Keeping Corporations in the CourtsPosted on Nov 21, 2022
Over the past eleven years, the Supreme Court has issued a series of decisions that have made it significantly more difficult to hold corporations accountable through the courts by limiting a court’s power to exercise personal jurisdiction over corporate defendants. These decisions explicitly left open whether their jurisdictional constraints apply to class actions. Because of the important role that class actions play in corporate accountability, it is essential that these limitations are not extended to the class action form.
This string of decisions has limited personal jurisdiction in two doctrinal contexts. First, the Supreme Court significantly narrowed courts’ ability to exercise jurisdiction over a corporation under a theory of general jurisdiction. General jurisdiction allows a court to exercise jurisdiction over a defendant for any claim against that defendant, whether or not directly related to the defendant’s contacts with the forum, by virtue of the defendant’s significant presence there. Until 2011, when analyzing whether a defendant was subject to general jurisdiction, a court would assess whether a defendant’s contacts with the forum were “continuous and systematic.” However, in 2011, in Goodyear Dunlop Tires Operations. S.A. v. Brown, the Supreme Court limited the “continuous and systematic” inquiry by holding that general jurisdiction can be found only where a corporation can be deemed to be “essentially at home.” Three years later, in Daimler AG v. Bauman, the Court affirmed that, for a corporate defendant, this language refers almost exclusively to the corporation’s place of incorporation or its principal place of business. The result of these two cases is that, in exercising general personal jurisdiction over a corporate defendant, courts are greatly limited in considering whether significant business presence in a state may meet a “continuous and systematic” standard, but instead are to address only whether the forum in question is that corporation’s place of incorporation or its principal place of business.
Second, soon after these two opinions, the Court proceeded to limit the ability for courts to exercise specific personal jurisdiction over a defendant. Specific jurisdiction allows courts to exercise jurisdiction over claims against a defendant that are related to that defendant’s contacts with the state, even if those contacts themselves do not rise to a sufficient level to meet a general-jurisdiction standard. In Bristol-Myers Squibb Co. v. Superior Court of California, nearly 600 plaintiffs joined together to sue Bristol-Myers in state court in California for injuries resulting from the same drug. However, of these nearly 600 plaintiffs, close to 500 purchased the drug and suffered their injuries outside of California. Despite the defendant’s extensive contacts with state, the Court refused to find jurisdiction over the identical claims that occurred outside of the state. The resulting state of the law is that plaintiffs, even when asserting factually identical claims, cannot join together in one state to litigate their claims efficiently if some of these claims relate to conduct that did not occur in the forum state.
It is critical to note that BMS was a mass action, not a formal class action under Rule 23 of the Federal Rules of Civil Procedure. As a matter of fact, the Supreme Court explicitly left open the opinion’s applicability to class actions. However, soon after the opinion was issued, influential legal scholars and judges began arguing that it should. While district courts have ruled both ways, the only circuit courts to consider the question have ruled that BMS does not apply to class actions. That being said, due to the lack Supreme Court precedent on the issue, as well as that Court’s lack of hesitation in continuing to constrain the limits of personal jurisdiction, the question still remains an open one.
It is essential that BMS’s logic is not extended to apply to class actions. Litigation, and particularly class-action litigation, is de facto regulation. Some scholars even argue that the fact that class actions effectively deputize “private attorneys general” to bring suits against corporations makes “[c]lass action lawsuits . . . the most effective way to hold corporations accountable.” This is true not only due to the inefficiencies of governmental regulation in areas like products liability, but also because of the economic realities of litigation that make it unlikely that a sufficient number of individuals will bring claims against a given corporation to constitute a legitimate threat to that corporation’s financial or reputational wellbeing. Of potentially even greater importance is the high-stakes nature of class actions. Due to their size, class actions usually seek enormous monetary damages and attract lots of media attention. From the perspective of the corporation, “class actions are too expensive and risky to defend,” thus leading to settlement.
Extending BMS to class actions would limit the size of class actions brought in states where the defendant is not subject to general jurisdiction by limiting the size of the class to those individuals whose injuries arise out of the defendant’s contacts in the state. This limitation would directly undermine the primary element of class actions that make them so effective in holding corporations accountable. Were BMS extended to class actions, a nation-wide class could only bring suit in a state where the defendant was subject to general jurisdiction. This is problematic for two reasons. First, for many foreign entities, there is no forum in the United States where they would be subject to general jurisdiction. Second, and more broadly, limiting personal jurisdiction in class actions to defendants’ home states would “predictably lead to defendant-friendly substantive law.”
