Legal Perspectives: Significant cases this term for manufacturers

By Linda Kelly, SVP, General Counsel and Corporate Secretary

This week, the U.S. Supreme Court wrapped up its October 2016 term. While most legal reporters would tell you this was a mundane term with few blockbuster cases, there were some very significant holdings this term for manufacturers.

Chief among these significant cases were three involving the fundamental question of where a lawsuit may be brought.  For our members who find themselves targets of civil litigation, one of the most significant factors is where they are sued.  Not only does tort law vary from state to state, but certain state court jurisdictions have become favorite destinations of the plaintiffs’ bar because the juries and the court systems have the reputation of being pro-plaintiff and anti-corporate Because of this, plaintiffs’ lawyers will go to great lengths to construct their cases to include parties and claims that will allow the cases to be brought in their favored jurisdictions. This can sometimes lead to tortured construction of claims in order to have the cases be heard where the plaintiffs’ lawyers think they have the best chance of winning.

Such was the case in BNSF v. Tyrrell.  In BNSF, two parties brought employment claims against the railroad company in Montana state court.  Neither party worked in Montana, resided in Montana, or claimed injury in Montana.  Nor did they claim that their injuries were related to BNSF’s activity in Montana.  Nor is the company headquartered there nor even have a significant presence there.  It was simply the plaintiffs’ choice of venue for the lawsuit.  In a significant blow to forum-shopping, the court held that BNSF could not be sued in Montana because it was not found at home there and the claim had no connection to the state.

Similarly, in Bristol Myers Squibb v. Superior Court, the court considered whether claims by Ohio and New York residents could be brought in California court, joined with claims by California residents, for damages arising from the plaintiffs’ use of the drug Plavix.  The Ohio and New York plaintiffs claimed no connection between their injuries and the state of California—they had not been prescribed the drug there, had not purchased it there, and had not ingested it there.  The Supreme Court held 9-1 that the California court did not have jurisdiction over the plaintiffs simply because they had suffered the same injuries as California plaintiffs.  Justice Sotomayor was the lone dissenter because she feared the holding would lead to fragmented, piecemeal litigation and eliminate the ability to have a nationwide mass action.  (Note that had the plaintiffs’ lawyers wished to adjudicate the case efficiently as a nationwide action, they could have brought it in federal court.)

Finally, in TC Heartland v. Kraft Foods, a case in which the Manufacturers’ Center for Legal Action (MCLA) did not participate, the court limited jurisdiction for patent lawsuits to the state of incorporation or residence of the defendant or to the venue where infringement occurred and the defendant has a business presence.  This holding is highly significant because it will greatly limit the number of cases that can be brought in the Eastern District of Texas, which has become a forum of choice of patent litigation.

While these cases may seem mundane to reporters—many of whom reported more about the fact that Justice Breyer’s cell phone rang on the day BNSF and BMS were argued than on the arguments themselves—they are important clarifications to the rules of the road for civil litigation involving manufacturers.  Perhaps more important, they reinforce core elements of due process, including the principle that you can’t sue anyone anywhere you want to.  The court has to have jurisdiction over the defendant by virtue of either the defendant’s or the claim’s connection to that jurisdiction. The MCLA was proud to support the outcomes inBNSF and Bristol-Myers Squibb with our amicus program. These commonsense holdings will go a long way to help restore some rationality to our out of control tort system. Indeed, the term was very significant for manufacturers.