Prior to the adjudication of an issue, a court must inquire into its jurisdiction, for without jurisdiction, a court’s holding is not binding. Before a court can decide a case, it must have jurisdiction over both the parties (personal jurisdiction) and the subject matter. Rule 4 of the Federal Rules of Civil Procedure governs personal jurisdiction in federal courts, extending jurisdiction within the territorial boundaries of the state in which the district court is located, as well as anywhere service is amenable under the state’s long-arm provision. In addition, Rule 4 confers jurisdiction in certain third-party actions under the “bulge provision” and in any action expressly proscribed by statute. However, any assertion of personal jurisdiction over a non-resident defendant must satisfy the due process standards of the Fourteenth Amendment.
Adapting Due Process to Match Your Tort: In re DES: A Novel Approach to Jurisdiction, St. John’s Law Review, Issue 3 Volume 67, Number 3 Article 9, April 2012.
The Supreme Court interpretation of due process for jurisdictional purposes has evolved from a strict test of physical presence to a liberal test based on “minimum contacts” and fairness. A valid exercise of jurisdiction under the Due Process Clause requires minimum contacts between the non-resident and the forum state, as well as fairness and reason in requiring the defendant to litigate in the forum at issue. To establish minimum contacts, “some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State” is necessary. Recently, however, in Ashley v. Abbott Laboratories an re Des), a mass tort diethylstilbestrol (DES) action, the United States District Court for the Eastern District of New York held that a non-resident defendant corporation, lacking traditional minimum contacts, was within the jurisdictional grasp of the forum.
In Ashley, the plaintiff class was comprised entirely of New York residents. The defendant, Boyle & Co. (“Boyle”), was a California-based pharmaceutical corporation, which operated west of the Mississippi River and was involved in the manufacture and distribution of DES between 1949 and 1960. Boyle occupied less than one-half of one percent of the DES market and never shipped any products to New York. Furthermore, Boyle was never licensed to do business in New York, nor had any agents or offices within the state. For purposes of determining jurisdiction under the New York long-arm statute, the court found that, absent any proof to the contrary, the “situs of the injury” must be New York, where the plaintiffs’ mothers probably had ingested the DES. In addition, the court concluded that any DES manufacturer should “‘reasonably expect its act to have . . .consequences in New York,” merely by participating in “the national marketing of a generic drug …. – Finally, since Boyle had “received substantial revenue from commerce in several states,” jurisdiction under the long-arm statute was established.
In deciding whether such an application of New York law satisfied the Due Process Clause of the Constitution, Judge Weinstein recognized that traditional due process analysis precludes state assertions of jurisdiction over non-resident defendants having no physical, territorial nexus with the forum, that is, having committed no voluntary act within the state. Judge Weinstein concluded, however, that “the territorial nexus requirement is, at least in mass tort cases, an unnecessary and debilitating element of the fairness inquiry.” Through its interpretation of Hymowitz v. Lilly & Co., the seminal New York case apportioning liability severally among DES manufacturers according to each manufacturer’s market share, the district court determined that a “direct link” was drawn between the “jurisdictional and substantive components of DES litigation” since a DES plaintiffs recovery under a theory of several liability would be thwarted if all the manufacturers were not brought into court. The Ashley court reasoned that since the substantive law of Hymowitz “empowers plaintiffs in mass tort DES cases to bring in all industry participants to achieve a full and economical resolution,” jurisdictional law should not prevent the “results envisioned.” Judge Weinstein further found that prior precedent must not be a barrier to rational decision making. Thus, the court fashioned a new due process test for mass DES torts, eliminating the territorial nexus requirement, yet preserving the fairness inquiry.
This Comment examines the Ashley decision and suggests that state substantive law should not be allowed to control “due process” interpretation. First, it reviews prior case law on personal jurisdiction. It then explores the substantive DES law of Hymowitz, in connection with the jurisdictional analysis of Ashley. Finally, this Comment evaluates Judge Weinstein’s “new” due process test for mass DES torts, discussing the potential implications of inconsistent application of this standard by the courts.
I. CONSTITUTIONAL STANDARDS OF PERSONAL JURISDICTION
The Supreme Court initially interpreted the Due Process Clause very narrowly. In Pennoyer v. Neff, the Court questioned the validity of judgments over non-resident defendants absent their presence or consent and held that such jurisdictional assertions are precluded by the Fourteenth Amendment. Regarding corporations, presence was originally restricted to the place of incorporation, and later expanded to include principal and other places of business. Attempting to create fair jurisdictional boundaries, the Court utilized the theories of implied consent, corporate presence, and domicile.
The modern view of jurisdiction over foreign corporations, however, derives mainly from International Shoe Co. v. Washington, in which the Court established a due process standard, based on the defendant’s “minimum contacts” with the forum state. The minimum contacts must be judged by the “relationship among the defendant, the forum, and the litigation,” and the quality and nature of the defendant’s activity must be deemed reasonable to require defending a suit in the forum. In other words, the exercise of jurisdiction must relate to the “fair and orderly administration of the laws,” and not offend traditional no tions of “fair play and substantial justice.” Although International Shoe expanded the basis for jurisdiction, it still maintained a certain physical nexus requirement between the forum and defendant.
