ATRA Briefs Urge SCOTUS to Limit Lower Courts’ Jurisdiction

Press Releases | April 24, 2017

WASHINGTON, D.C., April 24, 2017 – With the U.S. Supreme Court to hear Tuesday appeals of two state supreme court decisions that dramatically expand lower courts’ personal jurisdiction over out-of-state defendants, the American Tort Reform Association has filed amicus briefs that urge the high court to set a definitive, unambiguous standard that reasonably limits jurisdiction and protects defendants’ right to due process.

“Our Judicial Hellholes program has documented the steady growth of ‘litigation tourism,’” began ATRA president Tiger Joyce, “typically comprising out-of-state personal injury lawyers filing their clients’ lawsuits against out-of-state corporate defendants in notoriously plaintiff-favoring jurisdictions that have little or no connection to the facts of a given case.

“Ample SCOTUS precedent makes clear that this dragging of civil defendants across the country into plaintiff-friendly courts violates the Constitution’s Due Process Clause, and that cases should be adjudicated where a plaintiff resides, where a defendant is incorporated or maintains a principal place of business, or where the alleged injury occurred.

“But varying and sometimes contradictory decisions by rebellious state and lower federal courts in recent years have sown confusion about the breadth of courts’ jurisdiction over civil cases, and the plaintiffs’ bar has seized on that confusion to bring more cases where they believe they’ll have the biggest advantage over defendants.

“For example, even though she regularly bemoans overburdened court budgets, California Supreme Court Chief Justice Tani G. Cantil-Sakauye last year wrote a precedent-defying 4-3 decision that effectively throws open her state’s already packed courthouses to an inestimable number of out-of-state plaintiffs.”

That slim majority in Bristol-Myers Squibb v. Superior Court of San Francisco County held that California courts can assert jurisdiction in lawsuits against defendants that are not headquartered or incorporated there, even when out-of-state plaintiffs allege out-of-state injuries. The court found that a company becomes subject to litigation in California merely when it has significant sales there ̶ as any national business does, given the state’s size.

In a commonsense dissent, retiring Justice Kathryn Werdegar warned that the majority’s “decision impairs important functions of reciprocity, predictability, and limited state sovereignty” by threatening “to subject companies to the jurisdiction of California courts . . . beyond our state’s legitimate regulatory interest” and “inconsistent with the limits set by due process.”

“Also in 2016,” Joyce continued, “Montana’s Supreme Court ̶ increasingly known for its own activism, willingness to ignore precedent and defiance of the U.S. Supreme Court on matters of federal law ̶ found in Tyrell v. BNSF Railway Co. that state trial courts can decide cases filed by out-of-state railroad workers allegedly injured outside Montana’s borders. Like its California counterpart, Montana’s high court also refused to obey jurisdictional limits established by the SCOTUS as recently as 2014 in Daimler AG v. Bauman.”

Joyce pointed to the first paragraph of Justice Laurie McKinnon’s to-the-point dissent:

I respectfully dissent from the Court’s opinion. I would conclude that the District Courts lack general (all-purpose) personal jurisdiction over BNSF in the consolidated appeals under the Due Process Clause of the Fourteenth Amendment to the United States Constitution. The United States Supreme Court has made clear twice within the last five years that a state court may assert general jurisdiction over a foreign corporation under the Due Process Clause of the Fourteenth Amendment “only when the corporation’s affiliations with the State in which suit is brought are so constant and pervasive `as to render it essentially at home in the forum State.'” Daimler AG v. Bauman, ___ U.S. ___, 134 S.Ct. 746, 751, 187 L.Ed.2d 624 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011)) (brackets omitted). The United States Supreme Court has made it equally clear that merely “engag[ing] in a substantial, continuous, and systematic course of business” with the forum State is insufficient standing alone to subject a defendant to general jurisdiction. Daimler, 134 S.Ct. at 761. Such a formulation, the Supreme Court has explained, would be “unacceptably grasping.” Daimler, 134 S.Ct. at 761.

“Thankfully, the high court will hear arguments in both the California and Montana cases tomorrow and thus have another chance to clarify unambiguously the limits to lower courts’ jurisdiction.

“No one wants to keep genuinely injured plaintiffs from their day in court. But the business community is justified in seeking definitive standards to govern which courts can exercise jurisdiction over which claims.

“Letting plaintiffs pull defendants into distant, plainly imbalanced courts as readily as Chinese dissidents are pulled out of bed in the middle of the night is an obvious violation of due process. It eliminates all predictability as to where companies may be sued, and such uncertainty also strains defendants’ budgets, burdens interstate commerce by exerting upward pressure on consumer prices, and erodes core principles of federalism as courts in certain states interfere with the regulatory affairs of other states.

“It is not overly dramatic to suggest that some jurisdiction-expanding lower courts are in full rebellion against well-established precedent. So with the Supreme Court again at full strength, it should firmly put down this insurrection once and for all when deciding these cases by term’s end,” Joyce concluded.

ATRA’s briefs for the California and Montana cases are, respectively, here and here.

-ATRA-

The American Tort Reform Association, based in Washington, D.C., is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation. Its members include nonprofit organizations and small and large companies, as well as trade, business and professional associations from the state and national level. The American Tort Reform Foundation is a sister organization dedicated primarily to research and public education.

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