Let's Be Specific About Personal Jurisdiction: Missouri and Illinois Address Bristol-Myers Squibb v. Superior Court of CaliforniaJuly 27, 2020 | Jennifer Maloney and Julie Simaytis
The Supreme Courts of Missouri and Illinois have recently addressed the constitutional limitations on the exercise of specific personal jurisdiction. In both states, the Courts held that due process prohibits the exercise of specific personal jurisdiction over out-of-state defendants in cases where the defendant does not have sufficient minimum contacts with the forum state and in cases where the alleged injury does not arise from those contacts.
In State ex rel. LG Chem, Ltd. v. The Hon. Nancy Watkins Laughlin, 2020 Mo. LEXIS 193 (Mo. banc June 2, 2020), Plaintiff Peter Bishop brought suit against Defendant LG Chem, a Korean company, in St. Louis County Circuit Court. Bishop alleged he was injured when a lithium-ion battery manufactured by LG Chem exploded in his pocket. Bishop also alleged LG Chem sold the battery to an intermediate distributor, which independently sold the battery to a retailer of electronic cigarettes in Missouri from whom Bishop purchased the battery.
LG Chem moved for dismissal based on lack of personal jurisdiction. In opposing LG Chem’s motion, Bishop relied on Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017). In Bristol-Myers, the United States Supreme Court held that a state court could not exercise specific personal jurisdiction over an out-of-state defendant unless there was “an affiliation between the forum and the underlying controversy, principally…an occurrence that takes place in the forum state.” Id. at 1781. Bishop argued there was a sufficient “affiliation” between Missouri and the underlying controversy to justify the exercise of specific personal jurisdiction over LG Chem because the battery had made its way to Missouri through the third-party distributor and caused injury in Missouri. LG Chem’s motion to dismiss was denied. Ultimately, the Missouri Supreme Court found Bishop’s application of Bristol-Myers to be overbroad and held the actions of a third party, standing alone, cannot be used to satisfy the due process requirement of the specific personal jurisdiction analysis. Since the subject battery had been sold to the Missouri retailer by an independent third party, the Court directed the circuit court to vacate its order overruling LG Chem’s motion to dismiss for lack of personal jurisdiction.
Two days later, the Supreme Court of Illinois also issued an opinion addressing the exercise of personal jurisdiction over an out-of-state defendant, but unlike the Missouri case, the case involved claims brought by out-of-state plaintiffs. In Rios v. Bayer Corp., 2020 IL 125020 (June 4, 2020), the Court held that due process did not allow Illinois courts to exercise specific personal jurisdiction over an out-of-state defendant as to the claims of out-of-state plaintiffs for personal injuries suffered outside of the state from a device manufactured outside of the state. At issue were two cases, both filed in Madison County, Illinois, in which 180 women from more than twenty states alleged injuries related to the use of a permanent birth control device called Essure. The out-of-state plaintiffs had not had the Essure device prescribed or implanted in Illinois and had not sought treatment for their alleged injuries in Illinois. Bayer moved for dismissal of the out-of-state plaintiffs’ claims based on lack of personal jurisdiction. In response to Bayer’s motion, the out-of-state plaintiffs argued the trial court could exercise specific personal jurisdiction over Bayer for their claims because Bayer had developed, labeled, marketed and worked on gaining regulatory approval for Essure in Illinois, and the plaintiffs’ claims arose, in part, from those “minimum contacts” between Bayer and the State of Illinois.
While Bayer’s motion was pending in the trial court, the United States Supreme Court issued its opinion in Bristol-Myers. Despite the new guidance provided in Bristol-Myers, the trial court denied Bayer’s motion, relying on M.M. v. GlaxoSmithKline LLC, 2016 IL App (1st) 151909, wherein the Illinois Court of Appeals had found the exercise of personal jurisdiction over an out-of-state defendant did not violate the due process clause in product liability cases brought by out-of-state plaintiffs where clinical trials had been conducted in Illinois. Bayer appealed. The appellate court held the exercise of personal jurisdiction over Bayer by the trial court was constitutional because the out-of-state plaintiffs’ claims arose, at least in part, from Bayer’s marketing, clinical trials and physician accreditation programs related to Essure in Illinois.
Ultimately, the Illinois Supreme Court reversed the appellate and trial courts. The Court determined Bristol-Myers had foreclosed the plaintiffs’ theory of specific personal jurisdiction and concluded that the out-of-state plaintiffs’ claims did not arise out of Bayer’s activities in Illinois; therefore, due process did not allow the trial court’s exercise of specific personal jurisdiction over Bayer as to the out-of-state plaintiffs’ claims.
These cases represent the first application of the limitations on specific personal jurisdiction expressed in Bristol-Myers by each state’s Supreme Court. The conclusion reached by both Courts emphasizes the importance of conducting a comprehensive evaluation of a defendant’s contacts with the forum state immediately upon service of the summons in every instance.
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Do you have a valid and enforceable arbitration agreement? Is your arbitration provision unconscionable? Have you waived your right to arbitration? Missouri litigants may have the right to submit these threshold legal questions to an arbitrator.
In TD Auto Finance, LLC v. Bedrosian, the Missouri Court of Appeals, Eastern District, reversed the circuit court’s denial of a motion to compel arbitration, finding that the threshold issues of arbitrability were delegated to an arbitrator under the parties’ agreement and the circuit court erred in finding a lack of consideration for the arbitration agreement.
