if any guidance regarding when

their activities within a State will subject them to the

jurisdiction of that State’s courts.

ARGUMENT

1. CALIFORNIA COURTS MAY NoT EXERCISE

PERSONAL JURISDICTION OVER BMS IN THE

ABSENCE OF EVIDENCE THAT BMS’s

CALIFORNIA-BASED ACTIVITIES CAUSED

INJURY TO RESPONDENTS

As this Court has long recognized, the Due

Process Clause of the Fourteenth Amendment limits

the authority of state courts to exercise personal

jurisdiction over nonresident defendants that do not

voluntarily consent to jurisdiction. See, e.g.,

J. McIntyre Machinery, 564 U.S. at 881 (plurality)

(“[T]hose who live or operate primarily outside a State

have a due process right not to be subjected to

judgment in its courts as a general matter.”). A state

court may exercise personal jurisdiction over a

nonresident defendant only if the plaintiff can

demonstrate a relationship among the defendant, the

forum state, and the litigation. International Shoe, 326

U.S. at 316. This requirement serves two important

functions: it protects the defendant from being required

to defend a lawsuit in an inconvenient forum and it

“acts to ensure that the States through their courts, do

not reach out beyond the limits imposed on them by

their status as coequal sovereigns in a federal system.”

World-Wide Volkswagen, 444 U.S. at 292.

1]

The Court has consistently held that a state

court may not exercise personal jurisdiction over an

out-of-state defendant simply because the defendant

has engaged in continuous and systematic activities

within the State. Rather, personal jurisdiction also

requires a showing that the defendant’s activities are

sufficiently connected to the claim. See, e.g., Daimler,

134 S. Ct. at 757 (“a corporation’s ‘continuous activity

of some sort within a state is not enough to support the

demand that the corporation be amenable to suits

unrelated to that activity”) (quoting International

Shoe, 326 U.S. at 318); Shaffer v. Heitner, 433 U.S.

186, 204 (1977) (“the central concern of the inquiry into

personal jurisdiction” is “the relationship among the

defendant, the forum, and the litigation”) (emphasis

added). As Daimler explained, personal jurisdiction

may not be exercised over nonresident defendants

based on claims “having nothing to do with anything

that occurred or had its principal impact in” the forum

state. Daimler, 1348S. Ct. at 762.

A defendant is generally required to answer any

and all claims asserted in its “home” jurisdiction, even

if the claim bears no relationship to the jurisdiction.

The Court refers to an assertion of personal jurisdiction

where the defendant is “at home” as an exercise of

“general jurisdiction.” Goodyear, 564 U.S. at 919.

Daimler made plain, however, that—except in very

unusual circumstances—an assertion of general

jurisdiction over a corporation can be sustained in only

two places: the State in which a corporation maintains

its principal place of business and the State of

incorporation. 1348S. Ct. at 760. In Daimler, the Court

rejected the plaintiffs’ request that it approve “the

12

exercise of general jurisdiction in every State in which

a corporation engages in a substantial, continuous, and

systematic course of business,” characterizing the

plaintiffs’ proposed formulation as “too grasping.” Id.

at 761.

It is undisputed that BMS is not subject to

general jurisdiction in California. It is not

incorporated in California, nor does it maintain its

principal place of business in the State. Thus, for the

California courts to properly exercise personal

jurisdiction over BMS with respect to each of the tort

claims asserted by Respondents, it must do so on the

basis of “specific jurisdiction”—that is, a showing that

each claim “arises out of or relates to the defendant's

contacts with the forum.” Jd. at 754.

