On March 12, Judge Thomas Durkin in the Northern District of Illinois became the most recent federal judge to dismiss class claims by non-resident putative plaintiffs against non-resident defendants, holding that the Court did not have personal jurisdiction over such claims. The case is Practice Management Support Services, Inc. v. Cirque Du Soleil Inc., No. 1:14-cv-2032 (N.D. Ill. Mar. 12, 2018). This holding is based on the personal jurisdiction principles outlined last year in the United States Supreme Court decision Bristol-Myers Squibb Company v. Superior Court of California, San Francisco County, 137 S. Ct. 1773 (2017).
In Bristol-Myers, a group of plaintiffs, consisting of 86 California residents and 592 residents from 33 other states, brought product liability claims in California state court against an out-of-state defendant. The California Supreme Court held that there was no general personal jurisdiction over the defendant, but applied a “sliding scale” to find that there was specific personal jurisdiction for the claims alleged by the non-resident plaintiffs. On appeal, the United States Supreme Court applied “settled principles” regarding specific personal jurisdiction to hold that a state court’s attempt to exercise jurisdiction over claims by non-resident plaintiffs against a non-resident defendant violated the Due Process Clause of the Fourteenth Amendment.
Since the Bristol-Myers decision, lower federal courts have reached differing conclusions regarding whether the holding should be extended to class actions or is only applicable to mass tort and product liability actions. For example, in Fitzhenry-Russell v. Dr. Pepper Snapple Grp., Inc., No. 17-cv-564, 2017 WL 4224723, at *5 (N.D. Cal. Sept. 22, 2017), the court held that the reasoning of Bristol-Myers was not applicable to class action cases. In contrast, in DeBernardis v. NBTY, Inc., No. 17-cv-6125, 2018 WL 461228, at *2 (N.D. Ill. Jan. 18, 2018), the court ruled that the reasoning of Bristol-Myers applied to class action cases.
In Practice Management, Judge Durkin joined colleagues in the Northern District of Illinois in holding that the reasoning of Bristol-Myers applies to class actions, as was found in Anderson v. Logitech, Inc., No. 17-cv-6104 (N.D. Ill. Mar. 7, 2018) (Leinenweber, J.), and McDonnell v. Nature’s Way Prod., LLC, No. 16-cv-5011 (N.D. Ill. Oct. 26, 2017) (Ellis, J.). Such personal jurisdiction holdings are not new in Illinois, as demonstrated by Judge Darrah’s opinion in Demedicis v. CVS Health Corp., No. 16-cv-5973 (N.D. Ill. Feb. 13, 2017), finding even prior to Bristol-Myers that “[b]ecause specific personal jurisdiction is based on claims arising out of a defendant’s conduct within the forum state, this Court has no jurisdiction over claims based on out-of-state consumer fraud laws” alleged by non-resident putative plaintiffs in a class action.
Practice Management attempted to distinguish the Bristol-Myers holding as not applicable to class actions, but Judge Durkin rejected such argument. According to Judge Durkin, Bristol-Myers held that the Fourteenth Amendment “precludes nonresident plaintiffs injured outside the forum from aggregating their claims with an in-forum resident,” and “it not clear how Practice Management can distinguish the Supreme Court’s basic holding in Bristol-Myers simply because this is a class action.” He observed that Rule 23 class action requirements must be interpreted in keeping with Article III constraints and, under the Rules Enabling Act, cannot “abridge, enlarge, or modify any substantive right.” Consequently, if a Rule 23 class action cannot abridge, enlarge, or modify a substantive right, then bringing a matter as a Rule 23 class action cannot make a material distinction for purposes of determining a defendant’s due process rights as protected by the requirement that a court have personal jurisdiction over the defendant.
Having found that the reasoning of Bristol-Myers applied to class actions, in evaluating Practice Management’s motion for class certification, Judge Durkin dismissed the claims of the non-Illinois-resident class members “[b]ecause these nonresidents’ claims do not relate to defendants’ contacts with Illinois, [and therefore] exercising specific personal jurisdiction over defendants with respect to them would violate defendants’ due process rights.”
The reasoning of Bristol-Myers has the potential to be an effective argument in dismissing claims in nationwide class actions. However, there are risks with this argument as well—such as plaintiffs’ counsel bringing multiple state-specific cases or an increase in cases filed in a defendant’s home state where it is subject to general personal jurisdiction. This will be a developing area of the law to watch as federal courts continue to weigh in with opinions analyzing this issue.