Mind Your Step: Navigating Landmines in the Joint Defense Landscape
1. By Ronald J. Levine and Sharon A. O’Shaughnessy
In the mass tort litigation context, where one plaintiff typically brings similar
claims against numerous defendants within a particular industry, the coordi-
nation of defense efforts among codefendants can be a very prudent course
of action. By banding together to develop a litigation strategy and common de-
fense, competitor companies can pool their knowledge, expertise, and resources
to achieve the most beneficial outcome for their respective clients. This practice,
however, is fraught with landmines that can have a devastating effect on clients
and practitioners alike.
In complex mass tort cases, different lawyers necessarily represent different
clients with respect to issues of common concern. While formulating a joint de-
fense is a collaborative effort, the attorneys involved in multi-defendant mass tort
litigations must not lose sight of the fact that they may be sharing work product
and confidential information with their competitors, which has the potential to
leave clients exposed and pave the way for future litigation between codefen-
dants. Additionally, in the absence of establishing preemptive safeguards prior
to formulating a joint defense — namely a carefully tailored joint defense agree-
ment — attorneys may run into a host of conflict of interest and waiver issues,
unwittingly create an attorney-client relationship with other codefendants, and
ultimately expose themselves to malpractice liability.
Accordingly, it is important for all mass tort defense attorneys to: 1) understand
what benefits are achieved by engaging in a joint defense; 2) identify when a joint
defense agreement may be utilized; 3) be cognizant of why it is crucial to draft a
joint defense agreement carefully; and 4) learn how to draft a joint defense agree-
ment that will best protect the interests of both attorney and client.
In This Issue
PERIODICALS
By Larry Goldhirsch
Everything you learned in law
school about jurisdiction (unless
you just graduated) has been
turned on its head. In 2014,
two Supreme Court decisions
radically changed jurisdictional
rules, which were in place since
the middle of the 20th century.
One of the most important con-
siderations for a firm retained in
a product liability case is to de-
termine where to file suit. These
two recent cases will have im-
mediate, far-reaching conse-
quences for all product liability
litigators, plaintiff or defense.
Daimler AG v. Bauman, 134
S.Ct. 746 (2014) and Walden v.
Fiore, 134 S.Ct. 1115 (2014) se-
verely restrict jurisdiction over
out-of-state defendants, and will
add to plaintiffs’ already existing
problems in product liability cas-
es caused by Twombly-Iqbal (fact-
specific pleading) and Daubert
(expert evidence) requirements.
Jurisdiction Refresher
There are two kinds of juris-
diction. General jurisdiction per-
mits a state to exercise its power
over a defendant domiciled in
the state or that is “doing busi-
ness” in the state. “Doing busi-
ness” meant defendant engaged
in a substantial, continuous, and
systematic course of conduct
Volume 33, Number 9 • March 2015
JointDefense:
Navigating
Landmines.............. 1
PracticeTip:
Jurisdiction.............. 1
CaseNotes.............. 3
Product Liability
Law & Strategy ®
LJN’s
PRACTICE TIP
continued on page 4
continued on page 2
Jurisdiction in
Product Liability
Cases After 2014
Mind Your Step: Navigating Landmines in the
Joint Defense Landscape
3. March 2015 Product Liability Law & Strategy ❖ www.ljnonline.com/ljn_prodliability 3
being a codefendant does not auto-
matically translate into an alignment
of interest, and the joint defense
privilege only attaches for as long as
the common litigation-related inter-
est exists between the codefendants.
While the joint defense agreement
can be limited to specific issues and
may not necessarily need to encom-
pass the entire litigation or shared
defense strategy, the shared infor-
mation between the parties must
further the joint defense effort and
be related to the common litigation-
related interest in order to be pro-
tectable.
There must also be an objective
agreement among the parties to the
joint defense agreement to maintain
confidentiality. Because the “joint
defense privilege” does not create
an independent privilege, attorneys
and clients should be mindful that
the privilege is delicate and sharing
information with third parties may
destroy it.
