This Time, It’s Personal: TCPA Personal Jurisdiction Ruling Severely Limits Nationwide Class Actions

It is no secret that there are certain jurisdictions that plaintiffs’ class action attorneys prefer to file suit, most notably, Chicago, Los Angeles, Miami and New York, to name a few.  While plaintiffs’ lawyers may have countless clients in those jurisdictions, rarely is the defendant they are pursuing physically resident in those jurisdictions.  In order to satisfy the personal jurisdiction requirements then, plaintiffs’ lawyers thus have to rely on specific jurisdiction—jurisdiction that arises out of the defendant’s suit-related contacts with the forum—not general jurisdiction—jurisdiction that exists (with limited exception) only in those forums where the defendant is incorporated or headquartered.

It is fairly common practice for plaintiffs’ lawyers to file nationwide class actions in their forum of choice.  For example, it is normal to see a nationwide false labeling class action in Los Angeles, brought against a Delaware corporation, headquartered in Houston.  Likewise, it is normal to see a nationwide Telephone Consumer Protection Act class action filed in Chicago against a North Carolina corporation, headquartered in Charlotte.  The only tie to Los Angeles or Chicago is typically that the plaintiff lives there and/or purchased the allegedly offending product or received the solicitation at issue there.  The plaintiffs’ lawyer—in these examples—avoids perceived unfriendly jurisdictions (like Texas and North Carolina) and instead finds home in a more plaintiff-friendly forum based solely on specific jurisdiction.

This practice, however, began to show signs of cracking in June of 2017, when the Supreme Court issued its decision in Bristol-Myers Squibb v. Superior Court of CaliforniaSee 137 S. Ct. 1773 (2017).  In Bristol-Myers, a group of 592 out-of-state residents (and 86 in-state residents) brought a number of lawsuits in California stemming from the drug Plavix.  Bristol-Myers, a Delaware Corporation headquartered in New York, asserted lack of personal jurisdiction relating to the non-California plaintiffs.  Though the general jurisdiction was found to be lacking, the California Supreme Court eventually found specific jurisdiction existed by virtue of Bristol-Myers’ in-state contacts (for example, it made over $900 million from the sale of Plavix in California alone).  Notably, none of the out-of-state plaintiffs asserted they were prescribed Plavix in California or ingested Plavix in California.

The Supreme Court reversed, holding that there was no specific jurisdiction over non-resident claims in California where, as here, there was no link between the particular out-of-state plaintiff’s claims and the State of California.  The Supreme Court hinted, however, that the residents of a particular state could join together in that state or that the plaintiffs could simply sue in a forum in which general jurisdiction was available.

Over the last few months, the cracks started by Bristol-Myers in the practice of pursuing nationwide class actions using specific jurisdiction in friendly forums have turned into a Grand Canyon of sorts, coming to a head on March 12, 2018 when a Northern District of Illinois court limited class certification to a class of Illinois plaintiffs in light of Bristol-Myers.  Specifically, in Practice Management v. Cirque Du Soleil, the Court evaluated a motion to certify a nationwide TCPA fax class.  See No. 14-cv-2032, 2018 WL 1255021 (N.D. Ill. Mar. 12, 2018).  Though the Court granted certification, it evaluated whether the certified class could include out-of-state residents given that neither of the defendants were incorporated in or based in Illinois (one was incorporated in Quebec and headquartered in Montreal and the other was incorporated in Delaware and headquartered in Las Vegas).  Jurisdiction was thus predicated solely on specific jurisdiction resulting from the fax transmission received by the plaintiff in Illinois.  The Court concluded that it was compelled to dismiss the claims of non-Illinois class members, and thus re-defined the certified class to consist only of fax recipients who were Illinois residents.

The import of the Cirque Du Soleil decision is significant.  Though Bristol-Myers was a mass tort case, not a class action under Rule 23, the Court held that the reasoning of Bristol-Myers applied nonetheless, and a nationwide class action could not be pursued other than in forums where general jurisdiction existed.  And, should a plaintiffs’ lawyer continue to pursue a putative class action relying solely on specific jurisdiction, the size and scope of the class can be limited drastically to residents of that single state.

As a practical matter, in many cases, like major nationwide data breaches for example, it may be that plaintiffs’ lawyers will pursue multiple cases in different states (in which case there is the MDL process or the defendant can simply waive personal jurisdiction to have a nationwide class and avoid multiple suits).  In those cases, it is not difficult to find multiple plaintiffs.  But, in many class actions, particularly those brought under various consumer protection statutes, like the TCPA, FACTA, and FCRA, finding multiple plaintiffs in different states is not possible for plaintiffs’ lawyers, meaning that they will be restricted to a single state class if they want to sue in their chosen forum.  Or, they will be forced out of their comfort zone to sue in the defendant’s home forum.

Perhaps the most significant effect, however, will be in cases that are currently pending.  The Bristol-Myers decision is a fairly recent decision and its rationale is worth raising in currently pending cases in which the plaintiff is relying solely on specific jurisdiction.  In cases pending for two, three, four years, it may be too late for a plaintiffs’ lawyer to track down a new plaintiff to sue in the defendant’s home forum.  To that end, defendants may be able to limit the size and scope of the pending class action drastically without fear of a tag-along case popping up elsewhere.