On October 15, 2019 the Missouri Court of Appeals for the Eastern District overturned a jury verdict, including punitive damages, to an out of state plaintiff. The Court ruled that the trial court lacked personal jurisdiction to render the verdict pursuant to recent United States Supreme Court authority.
Plaintiff Lois Slemp, a resident of Virginia, was one of sixty-two plaintiffs alleging claims against defendants Johnson & Johnson, Johnson & Johnson Consumer Companies, Inc. and Imerys Talc America, Inc. for personal injuries related to use of talc products produced, manufactured and sold by defendants. Plaintiff’s claim was tried separately, and the jury awarded a verdict in her favor for actual and punitive damages in May 2017. Judgment was entered on August 3, 2017, including a finding by the trial court pursuant to Missouri Rule of Civil Procedure 74.01(b) that there was no just reason to delay entry of final judgment for purposes of proceeding with appeal.
After the verdict but before judgment was entered, the landmark United States Supreme Court personal jurisdiction case, Bristol-Myers Squibb v. Superior Court of Ca., 137 S.Ct. 1773 (2017), was handed down. Following entry of judgment, defendants filed a timely post-trial motion on September 1, 2017 seeking dismissal of plaintiff’s claims for lack of personal jurisdiction based upon the BMS case. Defendants argued that under the Bristol-Myers case, there was no basis for the trial court to exercise specific personal jurisdiction over the non-resident plaintiff’s claims where none of the circumstances leading to the plaintiff’s claim occurred in the State of Missouri.
Plaintiff later filed a motion requesting the Court temporarily vacate the judgment, and allow discovery on the issue of personal jurisdiction. On November 29, 2017, the trial court denied both defendants’ motions to dismiss for lack of personal jurisdiction and plaintiff’s motion to vacate and reopen discovery. The trial court also issued an order striking the Rule 74.01(b) language from its original judgment. Defendants’ subsequently appealed.
The Court of Appeals reversed the trial court’s ruling denying defendants’ motion to dismiss on the personal jurisdiction issue, and vacated the trial court judgment in plaintiff’s favor. Key to the appeal was whether the judgment entered by the trial court was final for purposes of appeal. Because claims remained pending as to other plaintiffs, a rule 74.01(b) finding was necessary for defendants to proceed with an appeal. The Court originally entered the finding on August 3, 2019, then modified the judgment on November 29, 2017.
Under Missouri law, a trial court maintains control of its judgment for thirty days and may modify the judgment, for good cause, within this window, regardless of whether either party requests a change. After expiration of this original thirty-day window, a judgment may be modified only upon grounds asserted in a timely-filed post-trial motion, which must be filed within thirty days of entry of judgment.
Because neither party filed a timely, authorized post-trial motion requesting the Rule 74.01(b) language be removed, the appellate court ruled that the trial court was without authority on November 29, 2017 to modify its judgment to remove the language certifying the judgment as final for purposes of appeal. The Appellate Court therefore ruled that the Order removing the Rule 74.01(b) certification language exceeded the authority of the trial court, and the appeal was properly before the Court pursuant to the language in the August 3, 2017 Judgment.
After determining the judgment was final for purposes of appeal, the Court found that specific personal jurisdiction may not be established by out of state plaintiffs under circumstances arising outside the state merely by joining the claim with a Missouri plaintiff. Accordingly, the rulings on the personal jurisdiction motions were reversed, and plaintiff’s judgment was reversed.
Guidance for the Future
When filing post-trial motions, all parties should be certain to timely request all post-trial relief, including any desired modification of judgment language, within the time allowed under procedural rules. Additionally, under the Bristol-Myers case personal jurisdiction against a defendant must be established for each claim made against it.