Last, before entering into a joint
defense agreement and disclosing
confidential information to the joint
defense team, attorneys should: 1)
carefully consider whether they
could effectively represent their cli-
ent without participating in a joint
defense; 2) conduct a careful analy-
sis of all theories of liability against
the codefendants as well as their
available defenses; and 3) make
a determination as to whether the
codefendants and their attorneys
are trustworthy. This is absolutely
critical because, if codefendants in a
joint defense group become adverse
and develop causes of action against
one another during the litigation, it
is possible for an attorney to use
confidential information against the
opposition that was obtained dur-
ing the course of the joint defense
effort.
In sum, if there is a possibility
that divergent interests exist or that
codefendants or their counsel are
not trustworthy, an attorney should
either refrain from entering into the
agreement altogether or narrow the
scope of the agreement to ensure
that it only applies to aligned inter-
ests.
3. Why
Once an attorney has determined
that entering into a joint defense
agreement does not pose a risk of
substantial harm to his or her cli-
ent’s interests, the next step is to
ensure that the joint defense agree-
ment is clearly and carefully drafted
in order to preempt conflict of inter-
est, waiver, and imputed attorney-
client relationship issues down the
line.
Participation in a joint defense
amplifies the risk that attorneys
will encounter a conflict of interest.
By way of example, if an attorney
shares privileged communications
with the joint defense group and is
later determined to have a conflict of
interest, that could result in poten-
tially disastrous results for the entire
group, up to and including disquali-
fication of all attorneys involved in
the joint defense agreement. To that
end, it is recommended that practi-
tioners carefully vet the other attor-
neys and firms involved in the joint
defense effort in order to reduce the
risk of disqualification and secure a
representation from each law firm
that it is free of conflicts and will
guard against them in the future. It
is recommended that the joint de-
fense agreement contain provisions
that: 1) specifically address current
conflicts of interest and outline their
resolution; 2) expressly waive future
conflict of interest claims; 3) prohib-
it the disqualification of attorneys
based on the realignment of parties
during the course of litigation; and
4) clearly delineate that each party
is solely represented by its own
counsel.
Next, while the general rule is
that a party to a joint defense team
may not unilaterally waive the “joint
defense privilege” without the con-
sent of the other participants, it is
prudent to include a provision in
the joint defense agreement that
explicitly provides as such. Without
this safeguard in place, it is possible
for a court to find that a waiver of
the privilege has transpired if mem-
bers of the joint defense team have
disclosed confidential information
to third parties.
Participating in a joint defense
also bolsters the risk that an im-
plied attorney-client relationship
may be formed, which could give
rise to legal malpractice claims by
codefendants. Because some courts
evaluate whether an attorney-client
relationship exists on the basis of
whether the client subjectively be-
lieves that he or she is consulting a
lawyer intending to seek profession-
al legal advice, the act of sharing
confidential information may lead a
codefendant to believe that such a
relationship has been created. It is
therefore recommended for counsel
engaged in a joint defense effort to:
1) actively refrain from any conduct
that could lead to such a perception;
and 2) include a written disclaimer
of the attorney-client relationship
from the other codefendants in the
joint defense agreement.
It is also important to heed the
fact that, should parties to a joint
defense agreement become adverse
in subsequent proceedings, the
previous communications between
the parties that were made pursu-
ant to the joint defense agreement
can lose their privileged status un-
less the parties explicitly agree oth-
erwise. See Restatement (Third) of
Law Governing Lawyers, § 76 cmt. f.
It is therefore critical to insert a pro-
vision into the joint defense agree-
ment stating that the joint defense
privilege is not waived between the
signatories to the agreement under
any circumstance and that all com-
munications made pursuant to the
joint defense agreement will remain
privileged in subsequent adverse
proceedings. Similarly, with respect
to cross-claims, it is recommended
that the parties insert a “standstill”
provision into the joint defense
agreement that defers the assertion
of cross-claims until after the suit is
brought to a final disposition.