Most of the circuit courts that have limited BMS to mass actions have done so invoking Devlin v. Scardelletti, a Supreme Court opinion in which the Court states that “[n]onnamed class members . . . may be parties for some purposes and not for others. The label ‘party’ does not indicate an absolute characteristic, but rather a conclusion about the applicability of various procedural rules that may differ based on context.” Using this framework, these courts then conclude, for various reasons, that in this “context,” non-named class members should not be considered “parties.”
Were the Supreme Court to definitely hold as much with respect to the non-consideration of class members (as opposed to class representatives) in a personal jurisdiction inquiry, then the issue would be settled. However, perhaps an even more effective solution would be to amend Rule 23 of the Federal Rules of Civil Procedure, which governs class actions. Rule 23 already includes provisions that prescribe special procedural considerations that apply to how class actions are treated apart from the class certification stage. An amendment to Rule 23 limiting the jurisdictional inquiry in class actions to only named class representatives would determinatively solve the issue and would allow class actions to continue as a powerful device for corporate accountability.
 Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773, 1779–80 (2017).
 See, e.g., Perkins v. Benguet Consol. Min. Co., 342 U.S. 437, 446 (1952); Helicopteros Nacionales de Colombia, S.A. v. Hall, 446 U.S. 408, 416 (1984).
 564 U.S. 916 (2011).
 Id. at 919.
 571 U.S. 117 (2014).
 Id. at 137–39. In fact, the Court describes the possibility of exercising general jurisdiction in a forum that is not the corporation’s place of incorporation nor its principal place of business as “an exceptional case.” Id. at 139, n. 19.
 See generally International Shoe Co. v. State of Wash., 326 U.S. 310 (1945).
 Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773 (2017). It is worth noting that, prior to Goodyear and Daimler, a case like BMS would have almost certainly never come about no one would have thought to question Bristol-Myers’s susceptibility to general personal jurisdiction in California. In fact, the California state court itself originally held that there was general jurisdiction over Bristol-Myers before the case went up to the Supreme Court. Plavix Product and Marketing Cases, 2013 WL 6150251 (Cal. Super. 2013).
 This may have been because plaintiffs certifying a class action must meet numerous substantive and procedural requirements that are not present in traditionally joined mass actions. See generally Fed. R. Civ. P. 23; Cal. Code Civ. Proc. § 382.
 Bristol-Myers Squibb, 137 S.Ct. at 1784, n. 4 (Sotomayor, J., dissenting).
 See, e.g., Molock v. Whole Foods Mkt. Grp., Inc., 952 F.3d 293, 306 (D.C. Cir. 2020) (Silberman, J., dissenting) (“Although the Supreme Court avoided opining on whether its reasoning in the mass action context would apply also to class actions, it seems to me that logic dictates that it does. After all, like the mass action in Bristol-Myers, a class action is just a species of joinder, which ‘merely enables a federal court to adjudicate claims of multiple parties at once, instead of in separate suits.’” (quoting Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 408 (2010))).
 See, e.g., Fisher v. Fed. Express Corp., 42 F.4th 366 (3d Cir. 2022); Lyngaas v. Ag, 992 F.3d 412 (6th Cir. 2021); Mussat v. IQVIA, Inc., 953 F.3d 441 (7th Cir. 2020).
 MandA. TV, Bill Savitt - Wachtell, Lipton, Rosen & Katz, YouTube (Feb. 19, 2016) (interview with William Savitt), https://www.youtube.com/watch?v=csiySHar2RI.
 Brian T. Fitzpatrick, The Conservative Case for Class Actions 3 (2019).
 See Id. (“Relying on each person a company steals from to enforce the rules is unrealistic: people sometimes don’t know about the theft, and, even when they do, the theft might not be worth enough to hire a lawyer. Class actions overcome these problems by letting one person sue for everyone else; this transforms and unprofitable lawsuit for a small amount of money into a profitable lawsuit for a lot of money.”).
 Id. at 5.
 See, e.g., Douglass v. Nippon Yusen Kabushiki Kaisha, 46 F.4th 226 (5th Cir. 2022) (where a Japanese carrier company could not be subject to personal jurisdiction in any United States forum for deaths caused to United States soldiers overseas, despite the company’s extensive, unrelated contacts with California).
 Maggie Gardner et al., The False Promise of General Jurisdiction, 73 Ala. L. Rev. 455, 456 (2022).
 Devlin v. Scardelletti, 536 U.S. 1, 9–10 (2002).
 See, e.g., Mussat v. Iqvia, Inc., 953 F.3d 441, 447 (7th Cir. 2020).
 See, e.g., Fed. R. Civ. P. 23(f) (detailing special procedures for class action appeals).