A. Respondents’ Claims Do Not Arise

out of or Relate to BMS’s Contacts

with California

In concluding that Respondents’ claims “arise

out of or relate to” BMS’s contacts with California, the

California Supreme Court principally relied on

evidence that BMS markets Plavix on a nationwide

basis and that its California marketing efforts are

similar to the allegedly misleading Plavix marketing

efforts undertaken by BMS in each of Respondents’

home States. Pet. App. 28a. The court concluded that

Respondents’ claims:

[A]Jre based on the same allegedly

defective product and the assertedly

misleading marketing and promotion of

13

that product [as asserted by other,

California-based plaintiffs], which

allegedly caused injuries in and outside

the state. Thus, the nonresident

plaintiffs’ claims bear a_ substantial

connection with BMS’s contacts in

California.

Ibid.

In other words, as far as the California Supreme

Court is concerned, the requisite relationship among

BMS, the forum, and the litigation can be established

even when, as here, “the nonresident plaintiffs’ claims

would be exactly the same if BMS had no contact

whatever with California.” Jd. at 29a. The court

rejected BMS’s argument that the existence of a

nationwide Plavix marketing campaign was

insufficient “to establish relatedness for purposes of

minimum contacts,” stating that that argument

“rest[ed] on the invalid assumption that BMS’s forum

contacts must bear some substantive legal relevance to

the nonresident plaintiffs’ claims.” Id. at 30a.

Yet, the assumption that the court deemed

“invalid”—-that the defendant’s forum contacts must

“bear some legal relevance” to the plaintiffs’ claims in

order to satisfy the “arise out of or relate to”

requirement—is an assumption that has underpinned

every one of this Court’s specific-jurisdiction decisions.

Thus, for example, in determining whether

California courts could exercise specific jurisdiction

over Florida residents in connection with a libel claim

14

asserted by a California resident, the Court focused its

inquiry solely on forum contacts that were legally

relevant to the libel claim. Calder v. Jones, 465 U.S.

783 (1984). The defendants were the writer and editor

of an article that was widely circulated by the National

Enquirer in California. Although the defendants were

responsible for numerous other articles that were

circulated in California, the only forum contacts upon

which the Court relied were those related to the article

that allegedly defamed the plaintiff: “petitioners are

primary participants in an alleged wrongdoing

intentionally directed at a California resident, and

jurisdiction over them is proper on that basis.” Id. at

790. But under the California Supreme Court's

expansive understanding of specific jurisdiction, the

defendants’ authorship of articles directed at other

California residents would have been sufficient by

itself to satisfy due-process requirements.

Similarly, in MHelicopteros Nacionales de

Columbia, S.A. v. Hall, 466 U.S. 408 (1984), the Court

determined that the defendant’s numerous contacts

with the forum State (Texas) were insufficient to

permit Texas to exercise personal jurisdiction because

those contacts did not arise out of or relate to the

plaintiffs’ claims (which involved injuries arising from

a helicopter crash in Peru). Yet the decision almost

surely would have come out the other way under the

specific-jurisdiction standard adopted by the California

Supreme Court.

Although the ill-fated helicopter services were

not provided in Texas, the defendant engaged in

numerous helicopter-related activities within the State,

15

including: (1) purchase of its helicopters and spare

parts within Texas; (2) sending its pilots to Texas for

flight training; (3) regularly sending employees to

Texas to consult with the helicopter manufacturer;

(4) sending its chief executive officer to Houston to

negotiate the helicopter service contract with the

plaintiffs’ employer; and (5) accepting checks written

by the Texas-based employer and drawn on a Texas

bank. None of those Texas-based activities had any

“legal relevance” to the plaintiffs’ claims that the

defendant operated its helicopter in Peru in a negligent

manner. But because the California Supreme Court

does not deem “legal relevance” a prerequisite for

establishing specific jurisdiction under its “significant

nexus or connection” test, those numerous forum

contacts (all of which related to the defendant's

helicopter operations) seemingly would have been more

than sufficient for the California Supreme Court to

uphold personal jurisdiction.

Most recently, the Court held that a Nevada

court lacked specific jurisdiction over claims against a

DEA agent arising from his seizure of cash at the

Atlanta airport from a Nevada resident about to board

a flight home to Nevada. Walden v. Fiore, 134 S. Ct.