4. How
Careful crafting of a joint defense
agreement is essential in order to
shield both attorneys and their
continued on page 4
Joint Defense
continued from page 2
4. 4 Product Liability Law & Strategy ❖ www.ljnonline.com/ljn_prodliability March 2015
clients from the quagmire of harms
that can arise from engaging in a
joint defense. Because joint defense
agreements may be discoverable, it
is advisable both to refrain from in-
cluding any specifics about the joint
defense strategy in the agreement
and to insert a provision providing
that the agreement itself is confi-
dential. At a minimum, clauses that
merit serious consideration for in-
clusion should contain language to
the following effect:
• The parties to the agreement are
actual or potential defendants
in litigation with common inter-
ests and the sharing of joint de-
fense materials is in the parties’
common interest and necessary
to the establishment a common
defense strategy;
• All attorneys have performed
thorough conflict checks and
are free from existing conflicts
of interest;
• The right to disqualify attorney
members of the joint defense
group based on access to joint
defense materials or the re-
alignment of parties during the
course of litigation is waived;
• Waiver of the joint defense priv-
ilege can only be achieved by
the consent of all parties;
• Any attorney client-relationship
(including any duty of confiden-
tiality or loyalty) between an at-
torney and client other than the
attorney’s pre-existing client is
expressly disclaimed, and no
such relationship will arise by
implication;
• Communications or materials
that fall within the applicable
privilege may only be disclosed
to parties to the agreement and
their agents (and the parties
may so specify the parameters
for using these materials as
well);
• All parties are prohibited from
using shared information that
they otherwise would not have
obtained against one another
(in an adverse manner or oth-
erwise);
• The agreement remains opera-
tive as to all information ex-
changed pursuant to the agree-
ment if adversity arises between
the parties;
• The time for filing any cross-
claim will be deferred until af-
ter the suit is brought to a final
disposition;
• Parties may only withdraw from
the agreement upon written
notice (a method for returning
shared materials should be es-
tablished as well);
• Communications between par-
ties to the agreement related to
the joint defense that occurred
prior to the date of the agreement
are also subject to the joint de-
fense privilege;
• The joint defense privilege ex-
tends beyond the conclusion of
the litigation; and
• All parties to the agreement will
be notified if any party to the
agreement effectuates a settle-
ment.
Other Considerations
Even if mass tort defense practi-
tioners are not involved in a multi-
party litigation where a joint de-
fense agreement is necessary, there
are existing resources — such as
the Product Liability Advisory Coun-
cil’s (PLAC) secure, members-only
website — where non-confidential
deposition transcripts, new case
developments, and comments on
case strategy are available. (Further
information available from Hugh R.
Young, Jr., President, at hyoung@
plac.net.)
While these tools are useful to
assist attorneys in understanding
what is going on in their respec-
tive industries, contributors to these
websites should be cautioned that
the plaintiff bar has been known to
serve subpoenas on companies for
e-mails between competitors sug-
gesting conspiracies or as a means
to embarrass corporations.
in the state. One could sue such a
defendant for any cause of action
arising anywhere, even though the
cause of action had no connection
to the state. Lawyers often refer to
general jurisdiction as “doing busi-
ness” jurisdiction.
In 1945, the Supreme Court ex-
panded jurisdiction to include non-
domiciliary corporations. Interna-
tional Shoe Co. v. Washington, 326
U.S. 310 (1945). International Shoe
held that jurisdiction could arise
when a non-domiciliary defendant,
not “doing business” in a state, had
“minimum contacts” with the state
so long as the maintenance of the
suit did not offend “traditional no-
tions of fair play and substantial jus-
tice” and the cause of action arose
from the defendant’s state-connect-
ed activity. The “minimum contacts”
could even be “some single or oc-
casional acts.”
This type of jurisdiction, which is
more often used in product liabil-
ity cases, is called “long arm juris-
diction” because out-of-state service
of process was contemplated. After
1945, states began to pass “long arm
statutes” to comport with the due
process considerations of Interna-
tional Shoe. Some states provided
that long arm jurisdiction would be
allowed to the full extent permitted
by due process. Others, such as New
York, provided a list of activities
that would qualify as a “minimum
contact” so as to permit jurisdiction,
e.g., tortious acts without the state
that cause injury in New York.
The Supreme Court, from time
to time, has reminded lawyers that
long-arm jurisdiction may not ex-
ceed the limits of due process. Thus,
one must show that the defendant
has purposely availed itself of the
continued on page 5
Joint Defense
continued from page 3
Practice Tip
continued from page 1
Larry Goldhirsch, a member of this
newsletter’s Board of Editors, is Tri-
al Counsel to Weitz and Luxenberg’s
Drug and Medical Device Litigation
Department.
