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The Supreme Court’s recent decision in Mallory v. Norfolk Southern Railway Co. creates substantial uncertainty over whether companies that register to do business in certain states can be subject to personal jurisdiction for claims unrelated to the forum—because those states require consent to general jurisdiction as a condition of registration. Mallory involved a Pennsylvania law treating registration to do business “as a foreign corporation” as a “sufficient basis” for “general personal jurisdiction” over that corporation.

In a splintered set of opinions, the Supreme Court rejected a challenge to the law under the Due Process Clause. Five Justices agreed that—in this case—assertion of jurisdiction based on the Pennsylvania law was not unconstitutional as a matter of due process. But one of those five Justices (Justice Alito) indicated that the due process issue might be resolved differently under other facts. And Justice Alito strongly suggested in his concurrence that the dormant Commerce Clause might prohibit a state from requiring consent to general personal jurisdiction as a condition of doing business. The four dissenting Justices would have held that jurisdiction based on the law violates the Due Process Clause.

The Pennsylvania courts are likely to consider (at minimum) the dormant Commerce Clause challenge on remand. In the meantime, the fractured nature of the Court’s opinions—combined with the reality that, despite the result, five Justices have questioned the constitutionality of Pennsylvania’s requirement—ensures further litigation over so-called “consent-by-registration” jurisdictional statutes.Continue Reading Supreme Court rejects Due Process Clause challenge to Pennsylvania statute requiring out-of-state corporations to consent to jurisdiction as a condition of registering to do business

The Supreme Court has resolved many important questions about personal jurisdiction.  But somewhat surprisingly, it has not decided a fundamental question that arises in class actions – to establish specific personal jurisdiction (meaning case-linked personal jurisdiction) over a defendant, must the plaintiff establish that the defendant has sufficient connections to the forum with respect to all plaintiffs’ claims, or only the named plaintiffs’ claims?  Not only has the Supreme Court not decided this question, but no court of appeals has yet decided it.  The D.C. Circuit will likely be the first, in a case now pending – Molock v. Whole …
Continue Reading What Must Plaintiffs Show To Establish Specific Personal Jurisdiction Over Corporations in Class Actions?

We have repeatedly discussed in this space the ongoing debate among the federal courts about ascertainability—a red-hot topic in class action litigation these days. (For a more detailed look at our views on the ascertainability doctrine, see the amicus brief (pdf) that we filed on behalf of the National Association of Manufacturers in support of a pending cert petition.) That topic—and the debate among the lower courts—shows no sign of slowing down, as evidenced by new decisions issued by the Second, Sixth, and Third Circuits over the past two months. The central takeaway from these decisions is that while ascertainability is not a panacea for defendants facing consumer class actions, the doctrine (or variations on the ascertainability theme) should help defeat class actions in many circuits when class members cannot be identified without individualized inquiries.
Continue Reading Making sense of the cascade of appellate decisions on ascertainability

We’ve previously blogged about Bristol-Myers Squibb v. Superior Court (“BMS”), in which the Supreme Court granted certiorari to review a decision of the California Supreme Court that adopted an unusual—and extraordinarily expansive—view of California courts’ power to exercise specific personal jurisdiction over a defendant.

We filed an amicus brief on behalf of the Chamber of Commerce of the United States of America, the California Chamber of Commerce, the American Tort Reform Association, and the Civil Justice Association of California, arguing that the California court’s holding conflicted with numerous Supreme Court decisions making clear that in order to invoke specific jurisdiction, a plaintiff’s claims must arise out of the defendant’s in-state conduct.  (The views in this post are ours, and not those of our clients.)

The case was argued in April, and the Court announced its decision today. The result is an 8-1 opinion rejecting the California Supreme Court’s approach and, in our view, recognizing important limits imposed by the Fourteenth Amendment’s due process clause on the ability of courts to adjudicate cases that aggregate the claims of plaintiffs from many jurisdictions.

The immediate impact of the decision is to limit the forums where nationwide mass actions in state court can proceed to those states in which the defendant is subject to general jurisdiction (usually the state of incorporation and principal place of business).  In addition, as we discuss below, the decision raises substantial questions about whether nationwide class actions can proceed in jurisdictions where a defendant is not subject to general jurisdiction.
Continue Reading Supreme Court’s Decision In Bristol-Myers Squibb v. Superior Court Rejects Expansive View Of Specific Jurisdiction

Every first-year law student learns that one of the first questions a defendant must ask is whether the court in which a lawsuit is filed has personal jurisdiction—that is, whether the state or federal court can exercise power over the defendant. The Due Process Clause of the Fourteenth Amendment limits the reach of that power, preventing a court from exercising jurisdiction over a defendant that has no ties to the State in which the court sits.