1115 (2014). The Court conceded that the injury

caused by the defendant’s allegedly tortious conduct

occurred in Nevada by virtue of the plaintiffs Nevada

residency and that the defendant was well aware of the

plaintiffs residency. Jd. at 1125. But the Court

concluded that that evidence was insufficient to

establish that the plaintiffs claims “arose out of or

were related to” relevant forum contacts. It explained

that “[flor a State to exercise jurisdiction consistent

16

with due process,” it is the defendant’s “suit-related

conduct” that must create a “substantial connection”

with the forum State, id. at 1121, and the

happenstance of the plaintiffs residency was unrelated

to the defendant’s allegedly tortious conduct in Atlanta.

In other words, it made no difference whether

the DEA agent might have had numerous other

connections with Nevada that were not “suit related.”

In the absence of evidence that the defendant’s conduct

toward the plaintiff and his claim had a substantial

connection with Nevada, the Due Process Clause

prohibited a Nevada court from exercising personal

jurisdiction. The decision below, which based a finding

of specific jurisdiction on BMS forum contacts that

were not “suit related,” cannot be reconciled with

Walden.

As Justice Werdegar explained in her dissent

below:

Of the post-International Shoe decisions in

which the high court actually found a factual

basis for specific jurisdiction, each featured a

direct link between forum activities and the

litigation. (See Burger King Corp. v. Rudzewicz

(1985) 471 U.S. 462, 479-80 [specific jurisdiction

in Florida courts proper where franchise dispute

“grew directly out of” contract formed between

Florida franchisor and Michigan franchisee,

whose breach caused “caused foreseeable

injuries to the corporation in Florida.”])

Pet. App. 53a-54a.

17

The Court has not specified precisely how close

the connection must be before the plaintiffs claims can

be deemed to “grow out of’ the defendant’s forum-

related activities. But its case law indicates that those

contacts must, at the very least, be a but-for cause of

the plaintiffs injury. In every case in which the Court

has sustained specific jurisdiction, a causal connection

existed between the defendant’s forum-related

activities and the claimed injury. The Court has

prohibited the exercise of personal jurisdiction in cases

in which there was no evidence that the forum-related

activities were causally related to the injury. See, e.g.,

Helicopteros, 460 U.S. at 415-19 (Defendant had

numerous contacts with Texas that were not causally

related to plaintiffs’ injuries in Peru; those contacts

were insufficient to sustain personal jurisdiction in

Texas courts.); Goodyear, 564 U.S. at 926-27

(Defendants sold tires in North Carolina, and a defect

in other tires manufactured and sold in Europe (the

very same brand) caused injury to plaintiffs’ decedents

in Paris; defendants’ North Carolina sales were

insufficient to sustain specific jurisdiction in North

Carolina.). Because the California Supreme Court

explicitly held that the nonresident Respondents were

not required to establish a causal connection (between

BMS’s California activities and their injuries) in order

to sustain specific jurisdiction over BMS, the decision

below must be reversed.

18

B. The California Supreme Court Relied

on Inappropriate Factors in

Determining that BMS’s California

Contacts Were Sufficiently Related to

Respondents’ Claims

BMS asserted below that the factual similarity

between the claims of California residents (over whose

claims, all agree, the California courts are entitled to

exercise jurisdiction) and those of the nonresident

Respondents did not in and of itself justify California’s

exercise of personal jurisdiction over the claims of the

nonresident Respondents. The California Supreme

Court rejected that assertion, concluding that the

existence of a nationwide marketing campaign for

Plavix demonstrated that the claims of the nonresident

and resident Respondents were closely intertwined and

not merely “similar”:

[BMS’s] characterization ignores the

uncontested fact that all the plaintiffs’

claims arise out of BMS’s nationwide

marketing and distribution of Plavix.

