The Challenge: Your pharmaceutical client has just been served with a multi-plaintiff complaint in state court. Only one plaintiff is from the state of filing; the other 74 are citizens of other states and allege no meaningful contact with the filing state. There are not enough plaintiffs to remove under the Class Action Fairness Act (“CAFA”). Accordingly, the only vehicle for removal is diversity jurisdiction. But one of the out-of-state plaintiffs is a resident of the state in which your client is incorporated, which facially defeats diversity.

To establish personal jurisdiction in the filing state, plaintiffs allege that your client subjected itself to general jurisdiction by introducing products into the stream of commerce and doing business in the state,. But the Supreme Court has rejected this argument, finding that a corporation is only subject to general jurisdiction where it is “at home”, which, absent unusual circumstances, is only in the state(s) where it is incorporated and/or has its principal place of business. Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (reiterating its holding in Goodyear Dunlap Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011)).

After Daimler, the practical question remained of how to overcome the “jurisdictional hierarchy” often presumed by reviewing courts that subject-matter jurisdiction must be considered before personal jurisdiction. If subject-matter jurisdiction is considered first, the district court will lack jurisdiction because there is no diversity on the face of the complaint. But if personal jurisdiction is addressed first, the out-of-state, non-diverse plaintiffs would be dismissed and the court would retain jurisdiction over the remaining in-state plaintiff through complete diversity.

Put another way, how can your pharmaceutical client raise a personal-jurisdiction challenge to remove or dismiss the 74 out-of-state plaintiffs from the multi-plaintiff state court case before the court has to decide potentially thornier subject-matter jurisdiction issues, such as fraudulent joinder, fraudulent misjoinder, or sham joinder?

For the solution, click here.