—❖—
5. March 2015 Product Liability Law & Strategy ❖ www.ljnonline.com/ljn_prodliability 5
privilege of conducting activities in
the forum state (Hanson v. Deckla,
357 U.S. 235 (1958)); the defen-
dant’s conduct must be such that he
should reasonably anticipate being
hauled into court there (World Wide
Volkswagen Corp. v. Woodson, 444
U.S.286 (1980)); or the defendant
has purposefully directed his activi-
ties at residents of the forum (Burg-
er King v. Rudzewicz, 471 U.S. 462
(1980)). Mere purchases of products
in the forum are not sufficient for ju-
risdiction over an out-of-state manu-
facturer (Helicopteros Nacionales
de Colombia, S.A. v. Hall, 466 U.S.
408(1984)) and placing a product
into the “stream of commerce” may
not be sufficient where the cause of
action is unrelated to the purchase
(Asahi Metal Industry Co. v. Superi-
or Court of California, 480 U.S. 102
(1987) and Goodyear Dunlop Tires
Operations, S.A. v. Brown, 131 S. Ct.
2846 (2011)).
Daimler v. Bauman
In 2011, the Supreme Court de-
cided Goodyear Dunlop Tires Op-
erations, S.A. v. Brown, supra., in
which it held that in order to sue an
out-of-state corporation, one would
have to show that the corporation is
“at home” in the forum state.The de-
cision, by Justice Ginsberg, did not
tell us what “at home” meant. We
found out in Bauman.
Bauman dealt with claims arising
in Argentina and filed in California
by Argentine citizens against Daim-
ler Benz, a German entity, for having
collaborated with the Argentine gov-
ernment to cause injury and death
to Daimler employees. The plaintiffs
argued that Daimler’s contacts with
California subjected it to general ju-
risdiction, as did having a subsidiary,
Mercedes Benz U.S., whose con-
tacts, likewise, gave rise to general
jurisdiction that could be imputed to
Daimler. (Mercedes Benz U.S. had an
office in California and sold $4.6 bil-
lion worth of cars and service there.)
The district court dismissed, but the
Ninth Circuit reversed and held that
the theory of agency between the
two defendants was sufficient to give
California jurisdiction over Daimler.
The Supreme Court reversed and de-
cided that $4.6 billion in car sales and
a California office was not sufficient
for jurisdiction. The Court held, in a
decision by Justice Ginsburg, that in
order to obtain general jurisdiction
over a foreign corporation, the plain-
tiff had to show that the corporation
was “at home” in the state, which she
now defined as having been incor-
porated in the forum or had its prin-
cipal place of business in that state.
The Court also said, even assuming
Mercedes Benz U.S. was “at home”
in California, that was not sufficient
for jurisdiction over Daimler because
the latter was neither incorporated
there nor had its principal place of
business there. The Court left open
the door that there might be an ex-
ceptional case where a corporation’s
operations in the forum were so sub-
stantial that it was “at home” even
though it was not incorporated or
had its principal place of business
there; however, it stated that the “do-
ing business” rule to uphold general
jurisdiction, was insufficient and “un-
acceptably grasping.” Evidently, the
Court believed that it would be un-
fair to subject a defendant to suit in
every state in which it had a sizable
sales because that might discourage
foreign investment.
The Bauman decision appears to
do away with “doing business” as
a grounds for general jurisdiction.
Even if it can be argued that there
still are some situations where a
corporation can be “at home” with-
out being incorporated or having its
principal place of business, the deci-
sion radically changes the American
notion of general jurisdiction from a
business contacts test to a domicile-
based analysis similar to the citizen
definition under diversity jurisdic-
tion. (28 USCA 1331). Instead of com-
paring a foreign defendant’s busi-
ness contacts with the forum, courts
now have to compare the relative
magnitude of business in different
states to determine where a defen-
dant is “at home.” This approach was
criticized by Justice Sotomayor in a
concurring opinion, and she would
have affirmed on the basis that juris-
diction in the case would have been
unreasonable in view of the fact that
Argentine plaintiffs were suing a
German entity for conduct that took
place in Argentina with no connec-
tion to the United States.