In Home Depot U.S.A., Inc. v. Jackson, 139 S.Ct. 1743 (May 28, 2019), the U.S. Supreme Court affirmed in a 5-4 decision authored by Justice Thomas that neither the general removal provision (28 U.S.C. §1441(a)) nor the removal provision in the Class Action Fairness Act of 2005 (28 U.S. C. §1453(b)) permits a third-party counterclaim defendant to remove a class-action from state to federal court.
Citibank filed a debt-collection action against George Jackson alleging he was liable for charges he incurred on a Home Depot credit card. In response, Jackson filed a counterclaim against Citibank and third-party class-action claims against Home Depot U.S.A. and Carolina Water Systems. Jackson alleged that Home Depot and Carolina Water induced homeowners to buy water treatment systems at inflated prices and engaged in unlawful referral sales and deceptive and unfair trade practices. Jackson also alleged that Citibank was jointly and severally liable for the conduct of Home Depot and Carolina Water and that his obligations under the sale were null and void. After Citibank dismissed its claims against Jackson, Home Depot removed the case to federal court under the Class Action Fairness Act (“CAFA”). Jackson moved to remand, arguing that precedent barred removal by a third-party/additional counter-defendant like Home Depot.
The District Court remanded and the Fourth Circuit affirmed, relying on some almost-80 year old precedent that the general removal provision (§1441(a)) did not allow Home Depot as a third-party defendant to remove the class-action claims; and concluding that CAFA’s removal provision (§1453(b)) likewise did not allow removal. The Supreme Court affirmed.
The general removal statute, 28 U.S.C. §1441(a), provides that “any civil action” over which a federal court would have original jurisdiction may be removed to federal court by “the defendant or the defendants.” Similarly, CAFA provides that a “class action” may be removed to federal court by “any defendant without the consent of all defendants.” 28 U.S.C. §1453(b).
Home Depot argued that because a third-party counterclaim defendant is a “defendant” to the claim against it, it may remove pursuant to §1441(a). The Supreme Court disagreed based on the structure of the statute and precedent. When determining whether a district court has original jurisdiction over a civil action, it must evaluate whether that action could have been brought originally in federal court, either because it raises claims arising under federal law or because it falls within the court’s diversity jurisdiction. The Court noted that the presence of a counterclaim is irrelevant to whether the district court has “original jurisdiction” over the civil action because the “civil action” of which the district court must have original jurisdiction is the action as defined by the plaintiff’s complaint and the “defendant” to that action is the defendant to that complaint, not a party named in a counterclaim. Further, the Court noted that Congress did not intend for the phrase “the defendant or the defendants” in §1441(a) to include third-party counterclaim defendants because the Federal Rules of Civil Procedure differentiate between third-party defendants, counterclaim defendants, and defendants. Additionally, in other removal provisions, Congress clearly extended the reach of the statute to include parties other than the original defendant (See §1452(a) and §§1454(a) and (b)), whereas §1441(a) does not so clearly extend its reach. Section 1441(a) limits removal to “the defendant or the defendants” in a civil action over which the district courts have original jurisdiction. Section 1441(a), therefore, does not permit removal by any counterclaim defendant, including parties brought into the suit for the first time by a counterclaim.
Home Depot also argued that it could remove under §1453(b) because of the different wording of that statute. It argued that although §1441(a) permits removal only by “the defendant or the defendants” in a “civil action,” §1453(b) permits removal by “any defendant” to a “class action.” The Court disagreed, holding that there was no indication that this language does anything more than alter the general rule that a civil action may not be removed on the basis of diversity jurisdiction “if any of the … defendants is a citizen of the State in which such action is brought.” The Court found that the two clauses in §1453(b) that use the term “any defendant” simply clarify that certain limitations on removal do not limit removal under that section. The Court specifically found held that neither alters the limitation on who can remove, which suggests that Congress intended to leave that limit in place.
The Court also referenced and reaffirmed its holding in Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941), which held that an original plaintiff may not remove a counterclaim against it. The Court found that this decades-old holding applies equally to third-party counterclaim defendants.
