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$72 Million Dollar Verdict Against Johnson & Johnson Tossed Because Filed in Wrong Court: Does This Make Sense?

Posted October 23, 2017

By Jonathan A. Karon

Last week a Missouri Appeals Court threw out a $72 million dollar products liability judgment against Johnson & Johnson for allegedly causing a woman to develop fatal ovarian cancer due to use of its talcum powder. What is striking is that the Court did not find any fault with the jury’s conclusion that exposure to the talcum powder had caused the fatal cancer or that Johnson & Johnson was liable under products liability law. Instead, the Appeals Court held that Missouri courts lacked the legal authority, known as “personal jurisdiction” to decide the case. Therefore, even if the judge made no mistakes and the jury properly found the defendant liable based on the evidence presented a trial, the verdict against Johnson & Johnson could not stand.

What is going on here and does it make any sense? There are at least two ways to look at this. One is that the plaintiff’s attorneys were being too clever by half. The other is that the U.S. Supreme Court recently ignored reality. Let’s look at both.

First, the reason the Missouri Appeals Court threw out the case was that the plaintiff did not live in Missouri and hadn’t bought or used the talcum powder there. Similarly, Johnson & Johnson is a New Jersey corporation, with its corporate headquarters in New Jersey. In accordance with a recent U.S. Supreme Court case, Bristol-Meyers Squibb Co. v. Superior Court of California, 137 S.Ct. 1772 (2017), the Appeals Court believed it was required to dismiss the case because it lacked a sufficient relationship with Missouri. I agree that the Supreme Court’s ruling essentially required this result.

In the Bristol-Meyers Squib case, a group of 678 plaintiffs sued the defendant in California alleging that its drug Plavix had injured their health. Out of that group, 592 were not
residents of California. The defendant was incorporated in Delaware and had its headquarters in New York. The Supreme Court held that the 592 out of state plaintiffs could not maintain their claims in California. This was because California state courts lacked personal jurisdiction over the out of state claims.

“Personal jurisdiction” refers to the power of a court to exercise authority over a party. The “Due Process” clause of the 14th Amendment limits the power of a state court to hear a case against a non-resident. This makes sense if you imagine a situation where a Georgia resident tries to sue a Massachusetts resident for an auto crash that occurred in Massachusetts. The concept of personal jurisidiction is an important protection against being forced to defend yourself in a hostile state court in a distant state in a case having nothing to do with that state. Thus, the Supreme Court has long held that to exercise jurisdiction over a defendant, the defendant must have “minimum contacts” with the state so that letting the case proceed is consistent with “fair play and substantial justice”.

The Constitution allows a court to hear a case against a defendant based on either “general jurisdiction” or “specific jurisdiction”. General jurisdiction means that your relationship with a state is so extensive that it’s fair to sue you there. So, if you live in Massachusetts and you cause an accident while driving in Georgia, the injured person can always sue you in Massachusetts, because there’s nothing unfair or burdensome about making you come to court where you live. Specific jurisdiction occurs when the case arose out of events or a transaction in a specific state. So, if you live in Massachusetts and you cause an accident in Georgia, you usually can be sued in Georgia because you chose to drive there and that’s where you injured someone.

These concepts get more confusing when applied to a large national (or multi-national) corporation. Large corporations, like Bristol-Meyers or Johnson & Johnson do extensive business throughout the United States. It’s well settled that if you’re injured by using one of their products where you live you can sue them in your home state. You also have the option of suing them where they are incorporated or have their headquarters (which is considered the corporation’s home state). A grey area until recently was whether you could sue the corporation in any other state. The argument was that where a company does extensive business throughout the country that it was fair to bring a case against them in any state. The Supreme Court has essentially shot this down, holding that general jurisdiction could only be used to sue a corporation where it is essentially “at home” meaning its state of incorporation or principal place of business. Otherwise, a corporation can only be sued in a state where the claim arose out of a corporation’s conduct. So, a Massachusetts resident injured by using a product sold in Massachusetts can sue in Massachusetts, but can’t sue in California (unless the corporation has its home there).

Until recently, courts in California and Missouri would allow out of state plaintiffs to join similar products liability claims in the same case with in state residents. Since the Court already had jurisdiction over the claims of the in-state plaintiffs, who were alleging the same wrongful conduct (negligent design, failure to warn, etc.) it seemed efficient, logical and fair to allow out of state plaintiffs to join the suit. Under the Supreme Court’s recent decision, this is clearly no longer permitted.

Why did the plaintiffs’ attorneys file the out of state claims? I don’t know for sure, but my guess is that this was either a way to avoid paying additional filing fees (some states allow you to file one fee no matter the number of plaintiffs, while others, like Massachusetts,require a separate fee for each plaintiff) or an attempt to forum shop for what was perceived as better jury pool. If so, then they may have been “too clever by half”.

On the other hand, does it really impose an unfair burden on a multinational corporation to defend an additional case in a state where it is already defending identical claims and in which it takes in significant revenue from selling its products?

The answer, like so many things these days, depends on your point of view.

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