In a closely watched decision, the California Supreme Court ruled 4-3 Monday that hundreds of out-of-state residents had the right to sue Bristol-Myers Squibb in the state court system over side effects caused by one of its drugs.
At issue was the question of jurisdiction, which can be used to determine where a lawsuit may be filed. This particular ruling clarified the extent to which the drug maker needed to have a presence in California in order to be sued by people from Texas, Ohio, and 33 other states, who claim they were harmed by the Plavix blood thinner.
Although Bristol-Myers may not be headquartered in California, the court determined the company conducts enough business — sales, marketing, distribution, and R&D — for state courts to serve as a venue for lawsuits filed by out-of-state residents. The drug maker failed to demonstrate that allowing such lawsuits would have been “unreasonable,” the court wrote in its 37-page opinion.
At first blush, the topic may seem limited in scope, but there are wider implications for the pharmaceutical industry, which continually faces product liability lawsuits brought by consumers. Although the ruling applies only to this particular case, the court may have hung a welcome sign that invites still more people from around the country to file lawsuits in California against drug makers.
That’s because California state courts are seen as more hospitable to people who bring lawsuits against drug makers, according to attorneys who defend the pharmaceutical industry. “California has a strong consumer protection act,” said Daniel Herling, a partner at Mintz Levin, who is not involved in this litigation. “The state has very strong laws favorable to plaintiffs to bring cases there.”
This helps explain why Bristol-Myers would have preferred that the lawsuits were confined to the various state courts where the hundreds of plaintiffs resided when they were treated with Plavix, which was blamed for causing heart attacks, strokes, and cerebral bleeding, among other things. After all, why submit yourself to a venue if you believe your chances are not so good?
There’s another reason which, essentially, reflects a divide-and-conquer strategy. It’s also easier for the company to force consumers to press their lawsuits in as many different venues as possible. In this way, resources are taxed, while Bristol-Myers has the wherewithal to defend itself.
“Bristol-Myers would prefer to have sued in their home states and not in California. The company would rather see them spread around,” said Steven Boranian, a partner at Reed Smith, who has defended drug makers, but is not involved in this litigation. “Now, I think the pharmaceutical industry will view this as making it easier to file more lawsuits in California.”
However, in its opinion, the court maintained that such large numbers of similar lawsuits, which are known as mass torts, may not be efficiently processed if dispersed in separate venues. The opinion noted that multiple venues would result in duplicate efforts around the country “at substantial costs” to the judicial system and those involved in the litigation.
In their dissent, the three remaining judges disagreed that jurisdiction was appropriately applied and “is inconsistent with the limits set by due process.” For this reason, Boranian suggested that Bristol-Myers may ask the US Supreme Court to review the ruling, since due process is a constitutional issue.
As for Bristol-Myers, a spokeswoman wrote us that “we respectfully disagree with the majority’s 4-3 decision and believe the dissent applied the correct analysis. We continue to review the decision and are evaluating our options.”