The claims are based not on “similar”

conduct, as our dissenting colleagues

contend, but instead on a _ single,

coordinated, nationwide course of conduct

directed out of BMSs New York

headquarters and New Jersey operations

center and implemented by distributors

and salespersons across the country.

Pet. App. 29a-30a.

19

But focusing on the allegedly coordinated nature

of the nationwide marketing campaign does nothing to

establish a causal connection between BMS’s

California-based activities and the injuries allegedly

suffered by the nonresident Respondents. As the court

recognized, the marketing campaign was coordinated

from New York and New Jersey, not California. The

campaign may have been “implemented by distributors

and salespersons across the country,” but there is no

allegation that any of the distributors and salespersons

who played a role in marketing Plavix to the

nonresident Respondents were located in California.

In the absence of evidence that the marketing of Plavix

to the nonresident Respondents involved any

California-based activity, the allegedly coordinated

nature of that marketing is a red herring; it provides

no support for an assertion that the nonresident

Respondents’ claims are connected to or arise out of

BMS’s activities in California.

Nor are Respondents’ claims strengthened by the

allegation that “BMS maintains research and

laboratory facilities in California, and it presumably

enjoys the protection of our laws related to those

activities.” Pet. App. 29a. [tis uncontested that none

of those facilities has ever conducted any research

regarding Plavix. The California Supreme Court

nonetheless concluded that the existence of those

facilities “provides an additional connection between

the nonresident plaintiffs’ claims and the company’s

activities in California.” Jbid. The Court justified that

“substantial nexus and connection” finding on the fact

that the complaint includes claims that other BMS

research facilities located in other States were

20

responsible for the allegedly negligent development

and design of Plavix.

That justification—which is based on nothing

more than a similarity of function between the

California-based facilities and the non-California BMS

facilities responsible for BMS’s allegedly tortious

conduct—well illustrates the essentially limitless

nature of California’s assertion of personal jurisdiction

over nonresident companies that conduct business

within the State. It would permit the exercise of

personal jurisdiction with respect to virtually all claims

against an out-of-state company that engages in a

substantial, continuous, and systematic course of

business within California (without regard to where

the claims may arise), because the in-state activities of

such a company are highly likely to parallel the out-of-

state activities that give rise to such claims. But

Daimler unequivocally rejected that broad

“formulation” for personal jurisdiction, terming it

“unacceptably grasping.” 134 S. Ct. at 761.

Nor is it relevant to the “arise out of or relate to”

inquiry that Respondents also assert claims against

McKesson Corporation, which (as a California

corporation) is subject to the general jurisdiction of the

California courts. This Court has explained that

International Shoe’s due process requirements “must

be met as to each defendant over whom a state court

exercises jurisdiction” and that the assertion of

jurisdiction over one defendant based solely on the

activities of another defendant “is plainly

unconstitutional.” Rush v. Savchuk, 444 U.S. 320, 331-

32 (1980).

21

The California Supreme Court’s reliance on this

Court’s decision in Keeton v. Hustler Magazine, Inc.,

465 U.S. 770 (1984), was misplaced. The California

court asserted, “As the high court explicitly declared in

Keeton, a ‘plaintiffs residence in the forum State is not

a separate requirement, and lack of residence will not

defeat jurisdiction established on the basis of the

defendant’s contacts.” Pet. App. at 34a (quoting

Keeton, 465 U.S. at 780). The court badly misconstrued

Keeton. Although the plaintiff in that case did not

reside in the forum State (New Hampshire), she

suffered injuries there. The defendant’s allegedly

libelous publication was widely circulated in New

Hampshire, causing injury to the plaintiffs reputation

within the State.

Indeed, Keeton’s heavy reliance on _ the

defendant’s litigation-related contacts with New

Hampshire in upholding the exercise of personal

jurisdiction by the New Hampshire court directly

undercuts the California Supreme Court’s position.