Walden v. Fiore
The Walden case turned specific
jurisdiction on its ear. In Walden,
the plaintiffs, who were return-
ing to Nevada with their winnings
from a poker tournament in Puerto
Rico, evidently raised the suspicions
of a DEA agent at the Atlanta air-
port when their hand luggage was
checked while changing planes. A
local policeman, Walden, filed an
affidavit concerning probable cause
so that the DEA could test the cash
for drug residue. It tested negative.
When the plaintiffs returned to Ne-
vada, they sued officer Walden for
filing a false affidavit, as well as the
DEA for an illegal search and sei-
zure. The lower court upheld juris-
diction over Walden on the theory
that fraudulent execution of the affi-
davit coupled with Walden knowing
his conduct might have consequenc-
es in Nevada (inability of plaintiffs
to use their winnings) was a suffi-
cient connection to warrant jurisdic-
tion. The Supreme Court dismissed
the case, saying that Walden’s con-
duct did not connect him to Ne-
vada; only the plaintiffs’ conduct of
being in Nevada when they wanted
to spend the money was a connec-
tion. Because Walden’s conduct did
not purposefully create a substantial
claim-related nexus with Nevada,
there was no jurisdiction. Walden
thus restricts jurisdiction over out-
of-state defendants who cause in-
state effects where the defendant
did not aim to cause any effects
within the forum state.
The decision implies that an out-
of-state tortious act, such as negli-
gent design of a product, coupled
with the foreseeability of the manu-
facturer that the product may reach
a particular state is now insufficient
to establish jurisdiction. No longer
will a plaintiff who is merely injured
in his home state be able to sue an
continued on page 6
Practice Tip
continued from page 4
6. 6 Product Liability Law & Strategy ❖ www.ljnonline.com/ljn_prodliability March 2015
out-of-state manufacturer. Many
states’ long arm statutes will be nul-
lified, or at least partially nullified,
by this decision.
Effect on Product Liability
Litigation
First and foremost, plaintiffs will
no longer have the luxury to choose
the forum best suited for conven-
ience and maximum recovery.This
limitation will change the valuation
of cases because the new jurisdic-
tional limitations may require great-
er litigation expense if the forum is
far from the plaintiff’s home state or
the lawyer’s office. Also, there may
even be no forum available in the
U.S. if the defendant is a foreign
manufacturer that does business
through a distributor.
When foreign products fail, the
question will now arise as to where
their manufacturers are “at home.”
Until Bauman, most defendants
with extensive sales in any given
state probably would not have even
contested jurisdiction. But now, with
the new “at home” rules of domicile
and principal place of business, we
will probably see motions addressed
to jurisdiction in such cases. In fact,
if the multinational merely sends its
products to the U.S. for distribution
by, for example, Amazon, the manu-
facturer may not be available for suit
anywhere in the U.S. Does this mean
that American plaintiffs will have to
seek redress in the multinational’s
home country? The answer may very
well be “Yes.” Will bringing the ac-
tion against the distributor suffice?
What discovery will be available in
the U.S. concerning the design and
testing by a foreign manufacturer
if it is not a defendant? Will a dis-
tributor of a foreign manufacturer’s
product be required to produce that
information in discovery? If plain-
tiffs are compelled to undertake dis-
covery using the Hague Convention
on Taking Evidence, (assuming the
manufacturer is in a country that is
a signatory) that will add years of
litigation and tremendous costs to
do so on foreign soil. In fact, many
countries do not even have discov-
ery as we know it, while others pro-
hibit discovery from taking place on
their soil.
Some states permit apportion-
ment of damages against non-par-
ties that should have been sued if
amenable to jurisdiction. Will this
mean that plaintiffs will have to sue
foreign manufacturers, even though
the plaintiff believes there is proba-
bly no jurisdiction in order to avoid
apportionment? Plaintiffs’ lawyers
may have to file in several “back-up”
jurisdictions because they will not
know if there is valid jurisdiction
until the issue is litigated in the first
one. We may see a lot of litigation
by losing defendants on the issue of
jurisdiction against a foreign manu-
facturer after a verdict. Defendants
will want to show there was juris-
diction so they will only have to pay
their pro-rata share of the verdict.
