While questions remain about the Consumer Financial Protection Bureau’s (“CFPB”) future power, the agency, which was created by the Dodd-Frank Act in the wake of the 2008 economic crash, issued a powerful Final Rule that will ban companies from using class action waivers in arbitration clauses. The Final Rule will go into effect 60 days after its publication in the Federal Register, and arbitration agreements entered into 180 days after publication must comply with the new rule. Retail clients, banks and financial institutions, debt collectors, and credit card companies may be most impacted by the new rule, as they often utilize these arbitration clauses in consumer agreements as a less expensive—and private—alternative to litigation. The CFPB, which has faced intense scrutiny from the Trump Administration as well as challenges in federal courts, reasoned that class action litigation waivers effectively foreclose consumers from pursuing small-dollar disputes on an individual basis because doing so is not cost effective.
The Supreme Court of the United States recently reaffirmed the principle that there must be a direct connection between a forum state and the underlying controversy in order for a court to exercise specific jurisdiction over the claims. Bristol-Myers Squibb Co. v. Superior Ct. of Calif., No. 16-466 (U.S. June 19, 2017).
Bristol-Myers Squibb (“BMS”) is incorporated in Delaware and maintains headquarters in New York. It conducts business in California, including the sale of a blood-thinning drug called Plavix. A group of plaintiffs, consisting of residents and nonresidents of California, sued BMS, alleging that Plavix had damaged their health. The nonresident plaintiffs did not allege that they obtained Plavix through California doctors, nor did they claim that their injuries or treatment had any relation to California. BMS challenged the trial court’s finding that it had personal jurisdiction over BMS with respect to the nonresident plaintiffs’ claims. The California Supreme Court affirmed, finding that while the court lacked general jurisdiction, it had specific jurisdiction over the nonresident plaintiffs’ claims. Id. at 3. It found that BMS’s “extensive contacts” with California permitted the exercise of specific jurisdiction “based on a less direct connection between BMS’s forum activities and plaintiffs’ claims than might otherwise be required.” Id. This “less direct connection” was satisfied because the claims of the nonresident plaintiffs were similar to the claims of the California plaintiffs. Id.
The Supreme Court of the United States reversed. Under the Court’s precedent, a lawsuit “must arise out of or relate to the defendant’s contacts with the forum” in order for the trial court to exercise specific jurisdiction. Id. at 5 (citing Daimler AG v. Bauman, 571 U.S. ___ (2014), slip op. at 8). There needs to be “an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State…” Id. at 5-6 (citing Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 919 (2011)). A defendant’s general connections with the forum state, such as regularly occurring sales of a product, are not enough for specific jurisdiction. Id. at 7. Instead, the connection must be specific to the claims of the plaintiff.
In this case, the nonresident plaintiffs were not prescribed Plavix in California, did not purchase or ingest the drug in California, and were not injured by it in California. “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.” Id. at 8. It was not relevant that BMS conducted research in California on matters unrelated to Plavix. Id. Finally, the fact that BMS contracted with a California company, McKesson, to distribute Plavix nationally did not provide a basis for the exercise of specific jurisdiction. Id. at 11. BMS was not derivatively liable for McKesson’s conduct and did not engage in relevant acts together with McKesson.
In her dissent, Justice Sotomayor expressed her belief that since the nonresident plaintiffs’ claims against BMS concerned “conduct materially identical to acts the company took in California,” i.e. the marketing and distribution of Plavix, their claims “related to” BMS’s conduct in the forum state. She would have found specific jurisdiction.
New Jersey companies, specifically those who engage in business throughout the country, should take solace in this case. They cannot be sued in a foreign state under a theory of specific jurisdiction unless there is a direct relation between the company’s activities in the forum state and the plaintiffs’ allegations. The Supreme Court’s decision will also likely lead to increased filings in New Jersey, which is home to some of the largest pharmaceutical and consumer products companies in the country.
On July 5, 2017, the Superior Court of New Jersey, Appellate Division, ruled in favor of our client WolfBlock LLP in the matter of Dutch Run-Mays Draft V. Wolf Block, making it the first published case in a New Jersey court to apply the U.S. Supreme Court’s latest rulings on personal jurisdiction.
In 2004, Dutch Run, a West Virginia limited liability company having its place of business in Deerfield Beach, Florida, retained Pennsylvania attorney, Henry Miller, a partner with the law firm of WolfBlock LLP, a Pennsylvania limited liability partnership, in connection with Dutch Run’s acquisition of 5,000 acres of property in West Virginia. In March 2009, WolfBlock’s partners voted to dissolve the partnership, and all of its activities as a law firm ceased. At that time, WolfBlock shuttered all of its offices and its attorneys and staff were dismissed. Since that time, WolfBlock has been winding down its affairs. In 2014, Dutch Run filed suit against WolfBlock in the New Jersey Superior Court, Law Division, for legal malpractice arising out of its representation of Dutch Run in 2004. In this regard, Dutch Run claimed that there were title defects that rendered the West Virginia property unfit for residential development. Continue reading “Blank Rome Secures Precedential Opinion on Personal Jurisdiction in Dutch Run-Mays Draft V. Wolf Block“
In a case of first impression in the Third Circuit, Vincent Carieri v. Midland Credit Management, Inc., No. 17-0009 (D.N.J. June 26, 2017), the District Court of New Jersey held that that a debt collector does not have a duty to notify a debtor of potential tax consequences for settling a debt at a discount under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”).
Blank Rome Partner Adrienne Rogove will speak at the National Business Institute (“NBI”) “Construction Law: Advanced Issues and Answers” seminar on Wednesday, July 12, 2017, which will take place from 9:00 a.m. to 4:30 p.m. in Princeton, NJ.
In this advanced-level course, experienced faculty will share their decades of construction law experience and will provide you with valuable tools you can use to help your clients through change order disasters, project delay disagreements, construction defect disputes and more.
Ms. Rogove will present the first session, from 9:00 a.m. to 9:45, “Construction Contracts: Advanced Negotiation Techniques for the Top Sticking Points.” Her presentation will cover:
- Payment Clauses
- Pass-Through Clauses
- No Damage for Delay Clauses
- Performance and Timing Clauses
- Project Termination Clauses
- Liquidated Damages Clauses
For more information or to register, please click here.
Blank Rome LLP Partner Nicholas C. Harbist recently spoke on “Lyin’, Cheatin’, Stealin’: The Perils of Dealing with Whistleblowers under the False Claims Act” at Seton Hall Law’s U.S. Healthcare Compliance Certification Program, on June 12, 2017, at Seton Hall Law School. Continue reading “The Perils of Dealing with Whistleblowers under the False Claims Act”
Suppose there is a hit-and-run in a sparsely populated area. You are retained as counsel to represent the victim, who sustained significant property damage to her vehicle and debilitating personal injuries. After a preliminary investigation, you learn that there are no witnesses to the incident, but there is a nearby gas station equipped with video cameras that may have footage of the hit-and-run and from which you may be able to identify the other driver. The gas station refuses to share its video footage with you. At this point, you could file a “John Doe” complaint and then serve a subpoena on the gas station. But the fastest and cheapest way to obtain the video is by filing a petition for pre-suit discovery under New Jersey Rule 4:11-1. Continue reading “Pre-Complaint Discovery: An Underutilized, Underrated and Unknown Tool”