Keeton quite clearly does not support the claim that

exercise of specific jurisdiction is proper even though

Respondents “did not suffer any Plavix-related injuries

in the State.” Pet. App. at 33a-34a.

cC. Interstate Federalism Principles Also

Bar Exercise of Personal

Jurisdiction over BMS

The California Supreme Court also sought to

bolster its specific-jurisdiction holding by arguing that

“judicial economy” would be served by permitting the

consolidated complaints to proceed in California courts,

22

rather than requiring the 575 nonresident Respondents

to file their factually similar claims in separate States.

Pet. App. 4la-44a* The court concluded that

coordinating all of the claims in one California court

would permit common issues to be resolved more

efficiently. Ibid.

Such efficiency considerations are simply not

relevant to the due-process issue before the Court:

whether the claims of the nonresident Respondents

“arise out of or relate to” BMS’s California activities.’

The Court has never authorized a state court to

exercise personal jurisdiction over nonresident

defendants in the name of judicial efficiency, if doing so

would subject the defendants to claims having little or

no connection to the defendant’s contacts with the

forum. Indeed, the Court has made clear that the U.S.

Constitution imposes territorial constraints on the

jurisdiction of state courts, and that such constraints

do more than simply ensure fairness to an out-of-state

defendant. As the Court said in World-Wide

Volkswagen, constitutional limits on _ personal

jurisdiction also operate “to ensure that the States,

through their courts, do not reach out beyond the limits

* Of course, counsel for Respondents could avoid the

problem of multiple state-court forums simply by filing all of their

lawsuits in either Delaware or New York, the two States in which

BMS is “at home” and thus subject to general jurisdiction.

* Assertions by counsel for Respondents that their clients’

claims should be tried together ring particularly hollow when one

considers that they deliberately filed the initial claims in eight

separate lawsuits, in an apparent effort to avoid removal to federal

court.

23

imposed on them by their status as coequal sovereigns

in a federal system... . [W]e have never accepted the

proposition that state lines are irrelevant for

jurisdictional purposes, nor could we, and remain

faithful to the principles of interstate federalism

embodied in the Constitution.” World-Wide

Volkswagen, 444 U.S. at 292-93. Those federalism

principles impose enforceable limits on a State’s

authority to project its laws outside of its own

boundaries:

Even if the defendant would suffer

minimal or no inconvenience from being

forced to litigate before the tribunals of

another State; even if the forum State has

a strong interest in applying its laws to

the controversy; even if the forum state is

the most convenient location for

litigation, the Due Process Clause, acting

as an instrument of interstate federalism,

may sometimes act to divest the State of

its power to render a valid judgment.

Id. at 294.

Although recognizing that International Shoe

marked a departure from the rigid territorial-based

rules of personal jurisdiction that prevailed in the late

nineteenth and early twentieth centuries, the Court

has warned that:

[l]t is a mistake to assume that this trend

heralds the eventual demise of all

restrictions on the personal jurisdiction of

24

state courts. Those restrictions are more

than a guarantee of immunity from

inconvenient or distant litigation. They

are a consequence of _ territorial

limitations on the power of the respective

states.

Hanson v. Denckla, 357 U.S. 235, 251 (1958).

Thus, while BMS (by virtue of maintaining its

principal place of business in New York), is subject to

the general jurisdiction of the New York courts, it

unequivocally is not subject to the exercise of personal

jurisdiction by the courts of suburban Connecticut over

claims arising outside the State—even though those

courts are located only a few miles away from New

York and thus could be a relatively convenient location

for BMS to litigate claims asserted against the

company. Permitting suit in Connecticut in some

circumstances might promote efficiency, but it would

undercut the Framers’ intent that States not be

permitted to exceed the limits imposed on them by

interstate federalism principles. World-Wide

Volkswagen, 444 U.S. at 292.

