In the March edition of Predominant Issues, we reported on the first two appellate decisions (from the D.C. and Seventh Circuits) to address whether the Supreme Court’s landmark personal jurisdiction decision in Bristol-Myers Squibb v. Superior Court of California applies to putative class actions. Now, the Fifth Circuit has weighed in, holding that a defendant does not waive the right to challenge personal jurisdiction as to the claims of absent class members by not raising that argument in a motion to dismiss—provided that the defendant properly preserves the argument in its answer and through its subsequent litigation conduct.
- In Cruson v. Jackson National Life Insurance Company, Texas plaintiffs brought a putative class action against Jackson National Life Insurance Company in the Eastern District of Texas, alleging that Jackson overcharged them by miscalculating fees for early withdrawals from the annuities they had purchased from Jackson.
- Jackson filed a motion to dismiss the initial complaint and an amended complaint for lack of subject-matter jurisdiction and failure to state a claim. Jackson did not assert a personal jurisdiction defense in either of its motions to dismiss. But its answer expressly denied that the court had personal jurisdiction with respect to the claims of putative class members residing outside Texas.
- In its opposition to the plaintiffs’ motion to certify a nationwide class, Jackson argued that the court lacked personal jurisdiction over the non-Texas class members’ claims. The district court held that Jackson waived this defense by not raising it in its initial Rule 12(b) motions and by litigating the merits of the plaintiffs’ claims. The court granted the motion for class certification.
- Jackson filed a Rule 23(f) petition, which the Fifth Circuit granted. On appeal, the Fifth Circuit concluded that Jackson had not waived its personal jurisdiction defense as to the claims of the non-Texas class members.
- The court explained that a defense which is omitted from a Rule 12 motion is waived only if the defense was “available” to the defendant at the time the motion was filed. Jackson’s personal jurisdiction defense as to the absent class members, however, was not “available” at the time of Jackson’s motion to dismiss, because the absent class members “were not yet before the court when Jackson filed its Rule 12 motion.”
- In other words, the absent class members’ claims only became relevant, and the personal jurisdiction defense only became “available” to Jackson, when the district court certified the class. Because Jackson asserted its personal jurisdiction defense at that juncture, Jackson did not waive the defense.
- The Fifth Circuit declined to address the merits of Jackson’s personal jurisdiction defense, leaving that issue for the district court to determine in the first instance. The panel observed that although “Bristol-Myers provided new legal support for Jackson’s objection, the Supreme Court’s decision did not make the objection ‘available.’ Certification did.”
- Although the Fifth Circuit’s ruling constituted a “win” for the defendant on the waiver issue, it may make matters more difficult for class action defendants in the Fifth Circuit, as the court’s reasoning suggests that district courts will no longer dismiss the claims of out-of-state absent class members for lack of personal jurisdiction at the pleading stage. Like the Seventh Circuit and D.C. Circuit opinions before it, however, the Fifth Circuit’s ruling did not call into question the generally prevailing view after Bristol-Myers Squibb that non-resident named plaintiffs may not pursue claims in jurisdictions where the defendant is not subject to general jurisdiction.
Read the Fifth Circuit’s opinion here.