Post-BMS, Courts Grapple with the Nexus Between Stream of Commerce Activities and the Plaintiff’s Claim Required for Specific Jurisdiction over Manufacturers in Product Liability Cases

Courts have struggled for decades to define the constitutional limitations on personal jurisdiction over major product manufacturers who sell their products nationwide. The central tension has been determining the validity and potential scope of the “stream of commerce” theory in a world of advancing technology and associated evolution of business operations and practices. That tension is increasing as state courts decide what kind of nexus is required, between a defendant’s “forum-directed” commercial activities and the plaintiff’s claim, to justify the exercise of specific jurisdiction. Specifically, how purposefully forum-directed and how closely tied to the specific claim must the activities be?

Stream of commerce theory posits that a defendant that has placed a product into the nationwide channels of commerce should anticipate that its products will thereby be “swept” into any state and if it causes injury there, it will be subject to suit. In its purest form, the theory collides to some degree with the fundamental limiting requirement that a defendant may be haled into a forum to litigate only where it has “purposely availed” itself of the privilege of doing business by, for example, directing its products into the forum.

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Biotin Supplement Suit Dismissed on Preemption Grounds

A California federal judge tossed a proposed class action against allegedly “worthless” biotin dietary supplements on preemption grounds earlier this week, citing the Ninth Circuit’s recent decision in Dachauer v. NBTY, Inc., 913 F.2d 844 (9th Cir. 2019).

In Greenberg v. Target Corp., et al., the plaintiff filed a putative class action alleging that labeling for Target’s Up & Up brand of biotin dietary supplements was misleading under California’s Unfair Competition Law (UCL) and Consumer Legal Remedies Act (CLRA).

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The Trend Toward MDLs in Products Cases

A review of multidistrict litigation (MDL) statistics confirms the increasing percentages of federal cases being consolidated into MDLs. According to the Judicial Panel on Multidistrict Litigation (JPML) website, as of June 2019, 202 MDLs were pending in 46 different federal districts, in 32 different states, before 160 different transferee judges. California boasts the largest number of MDLs, with 30. New York State is close behind with 26. The 141,721 cases included in these MDLs represent more than 50 percent of the federal civil docket. More than 30 percent (or 70 MDLs) of the pending MDLs are products liability cases, a significant increase from 16 percent in 2005. And, of the 70 MDLs, more than 50 are litigations involving pharmaceutical products and/or medical devices. These numbers highlight the increase in the frequency with which products liability cases are being coordinated in MDL proceedings.

The MDL statute enacted in 1968 allows for the transfer of cases “involving one or more common questions of fact … pending in different districts” to “any district for coordinated or consolidated pretrial proceedings.” 28 U.S.C. § 1407(a). After an MDL is established, later-filed cases involving the same questions of fact are seamlessly transferred to the MDL as tagalong cases. The efficiencies seen in MDL proceedings since 1968 have caused the MDL docket to grow dramatically. In the early years, the “caseload was relatively flat—in the late 1970s and throughout the 1980s, the Panel averaged only around 40 [consolidation] motions per year.” Emery G. Lee III et al., “Multidistrict Centralization: An Empirical Examination,” 12 Journal of Empirical Legal Studies,  211, 221 (2015). By the 1990s, the MDL caseload was growing rapidly. Today, the JPML reports that it considers more than 55 motions per year on average, and as of the end of 2018, MDLs accounted for 52 percent of all civil cases pending in federal court.
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Products in a New Dimension: Manufacturing Considerations for 3D-Printed Products

Since its advent more than 30 years ago, the 3D printing market has grown, and will continue to expand for a myriad of reasons, including sustainability and reduced energy consumption. As the process, including the applicable technology, becomes more cost-effective, its widespread use continues to increase across many industries, such as aerospace and defense, energy, architecture and construction, automotive, food/culinary, consumer products and health care.

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The CPSC Releases Framework of Safety for the Internet of Things

The rapidly developing technology of interconnected software allows consumers to reach new heights of convenience and efficiency. We can start our dinner remotely, listen to our music in every room in the house, track and log our heart rate and step count, and program our coffeepot to be ready for us in the morning. This technology sometimes is called the Internet of Things (IoT), which describes the interconnectedness of devices via the internet. These devices can exchange data between themselves to coordinate a variety of helpful functions. While this technology is exciting and signifies many positive new directions for consumer products, manufacturers should be aware of the potential risks that come with creating such products.

To that end, the U.S. Consumer Product Safety Commission (CPSC) released a Framework of Safety for the IoT (the CPSC Framework) in January 2019. The CPSC Framework provides “technology-neutral best practices to ensure consumer product safety” and to prevent “death, physical injury or illness” resulting from the use of IoT products. It is not intended to address privacy or confidentiality. While general in tone, the CPSC Framework is intended to assist with an “active approach” to safety rather than a reactive one in this quickly growing industry.

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Third Circuit Holds Online Retailers May Be Liable for Defective Third-Party Products Under Pennsylvania Product Liability Laws

The Third Circuit Court of Appeals has held that online retailers such as Amazon could be held liable for allegedly defective third-party products sold through its website.
In a 2−1 panel decision in Oberdorf v. Amazon.com, Inc., — F.3d —, 2019 WL 2849153 (3d Cir. July 3, 2019), the Third Circuit Court of Appeals reversed the district court’s ruling that Amazon was not a “seller” under § 402A of the Restatement Second of Torts, and therefore could be held strictly liable under Pennsylvania products liability law.

Pennsylvania has adopted Restatement Second of Torts § 402A, which “specifically limits strict products liability to ‘sellers’ of products.” Because the Pennsylvania Supreme Court has not yet addressed whether an online sales listing service such as Amazon Marketplace qualifies as a “seller” under § 402A, the district court was tasked with predicting what the Pennsylvania Supreme Court would decide under Pennsylvania law.

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