As Judge Werdeger explained in dissent:

[When] specific jurisdiction [is based] on

mere similarity between a corporation’s

forum activities and those outside the

state, ... interstate federalism is perhaps

most directly impaired; by taking

jurisdiction to adjudicate a dispute

arising only from BMS’s actions in, for

25

example, Texas, and allegedly resulting

in injuries only to a Texan, the California

courts infringe directly on Texas’s

sovereign prerogative to determine what

liabilities BMS should bear for actions in

its borders and injuring its residents.

Pet. App. 83a. Fair play and substantial justice

requires that California cease such grasping conduct.

Il. CALIFORNIA MAY NOT AVOID DAIMLER’S DUE-

PROCESS CONSTRAINTS BY RE-LABELING ITS

ACTIONS AS AN ASSERTION OF SPECIFIC

JURISDICTION

The California Supreme Court appears to have

been led astray by its erroneous belief that it coula

evade the limits on “general jurisdiction” by taking the

test the Court rejected in Daimler and repackaging it

as a form of “specific jurisdiction.” That is incorrect.

Regardless of which of the two strands of personal

jurisdiction one applies, due process constraints still

apply. Due process permits a defendant to be haled

into a court only if doing so is consistent with

“traditional notions of fair play and substantial

justice.” International Shoe, 326 U.S. at 316. The

reasons why subjecting BMS to general jurisdiction in

California offends traditional notions of fair play and

substantial justice (a point conceded by the California

Supreme Court) are very similar to the reasons why

BMS is not subject to specific jurisdiction with respect

to the claims of the nonresident Respondents.

Daimler rejected, as “unacceptably grasping,”

26

efforts to subject an out-of-state corporation to the

general jurisdiction of California courts, despite

allegations that it “engage[d] in a _ substantial,

continuous, and systematic course of business” within

the State. 134 S. Ct. at 761. “Traditional notions of

fair play and substantial justice” permit a State to

exercise “all purpose jurisdiction” over a corporation if

and only if the corporation’s ties with the State are

sufficiently extensive that the State can fairly be

considered its “home.” Jd. at 760. The Court indicated

that, barring exceptional circumstances, a corporation

is “at home” only in the State in which it is

incorporated and the State in which it maintains its

principal place of business.

For identical reasons, a State offends traditional

notions of fair play and substantial justice when it

purports to exercise specific jurisdiction over an out-of-

state corporation based primarily on allegations that

the corporation engaged in a substantial, continuous,

and systematic course of business within the State.

Yet that is precisely what the California Supreme

Court is attempting to do in this case. Employing its

sliding scale approach, the court declared that BMS’s

extensive business contacts with California

substantially lessened any need for Respondents, in

order to establish specific jurisdiction, to demonstrate

a relationship between BMS’s forum contacts and their

claims. Pet. App. 22a.° Indeed, the Court indicated

° The court explained its sliding-scale approach as follows:

“The more wide ranging the defendant’s forum contacts, the more

readily is shown a connection between the forum contacts and the

claim.” Ibid.

27

that when the corporation’s business contacts with

California are wide-ranging, virtually any relationship

between those contacts and the plaintiffs’ claims will be

sufficient to establish specific jurisdiction. Ibid

(“Indeed, only when the operative facts of the

controversy are not related to the defendant’s contact

with the state can it be said that the cause of action

does not arise from that contact.”) (emphasis added).

As the preceding quotations make plain, the

California Supreme Court’s sliding-scale approach is,

in effect, an effort to exert all-purpose jurisdiction over

BMS and other large, nationwide corporations by re-

labeling the court’s actions. What in a pre-Daimler

world was categorized as an assertion of general

jurisdiction over large corporations is now categorized

as an assertion of specific jurisdiction. But the result

is the same: under the decision below, California courts

may assert personal jurisdiction over any large

corporation that operates on a nationwide basis, even

with respect to tort claims asserted by nonresident

plaintiffs based on injuries incurred in other States.®

° The alleged relationships between “the operative facts of

the controversy” and the BMS forum contacts cited by the

California Supreme Court—e.g., the establishment of a nationwide

marketing campaign directed from outside California that

marketed Plavix both to California residents and to the

nonresident Respondents, the existence of BMS research facilities

in California that performed no Plavix-related research, a

contractual relationship with a California-based distribution

company that played no role in distributing Plavix to nonresident

Respondents—-are the sorts of relationships one would expect any

large company to maintain if it engages in a substantial,

continuous, and systematic course of business within California.

