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Supreme Court closes the door on forum shopping

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Supreme Court closes the door on forum shopping

A U.S. Supreme Court ruling that limits where lawsuits can be filed will reduce forum shopping and curtail situations where defendants may feel pressured to settle litigation because of the large number of cases filed against them, experts say.

More than 600 plaintiffs, only 86 of whom were California residents, had filed litigation in California state court against New York-based Bristol-Meyers Squibb Co., asserting a variety of state law claims based on injuries allegedly caused by its blood thinner drug Plavix, according to the June 19 ruling in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County et al.

The California Supreme Court held in a 2016 ruling that California courts have jurisdiction to consider nonresident’s claims.

“In order for a court to exercise specific jurisdiction over a claim, there must be an ‘affiliation between the forum and the underlying controversy, principally (an) activity or an occurrence that takes place in the forum state,’” said the 8-1 ruling by Justice Samuel A. Alito Jr., quoting an earlier case, in overturning that ruling.

In her dissenting opinion, Justice Sonia Sotomayor said, “The majority’s rule will make it difficult to aggregate the claims of plaintiffs across the country whose claims may be worth little alone.”

Experts say the majority opinion means litigation must be filed in the state where the company is incorporated or headquartered or the site where a plaintiff’s injury occurred.

In a related ruling on May 30, the Supreme Court held in its 8-1 decision in BNSF Railway Co. v. Tyrell in two cases filed by injured workers, that Montana courts could not exercise general personal jurisdiction over the Fort Worth, Texas-based railroad, which maintained track in the state but was not incorporated nor had its principal place of business there.

Experts say jurisdictions with a reputation for being plaintiff-friendly, where many consumer lawsuits are filed, include St. Louis — which was named the “top judicial hellhole” by the Washington-based American Tort Reform Foundation in 2016 — the California courts and Philadelphia.

The ruling had an immediate impact in St. Louis, where in response a judge declared a mistrial in a case filed against New Brunswick, New Jersey-based Johnson & Johnson over a claim that talcum powder in its products caused ovarian cancer.

The ruling makes it clear there must be “a link between the case, the defendant and the forum,” said Andrew J. Pincus, a partner with Mayer Brown L.L.P. in Washington.

The Bristol-Myers and BNSF rulings, as well as some other cases in recent years, “provide some pretty strong tools for defense lawyers who want to avoid forum shopping by plaintiff lawyers,” said David R. Fine, a partner with K&L Gates L.L.P. in Harrisburg, Pennsylvania.

He added the Johnson & Johnson mistrial “may be indicative of what we’ll see in other courts” with respect to pending cases as well as those yet to be filed.

No longer will a North Carolina resident be suing New Jersey-based Johnson & Johnson in St. Louis, said James M. Beck, a senior life sciences policy analyst with Reed Smith L.L.P.in Philadelphia. “It was always ridiculous, and now it’s unconstitutional,” he said.

Experts say the ruling will diminish plaintiffs’ leverage. Plaintiff attorneys have taken “plaintiffs from all over the country, even though those plaintiffs have no connection to that particular jurisdiction, and that can really cost defendants a lot of negotiating power because they’re dealing with all these plaintiffs in one jurisdiction,” said Kara Kapke, a partner with Barnes & Thornburg L.L.P. in Indianapolis.

The decision “really slams the door on that form of aggregate forum shopping,” she said.

“It means defendants will be able to fight unjustified claims” rather than settling out of fear that this bundling creates an unfair playing field, Mr. Pincus said

Bruce Jones, a partner with Faegre Baker Daniels L.L.P. in Minneapolis, said the ruling will benefit smaller companies in particular. A Northeast company with only a few thousand employees will no longer have the expense of litigating cases in California or Washington, he said.

J. Nicci Warr, an associate with Stinson Leonard Street L.L.P. in St. Louis, said the ruling could also have implications for class action litigation.

It could potentially “weaken the theory behind class actions,” where almost always there are broad nationwide classes whose litigation can be heard in a single state, she said.

Mr. Pincus added, however, “the one imponderable we don’t know” is how much of a connection there must be between the claim and the forum.

Plaintiff attorneys are “very creative and entrepreneurial,” he said. Determining “how much connection is enough” will be a focus of future litigation, he said.

 

 

 

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