The Delaware Judiciary has been consistently ranked one of the highest in the nation for its competence, fairness, and ability to handle scientific/technical evidence. Although historically there has not been a large national mass tort presence in Delaware, the United States Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco, et al. (“BMS”) could change that. Delaware is the state of incorporation of more than 50 percent of publicly traded U.S. companies and a majority of fortune 500 companies. This makes Delaware a safe bet for proper jurisdiction in suits against companies that are incorporated in Delaware.
In BMS, the Court held that California courts lack specific jurisdiction to consider non-resident plaintiffs. This has raised the question of where is the best place for plaintiffs to now file after BMS.
In BMS, over 600 plaintiffs filed suit against Bristol-Myers Squibb in California state court, asserting claims for their injuries caused by Plavix. Although Bristol-Myers Squibb is incorporated in Delaware with its headquarters in New York, and 592 of the over 600 plaintiffs were nonresidents of California, all of the plaintiffs asserted their claims under California law. The California Supreme Court, applying a sliding scale approach, held that California courts had specific jurisdiction over the nonresident plaintiffs’ claims because their claims were based on the same allegedly defective product, misleading marketing and promotion of Plavix as the California resident plaintiffs’ claims.
The United States Supreme Court reversed the California Supreme Court, holding that subjecting the company to specific jurisdiction violated the Due Process Clause of the Fourteenth Amendment. The Supreme Court reiterated that in order for a state court to exercise specific jurisdiction over a defendant, there must be an affiliation between the state and the underlying controversy, principally an activity or occurrence that takes place in the forum state.
In deciding that Bristol-Myers Squibb’s activities relating to Plavix did not meet the necessary affiliation with California to justify specific jurisdiction in the State, the Supreme Court pointed to several factors that were lacking including, that Bristol-Myers Squibb did not: develop Plavix in California, create a marketing strategy for Plavix in California, did not manufacture, label or package Plavix in California, nor did it work on the regulatory approval of Plavix in California. These factors give insight into what activities must occur in a forum state to support specific jurisdiction over a nonresident defendant.
Generally, a defendant corporation’s place of incorporation, and principal place of business are the “paradigm all-purpose forums.” See Goodyear, 564 U.S. at 922. However, under Damiler, the Supreme Court held that a defendant may be subject to general jurisdiction in a forum other than its state of incorporation or principal place of business when that corporation’s affiliations with the state are so “continuous and systematic” as to render it essentially home there. See Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014).
This is where Delaware comes into play. Of the top-ten pharmaceutical companies in the United States, eight are incorporated in Delaware, making them subject to general jurisdiction there. The Delaware Superior Court is well suited to hear mass tort cases. In addition to a highly sophisticated bench and diverse jury pool, Delaware Judges have experience in mass tort cases and dockets.
In 2015, Judge Mary Johnston presided over a $100 million TVM verdict (she later reduced it to 2.5 million in compensatory damages and 7.5 million in punitive damages). Also, for several years, the Superior Court has facilitated a well-oiled machine of an Asbestos Docket in which the Judges rotate two-year terms with two judges assigned at all times. In the event that mass tort filings in Delaware increases, the Judges of the Superior Court are likely to create a frame-work for hearing these cases.
Not everyone is excited about filing in Delaware. There is some concern regarding whether the Delaware Supreme Court would act conservatively and cut back large jury awards. However, given the fairness of the Judiciary, the Supreme Court, like the Superior Court, would likely embrace its new role in mass tort litigation and issue fair opinions. There is also a concern that the U.S. Chamber of Commerce likes to litigate civil cases in Delaware. However, this should be less of a concern because the research has shown that Delaware is a fair playing field with an impartial and sophisticated Judiciary. Meaning, if you bring good cases you will get good results—especially in pretrial rulings.
There are several pros and cons to consider when filing a case in any jurisdiction. However, filing in Delaware would avoid the uncertainty of whether jurisdiction is proper under the new BMS factors. There is also little to no concern over “pulling a bad judge” because any judge on the Delaware Superior Court is capable of providing fair and impartial rulings. These two factors are crucial to the success of any plaintiff’s case and should be heavily considered when deciding where to bring a case.