The ruling puts limits on where lawsuits can be filed against corporations in liability cases. Jurisdiction, the court says, is restricted to the state where the corporation is registered or the injury took place. The decision also makes it more difficult for injured plaintiffs to band together and sue corporations.
The ruling, which has far-reaching implications, could potentially change mass-tort litigation moving forward.
"There is no federal product liability law. Normally, product liability claims depend on state laws and under the basic principles of negligence, strict liability, or breach of warranty," explains Bill Easterly & Associates, a law firm specializing in product liability, on their website. "Aside from that, a set of business statute laws in each state followed the Uniform Commercial Code, will contain warranty standards impacting product liability."
Because cases depend on state laws, plaintiffs often "shop around" before filing lawsuits to find states with more favorable product liability laws.
The case at the center of the decision involved 592 plaintiffs, which sued Bristol-Myers Squibb in the state of California for product liability. The plaintiffs, which claimed that the company misrepresented the risks of its Plavix drug, will have their lawsuits dismissed.
Just hours after the Supreme Court's decision, a Missouri judge declared a mistrial in a case involving two plaintiffs from out of state and one local plaintiff who sued Johnson & Johnson for wrongful death. The plaintiffs' loved ones died after using the company's talcum powder.
The case involving Bristol-Myers Squibb overturned a California Supreme Court decision, which allowed 600 out-of-state people to sue the company in state court for injuries allegedly caused by the Plavix drug. The court permitted the lawsuit despite the fact that the company's only contact with the state was that the product was sold in local stores.
Bristol-Myers Squibb is incorporated in Delaware and its headquarter is in New York. The company did not manufacture, develop, package, label or apply for regulatory approval in the state of California. The plaintiffs, who are not residents of California, did not purchase the drug in California, nor do they claim to have been injured or have sought treatment in the state.
The Supreme Court, based on these factors, ruled that California did not have jurisdiction to hear the claims from these out-of-state plaintiffs.
While the decision in the Bristol-Myers Squibb case changes the landscape of product liability claims, the Court pointed out that plaintiffs still have the ability to sue in their home state if that is where they were injured. Plaintiffs will also likely be able to sue in the state where the manufacturer is incorporated or maintains a principal place of business.
The lone dissenter in the ruling, Justice Sonia Sotomayor, says the ruling, which was authored by Justice Samuel Alito, will make it more difficult for injured victims to sue large corporations.
"It will make it impossible to bring a nationwide mass action in state court against defendants who are 'at home' in different States," she said. "The effect of the Court’s opinion today is to eliminate nationwide mass actions in any state other than those in which a defendant is 'essentially at home.'"
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