Out-of-State Defendants Score Win as Court Strikes Nonresident Class Members for Lack of Personal Jurisdiction — Chicago Class Action Defense Attorneys — Chicago Consumer Fraud Lawyers

An Illinois Federal District court recently handed Telephone Consumer Protection Act (“TCPA”) claim defendants a win of sorts by slashing the size of a putative class, striking all out-of-state residents from the putative class on personal jurisdiction grounds. The case, Garvey v. American Bankers Insurance Co. of Florida, is just one of an increasing number of cases limiting the scope of potential class actions filed in states other than the defendant’s home state.

On May 10, District Judge Sharon Johnson Coleman of the District Court for the Northern District of Illinois struck all non-Illinois residents from a putative class in a TCPA class action filed against two Florida corporations. The ruling relied heavily upon the Supreme Court’s 2017 decision in Bristol Myers Squibb v. Superior Court of California, San Francisco Cty., 137 S. Ct. 1773 (2017), which limited California courts’ jurisdiction over an out-of-state defendant in a mass tort action.

Although not a mass tort case, Garvey concerns alleged telemarketing calls using an automated telephone dialing system to individuals without their prior express consent in violation of the TCPA. The plaintiff, who is an Illinois resident, sought to certify a class consisting of “[a]ll persons in the United States and its Territories” who had received similar calls from the defendants. The two defendants, both incorporated in and having their principal places of business in Florida, moved to strike all non-Illinois plaintiffs from the putative class on grounds that the court lacked general or specific personal jurisdiction over the defendants with regard to the claims of those plaintiffs. The defendants, however, did not challenge the court’s jurisdiction to adjudicate the claims brought by Illinois residents. The Garvey court relying on the Supreme Court’s decision in Bristol Myers agreed with the defendants, finding that it lacked personal jurisdiction over the companies to decide claims brought by nonresidents of Illinois.

The Supreme Court’s decision in Bristol Myers, while not a class action, dealt with a concept ultimately fundamental to every case: personal jurisdiction. Courts may hear a case and decide a claim only if it has personal jurisdiction over the defendant or defendants. Personal jurisdiction can be either general or specific. General jurisdiction exists in the defendant’s “home state,” which for a corporation is the state in which the corporation is incorporated or where is headquarters. As its name implies, general jurisdiction provides the broadest basis for a court to decide claims filed against a defendant. When a court has general personal jurisdiction, it can decide any claims against that defendant, assuming the court has subject matter jurisdiction to decide such a claim. Specific jurisdiction, on the other hand, arises out a defendant’s particular actions in a state. Where a court only has specific jurisdiction over a defendant, it may only decide claims that arise out of or relate to that defendant’s particular actions in the state.

In Bristol Myers, a group of mostly non-Californian plaintiffs injured throughout the country brought a products liability action in California state court against a pharmaceutical manufacturer. The defendant, who was incorporated in Delaware and headquartered in New York, challenged the state court’s jurisdiction over it with regard to non-Californian plaintiffs. The state courts ruled that they had specific jurisdiction over the defendant, which the defendant appealed to up to the Supreme Court. The Supreme Court overturned this ruling finding that the state courts lacked specific jurisdiction over the defendant for nonresident plaintiffs. As the Supreme Court explained, to have specific jurisdiction over a defendant, the plaintiff’s claim must arise out of or relate to the defendant’s contacts with that particular forum (i.e. state). The nonresidents’ claims lacked this link because, the Supreme Court explained, “the nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California.”

 It is important to note that Bristol Myers was not decided in the context of a Rule 23 class action, but its application to class actions like Garvey has been increasingly common. Garvey represents one more in a growing list of favorable opinions for out-of-state class action defendants. This precedent is important because it limits class action plaintiffs’ ability to forum shop for a favorable venue to bring nationwide class action lawsuits. The plaintiffs’ bar largely agrees with Justice Sotomayor’s dissent in  Bristol Myers that this precedent does little to improve litigation but rather simply creates a multiplicity of suits—requiring duplication of efforts and the potential for conflicting decisions.

Our Naperville, Illinois consumer rights law firm handles individual and class action gift card, data breach, privacy rights, deceptive advertising, predatory lending, unfair debt collection, lemon law, and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totaling over a million dollars to organizations including the National Association of Consumer Advocatesthe National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at Lubin Austermuehle are proud of our achievements in assisting national and local consumer rights organizations to obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Elgin and Aurora consumer attorneys provide assistance in data breach, privacy violation, fair debt collection, consumer fraud, and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases our Chicago consumer lawyers have handled. You can contact one of our Skokie and Waukegan consumer protection attorneys who can assist in consumer fraud, consumer rip-off, lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime and other consumer class action cases by filling out the contact form at the side of this blog or by clicking here.  You can also call our toll-free number at (833) 306-4933.