United States: Supreme Court Changes Gears On Specific Personal Jurisdiction

Highlights

• The U.S. Supreme Court in Ford Motor Co. v. Montana Eighth Jud. Dist. Ct. held that when a company "serves a market for a product in a state and that product causes injury in the state to one of its residents," the state's courts have specific personal jurisdiction to hear the case.
• The main legal issue was whether state courts have specific personal jurisdiction over a corporate defendant that has purposefully availed itself of doing business in a forum state but has not directly caused the plaintiff's injuries in that state through its forum conduct.
• Before Ford Motor Co., plaintiffs had not prevailed in a personal jurisdiction case before the Supreme Court since the 1980s

The U.S. Supreme Court on March 25, 2021, ruled in an 8-0 decision that the connection between the plaintiffs' claims and Ford Motor Co.'s activities in the forum states supported the exercise of specific jurisdiction over Ford.¹ The plaintiffs were injured by the defendant Ford's cars, and they subsequently sued in Montana and Minnesota state courts. Ford moved to dismiss both product liability lawsuits, asserting that personal jurisdiction did not exist where the company's conduct in the forum state had not caused the plaintiff's injuries.² Importantly, the vehicles at issue had not been designed, manufactured nor sold to the plaintiffs in Montana and Minnesota, the forum states. Thus, argued Ford, its activities in those states did not give rise to the plaintiff's claims.³

Supreme Court Decision

The Supreme Court rejected what it dubbed Ford's "causation-only approach" to specific personal jurisdiction.⁴ Instead, Justice Elena Kagan in her majority opinion stated that none of the Court's precedents required "a strict causal relationship between the defendant's in-state activity and the litigation" for specific personal jurisdiction.⁵

Previously, the Supreme Court had ruled in Bristol-Myers Squibb Co. v. Superior Court of California that there must be a connection between the plaintiff's claims and the defendant's activities in the forum state to support specific personal jurisdiction.⁶ Specifically, the Court (and thus all courts) must determine whether the claims "arise out of or relate to the defendant's contacts with the forum."⁷ If so, then the Fourteenth Amendment's Due Process Clause is satisfied as exercising jurisdiction over the defendant is fair.

The defendant Ford argued that a causal link was required to exercise specific jurisdiction in accordance with the Court's decision in Bristol-Myers. However, the majority opinion explained that Ford's interpretation of Bristol-Myers  was too narrow.⁸ In arguing that a causal link was required for the exercise of specific personal jurisdiction, the Court noted that Ford was ignoring the second half of the phrase "arise out of or relate to the defendant's contacts with the forum" and that Bristol-Myers  did not require a causal link between the defendant's contacts with the forum and the cause of action.⁹

Although the Court did not adopt Ford's narrow view of Bristol-Myers, the Court noted that Bristol-Myers  still effectively shuts the door on forum-shopping plaintiffs. Indeed, in that case, the litigants were not residents of nor had sustained injuries in the forum state. The Court in Ford Motor Co. distinguished that example from the instant case where the facts were completely distinguishable. In contrast to the plaintiffs in Bristol-Myers, the plaintiffs in Ford Motor Co. were residents of the forum states, used the allegedly defective products in the forum states, and suffered injuries when those products malfunctioned in the forum states.¹⁰ "In sum, each of the plaintiffs brought suit in the most natural State."¹¹

Important to the Court's analysis was Ford's admission that it had engaged in substantial business in both forum states, including advertising by billboard, TV, radio, print ads and direct mail, maintaining 36 dealerships in Montana and 84 in Minnesota, and distributing replacement parts to its own dealers and independent auto shops throughout both states.¹² Given the substantial amount of contacts that Ford has within the forum states, including selling replacement parts and providing facilities for the maintenance and repair of older Ford vehicles such as the ones involved in the accidents at issue in the case, it is clear that the plaintiffs' causes of action "relate to" Ford's contacts with the forum.

Takeaways and Considerations

This decision further clarifies the law on specific personal jurisdiction and the requirement that a claim "arise out of or relate to a defendant's contacts with the forum" as established in Bristol-Myers. To establish specific personal jurisdiction, a plaintiff must allege either that 1) the cause of action arises out of some action or contact by the defendant in the forum state, or 2) that the cause of action relates to the defendant's contacts with the forum state, which, as Bristol-Myers and Ford Motor Co. make clear, cannot be an illusory connection. Rather, the defendant must have engaged in certain contacts in the forum state that truly have some relation to the cause of action, such as serving a market in the forum state for the defective product.

For practitioners in the product liability context, the recent Supreme Court decision is significant because the specific products involved in the cause of action do not need to have been designed, manufactured or sold within the forum state in order for a state court to exercise jurisdiction. For general commercial litigators, Ford Motor Co. is instructive as it clarifies that there is no requirement for a direct causal link between the defendant's contacts in the forum state and the cause of action; it is sufficient that the cause of action relates to the defendant's forum activities such that it appears that the plaintiff is suing in "the most natural State."

At first glance, it appears that the Supreme Court removed another potential obstacle to jurisdiction, and the result may be that fewer lawsuits are dismissed for lack of personal jurisdiction. On the other hand, defense attorneys can argue that the Court in Ford Motor Co.  still sets a high bar to maintaining specific personal jurisdiction, requiring a sufficient amount of contacts with the forum state to create more than an illusory connection to the cause of action; the plaintiff's claim must still relate to the defendant's contacts in the forum.

Footnotes

1 592 U. S. ____, No. 19-368, 2021 WL 1132515, at *1 (U.S. March 25, 2021).

2 Id. at *3 (emphasis added).

3 Id. at *5.

4 Id.

5 Id.

6 137 S. Ct. 1773, 1776 (2017).

7 Id. at 1780 (quoting Daimler AG v. Bauman, 571 U.S. 117, 127 (2014)).

8 No. 19-368, 2021 WL 1132515, at *8.

9 Id. at *4.

10 Id. at *8.

11 Id.

12 Id. at 6.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.