Plaintiffs will try to prove the non-
sued defendant was not amenable
to jurisdiction. Thus, litigation on
jurisdiction will increase. Such time
and expense on an issue unrelated
to the merits of the case is wasteful.
Even where manufacturing de-
fendants are available in the U.S.,
plaintiffs do not like to sue them in
their home state. Picking a jury, for
example, in New Jersey, with jurors
having no connection with some-
one who works for a pharmaceuti-
cal manufacturer is almost unheard
of. If every product liability case had
to be filed where the defendant is
“at home,” it will be more difficult to
select impartial jurors.
The triage required to assess the
viability of cases when a firm accepts
a mass tort claim will be further com-
plicated; when a case comes into the
office, the plaintiff may be running
up against an impending statute of
limitations, especially in those cases
where a long time has passed from
the use of the product. The plaintiff
will have little time to decide where
to file the cases. This makes intake
of mass tort cases even more prob-
lematical than before. And what if
there are multiple defendants in a
case, each of which is domiciled in
a different state? Will the plaintiffs be
able to join them in one courthouse
or will plaintiffs have to start mul-
tiple actions in different states? Will
plaintiffs be relegated to use federal
courts more often because district
courts can transfer whereas state
courts cannot?
What of the usual safe harbor of
filing in the plaintiff’s own state
where the product was purchased,
used and caused injury? It would
seem that the strongest example of
specific jurisdiction occurs when
the out-of-state defendant causes in-
jury to a plaintiff in his or her home
state and the suit is brought there.
Do these two cases change that for-
mula? It appears so, because a for-
eign manufacturer may have sold
his product through a distributor
in the state, like in Daimler v. Bau-
man. Even though the manufacturer
may sell over $1 billion worth of its
products in that state, it may not
have targeted the state. Now, it is
not sufficient if a manufacturer rea-
sonably foresees its products end-
ing up in any particular state: it has
to target that state. How is a firm
supposed to decide if it is safe to file
the case in the plaintiff’s home state
without discovery of the parameters
now needed to obtain jurisdiction.
Out-of-State Defendants
Can one sue an out-of-state de-
fendant that has filed to do busi-
ness in a state where foreign cor-
porations are required to file with
the Secretary of State in order to
transact business? Or where a state
requires an out-of-state corporation
to appoint an agent for service of
process? These situations are now
in jeopardy, whereas before 2014,
most courts permitted “consent” ju-
risdiction over such defendants.
Can a state exercise jurisdiction
over out-of-state plaintiffs who join
plaintiffs from the forum state in an
action brought for the same defect?
Just such a case arose recently con-
cerning a pharmaceutical, Plavix.
In Bristol-Myers Squibb Co. v. Su-
perior Court, 228 Cal. App. 4th 605
(Ct. of App. 1st Dist. Calif.), plain-
tiffs from California and other states
continued on page 8
Practice Tip
continued from page 5
7. March 2015 Product Liability Law & Strategy ❖ www.ljnonline.com/ljn_prodliability 7
First Circuit: Plaintiff
Lacks Standing to Recover
For Allegedly Defective
Product
In Kerin v. Titeflex Corp., 2014
U.S. App. LEXIS 21057 (1st Cir. Nov.
4, 2014), the plaintiff owned a home
with an outdoor fire pit supplied
with natural gas through corru-
gated stainless steel tubing (CSST).
Although CSST can fail when ex-
posed to powerful electrical forces
such as lightning, it is widely used
and approved by both government
and industry regulatory bodies.
Even though the plaintiff’s CSST
had never caused a problem, he
sued its manufacturer in the United
States District Court for the District
of Massachusetts for negligence and
breach of the implied warranty of
merchantability (the Massachusetts
near-equivalent of strict liability).
Citing reports of 141 home fires
that “involved” both CSST and
lighting, the plaintiff alleged that
his CSST was defectively designed
because, in the event of a nearby
lightning strike, it was vulnerable
to puncture and fire, and the defen-
dant had failed to warn of this risk.
The plaintiff sought damages in the
amount of his “overpayment” for the
allegedly defective product or, in
the alternative, the cost of remedy-
ing the alleged safety issue.
The district court dismissed for
lack of standing under Article III of
the United States Constitution, hold-
ing “it is obvious that Plaintiff can-
not clear the ‘injury in fact’ hurdle.”
