In two recent appellate court decisions, the California Court of Appeal refused to exert general jurisdiction over the foreign defendants. These decisions provide important guidance for foreign entities with California contacts regarding the ability of California courts to assert jurisdiction over them in civil lawsuits.
It is not uncommon for a non-resident corporation to be sued in California, but the First Appellate District Court recently determined two unique jurisdictional issues requiring application of Daimler AG v. Bauman, 134 S.Ct. 746 (2014), the Supreme Court’s recent opinion regarding general jurisdiction. In the first instance, plaintiffs who suffered injuries in a car accident sued Daimler AG. See Kimberly Patrice Young et al. v. Daimler AG, 2014 DJDAR 10416. In the second instance, hundreds of non-resident co-plaintiffs sought to sue Bristol-Myers Squibb (BMS) for alleged defects in a drug BMS manufactures and sells throughout the country. See Bristol-Myers Squibb Co. v. Anderson, et al., 2014 DJDAR 10059.
Earlier this year, in Daimler AG v. Bauman, the Supreme Court limited the application of general jurisdiction under the Fourteenth Amendment. In cases proceeding Daimler, courts “focused on the quality and quantity of contacts a company had with a particular state, without much additional analysis or inquiry.” In Daimler, the Supreme Court explained that determining general jurisdiction does not focus solely on the magnitude of the defendant’s in-state contacts but rather looks at the corporation’s activities in their entirety to determine whether or not the corporation is “at-home” in the jurisdiction. Specifically, the Supreme Court explained that doing business in many states throughout the country does not necessarily open a corporation to the general jurisdiction of courts in each of those states.
In Bristol-Myers Squibb Co. v. Anderson, dozens of California residents sued BMS in San Francisco Superior Court, but the Court was asked to decide the specific question of whether California also has jurisdiction over BMS regarding identical claims brought by non-resident co-plaintiffs. The Court, under Daimler AG v. Bauman, determined that California does not have general jurisdiction over BMS as to the non-resident co-plaintiffs.
Plaintiffs failure to establish that “BMS is incorporated, or has its headquarters” in California, in conjunction with a general lack of “evidence regarding BMS’s activities in their entirety” led the Court to conclude that, in light of Daimler, it did not have general jurisdiction over BMS.
In Young v. Daimler AG, the First Appellate District similarly applied the Supreme Court’s recent decision to find no general jurisdiction over Daimler AG. In Young, plaintiffs argued general jurisdiction over Daimler in California is proper because of the substantial California contacts of current and former indirect subsidiaries of Daimler which are attributable to Daimler under theories of agency. Applying Daimler AG v. Bauman, the First District Appellate Court rejected this argument.
Daimler will continue to be an important case going forward because it raises the bar for plaintiffs to demonstrate sufficient contacts with a forum to warrant general jurisdiction. That said, given that the Court in Bristol-Myers Squibb Co. v. Anderson, found specific jurisdiction over BMS as to the non-resident co-plaintiff claims, even in the absences of sufficient evidence for general jurisdiction, the new Daimler standard may not benefit defendants in every case.