There are few things in the life of a business owner that are less enjoyable than getting sued. This already painful process can be even more stressful if you are unlucky enough to get sued by someone in a different state. The challenges associated with finding an attorney to defend you, answering a complaint, participating in discovery, and eventually going to trial are all exacerbated when the court hearing your case is hundreds, or even thousands of miles away.
There are protections built into the judicial system that are supposed to protect you from being dragged into court far from your home. One of these protections is a rule that prevents a court from hearing a lawsuit unless the defendants in the case are sufficiently connected to the place that court serves, either because the defendant resides in the jurisdiction of the court, or the defendant directs its business actions towards people in the court’s jurisdiction.
When your business gets sued out-of-state, one of the most effective ways to end the lawsuit is filing a motion to dismiss based on the court’s lack of jurisdiction over your business. Over time, however, this tool has become less and less effective for businesses, as the realities of the modern economy often mean that the business advertises and sells products into the court’s jurisdiction through the Internet. Many times a business defendant will have no choice but to defend a lawsuit in a far-flung corner of the country for no reason other than the fact that some people in that state happened to stumble upon the defendant’s website and buy a product. State and Federal courts have been struggling with how to handle the Internet and a court’s jurisdiction over business defendants for years, with the tide slowly turning against business defendants trying to escape the jurisdiction of out-of-state courts.
However, the United State Supreme Court recently decided to hear a case that could have major ramifications for business owners trying to quickly dispose of out-of-state lawsuits. In Bristol-Myers Squibb Company v. Superior Court of California, et al., the Supreme Court will decide a question that has become crucial to the debate surrounding business defendants who sell products over the internet: whether the connection a defendant has with a particular state has to be related to the harm suffered by the plaintiff before she can sue the defendant in that state.
The case revolves around a product liability class action lawsuit related to a drug developed and marketed by Bristol-Myers. The company argued that California court didn’t have authority to adjudicate the claims of the members of the proposed class action who lived outside the state of California, because those “plaintiff’s claims would be exactly the same even if the [company] had no” connection with California.
It will be months, if not years, before the Supreme Court ultimately decides whether Bristol-Myers’ argument has any merit. And while the decision will have obvious impact on class action litigation in this country, smaller business owners may also benefit from a ruling in Bristol-Myers’ favor. If the Supreme Court decides to heighten the requirement of a connection between a plaintiff’s claims against your business and your business’ connection with the state they are trying to sue you in, many more business defendants will be able to quickly and efficiently get that plaintiff’s claims dismissed.
We will be watching this case closely as it develops, and are always seeking out new strategies and tools we can use to defend our clients. If you or your business has been sued, contact one of our experienced litigation attorneys so we can get to work building a personalized litigation strategy.
Kenneth J. Bentley is an associate at Andersen, Tate & Carr. His practice focuses on assisting clients in business and commercial lawsuits, as well as personal injury and medical malpractice disputes.