The court reasoned that the “strand
of conjecture … is simply too at-
tenuated,” requiring both a light-
ning strike and one that effects a
puncture in the CSST. The court also
concluded that even if the plaintiff
had standing, he failed to state a
claim because he did not allege “an
applicable standard against which
[the defendant’s] due care could be
measured” as required to claim eco-
nomic injury from a defective prod-
uct under Massachusetts law.
On appeal, the First U.S. Circuit
Court of Appeals affirmed, although
it deviated somewhat from the dis-
trict court’s reasoning. The appel-
late court first noted that “the law
of probabilistic standing is evolving,
and it is conceivable that product
vulnerability to lightning might, in
some circumstances, constitute inju-
ry.” Typically, plaintiffs suing based
on an enhanced risk of harm allege
two types of injury — 1) the risk of
future harm itself; and 2) the pres-
ent cost or inconvenience created
by the increased risk (e.g., the cost
of mitigation or replacement) — ei-
ther of which can confer standing
so long as the alleged injury is not
too speculative. Whether the risk of
future harm is too speculative de-
pends on the chances the harm will
occur, and here the plaintiff failed to
allege facts sufficient to calculate or
even estimate that risk.
It was impossible to evaluate the
significance of 141 alleged fires that
“involved lightning and CSST” in the
absence of allegations concerning
the time frame over which these fires
occurred, the frequency of lightning
strikes in general, the proportion
of homes struck by lightning or the
likelihood of fire from such strikes.
Nor did the plaintiff allege that CSST
was the cause of the damage in the
141 fires. Finally, the fact that regula-
tory bodies had studied the risk of
lightning-related CSST failures and
concluded it was both permissible
and manageable supported the dis-
trict court’s conclusion that the risk
of future harm was not so great as to
confer standing.
Similarly, the plaintiff’s “overpay-
ment” or cost-of-replacement injury
theory was also too speculative to
confer standing. The court noted
that such a theory is more likely to
support standing where the prod-
uct at issue violates, or may soon
violate, a statute, regulation or stan-
dard of conduct; in such a case, the
legislature or executive agency has
already identified the risk as injuri-
ous and thus the need for mitigat-
ing action is clearer. Here, however,
the plaintiff conceded the CSST did
not violate any regulatory standard,
which is required to state a claim for
a defective product in the absence
of actual damage. Thus, his alleged
present economic injury was entire-
ly dependent on his unsupported
allegation that the CSST was defec-
tive, coupled with a risk of future
injury the court had already found
was too speculative.
MA Federal Court:
Defendants Not Subject to
General Personal
Jurisdiction
In Federal Home Loan Bank of
Boston v. Ally Financial, Inc., 2014
U.S. Dist. LEXIS 140975 (D. Mass.
Sep. 30, 2014), a plaintiff bank sued,
among others, certain credit rating
agencies in the U.S. District Court
for the District of Massachusetts,
alleging they understated the risk
of private label mortgage-backed
securities sold to the plaintiff. The
agencies moved to dismiss for lack
of personal jurisdiction, arguing that
their contacts with Massachusetts
were not such as to render them
“essentially at home” in the state, as
is required for the exercise of gen-
eral or “all-purpose” jurisdiction.
The court denied the motion, but
shortly thereafter the United States
Supreme Court held in Daimler AG
v. Bauman, 134 S. Ct. 746 (2014),
that “only a limited set of affiliations
with a forum will render a defen-
dant amenable to all-purpose juris-
diction there,” the paradigmatic ex-
amples being the defendant’s place
of incorporation or principal place
of business. The defendants then
moved for reconsideration of their
motion to dismiss. The plaintiff op-
posed, and also argued that even if
the court lacked personal jurisdic-
tion, it should sever and transfer the
claims against the rating agencies to
the Southern District of New York,
where personal jurisdiction existed.
Regarding general jurisdiction, the
court first noted that the Supreme
continued on page 8
C A S E N O T E S
8. 8 Product Liability Law & Strategy ❖ www.ljnonline.com/ljn_prodliability March 2015
sued the defendant for the same
alleged defect in its product. The
defendant conceded jurisdiction for
the California resident claims, but
moved to dismiss the non-Califor-
nia claims. The court first held that
there was general jurisdiction over
the defendant; however, after the
decision came down in Daimler v.
