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.

Clinical Trial Activity Is Not an Exception to the Rule

Defendants and courts have seen a variety of arguments set forth in attempts to demonstrate specific personal jurisdiction. One argument seen with increasing frequency in medical products cases is that specific jurisdiction exists over an out-of-state defendant for the claims of non-resident plaintiffs because the defendant conducted clinical trials of the product at issue in the forum state. Courts have consistently rejected this argument. Continue reading