28

Subjecting a corporation to personal jurisdiction

does not cease to offend traditional notions of fair play

and substantial justice simply because the state court

has re-labeled its action as an assertion of “specific

jurisdiction” and (employing a “sliding scale” standard)

has pointed to an insignificant relationship between

the defendant’s in-state activities and the claims

asserted. Unless Daimler’s limits on subjecting a

corporation to jurisdiction wherever it is “doing

business” apply to both strands of personal jurisdiction,

the important constitutional protections afforded out-

of-state corporate defendants by Daimler will be

rendered meaningless.

Ill. THE CALIFORNIA SUPREME COURT'S TEST

LACKS PREDICTABILITY AND THUS FAILS TO

PROVIDE BUSINESSES WITH GUIDANCE

REGARDING WHERE THEIR CONDUCT MAY

RENDER THEM LIABLE TO SUIT

The Court explained in Daimler that it adopted

its rule governing general jurisdiction over

corporations in part because of its simplicity.

Ascertaining a corporation’s principal place of business

and its place of incorporation—the attributes that

Daimler held are determinative in assessing where a

corporation is “at home”’—is a_ relatively

straightforward exercise:

Those affiliations have the virtue of being

unique—that is, each ordinarily indicates only

one place—as well as easily ascertainable. Cf.

Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010)

(“Simple jurisdictional rules . .. promote greater

29

predictability.”). These bases afford plaintiffs at

least one clear and certain forum in which a

corporate defendant may be sued on any and all

claims.

Daimler, 134 S. Ct. at 760.

Numerous other decisions of the Court have

stressed the importance of adopting straightforward,

easy-to-administer rules governing federal court

jurisdiction. For example, at issue in one recent case

was whether a jorens patriae lawsuit filed by

Mississippi to recover damages suffered by its citizens

qualified as a CAFA mass action, and thus fell within

the district court’s removal jurisdiction. Mississippi ex

rel. Hood v. AU Optronics Corp., 134 S. Ct. 736, 739

(2014). The Court stated that its holding—that

individuals not named in a complaint could not be

counted as CAFA “plaintiffs” (and thus that CAFA’s

100-plaintiff jurisdictional threshold had not been

achieved)—was based in part on its conclusion that a

contrary holding would unduly complicate a district

court’s decision-making process on a jurisdictional

issue—by requiring district courts to embroil

themselves in numerous factual inquiries regarding the

claims of individuals not named in the complaint. AU

Optronics, 134 S. Ct. at 743-44. The Court stated that

construing CAFA “plaintiffs” to include only named

parties “leads to a straightforward, easy to administer

rule.” Id. at 744. It added, “Our decision thus

comports with the commonsense observation that

‘when judges must decide jurisdictional matters,

simplicity is a virtue.” Ibid (quoting Standard Fire Ins.

Co. v. Knowles, 133 S. Ct. 1345, 1350 (2013)).

30

By upholding personal jurisdiction under its

expansive definition of specific jurisdiction, the

California Supreme Court has adopted a jurisdictional

rule that is anything but simple. Among other things,

the court’s “substantial nexus or connection test”

establishes a sliding scale, under which a showing that

the defendant has numerous forum contacts

(regardless whether they are causally related to the

claims asserted) reduces the required showing of a

connection between those contacts and the plaintiffs’

claim. Pet. App. 22a. But the unspecified degree of

reduction is left to be resolved by California courts on

a case-by-case basis. Jd. at 35.