Bauman, it changed its mind and
ruled that the court did not have
general jurisdiction over the out-of-
state plaintiffs’ claims. Despite that
ruling, the court went on to hold
that it had specific jurisdiction over
the non-resident claims because the
defendant had engaged in substan-
tial, continuous economic activity in
California that included sales in ex-
cess of $1 billion in that state. That
activity, it said, was sufficiently con-
nected to the non-resident claims to
permit the court to exercise juris-
diction over them, especially where
there are dozens of non-resident
plaintiffs rather than just one or
two. Although this decision com-
ports with prior case law, it may no
longer be valid after Bauman and
is currently on appeal to California’s
Supreme Court.
Conclusion
All of these questions will need
answers; however, it does not look
like they will be forthcoming very
soon. The Walden and Bauman de-
cisions will greatly increase uncer-
tainty in jurisdictional questions for
years until the Court comes up with
clear guidance. Meanwhile, practi-
tioners should seek to file cases in
those states where the defendant is
“at home,” i.e., is incorporated or
has its principal place of business
or in the state where the plaintiff is
otherwise domiciled, assuming that
was his place of injury. Plaintiff at-
torneys should also consider suing
the distributor and/or importer on
the theory that anyone in the chain
of sale is usually a viable defendant
in a product liability case.
The best advice for practitioners
at this point is to read all cases that
will be decided citing Bauman and
Walden. I assure you there will be
many of them.
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Court’s opinion in Daimler made
clear that whether a defendant is
“essentially at home” in the fo-
rum state is not determined by the
quantity of the defendant’s contacts
there, as “[a] corporation that oper-
ates in many places can scarcely be
deemed at home in all of them.” Un-
der this “tighter assessment of the
standard,” the rating agencies could
not be subject to general jurisdic-
tion. Although they had activities in
Massachusetts that generated sig-
nificant revenue, they had similarly
substantial contacts with dozens of
other states. Moreover, the agencies
were neither incorporated nor had
their principal places of business in
the state, and there was no indica-
tion this was an “exceptional case”
under Daimler such that general
jurisdiction should be extended be-
yond those paradigmatic forums.
Regarding the plaintiff’s request
for severance and transfer, two stat-
utes potentially authorized such a
transfer but there were unsettled
questions regarding the applicability
of each. The plaintiff principally re-
lied on 28 U.S.C. § 1631, which per-
mits a “court” that finds “there is a
want of jurisdiction” to transfer a suit
to another “court” in which the suit
“could have been brought.” There
is substantial disagreement among
courts, however, as to whether the
statute applies when either subject
matter or personal jurisdiction is
lacking, or only when the former is.
Although the First U.S. Circuit Court
of Appeals has acknowledged this
controversy, it has declined to weigh
in. The district court held the statute
applies only when subject matter ju-
risdiction is lacking, noting the legis-
lative history indicates the statutory
objective was to ameliorate that kind
of defect, and there is some textual
support for that position as the stat-
ute’s definition of “court” includes
appellate and administrative tribu-
nals where subject matter jurisdic-
tion is often an issue.
The plaintiff also argued that the
case could be transferred under 28
U.S.C. § 1406(a), which authorizes
transfer of a case “laying venue in
the wrong district … to any district
or division in which it could have
been brought.” Notwithstanding the
statute’s textual limitation to ven-
ue-related issues, it has commonly
been cited by courts as authoriz-
ing a transfer to cure a lack of per-
sonal jurisdiction. The court noted,
however, that although it is clear
that where venue is improper, the
statute authorizes transfer to a dis-
trict with proper venue, even if the
defendant was not subject to juris-
diction in the original district, it re-
mains uncertain whether the statute
“may be a vehicle for transfer when
venue is proper in the original dis-
trict, as here — that is, where there
is no venue defect calling for cor-
rection.” Accordingly, the court also
declined to transfer the case under
§ 1406(a), and dismissed all claims
against the rating agencies to per-
mit an immediate appeal to the First
Circuit to clarify the interpretation
of both transfer statutes. — David
Geiger, Foley Hoag LLP
Case Notes
continued from page 7
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Practice Tip
continued from page 6