Longtime readers of the Blog know we have a soft spot in our hearts for Nebraska. The state motto—“Equality Before the Law”—is both elegant and meaningful, and we should also call it progressive, given that it dates back to 1867—one year before ratification of the Fourteenth Amendment. We have also previously shared our affection for the shallow, meandering Platte River, which is among North America’s most underrated waterways. Not because of its navigability—as Bexis says, the Platte River is “a mile wide and six inches deep”—but because the Platte River Valley has been an overland highway to the West for hundreds of years. That now includes the option of Interstate 80, which traverses the river multiple times as it makes its way up a gentle slope to the Rocky Mountains.
Well, what if you get sued in Nebraska? That is what happened to a New Jersey-based pharmaceutical company in Bishop v. Amneal Pharm. Pvt. Ltd., No. 8:22-cv-11, 2022 WL 4000544 (D. Neb. Sept. 1, 2022), and a federal judge in the District of Nebraska filed a very useful order dismissing that out-of-state defendant for a lack of personal jurisdiction.
It seems that personal jurisdiction based on a “stream of commerce” runs no deeper than the Platte. And for good reason. The Nebraska plaintiff alleged “on information and belief” that the New Jersey defendant was the distributor of the prescription drug she took while residing in Nebraska, which would be the kind of forum contact that could support specific personal jurisdiction. What was the “information” upon which she formed that “belief”? Not much, if anything. She was prescribed the drug in Nebraska; she ingested the drug in Nebraska; and she purchased the drug from a Nebraska pharmacy that printed part of the defendant’s name in its records. Id. at *4. That is all fine and good, but there is nothing there about who actually distributed the product in Nebraska.
By comparison, the defendant submitted a declaration stating that it did not engage in any business in Nebraska and distributed its products only through third-party distributors. Id. at *3-*4. Based on these facts, the district court dismissed the defendant from the case. The plaintiff bears the burden of establishing a prima facie case of personal jurisdiction, and while the court will view the facts in the light most favorable to the plaintiff, “conclusory allegations and speculation are insufficient where no other allegations provide plausible factual support.” Id. at *7.
The plaintiff fell short of her burden. Her allegation that the defendant distributed the drugs that she ingested were “on information and belief,” which are “only conclusory and speculative.” Id. at *9. A pharmacy record included the defendant’s name, but that exhibit alone allowed no plausible inference that this particular defendant actually distributed the product in Nebraska. Id. Nor was it sufficient that the defendant placed the product into the stream of commerce knowing that it would be sold in Nebraska. The district court knew that because of the U.S. Supreme Court’s opinion in Bristol-Myers Squibb:
In Bristol-Myers Squibb, the Court linked specific jurisdiction either to a foreign defendant’s particular acts within the forum or the particular acts of its agent and/or alter ego subsidiary/distributor. 137 U.S. at 1781-83. Specifically, the Court stated, “[T]he bare fact that [a foreign defendant] contracts with [a forum-state] distributor is not enough to establish personal jurisdiction.”
Id. (quoting Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), emphasis ours). The defendant’s declaration established without contradiction that it distributed its products in Nebraska only through third-party distributors. Thus, to the extent the plaintiff was basing personal jurisdiction on the mere foreseeability flowing from the defendant’s relationships with third parties, that theory was “inapplicable in light of Bristol-Myers.” Id. As we discussed shortly after Bristol-Myers Squibb was decided, constraining the scope of the questionable stream-of-commerce jurisdictional theory was one of the key points of that case. Due process does not permit taking personal jurisdiction over one entity based only on the forum contacts of another. More is required.
The major takeaways from Bishop are that (1) pleading “on information and belief” will not carry the day when seeking to establish personal jurisdiction and (2) merely placing a product into the stream of commerce will not suffice either, even when it is foreseeable that the product will reach the forum.
There are, however, two additional points worth noting. First, both sides challenged the court’s jurisdiction: The defendant challenged personal jurisdiction, and the plaintiff challenged subject matter jurisdiction following the defendant’s removal of the case to federal court. The district court decided personal jurisdiction first, which was a good outcome for the defendant because it resulted in dismissal, as opposed to a remand to state court. Id. at *5-*6. Federal courts usually handle dueling jurisdiction challenges like these in this sequence (see for example here, here, and here), but not always.
Second, the district court denied the plaintiff’s request to take jurisdictional discovery. The plaintiff’s assertion that discovery might reveal the nature of the defendant’s contracts and communications with downstream distributors was “entirely speculative and conclusory.” In other words, the plaintiff was seeking “an unwarranted fishing expedition” into jurisdictional facts that were not reasonably controvertible. Id. at *10. Enough said. We are told the fishing for rainbow and brown trout in the Platte River is pretty good.