Justice Alito wrote a lengthy dissenting opinion (joined by Justices Roberts, Gorsuch, and Kavanaugh), arguing that a “defendant” is a ‘person sued in a civil proceeding’ and that the majority’s decision leaves third-party defendants unprotected under §1441 and CAFA. He thus asserted that the majority opinion reads an irrational distinction into the removal statutes.
As noted by the dissent, this inability of a third-party defendant to remove raises concerns about out-of-state bias, the inability to take advantage of federal procedure rules, and the inability to use multidistrict litigation procedure.
Dangerous Advertising: Violations of a fair trade practices statute creates new liability for firearm manufacturers and sellersApril 4, 2019 | James Seigfreid and Andreea Sharkey
On December 14, 2012, Adam Lanza used his mother’s XM15-E2S to shoot his way into the locked Sandy Hook Elementary School. Lanza killed twenty-six persons and wounded two others. The attack lasted four and one-half minutes. One hundred fifty-four rounds from Lanza’s XM15-E2S were fired.
The XM15-E2S Bushmaster is an AR-15 assault style semi-automatic rifle. It is similar to the standard issue M16 military service rifle used by the United States Armed Forces. Following the shooting, plaintiffs (Sandy Hook parents and others) filed actions against the Bushmaster Firearms International, LLC company (Remington) alleging a number of distinctive theories of liability. Among these was the claim that defendant wrongfully advertised and marketed Lanza’s assault rifle, emphasizing its character as a military style assault rifle suitable for offensive combat missions. Plaintiffs alleged, among other things, that this advertising was unethical, oppressive, immoral, unscrupulous, and in violation of the Connecticut Unfair Trade Practices Act (“CUTPA”). Defendants countered that the CUTPA was not broad enough to encompass such a claim and that defendants were immunized from suit by the federal Protection of Lawful Commerce in Arms Act (“PLCAA”).
The trial court agreed. On appeal, however, the Connecticut Supreme Court in Soto v. Bushmaster Firearms International, et al. concluded that the PLCAA did not immunize firearms manufacturers or suppliers who engage in wrongful marketing practices promoting criminal conduct. The Court also found that the CUTPA was indeed broad enough to address wrongful advertising practices and that it would fall to a jury to decide whether or not the defendant’s advertising violated standards set forth in Connecticut’s Unfair Trade Practices Act.
The CUTPA is an unfair and deceptive acts and practices statute with counterparts in every state. These acts prohibit deceptive, unfair and unconscionable practices and commonly create private rights of action for individuals harmed by the practices prohibited. Many such statutes also create authority for governmental entities or state consumer protection officials to bring suit.
Historically, firearms manufacturers and sellers have relied on the PLCAA bar to claims and immunize them from suits for injuries caused by the criminal conduct of third-party gun users. The Court in Soto, however, held that the PLCAA did not insulate Bushmaster from claims related to its advertising and marketing of the XM15-E2S assault style weapon.
The Connecticut Supreme Court also found that while prior interpretations limited the reach of the CUTPA with respect to such claims, plaintiffs’ claims in this case would be permitted. The holding expands the scope of the Connecticut statute in at least three important respects: (1) plaintiffs no longer need to have a “commercial relationship” with defendant; (2) personal injuries are now a cognizable harm under the CUTPA; and (3) continuous advertising up to and including the date of plaintiffs’ filing prohibits the tolling of applicable statutes of limitation.
While this ruling greatly changes the use and landscape of the CUTPA in Connecticut, the Court has only addressed the issue of standing in this case and no disposition has yet been made on the merits of plaintiffs’ claims.
The ruling is likely to encourage plaintiffs in other states to challenge advertising and marketing by firearm manufacturers under similar and applicable unfair practices acts. Plaintiffs’ challenge in Connecticut may be the first of many such efforts yet to come.
Soto v. Bushmaster Firearms Int'l, LLC, 331 Conn. 53, 157 (2019)
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