Bedrosian purchased a vehicle from a Missouri dealership. In seeking to finance her purchase, Bedrosian executed a Credit Application through TD Auto Finance, LLC (“TD Auto”). Bedrosian ultimately defaulted on her loan payments. TD Auto repossessed and sold the vehicle and then sued Bedrosian to the collect the deficiency. Bedrosian answered and filed a counterclaim. TD Auto moved to compel arbitration.
The credit application contained a section titled: “IMPORTANT CONTRACT OF ARBITRATION.” (Capitalized text in original) The arbitration provisions that provided “If any of us chooses, any dispute between or among us will be decided by arbitration and not in court” and “Any claim or dispute, whether in contract … (including any dispute over the interpretation, scope, or validity of this Important Contract of Arbitration or the arbitrability of any issue)… shall, at the election of any of us… be resolved by neutral, binding arbitration and not by a court action.”
Bedrosian opposed arbitration claiming: (1) the purported arbitration agreement was never formed or concluded because it lacked mutual promises and thus lacked consideration; (2) even if the arbitration agreement had been formed, the agreement was unconscionable; and (3) event if the agreement was valid and enforceable TD Auto had waived its right to arbitration by repossessing the vehicle and initiating a lawsuit against her. The trial court agreed with all three points raised by Bedrosian and denied the motion to compel arbitration.
On appeal, TD Auto contended: (1) the claims addressed by the circuit court were reserved for an arbitrator to decide, including the threshold issues of arbitrability; and (2) the court erred in finding a lack of consideration because the arbitration provision was part of the credit application which did have mutual obligations.
The Court of Appeals found that the circuit court erred in evaluating separate consideration for the arbitration provision because under Eaton v. CMH Homes, Inc., mutuality of the whole agreement satisfies the consideration for an arbitration provision.
The Court of Appeals also found that like arbitration in general, the question of who decides threshold arbitrability questions is a matter of contract and that the parties can agree by contract that an arbitrator will resolve threshold arbitrability questions as well as the underlying disputes.
The Court of Appeals thus concluded that threshold questions of arbitrability, concerning unconscionability and waiver by litigation were “reserved for the arbitrator. The circuit court should not have ruled on these matters.”
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Attorneys: Gregorio Silva
As employees slowly begin to return to work in “the new normal” following mandatory stay-at-home orders across the country, employers in Illinois and Missouri are busy establishing policies in compliance with opening orders and guidelines. To mitigate the risk of potential workers’ compensation claims, employers should be aware of possible changes to workers’ compensation laws due to COVID-19 exposure in the workplace.
On April 13, 2020, the Illinois Workers Compensation Commission passed an emergency rule in response to the COVID-19 pandemic. This rule created a rebuttable presumption of compensability in favor of employees classified as first responders and essential front-line workers during the COVID-19 state of emergency. For those individuals, the rule imposed a rebuttable presumption that the individual’s exposure arises out of and in the course of employment and is causally connected to their employment.
In response, the Illinois Manufacturers Association and Illinois Retail Merchants Association requested a Temporary Restraining Order, which was granted on April 24, 2020. The emergency rule was thereafter withdrawn by the IWCC. COVID-19 may still be considered a compensable occupational disease under the Illinois Workers’ Compensation Act, but there is no longer a rebuttable presumption of compensability following withdrawal of the rule.
In Missouri, Governor Mike Parson directed the Department of Labor and Industrial Relations to implement an emergency rule that will provide workers compensation benefits to first responders who contract COVID-19. On April 7, 2020, the Department of Labor and its Division of Workers’ Compensation filed an emergency rule creating a presumption that First Responders infected by or quarantined due to COVID-19 are deemed to have contracted a contagious or communicable occupational disease arising out of and in the course of the performance of their employment. “First Responders” include law enforcement officers, firefighters or an emergency medical technicians.
The presumption created by the rule is rebuttable in the event a subsequent medical determination establishes by clear and convincing evidence that (1) the First Responder did not actually have COVID-19, or (2) the First Responder contracted or was quarantined for COVID-19 resulting from exposure that was not related to the First Responder’s employment.
The Labor and Industrial Relations Commission voted unanimously to approve the emergency rule on April 8, 2020, with an effective date of April 21, 2020. However, the rule is retroactive. The full text of 8 CSR 50-5.005 can be found here.
Unlike the emergency rule attempted in Illinois, only First Responders are provided with a presumption of an occupational disease under the Missouri emergency rule. To date, no further amendments have been introduced to expand the presumption created by the emergency rule to non-First Responders, however, as more and more businesses slowly open following the lifting of the stay-at-home orders issued through Missouri, employers may find themselves receiving COVID-19-related workers’ compensation claims. COVID-19 has been classified as a communicable disease by the State of Missouri and communicable diseases are included in the definition of “occupational disease” under Missouri Workers’ Compensation Law.
As in all states, laws and regulations related to the COVID-19 pandemic are ever-changing in Illinois and Missouri. The area of workers’ compensation is no exception and additional changes and expansions to the current laws are possible. Employers in both states should remain aware of those changes in order to better anticipate potential claims, mitigate risk and create workplaces that protect employees from exposure to the best of their ability.
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