Alan Lazarus

About Alan Lazarus

Alan J. Lazarus is a Products Liability Partner residing in our San Francisco, California, office. Alan is an experienced trial and appellate attorney with a focus on products liability, consumer protection, toxic substances and environmental litigation. Alan writes and lectures frequently on products liability and appellate practice topics. Read Alan's full bio

Post-BMS, Courts Grapple with the Nexus Between Stream of Commerce Activities and the Plaintiff’s Claim Required for Specific Jurisdiction over Manufacturers in Product Liability Cases

Courts have struggled for decades to define the constitutional limitations on personal jurisdiction over major product manufacturers who sell their products nationwide. The central tension has been determining the validity and potential scope of the “stream of commerce” theory in a world of advancing technology and associated evolution of business operations and practices. That tension is increasing as state courts decide what kind of nexus is required, between a defendant’s “forum-directed” commercial activities and the plaintiff’s claim, to justify the exercise of specific jurisdiction. Specifically, how purposefully forum-directed and how closely tied to the specific claim must the activities be?

Stream of commerce theory posits that a defendant that has placed a product into the nationwide channels of commerce should anticipate that its products will thereby be “swept” into any state and if it causes injury there, it will be subject to suit. In its purest form, the theory collides to some degree with the fundamental limiting requirement that a defendant may be haled into a forum to litigate only where it has “purposely availed” itself of the privilege of doing business by, for example, directing its products into the forum.

The Supreme Court applied the theory to a manufacturer in Asahi Metal Indus. v. Superior Court, 480 U.S. 102 (1987). However, the Court was evenly and sharply divided as to whether placing a product into the stream of commerce, without more, was sufficient to authorize specific jurisdiction where the product allegedly causes an injury, or whether “something more,” some forum-directed activities purposely creating a “substantial connection” with the forum state, was required. A quarter-century later the Court revisited the issue to break the deadlock in J. McIntyre Machine v. Nicastro, 564 U.S. 873 (2011), but again fractured, producing no clear or definitive holding on the subject. Since Nicastro, courts have continued to debate the status and contours of the stream of commerce theory as a means of satisfying the requisite purposeful availment.

Bristol-Myers Squibb Co. v. Superior Court

Meanwhile, the Supreme Court’s seminal 2017 decision in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (BMS) examined the relationship between the defendant’s “purposeful” forum-related activities and the plaintiff’s injury/claim necessary to assert specific jurisdiction over a manufacturer. Hundreds of non-residents filed suit in California against Bristol-Myers for injuries from its drug Plavix®. The Court held that in order for a state to exercise specific jurisdiction, “the suitmust “[arise] out of or [relate] to the defendant’s contacts with the forum.” But the Court’s analysis demonstrated that only those activities having a fairly direct connection to both the forum and the claim are relevant. Bristol-Myers allegedly sold Plavix with deficient warnings in California and elsewhere. The nonresidents’ claims arose out of using prescribed Plavix – but crucially, not in California. Jurisdiction was therefore lacking.

The stream of commerce theory was not discussed in BMS, as the purposeful availment requirement was not contested. But in requiring that the claim bear a tight connection to the defendant’s forum-directed activities, BMS necessarily implies that there must be purposeful forum-directed activities to connect to the claim. Accordingly, the passive, “without more” formulation of stream of commerce theory advanced by one faction in Asahi and barely avoiding explicit rejection in Nicastro, appears to be a “dead letter.”

Justice Sotomayor in dissent observed that Bristol-Myers argued that a defendant’s in-state conduct must actually cause a plaintiff’s claim, adding a footnote that this question “appears to await another case.”

