Class-Action Lawyers Invoke Novel Doctrine to Avoid SCOTUS Jurisdiction Rulings

supreme courtCivil litigation is waged through a series of small battles between plaintiff’s and defendant’s counsel. One initial battle, which can be outcome-determinative, involves where suit can be filed. Plaintiffs’ lawyers want to be in courts in which “friendly” judges preside, while defense counsel want no part of such jurisdictions. U.S. Supreme Court decisions from the past five years, such as Bristol-Myers Squibb v. Superior Court (BMS), have thrown a monkey wrench into plaintiffs’ lawyers’ jurisdiction battle plans. But without fail, plaintiffs’ lawyers, and particularly those who specialize in class actions, devise new arguments. They have argued, with mixed results in the lower courts, that precedents such as BMS don’t dictate jurisdiction for nationwide class actions. Some class-action lawyers are also relying on a rarely used federal common law doctrine—“pendent personal jurisdiction.”

Pendent personal jurisdiction is similar to the better known supplemental subject matter jurisdiction. Supplemental subject matter jurisdiction, codified as 28 U.S.C. § 1367, allows federal courts to hear additional claims that arise from the same case or controversy as claims already properly before the court, even though the court would otherwise lack subject matter jurisdiction to hear those additional claims. Pendent personal jurisdiction, which has been recognized by some federal courts, is a product of federal common law. It “exists when a court possesses personal jurisdiction over a defendant for one claim, lacks an independent basis for personal jurisdiction over the defendant for another claim that arises out of the same nucleus of operative fact, and then, because it possesses personal jurisdiction over the first claim, asserts personal jurisdiction over the second claim.” United States v. Botefuhr, 309 F.3d 1263, 1272 (10th Cir. 2002).

Federal courts typically exercise it in cases where a plaintiff asserts jurisdiction over a defendant for the violation of a federal statute providing for nationwide service of process. Once the court has specific jurisdiction over the defendant pursuant to nationwide service, it asserts discretion to hear the “pendent” claims that arise from the same set of facts but for which Congress has not authorized service of process.

No federal appeals court has adopted this doctrine in the context of a nationwide class action, instead only exercising it when the same plaintiffs bring claims against the same defendant. But a recent decision from the U.S. District Court for the Northern District of California exercised pendent personal jurisdiction to authorize the filing of a nationwide class action despite the lack of connection between California and the nonresident absent class members’ cause of action. Allen v. ConAgra Foods, Inc., No. 13-CV-01279, slip op. at 7-8 (N.D. Cal. Dec. 10, 2018).

In Allen, Judge Orrick relied on the Ninth Circuit’s decision in Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174 (9th Cir. 2004), but conceded that in that case the same parties asserted distinct claims against the defendant, while in the case before him, the “pendent” claims were asserted on behalf of new plaintiffs. Nonetheless, the court found that the Ninth Circuit “focused on the similarities between the claims, rather than the identity of the parties asserting them.” Id. at 8. Allen also found that asserting jurisdiction would impose only a “de minimis burden on the defendant, who would otherwise face piecemeal litigation.” Id. Asserting pendent personal jurisdiction over the nonresident plaintiffs’ claims served the interests of “judicial economy, avoidance of piecemeal litigation, and overall convenience of the parties.”  Id.

But recent legal developments suggest that not only is Judge Orrick’s interpretation of the doctrine flawed, but that pendent personal jurisdiction may no longer be a viable theory at all.  While Allen focused on the burden on the defendant, BMS makes clear that the main issue to consider when attempting to assert jurisdiction over a nonresident plaintiff’s claim is whether a connection exists between the forum and the claim. “What is needed—and what is missing here—is a connection between the forum and the specific claims at issue.”  Bristol-Myers Squibb Co., 137 S. Ct. at 1781.

A court may not assert personal jurisdiction over a plaintiff’s claim simply because it may constitutionally assert personal jurisdiction over similar claims filed by another plaintiff against the same defendant. But exercising pendent personal jurisdiction to certify a nationwide class action does just that, and that practice nullifies the protections BMS granted. BMS makes it clear that the claims must arise out of or relate to the defendant’s contacts with the forum. Pendent personal jurisdiction attempts to establish a connection between the out-of-state claims and the claims properly before the court. This exercise violates due process and should be barred.

Another Supreme Court decision, Walden v. Fiore, stressed that the “defendant’s suit-related conduct must create a substantial connection with the forum State.” Walden v. Fiore, 571 U.S. 277, 284 (2014). There, plaintiffs from Nevada sued a Georgia defendant in Nevada court for tortious acts that occurred in Georgia because “he knew his allegedly tortious conduct in Georgia” would harm the plaintiffs in Nevada. The Court held that its minimum contacts analysis “looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.” Id. at 285.

In the nationwide class-action context, plaintiffs try to tack on their claims to ones that already are properly before the court through the exercise of pendent personal jurisdiction. But a thorough reading of BMS and Walden shows this is no longer a viable option, especially in a nationwide class action. Both cases stress the importance of there being a connection between the defendant and the forum State. Per BMS, there must be a connection between the specific claim and the forum.

Though not specifically using the term, BMS rejected “pendent” personal jurisdiction when it held that a trial court could not piggy-back its personal jurisdiction over a defendant with respect to one plaintiff as a basis for asserting jurisdiction over the substantially similar claims of nonresident plaintiffs over which personal jurisdiction was otherwise lacking. “Restrictions on personal jurisdiction are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States.” Bristol-Myers Squibb Co., 137 S. Ct. at 1780. And Walden makes clear that even a defendant’s in-state residency is not by itself sufficient to establish personal jurisdiction, making the doctrine of pendent personal jurisdiction even more uncertain. There must be a connection between each claim asserted against the defendant and the forum.

By asserting pendent personal jurisdiction, class-action plaintiffs’ attorneys are trying to group claims that arise in completely different States and bring them in a friendly court. Such a procedure in essence subjects the defendant to general jurisdiction in any court in the country, so long as at least one plaintiff can establish personal jurisdiction for his claim in the forum state. This cuts against all notions of fair play and substantial justice and flouts Supreme Court and legislative precedent. See J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873, 881 (2011) (plurality) (“[T] hose who live or operate primarily outside a State have a due process right not to be subjected to judgment in its courts as a general matter”).

An ample body of law supports analyzing all claims, including those in a class action, on a claim-by-claim basis. Plaintiffs’ lawyers’ attempts to use pendent personal jurisdiction ignores these precedents. If courts certify nationwide class actions based on pendent personal jurisdiction in a friendly court, the holdings in Walden and BMS will essentially be rendered moot.

Any expansion of federal-court jurisdiction must be the product of congressional legislation. Unless and until Congress decides to recognize pendent personal jurisdiction, courts should refrain from exercising and expanding this federal common-law doctrine to expand class actions.

Also published by Forbes.com on WLF’s contributor page.

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