As a result, out-of-state corporations are left

with little guidance regarding what activity in

California will render them subject to the jurisdiction

of California courts for claims arising outside the State.

That result is inconsistent with Daimler’s goal of

predictability and thus exacerbates due process

concerns.

The court below did not dispute the highly

attenuated nature of the relationship between

California and the Respondents’ claims. It nonetheless

concluded that California courts could exercise specific

jurisdiction over Respondents’ claims based on a

smorgasbord of BMS forum contacts. At no point did it

specify which of those contacts, by themselves, would

be sufficient to establish personal jurisdiction. Indeed,

although the court noted that some Plavix-based

products-liability claims have been filed by California

residents against BMS based on theories similar to

those raised by the nonresident Respondents, the court

31

never specified whether the existence of such claims

was crucial to its personal-jurisdiction finding.

A rule so amorphous provides corporations with

no guidance whatsoever. The California Supreme

Court insists that the nonresident Respondents’ claims

“arise out of or are connected with” BMS’s forum

contacts, but BMS and other nonresident defendants

are left to wonder precisely what that connection

consists of. One plausible’ interpretation:

manufacturers that market their products on a

nationwide basis are subject to suit in each of the 50

States with respect to any claim arising out of the sale

of their products. BMS is hardly unique among

manufacturers in distributing its products pursuant to

a nationwide distribution and marketing plan. But if

this Court upholds the California Supreme Court's

rule, little is left of Daimler; the Court will simply have

substituted a new name (specific jurisdiction) for the

exorbitant understanding of general jurisdiction it

rejected in Daimler as too grasping.

As Daimler explained in rejecting the Ninth

Circuit's expansive understanding of personal

jurisdiction over nonresident defendants based on

claims arising outside the forum, “Such exorbitant

exercises of all-purpose jurisdiction would scarcely

permit out-of-state defendants ‘to structure their

primary conduct with some minimum assurance as to

where that conduct will and will not render them liable

to suit.” Daimler, 1348S. Ct. at 761-62 (quoting Burger

King Corp. v. Rudzewicz 471 U.S. at 472).

32

The court below dismissed those concerns,

asserting that BMS “embraced th[e] risk” of being sued

in California by nonresident plaintiffs when it decided

to include California within its nationwide Plavix sales

efforts. Pet. App. 33a. But it is unrealistic to expect

large manufacturers to exclude California from their

marketing efforts.’ More importantly, the court’s

rationale is inconsistent with Daimler’s condemnation

of “exorbitant exercises of all-purpose jurisdiction” by

California courts based merely on evidence that the

defendant engaged in continuous and systematic

business activity within the State. The Court should

establish a rule that provides clear guidance to the

business community regarding the extent of forum

contacts, beyond simply conducting business on a

continuous and systematic basis, that is sufficient to

expose companies to the specific jurisdiction of forum

courts. The due-process requirement urged by BMS—a

showing of a causal link between the defendant’s forum

contacts and the plaintiffs’ claims—is a rule that would

provide appropriate clarity to the business community,

in addition to being consistent with this Court’s due-

process case law.

” Moreover, it is not consistent with “traditional notions of

fair play and substantial justice,” International Shoe, 326 U.S. at

316, to require a company— in return for the privilege of marketing

a product in a State—to agree to be answerable in the State’s

courts for 100% of the tort suits arising nationwide from that

marketing effort. Rather, if a company’s sales within a State

amount to 3% of a product’s nationwide sales, it should reasonably

anticipate that roughly 3% of the tort claims arising from those

sales will be filed in the State’s courts.

33

CONCLUSION

The Court should reverse the judgment of the

California Supreme Court.

Respectfully submitted,

Richard A. Samp

(Counsel of Record)

Mark S. Chenoweth

Washington Legal Found.

2009 Mass. Ave., NW

Washington, DC 20036

202-588-0302

rsamp@wlf.org

March 8, 2017