Applying this limitation, the U.S. Supreme Court has recognized two kinds of personal jurisdiction: general and specific. General jurisdiction permits courts to adjudicate claims against a defendant arising out of actions occurring anywhere in the world (subject, of course, to any limits specific to a particular cause of action). It requires that the defendant be considered “at home” in the forum.

Specific jurisdiction, by contrast, empowers a court to adjudicate particular claims relating to a defendant’s conduct within the forum. To be subject to specific jurisdiction, the defendant must have established contacts with the forum, and the lawsuit must arise out of those contacts.

Both of these forms of personal jurisdiction have been examined by the Supreme Court in recent years, but the lower courts remain in disarray over how to apply the Court’s precedents. Likely for that reason, the Court has recently agreed to review two cases addressing both facets of personal jurisdiction.

First, the Court granted certiorari in BNSF Railway Co. v. Tyrrell, in which (in our view) the Montana courts failed to honor Supreme Court precedent establishing limits on general jurisdiction. Second, the Court granted review in Bristol-Myers Squibb Co. v. Superior Court, in which the California courts similarly flouted the limits on specific jurisdiction by allowing out-of-state plaintiffs to sue in California for claims that have nothing to do with the state. Defendants who face class and mass actions should follow both cases closely, and both will be important barometers for whether the Court is committed to maintaining strict limits on the scope of personal jurisdiction. (We filed an amicus brief (pdf) for the U.S. Chamber of Commerce in Bristol-Myers Squibb explaining the disarray in the lower courts and why that case in particular warranted Supreme Court review.)Continue Reading Supreme Court Will Review Two Important Cases Regarding Scope Of Personal Jurisdiction

Can you have a class action if class members can’t reliably be found? That question is at the heart of the debate over ascertainability—one that has divided the federal courts. Earlier this week, the Ninth Circuit weighed in, holding in Briseno v. ConAgra Foods, Inc. (pdf) that plaintiffs need not demonstrate “an administratively feasible way to identify class members [as] a prerequisite to class certification.”

That conclusion is disappointing.Continue Reading Ninth Circuit rejects meaningful ascertainability requirement for class certification, cementing deep circuit split

Concept-Changes_Hughway_Sign_44809020Rule 23 may be in for some major changes. The Advisory Committee has commissioned a Rule 23 subcommittee to investigate possible revisions to the class action rules. That subcommittee issued a report (pdf) discussing its progress, and recently has been conducting a “listening tour” of sorts regarding potential rule changes.

Our initial view is that the business community should have serious concerns about the approach that at least some members of the subcommittee appear to be taking, as several proposals are aimed at rolling back judicial decisions—including Supreme Court decisions—that are critical to ensuring that class actions satisfy the requirements of due process.

Here are ten things you need to know from the subcommittee’s report.Continue Reading Ten Things Class Action Practitioners Need To Know About Potential Amendments To Federal Rule Of Civil Procedure 23

The first bill signed by Oregon Governor Kate Brown—H.B. 2700 (pdf)—changes the rules for handling payment of damages awards in class actions in Oregon state courts. Effective immediately, including for pending actions, the new law attempts to redirect unclaimed damages under class-action settlements or judgments to the state bar’s legal aid program and to charities picked by the judge presiding over each case. In other words, Oregon has effectively mandated cy pres in every class action. (We’ve repeatedly covered—and criticized—the use of cy pres awards in class actions.)

Among other things, the new law amends Oregon Rule of Civil …
Continue Reading New Oregon class-action law purports to seize unclaimed damages for legal aid and judge-picked charities

As readers of our blog know, ascertainability is one of the most contentious issues in class action litigation these days.  Ascertainability is the main issue presented in Jones v. ConAgra Foods, No. 14-16327, a pending Ninth Circuit case in which the plaintiff and his amici have mounted a full-scale attack on whether the ascertainability requirement even exists.  Along with our colleagues Andy Pincus and Dan Jones, we have filed an amicus brief (pdf) on behalf of the Chamber of Commerce of the United States arguing that ascertainability is a critical requirement for class certification, and that due process…
Continue Reading U.S. Chamber of Commerce Files Amicus Brief on Ascertainability in Key Ninth Circuit Case

There seem to be two prevailing conceptions of class actions.  In one view, a class action is a way of determining many similar claims at once by evaluating common evidence that reliably establishes liability (and lays a ground work for efficiently calculating damages) for each class member.  That is, the class device produces the same results as individual actions would, but more efficiently.  In the other view—one we consider misguided—a “class” of plaintiffs complaining about similar conduct can have their claims determined through statistical sampling even if no common evidence will provide a common answer to common factual or legal questions. Instead, this theory holds, the results of mini-trials can simply be extrapolated to the entire class, even if individual results would vary widely.

Last week, the Ninth Circuit took a step deeper into the second camp in Jimenez v. Allstate Insurance Co. (pdf), delivering a ringing endorsement of statistical sampling as a way to establish liability as well as damages.