Attacking Nationwide Class Actions Based On Personal Jurisdiction

29 January 2018 Consumer Class Defense Counsel Blog
Author(s): Michael D. Leffel

Earlier this month, Judge Leinenweber of the Northern District of Illinois rejected a named plaintiff’s attempt to bring a nationwide class action, basing his decision on the Supreme Court’s decision last June in Bristol-Myers Squibb Co. v. Superior Court of California (“Bristol-Myers”).[1]  As discussed in a previous post on this blog, the Bristol-Myers decision—and now its lower court progeny—bolsters a jurisdictional ground for defendants resisting class actions purporting to cover claims of proposed multi-state classes comprised of non-forum residents.

In DeBernardis v. NBTY, Inc. (“DeBernardis”)[2] Judge Leinenweber addresses allegations that a distributor of a dietary supplement made false and misleading representations regarding its potential benefits.  In addition to a class of Illinois purchasers seeking relief under the Illinois Consumer Fraud Act, the named plaintiff sought to represent a putative nationwide class with respect to consumer fraud, breach of warranty, and unjust enrichment claims.[3]  The defendant moved to dismiss the complaint in its entirety.

The defendant’s principal argument for dismissal was that courts in Illinois lacked personal jurisdiction—based on the Bristol-Myers opinion—over the claims of absent class members who did not have any connection to Illinois.[4]  The Supreme Court’s decision last summer in Bristol-Myers held that California state courts lacked personal jurisdiction over non-residents’ claims in a mass tort action where the defendant was not subject to general jurisdiction in California and the non-residents’ claims lacked any connection to California.[5]  Similarly, in DeBernardis, the defendant was not subject to general jurisdiction in Illinois and there was no connection between Illinois and absent class members’ alleged claims.

In response, the plaintiff attempted to cabin Bristol-Myers to the context of mass tort cases, distinguishing his case on the ground that it was a putative class action that would need to satisfy the requirements of Rule 23.[6]  Plaintiff counsel cited two recent, out-of-circuit district court opinions in support of this distinction,[7] while the defense pointed to a factually-analogous Northern District of Illinois case from just months earlier, which had dismissed claims relating to non-Illinois residents on personal jurisdiction grounds.[8]

Judge Leinenweber called the applicability of Bristol-Myers a “close question,” but he ultimately sided with the defendant and dismissed the claims relating to non-resident putative class members.  Reading the tea leaves, Judge Leinenweber wrote that he believed it “more likely than not” that the Supreme Court would eventually “apply Bristol-Myers Squibb to outlaw nationwide class actions in a forum, such as in this case, where there is no general jurisdiction over the Defendants.”[9]  Having dismissed the claims of non-Illinois residents, the court went on to dismiss the claims of the named plaintiff and Illinois class members due to a lack of standing to pursue injunctive relief and a failure to comply with certain Illinois statutory notice requirements.[10]

The DeBernardis decision highlights the significance of jurisdictional requirements.  A lack of personal jurisdiction with respect to non-resident claims may preclude multi-state class actions.  Such personal jurisdiction issues should be considered at the beginning of a case because, unlike subject matter jurisdiction, lack of personal jurisdiction may be waived by a defendant.[11]

Notably, the Supreme Court’s Bristol-Myers decision addresses specific jurisdiction: the Court expressly noted that a forum might be permitted to exercise personal jurisdiction over non-residents’ claims in situations where it possesses general jurisdiction over the defendant.[12]  It may still be possible for national class actions to proceed in states where a given defendant is considered “at home” under longstanding principles of personal jurisdiction (e.g., a corporation’s state of incorporation or principal place of business).

Given the recency and prominence of the Bristol-Myers opinion, we expect lower courts will continue to grapple with the intersection between personal jurisdiction and class action litigation.  With a split of authority already arising just six months after the Supreme Court’s decision, we will continue to monitor the developing case law and provide further updates.

[1] 137 S.Ct. 1773 (June 19, 2017).

[2] No. 17-C-6125, 2018 U.S. Dist. LEXIS 7947 (Jan. 18, 2018).

[3] Id. at *2.

[4] Id. at *2-4.

[5] Bristol-Myers, 137 S.Ct. at 1781-82.

[6] DeBernardis, 2018 U.S. Dist. LEXIS 7947, at *5.

[7] Id., citing Fitzhenry-Russell v. Dr. Pepper Snapple Group, Inc., 2017 U.S. Dist. LEXIS 155654 (N.D. Cal. Sept. 22, 2017) and In re Chinese-Manufactured DryWall Products, 2017 U.S. Dist. LEXIS 197612 (E.D. La. Nov. 30, 2017).

[8] Id., citing McDonnell v. Nature’s way Products, LLC, 2017 U.S. Dist. LEXIS 177892 (N.D. Ill. October 26, 2017).

[9] Id. at *6.

[10] Id. at *7-9.

[11] However, the extent to which a defendant could waive a federal court’s lack of personal jurisdiction when the issue relates to a lack of a connection between an absent plaintiff’s claim and the forum (as opposed to between the defendant and the forum) is debatable.

[12] 137 S.Ct. at 1784 (“Our decision does not prevent the California and out-of-state plaintiffs from joining together in a consolidated action in the States that have general jurisdiction over [the defendant].”).

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