On June 19, 2017, the United States Supreme Court handed down Bristol-Myers Squibb Co. v. Superior Court of California, an important decision regarding personal jurisdiction that will have a major effect on how class action personal injury lawsuits are brought against large corporate defendants.
In Bristol-Myers, the U.S. Supreme Court was asked to determine whether a California state court had personal jurisdiction to entertain nonresidents’ claims against Bristol-Myers Squibb ("BMS") for injuries that the nonresidents had sustained because of taking the drug Plavix. Ultimately, the Supreme Court determined that the California state court did not have personal jurisdiction over the nonresidents’ claims, reversing the decision of the California Supreme Court finding that there was specific personal jurisdiction. Accordingly, the Supreme Court held that the California court’s exercise of jurisdiction violated the Fourteenth Amendment’s Due Process Clause.
As a brief factual background, BMS manufactures the drug Plavix. Although headquartered in New York and incorporated in Delaware, from 2006 to 2012, BMS received more than $900 million from the drug’s sales in California. A group of plaintiffs sued BMS in California state court, alleging injuries resulting from the drug. The plaintiffs included approximately 600 people, 86 of whom were California residents. Non-residents from more than thirty other states were also included in the class of plaintiffs that brought suit in California state court.
In applying precedent, the Supreme Court reasoned that specific personal jurisdiction requires a lawsuit to arise out of a defendant’s specific contacts within a forum. Under the facts presented, the Court found that BMS’s activities within California—which consisted of doing research on another drug and contracting with a California corporation to sell Plavix in the state—did not have any connection to the nonresidents’ claims of injury. The Court found it notable that there were no allegations that the nonresidents were injured in, prescribed drugs in, or received treatment in California.
Justice Sotomayor wrote a scathing dissent from the 8-person majority. In her dissent, she pointed out that the majority’s decision would make it increasingly difficult for plaintiffs to bring a concerted action against a corporation that engages in nationwide misconduct. Under the majority’s decision, all the plaintiffs in a lawsuit would need to be from the same forum state. Otherwise, in a country-wide mass tort case, 50 different lawsuits might be required. (Sotomayor, J., dissent). She also argued that a core concern of the Court’s personal jurisdiction cases is fairness, and there is nothing unfair about allowing a defendant who is already going to be sued in a state court by resident plaintiffs, to be sued by non-residents in the same lawsuit. ("And there is nothing unfair about subjecting a massive corporation to suit in a State for a nationwide course of conduct that injures both forum residents and nonresidents alike.").
In conclusion, the Court’s decision is likely to have an immediate effect on class action tort suits against nationwide corporate defendants. These defendants already have a big advantage in resources to fight against plaintiffs, and now they have one more tool in their arsenal to prevent plaintiffs from having their day in court: a narrowed reading of specific personal jurisdiction.
On May 26, 2017, the Hawaii Supreme Court handed down its decision in Yukumoto v. Tawarahara, No. SCAP-15-0000460 (May 26, 2017).
This lawsuit stemmed from a moped accident in which Gregory Yukumoto (“Mr. Yukumoto”) was severely injured by Ruth Tawarahara (“Ms. Tawarahara”). Id. at *2. As a result of the accident, Mr. Yukumoto received medical treatment, and his health insurer, Hawaii Medical Service Association (“HMSA”), paid out health insurance benefits on his behalf. Later, HMSA filed a notice of lien to recover the benefits it paid out on behalf of Mr. Yukumoto, which totaled approximately $330,000.00.
Mr. Yukumoto’s total damages from the accident were approximately $4,000,000.00. Id. at *3. Via multiple automobile insurance policies, Mr. Yukumoto recovered $1,150,000.00 in general damages only, leaving him undercompensated by almost 3 Million Dollars. Id.
On appeal to the Hawaii Supreme Court, HMSA argued that it had equitable subrogation rights against the tortfeasor (Ms. Tawarahara) and contractual subrogation rights as to Mr. Yukumoto (via a health insurance contract), which gave HMSA the authority to and priority to recover its medical lien. Id. at *12. The Hawaii Supreme Court disagreed. It held that: "(1) A health insurer does not have equitable subrogation rights against a third-party tortfeasor in the context of personal insurance; (2) a health insurer’s subrogation and reimbursement rights are limited by HRS §§ 663-10 and 431-13:103(a)(10); and (3) any contractual provision that conflicts with HRS § 663-10 is invalid." Id. at 34.
Thus, HMSA was not permitted to go after Ms. Tawarahara (the tortfeasor) to recover the lien amount because HMSA had no equitable subrogation rights against her. Additionally, HMSA was not permitted to recover from the injured individual, Mr. Yukumoto, via contractual subrogation either. The Supreme Court found that HMSA’s “sole rights to reimbursement and subrogation are provided for in HRS §§ 663-10 and 431-13:103(a)(10)”. Id. at 31. Because the contractual subrogation term provided for in the insurance contract between HMSA and Mr. Yukumoto was in conflict with HRS §§ 663-10 and 431-13:103(a)(10), it was invalid as against public policy.
 HRS § 663-10 places the burden on the medical health insurer to prove that there was duplication between the settlement funds paid by Ms. Tawarahara to Mr. Yukumoto and the medical expenses paid by HMSA on behalf of Mr. Yukumoto, in order for HMSA to obtain reimbursement from Mr. Yukumoto. Id. at *6. Only if the health insurer can prove duplication is the health insurer entitled to reimbursement.
 At the trial court level, HMSA acknowledged that it could probably not meet its burden of proof under HRS § 663-10 (that it was entitled to reimbursement for medical expenses paid) because Mr. Yukumoto recovered only a portion of his damages ($1.15 Million out of $4 Million) and settled his claims for general damages only. Id. at *10-11.
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