Supreme Court ruling in drug case could have big implications for product liability
by Sarah Karlin-Smith
A Supreme Court decision Monday could make it harder for large groups of plaintiffs to sue corporations in state courts for damages caused by manufacturers’ products
Bristol-Myers Squibb prevailed in its effort to get the Supreme Court to limit where patients can seek compensation for harm caused by drugs. But the ruling will echo beyond the pharmaceutical industry to potentially affect any liability case in which consumers allege harm caused by a deficient product, including automobiles, tobacco, food and other mass litigation like consumer claims of financial fraud by a company. It could also affect lawsuits against companies being accused of environmental wrongdoing.
“This is one of the most important mass tort/product liability decisions,” wrote James Beck, who focuses on pharmaceutical and product liability law at Reed Smith, in a blog post Monday. “It will extremely limit the notion that large companies can be sued by anyone, anywhere,” he explained. And it probably precludes nationwide class actions based on state law, he told POLITICO.
“The result in BMS means that the era of big mass torts filed by plaintiffs anywhere against anyone, over anything, is [to paraphrase Bill Clinton] over,” Beck said.
Justices on Monday ruled 8-1 for the drug company in a case that pitted BMS against the state of California.
The case centered around whether plaintiffs residing outside of the state who claim they were harmed by BMS’ blood thinner Plavix could join in a lawsuit brought by California residents against the New York-based company in California. The out-of-state residents didn’t buy the drug or take it in California, and the product wasn’t manufactured in the state.
“The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California — and allegedly sustained the same injuries as did the non-residents — does not allow the State to assert specific jurisdiction over the nonresidents’ claims,” wrote Justice Samuel Alito in the court’s opinion.
BMS and the government said California’s Supreme Court erred when it agreed that the out-of-state plaintiffs had standing in the case. The company argued failure to overturn the ruling would create more unpredictable conditions for corporations.
The BMS win could limit patients’ ability to “forum shop” product liability cases. California is thought to be a particularly friendly state for injured plaintiffs, and a court victory for BMS could discourage patients from seeking relief there to boost their odds of a victory.’
Patients, Beck told POLITICO, will no longer be able to bring lawsuits based on “extraneous factors like where they think they will get the best or highest verdicts.” For example, he said nearly 95 percent of the mass torts filed in Philadelphia are submitted by out-of-state plaintiffs believing courts there will be sympathetic to their cause. Under the Supreme Court decision, plaintiffs could not file these suits in Pennsylvania unless the company was based in that state.
There are worries however, that the outcome could make it harder for plaintiffs to successfully sue corporations for product liability in any state.
“The effect of today’s opinion will be to curtail — and in some cases eliminate — plaintiff’s ability to hold corporations fully accountable for their nationwide conduct,” Justice Sonia Sotomayor wrote in a dissenting opinion.
The ruling “hands one more tool to corporate defendants determined to prevent the aggregation of individual claims and forces injured plaintiffs to bear the burden of bringing suit in what will often be far flung jurisdictions,” she said.
It will also “make it very difficult for plaintiffs to band together to pull their resources to bring a single action,” said Robert Peck of the Center for Constitutional Litigation, who filed an amicus brief in favor of California for the American Association for Justice. Instead, plaintiffs in each state will need to either bring separate actions in their home states or go to the state where the corporation is based.
But because suits often target multiple corporations, as was the case in the California case where BMS and pharmaceutical distributor McKesson were sued, plaintiffs would have to file mass suits in two venues — one where BMS is located and the other where McKesson is based.
That could be prohibitively expensive and make it easier for one of the corporations to put the blame on the other. The smaller cases may also be less attractive to law firms.
Peck said Alito’s decision expressed “a greater concern for the burden on corporation” than courts have expressed for individuals facing out-of-state lawsuits.
“After this case, it is difficult to imagine where it might be possible to bring a nationwide mass action against two or more defendants headquartered and incorporated in different states,” Sotomayor said. She also expressed concern about U.S. plaintiffs’ ability to sue companies not headquartered or incorporated anywhere in the U.S.
Bristol-Myers Squibb said it is “hopeful that this decision will provide litigants more certainty regarding where lawsuits can be heard. At its core, this decision was about basic principles of federalism and fairness in our legal system, and our legal team was deeply proud to be part of the process.”
Brent Griffith contributed to this report.