In World-Wide Volkswagen Corp. v. Woodson, the Supreme Court elaborated on the fairness requirement and set forth five interests which should govern such an inquiry: the burden on the defendant to litigate in the forum; the interest of the interstate judicial system in resolution of the action; the interest of the forum state in the litigation; the plaintiffs interest in obtaining “convenient and effective” results; and the shared interests of the states in promoting substantive social policies.
II. THE DES DILEMMA
A New York Substantive DES Law
Modem jurisdictional standards have developed based on traditional tort actions and other small-scale litigation. Not surprisingly, mass torts and complex litigation present additional problems and concerns, as evinced by nationwide recognition of the DES problem.
In Hymowitz v. Lilly & Co., the New York Court of Appeals was faced with the issue of how to apportion liability among manufacturers of DES in cases in which the identification of the particular manufacturer whose product caused plaintiffs’ injuries was “generally impossible.” After rejecting several methods, the court established a “new” market theory approach, which gives plaintiffs the ability to recover damages caused by DES without specifically identifying the defendant that manufactured the drug which caused the injury. This approach allocates liability severally based upon each defendant’s share of the national market for DES at the time of exposure,60 thus approximating the amount of risk each defendant created for the public at large. Each defendant is absolutely liable for its market share unless it can prove it never manufactured the DES for use during pregnancy. Therefore, causation is not a required element of the “new” market share analysis, and in its absence, defendants are not exculpated from liability. By adopting this “new” market share approach, while imposing only several liability, the Hymowitz court developed “an equitable way to provide plaintiffs with relief they deserve while also rationally distributing the responsibility for the plaintiffs’ injuries among the defendants.”
B. A New Due Process Test for Mass DES Torts
In Ashley, Judge Weinstein traced the evolution of the territorial nexus requirement of minimum contacts from its roots in Pennoyer to its subsumption in International Shoe. This linked the examination of a defendant’s “in-forum activity,” or territorial nexus, to both state sovereignty and fairness analyses. Eventually, however, the territorial nexus requirement was relegated to the fairness inquiry, and state sovereignty reduced to demanding only that the defendant’s acts give rise to a sufficient state interest; thus, “the inquiry has shifted from a territorial to an interest nexus analysis.” The element of territorial minimum contacts, which according to the court must be regarded as a “historical accident,” does not fit within the context of DES litigation. Further, the court observed that such a test has become outdated over time and must be modified to address mass tort suits.
“Conservatively” viewing precedents, Judge Weinstein set forth a two-prong test. Under the first prong, as long as the “forum state has an appreciable interest in the litigation,… the assertion of jurisdiction is deemed prima facie constitutional.”
Under the second prong, the exercise of jurisdiction is constitutional unless, “given the actual circumstances of the case, the defendant is unable to mount a defense in the forum state without suffering relatively substantial hardship.” The test must be applied flexibly to the facts of the case with the assumption of fairness, unless the defendant informs the court of potential burdens.
III. THE DUE PROCESS IMPLICATIONS OF ASHLEY
According to traditional and accepted standards, before addressing issues of substantive law, a court must initially inquire into its power to adjudicate a case. It is submitted that the Ashley court, by altering jurisdictional norms to suit DES litigation, stepped far beyond judicial constraints and produced an adhoc, jurisdictional synthesis of procedural and substantive lawan undertaking best reserved for the legislature. The judiciary cannot adequately resolve a nationwide policy problem by merely extending the outer bounds of personal jurisdiction, which will only lead to greater expense, inequities, and hardships for both plaintiffs and defendants. The Ashley decision, while supported by the desired objective of compensating injured plaintiffs,7 can only be viewed as an abuse of judicial powers.
By altering jurisdictional barriers, the Ashley decision released an economic hydra into the stream of commerce. The elimination of the territorial nexus requirement between the defendant and the forum state disregards the significance of foreseeability, leaving interstate commerce at the mercy of a remote, unforeseeable plaintiff. To permit state substantive law to control jurisdictional standards subordinates the constitutional protection of due process, as well as the traditional forum-defendant relationship, to the transient and malleable standard of the state’s interest in the litigation. The result will be variable and conflicting state jurisdictional guidelines based upon differing tort theories that will arguably expose interstate manufacturers to inconsistent and burdensome liabilities.
It is suggested that due process restrictions on personal jurisdiction must remain consistent regardless of the type of action at issue. This can only be achieved by following the traditional interpretation of due process. This will assure a foreseeable scope of jurisdiction for all potential defendants, uniformity in the application of substantive law, and a degree of certainty in the overall tort system.
Over the past 115 years, personal jurisdiction has evolved due to innovative judicial decisions modifying standards in response to a growing nation. Historically, the defendant’s conduct and relationship to the forum state have been the basis for establishing jurisdiction. The increasing number of mass tort suits, however, has introduced new and troubling legal questions in this area. The solution to policy concerns posed by mass DES torts is not to base jurisdictional standards on state substantive law. The creation of a “new” due process test grounded on state policy will inevitably lead to increased litigation and confusion in our legal system.
In the words of Judge Weinstein,
“We have reached a critical period when more stability and predictability through legislation is desirable.”
The Ashley decision, however, fails to recognize that mass torts, and DES cases in particular, present complicated problems of national magnitude whose solutions lie far beyond the limited power of the judiciary.
John Howard, Summer 1993.
- Click to download the full article.