Last July, Bexis blogged about two inconsistent personal jurisdiction rulings in talc litigation. Those rulings created a personal jurisdiction split between a Missouri court and the talc MDL court on whether non-Missouri plaintiffs could sue a non-Missouri defendant in Missouri even if those plaintiffs did not use the product or suffer an injury in Missouri. The Missouri court sustained personal jurisdiction because the non-Missouri defendant had contractual relationships with non-party Missouri companies relating to product manufacturing, packaging, and supply activities. To our eyes, the Missouri rulings directly contravened the SCOTUS ruling in BMS that a non-resident defendant’s relationship with a resident third party was an insufficient basis for personal jurisdiction. By contrast, the MDL court adopted a position following BMS and concluded that there was no personal jurisdiction over the non-Missouri defendant. The MDL court held that the fact that the non-Missouri defendant “contracted with an instate manufacturer to produce some of its products does not confer jurisdiction.” The agreement with the instate manufacturer “was to facilitate the indiscriminate nationwide sale of its products, including the products that allegedly injured Plaintiffs.” One could not say that the lawsuit in any way arose out of the instate contact. Goodbye personal jurisdiction, goodbye Missouri litigation tourism.
The MDL ruling was good. It was so good that the MDL plaintiffs sought reconsideration. They lost.
The opinion in Johnson v. Johnson & Johnson Inc., 2021 U.S. Dist. LEXIS 9359 (D.N.J. Jan. 21, 2021), is short (the list of parties and counsel is just about as long as the actual opinion) and to the point. But first, here is a reminder as to how the cases got to the MDL court in New Jersey. The plaintiffs filed in state court in Missouri because, well, they’re plaintiffs The defendants removed to federal court, then the case was transferred to the MDL. The plaintiffs sought to remand the case to Missouri because, well, they’re plaintiffs.
The plaintiffs sought reconsideration of the MDL court’s decision to sever each plaintiff’s claims from the multi-plaintiff complaints pursuant to Federal Rule of Civil Procedure 21. Upon reconsideration, the MDL court reiterated that it was proper to sever the multi-plaintiff misjoined complaints originally filed in state court and thereby preserve diversity jurisdiction. The misjoinder had created a “jurisdictional tangle” or “snarl” that the court was justified in using its discretion under Rule 21 to resolve. The plaintiffs contended that severance of a third party to preserve diversity jurisdiction is appropriate only where the action was originally filed in federal court, as opposed to removal from federal court. The MDL court rejected this contention, and held that Rule 21 allows a court to dismiss jurisdictional “spoilers” when those parties are not indispensable and there would be no prejudice to the parties. There is no reason for that power not to extend to cases removed from state court.
The plaintiffs also argued that severance was at odds with the notion that a plaintiff is the “master” of the complaint. But the MDL court reasoned that this notion should not protect plaintiffs employing a “thinly veiled litigation strategy” to avoid federal court whereby “seemingly unrelated plaintiffs and non-diverse plaintiffs have joined their claims in single multiple-plaintiff actions.” The MDL court emphasized the practical importance of severance in cases where the plaintiffs’ joinders created a “snarl of personal jurisdictional issues.” The SCOTUS BMS decision requires that each plaintiff’s personal jurisdiction issues be decided individually. Severance facilitates that due process goal.
In addition, the plaintiffs argued that Rule 21 does not permit severance of plaintiffs properly joined in a multi-plaintiff complaint. There is no authority supporting this argument. There is, in fact, plenty of authority going the other way. And now there is one more case supporting such severance.
The plaintiffs also sought reconsideration of the MDL court’s decision that some of the defendants were fraudulently joined. One of those defendants manufactured a product that plaintiffs did not use. The plaintiffs were at this point merely arguing what they argued, and lost, before. The MDL court was not so much being asked to reconsider as to give the plaintiffs a “second bite at the apple.” The MDL court refused to allow such a second bite. The plaintiffs’ effort to bring another dismissed defendant back into the case rested upon new assertions regarding ownership of that defendant The MDL court held that the plaintiffs were not allowed to go beyond the complaint at the time of removal in opposing fraudulent joinder.
In short, the MDL court denied the plaintiffs’ motion for reconsideration. Similarly, reconsideration of the MDL court’s decisions on personal jurisdiction and fraudulent joinder does not prompt us to change our belief that the MDL court got it right and the Missouri court got it wrong. If anything, the new decision by the MDL court strengthens that belief. Perhaps we are right about that, or perhaps we are stubborn, or perhaps we are biased. Or all three.