March 13, 2020

By: Michael T. Brody, Gabriel K. Gillett, Howard S. Suskin and Brenna J. Field

New-Development-IconThis week, the Seventh and DC Circuits issued long-awaited and major decisions addressing a critical issue in class action litigation explicitly left unresolved in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017)—whether a federal court has jurisdiction to hear claims by out-of-state members of a putative nationwide class action whose claims lack a connection to the forum. Both courts said yes, albeit for different reasons. As other circuit courts weigh in, and possibly disagree, the Supreme Court will likely be called upon to resolve the issue.

In Bristol-Myers Squibb, 600 plaintiffs brought a coordinated mass tort action asserting California state law claims in California state court using a California rule for consolidating individual suits. But only 86 plaintiffs were California residents. The defendant argued that it was not subject to specific personal jurisdiction as to the non-resident plaintiffs’ claims because they and their claims lacked a sufficient connection to the forum. The Supreme Court agreed, but stated that it did not decide whether its holding applied to federal courts or to class actions. Since then, some federal district courts have taken this to mean that federal courts have specific personal jurisdiction over defendants facing claims by absent non-resident putative class members in any type of aggregated litigation while others have taken the opposite view, that this ruling limits the court’s jurisdiction to claims by plaintiffs (named and unnamed) with a connection to the forum.

On March 11, the Seventh Circuit became the first appellate court to decide whether Bristol-Myers Squibb applies to federal class actions. In Mussat v. IQVIA, Inc., No. 19-1204, the court sided with plaintiffs and held that a federal court has jurisdiction to hear federal claims by unnamed class members in a putative nationwide class action even if they lack a connection to the forum. In this Telephone Consumer Protection Act suit, defendant moved to strike the class definition, which included out-of-state plaintiffs. The Court held that Bristol-Myers Squibb did not bar federal courts from hearing these claims, reasoning that absent class members are not “parties” to a class action for purposes of jurisdiction, whereas due process required a due process result for the consolidated mass action plaintiffs in Bristol-Myers Squibb. A day earlier, the DC Circuit reached a similar conclusion, at least temporarily, without taking on Bristol-Myers Squibb. In Molock v. Whole Foods Market Group, Inc., No. 18-7162, an employment discrimination case arising from the denial of the defendant’s motion to dismiss, the court held that the defendant could not challenge personal jurisdiction over claims by absent class members until after the class is certified. The Court reasoned that it would be premature to dismiss absent class members until they are full parties to the action.

IQVIA and Whole Foods will not be the last words on federal court jurisdiction over class actions after Bristol-Myers Squibb. The Fifth and Ninth Circuits are each considering cases that raise the issue. See Tredinnick v. Jackson National Life Ins., No. 18-40605 (5th Cir.); Moser v. Health Insurance Innovations, No. 19-56224 (9th Cir.). Meanwhile, district courts likely will continue to reach divergent results. Litigants are therefore well-advised to continue raising and preserving the issue for further review, as these decisions hardly bring clarity or certainty on the important issue of whether a defendant is subject to claims in federal court asserted by a putative class of plaintiffs with no tie to the forum. That clarity and certainty may only arrive when the Supreme Court interprets how its decision in Bristol-Myers Squibb applies in the class action context once and for all.