Recent Interpretation of Bristol-Myers

That other case may have arrived. In Bandemer v. Ford Motor Co., 913 N.W.2d 744 (Minn. 2019), the Minnesota plaintiff was injured in Minnesota in a Ford vehicle that was designed, manufactured and originally sold outside the state. Ford argued that Minnesota could not exercise jurisdiction because there was no causal connection between Ford’s Minnesota contacts and the plaintiff’s injury. The Minnesota Supreme Court disagreed. It found BMS (1) inapposite, and (2) inconsequential, as BMS addressed claims by non-resident plaintiffs and did not explicitly require a causal nexus; rather, the Court had framed the nexus issue more broadly, requiring the claim arise out of or relate to the defendant’s forum contacts. Ford’s purposeful acts of selling thousands of cars in Minnesota, including the same make and model at issue, and advertising there, were sufficiently related to plaintiff’s design defect claims as those claims “are about more than one specific car.” So even though the specific car had no direct, purposeful connection between Ford and the forum state, Ford’s business there combined with the local accident was sufficiently “related” to justify jurisdiction.

Similarly, in Ford Motor Co. v. Montana Eighth Judicial District Court, 395 Mont. 478 (2019), the Ford at issue was not manufactured, designed or originally sold in Montana. Ford mounted the same causal nexus requirement argument. The Montana Supreme Court disagreed and held that because the accident occurred in Montana, Ford sells products that it expects will cross state lines, and Ford serves the local market, Montana courts could exercise specific jurisdiction.

Both opinions found BMS of little significance in a case involving residents injured within the state, notwithstanding the holding in Walden v. Fiore, 134 S. Ct. 1115 (2014), that the due process inquiry must focus on defendant’s activities directed at the forum, and not the plaintiff’s linkage between the defendant and the forum. Both courts honed in on the “related to” verbiage to relax the required nexus between activities and claim, even though Bristol-Myers’s contacts with California were similarly “related” to the claims and were deemed too disconnected to support specific jurisdiction in BMS. Both opinions seem generally inconsistent with the comparatively rigorous connection between forum-related activities and the plaintiffs’ claims required by BMS.

So the exercise of specific jurisdiction based largely on the manufacturer’s activities in the general stream of commerce retains vitality for the moment, notwithstanding BMS. But Ford is expected to petition for certiorari in both cases. At some point in the not-too-distant future, the U.S. Supreme Court will have to deliver additional, more definitive guidance on the quality of the relationship between a manufacturer’s forum activities and a plaintiff’s claim required to support specific jurisdiction. Perhaps it also will take the opportunity to make explicit the rejection of the pure, foreseeability-based notion of stream of commerce theory.

Whither Roberti? The Cockroach Precedent − An Exercise in Magical, Wishful Thinking

Amateur philosophers, bar flies, and eulogists, among others, are known to wistfully observe that nothing dies so long as it is remembered and discussed. That’s a comforting sentiment when it comes to loved ones and legacies, but it can be mischievous and bothersome when applied to fallen case law. The long, drawn-out demise of Roberti v. Andy’s Termite & Pest Control. Inc., 113 Cal.App.4th 893 (2003) is a case in point, so to speak.

Pre-Roberti Expert Admissibility Standards – The Kelly/Frye Rule and a Suggestion of Daubert

Roberti is part of a much longer story about California’s journey to adoption of Daubert-style reliability gatekeeping for the testimony of expert witnesses.

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Growing Pains: The Story Behind Florida’s Daubert Arc – Part 3

You can find the first two parts of this story here and here.

In 2013, spurred by the decisions in Marsh and Hood, the Florida Legislature amended F.S. 90.702 to mirror Federal Rule of Evidence 702. In a preamble to the final bill, the Legislature expressed its intent to (1) adopt the standards set forth in the U.S. Supreme Court’s Daubert trilogy and (2) prohibit “pure opinion testimony as provided in Marsh…”

The Plaintiff’s Bar Parries

Ordinarily, this definitive a legislative adoption of Daubert and rejection of Frye and pure opinion would be the end of the story. But Florida plaintiffs’ lawyers immediately mounted a challenge to the amendment based on the separation of powers provisions of the Florida Constitution, and they had a liberal and receptive Supreme Court.

