Bristol Myers Sqibb (NYSE:BMY)
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By Jess Bravin
WASHINGTON -- The Supreme Court on Monday dealt a blow to consumer plaintiffs by limiting where lawsuits against companies with business in multiple states can be heard.
By an 8-1 vote, the court said California courts could hear only claims by Californians against Bristol-Myers Squibb Co., whose blood thinner Plavix allegedly created a substantial risk of heart attack, stroke and other injuries.
The ruling was one of a series this term limiting so-called forum shopping, where plaintiffs' attorneys file suit in a state or federal court they believe will be sympathetic to their claims.
An attorney for the plaintiffs couldn't immediately be reached.
"We are hopeful that this decision will provide litigants more certainty regarding where lawsuits can be heard," Bristol said in a statement. "At its core, this decision was about basic principles of federalism and fairness in our legal system."
The Plavix suit involved nearly 700 plaintiffs, including 86 Californians, alleging product liability and other claims under California state law. There was no dispute over the Californians' ability to sue in their own state courts, but Bristol, which is incorporated in Delaware and conducted its Plavix business from New York and New Jersey, argued the nonresidents were a different story.
The California Supreme Court allowed the suit to proceed in state court, observing the plaintiffs had similar claims, that the drug was marketed nationwide and that Bristol had sold more than 180 million Plavix pills in the state, generating more than $900 million in sales.
Justice Samuel Alito, writing for the high court, said that wasn't enough.
Companies have long complained that plaintiffs in certain cases seek out venues where they believe they are most likely to receive favorable rulings, even when the cases involved may have only a tenuous connection to the area.
Monday's ruling could provide a boost to companies by limiting the opportunities for such forum-shopping, as the tactic is known. It could limit plaintiffs' ability to stray far from a jurisdiction where the company does business or where the plaintiffs have a relatively direct interaction with the company or its product.
Consumers groups, however,have warned that cutting back too sharply on plaintiffs' ability to sue could give big companies more ways to avoid responsibility for harm they cause.
At issue was the definition of jurisdiction, which refers to a court's legal authority over a claim or party. Courts have "general jurisdiction" over certain parties, such as companies based in their state, which allows them to hear any claim. They also may have "specific jurisdiction" to hear particular claims, such as those arising over an incident within their state.
In 2014, the Supreme Court narrowed the scope of general jurisdiction against corporate defendants, but the California court found specific jurisdiction based on Bristol's unrelated operations in its state.
Justice Alito called that "a loose and spurious form of general jurisdiction" that fell outside the high court's precedent.
"The nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California," he wrote. "The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California -- and allegedly sustained the same injuries as did the nonresidents -- does not allow the state to assert specific jurisdiction over the nonresidents' claims."
Only Justice Sonia Sotomayor dissented.
"There is nothing unfair about subjecting a massive corporation to suit in a state for a nationwide course of conduct that injures both forum residents and nonresidents alike," she wrote.
In May, the court ruled that Montana state courts couldn't hear employee-injury claims against the BNSF Railway unit of the Omaha, Neb.-based Berkshire Hathaway Inc., because the plaintiffs were neither residents of the state nor injured there, and the company itself, with headquarters in Fort Worth, Texas, was based out of state. The Montana Supreme Court had found jurisdiction because the railway runs through the state and employs thousands of people there.
Also last month, the U.S. Supreme Court narrowed the number of places patent-infringement suits could be brought, holding unanimously that a corporation is deemed to reside only in the state in which it is incorporated.
(END) Dow Jones Newswires
June 19, 2017 19:17 ET (23:17 GMT)
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