Applying last year’s U.S. Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Court of California, an Illinois federal court dismissed nationwide class claims against NBTY, Inc., for lack of jurisdiction.
Josh DeBernardis alleged that NBTY made false and misleading claims about the beneficial effects of a dietary supplement. He proposed to represent a class of Illinois purchasers under the state’s Consumer Fraud Act, as well as a nationwide class under theories of express warranty, unjust enrichment and the violation of other state consumer fraud acts.
The defendant moved to dismiss, relying on Bristol-Myers Squibb to argue that the court did not have jurisdiction over the claims of the nonresident class of plaintiffs. That case involved a group of plaintiffs who brought product liability actions against Bristol-Myers Squibb in California state court, claiming that a prescription drug damaged their health.
After the California Supreme Court found it had specific jurisdiction to hear the cases, the U.S. Supreme Court reversed last June, holding that the defendant has the burden of proof as to whether a court has personal jurisdiction.
The Due Process clause, “acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment,” Justice Samuel Alito wrote for the majority. Noting that the plaintiffs were nonresidents and did not claim that they suffered harm in California, and that all conduct giving rise to the nonresident claims occurred elsewhere, the justices held the court lacked jurisdiction over the case.
DeBernardis attempted to distinguish Bristol-Myers Squibb because it was based on a mass tort action and not a putative class action, a point raised by Justice Sonia Sotomayor in her dissent.
While U.S. District Court Judge Harry D. Leinenweber found the applicability of Bristol-Myers Squibb to be “a close question,” he sided with the defendant.
In addition to the practical problems of litigating in the out-of-state forum, the court must consider “the more abstract matter of submitting to the coercive power of a State that may have little legitimate interest in the claims in question,” a consequence of territorial limitations on the power of the respective states, the court explained.
“The Court believes that it is more likely than not based on the Supreme Court’s comments about federalism that the courts will apply Bristol-Myers Squibb to outlaw nationwide class actions in a form, such as in this case, where there is no general jurisdiction over the Defendants,” the court wrote. “Consequently, to the extent that [the complaint] seek[s] to recover on behalf of out-of-state plaintiff classes, the Motion to Dismiss is granted.”
To read the memorandum opinion and order in DeBernardis v. NBTY, Inc., click here.
Why it matters: The Illinois federal court decision has already made headlines and provides a road map for defendants to attack lawsuits that seek to bring nationwide class claims.