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    Locke Lord QuickStudy: Fifth Circuit Wades into Debate Over Bristol-Myers; Reverses Class Certification in Case Involving Alleged “Uniform” Breach of Form Contracts

    Locke Lord Publications

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    In Cruson v. Jackson National Life Insurance Company, 954 F.3d 240 (5th Cir. Mar. 25, 2020), the U.S. Court of Appeals for the Fifth Circuit waded into the ongoing debate over whether Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1713 (2017) applies to claims of putative class members in federal nationwide class actions. 

    Although Cruson did not grapple with the merits of that issue, it did address an important and related procedural question:  When should a defendant in a putative class action raise an objection to personal jurisdiction over claims of out-of-state putative class members based on Bristol-Myers?  The court held that a Bristol-Myers defense is not “available” until a district court certifies a class, meaning that defendants should not, and need not, raise the issue in a pre-answer motion to dismiss.

    Relevant District Court Proceedings

    The primary issue in Cruson concerned waiver.       

    The plaintiffs brought a putative nationwide class action against Jackson National Life Insurance Company (“Jackson”) claiming that Jackson overcharged them by miscalculating early-withdrawal fees in breach of their annuity contracts.

    Jackson did not move to dismiss for lack of personal jurisdiction in either of its motions to dismiss. Instead, it asserted lack personal jurisdiction over claims of out-of-state putative class members as a defense in its answer and later argued that the court could not certify a nationwide class because Bristol-Myers foreclosed specific personal jurisdiction over Jackson as to claims by non-Texas putative class members.  (Jackson is “at home” in Michigan.)

    Plaintiffs argued that Jackson waived its objection to personal jurisdiction by failing to raise it in a pre-answer motion to dismiss. The district court ultimately agreed and certified the class.

    The Fifth Circuit’s Decision

    The Fifth Circuit reversed, holding that there was no waiver. It reasoned that an objection to personal jurisdiction over claims of out-of-state putative class members based on Bristol-Myers was not “available” to Jackson prior to class certification because “Jackson’s objection to personal jurisdiction concerned only class members who were non-residents of Texas,” and those members “were not yet before the court when Jackson filed its Rule 12 motions.”  The court concluded that the appropriate time to object to personal jurisdiction as to claims by nonresident class members was after class certification.

    In concluding that a personal jurisdiction defense against nonresident class members is not “available” until after certification, the Fifth Circuit aligned itself with the D.C. Circuit in Molock v. Whole Foods Market Corp., 952 F.3d 293, 296-98 (D.C. Cir. 2020).  In Molock, the majority held that a pre-certification motion to dismiss claims of nonresident putative class members was “premature,”  reasoning that “[p]utative class members become parties to an action—and thus subject to dismissal—only after class certification.” 

    Unfortunately, Cruson did not reach the issue of whether Bristol-Myers applies in federal nationwide class actions, an issue that has deeply fractured the district courts.1 Instead, the court reversed class certification for lack of predominance and stated that Jackson was “free to raise the [personal jurisdiction] defense again should plaintiffs seek to re-certify a class.”  So far, the Seventh Circuit is the only federal appellate court to address whether Bristol-Myers applies to federal nationwide class actions—holding that it does not.  See Mussat v. IQVIA, Inc., 953 F.3d 441, 445-48 (7th Cir. 2020).

    Although Cruson’s discussion of Bristol-Myers will no doubt grab the headlines, the case’s discussion of predominance will be equally important to class action practitioners, especially those defending claims involving the uniform breach of form contracts like annuities and insurance policies. Although breach of contract claims involving form contracts “often lend themselves to class treatment,” the court said, the district court should have undertaken a serious analysis of state law to determine whether common issues would, in fact, predominate. It recognized varying state laws regarding contract interpretation could require a plaintiff-by-plaintiff analysis to determine breach or Jackson’s affirmative defense of waiver. In some states, for example, determining breach would require consideration of extrinsic evidence such individual brokers’ advice regarding the surrender charge calculations. Likewise, whether a putative class member waived any objection to Jackson’s calculation of their surrender charge would require delving into the knowledge of each class member regarding the circumstances.


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    1. Compare Chavez v. Church & Dwight Co., 2018 WL 2238191, at *9-11 (N.D. Ill. May 16, 2018) and In re Dental Supplies Antitrust Litig., 2017 WL 4217115, at *9 (E.D.N.Y. Sept. 20, 2017) (ruling that Bristol-Myers applies in federal class actions and holding no personal jurisdiction over nonresident absent class members), with In re Chinese-Manufactured Drywall Prods. Liability Litig., 2017 WL 5971622, at *8-11 (E.D. La. Nov. 30, 2017) and Fitzhenry-Russell v. Dr. Pepper Snapple Group, Inc., 2017 WL 4224723, at *5 (N.D. Cal. Sept. 22, 2017) (holding that Bristol-Myers does not apply in federal class actions and permitting jurisdiction over nonresident absent class members).

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