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9th Circuit Restores and Clarifies Standards for Certification of Settlement Classes

The Ninth Circuit’s recent en banc decision in In re Hyundai and Kia Fuel Economy Litigation, — F.3d —, 2019 WL 2376831 (9th Cir. Jun. 6, 2019), restored some much-needed balance to the class action universe. The court reversed the controversial 2018 panel decision that overturned a nationwide class settlement in a multidistrict litigation over car manufacturers’ fuel economy misrepresentations. The panel decision addressed the impact of potential variations in state law, holding the district court abused its discretion in approving the settlement and certifying a settlement class without conducting a rigorous choice-of-law analysis to determine whether the variations defeated predominance under FRCP 23(b)(3).

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Growing Pains: The Story Behind Florida’s Daubert Arc – Part 2

You can find the first part of this story here.

The Aftermath of Marsh

When the Marsh case was decided in 2007 its broad interpretation of the “pure opinion exception” and narrow vision of the role of Frye took Florida expert evidence admissibility law well out of the mainstream. Florida law was starkly at odds with the reliability concerns addressed by Daubert and its progeny and counterparts.

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Growing Pains: The Story Behind Florida’s Daubert Arc – Part 1

The steady but sometimes slow adoption by the states of the Daubert standard for expert admissibility, and the accompanying recession of the Frye standard, is something of a coming of age for the national jurisprudence. Frye has become outmoded and anachronistic in an era of dizzying technological and scientific advancement ─ and riddled with exceptions. Daubert’s focus on reliability and fit incorporates the necessary flexibility, rigor, and judicial engagement to warily allow the expert wheat while turning away the chaff. The transition has played a pivotal role in fine-tuning the tort system in search of well-founded fact-finding and more rational adjudications.

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Worth the Wait? Some Semi-Mature Thoughts on Albrecht

For some long-awaited events, a little time and distance can add a measure of clarity. Not always – many still are processing the Game of Thrones finale, with no end in sight. But over the past few weeks pharmaceutical products liability lawyers have had the opportunity to acquire some Zen and enlightenment about the Supreme Court’s highly anticipated preemption decision in Merck Sharp & Dohme, Inc. v. Albrecht, 2019 WL 2166393 (U.S. May 20, 2019). An initial description of the decision is here.

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Keeping Summary Judgment Strong

In this age of exorbitant costs and increasingly high stakes in civil litigation, a robust summary judgment mechanism – one capable of terminating cases lacking in merit long before the extraordinary expense of final trial preparation and trial – is simply critical to a properly functioning civil litigation system.

Recently, Division 8 of the Second Appellate District, California Court of Appeal did its part by contributing to several ongoing debates in California law related to the admissibility of expert declarations offered to oppose motions for summary judgment. Fernandez v. Alexander, 2019 WL 336517 (Jan. 28, 2019)(certified for publication). The court weighed in, at least implicitly, on these important issues:

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Remembering Stengel and Celebrating the Arizona Supreme Court

Those familiar with his legend know that Hall of famer Casey Stengel managed the New York Yankees in their mid-century heyday and, for a short time at their inception, the New York Mets.  But he also is remembered as one of baseball’s great characters.

One story about Stengel was told by the great broadcaster Curt Gowdy.  He was having a beer with Stengel at a bar in Cleveland.  Stengel received his beer and quickly downed it in one long gulp, leading Gowdy to ask why he drank it so fast.  Stengel said he drank beer that way ever since “the accident.”

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California Confronts the High Liability Costs of Scientific Uncertainty

Much has been said about the eye-popping verdict and the post-trial rulings in the Roundup case tried in San Francisco earlier this year. Johnson v. Monsanto Co., 2018 WL 5246323 (S.F. Super. Ct. Oct. 22, 2018). The court sustained the jury’s award of ~$39 million in compensatory damages, including $37 million in non-economic damages, and its finding that Monsanto was liable for punitive damages. The court reduced the punitive award on due process grounds to a one-to-one ratio, slashing it from $250 million to approximately $39 million. Monsanto recently filed its notice of appeal, and as we await the briefing and argument, a few issues and takeaways merit further discussion, particularly several disturbing issues surrounding the award of punitive damages. We will save for another day (or post) other significant liability and damages issues.

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