We recently covered the United States Supreme Court’s troubling decision in Ford Motor Company v. Montana Eighth Judicial District Court, 141 S. Ct. 1017 (2021), which has broadened the reach of specific personal jurisdiction for many product manufacturers.  In an 8–0 decision, the Court held that some companies (like Ford) may be subject to specific jurisdiction in any U.S. forum where a product-related injury occurs, regardless of whether the defendant’s contacts with the forum were a “but for” cause of the injury.  Though the Court attempted to limit its analysis to the “arise out of or relate to” prong of the specific jurisdiction test, the decision’s reach extends uncomfortably beyond that provision.  Of particular concern is its impact on another key element of the specific jurisdiction analysis:  purposeful availment.  

Manufacturers of component parts—car starters, motorhome chassis, etc.—typically have little to no direct contact with the state where the final product ends up and where a plaintiff files suit, raising the question of whether the manufacturer “purposefully availed” itself of the forum state’s laws.  End-product manufacturers may present a slightly different question, but they have historically been afforded a defense to personal jurisdiction through “stream of commerce” jurisprudence.  In either circumstance, Ford theoretically should not impact the analysis, as Ford did not dispute that it had “purposefully availed” itself of the forum states’ laws.  In practice, however, the evidence the Supreme Court relied on for its holding carries with it the ominous conclusion that Ford may have broader implications than the Court intended.

This article discusses the purposeful availment test, its historical application to product manufacturers under “stream of commerce” jurisprudence, and the potential impacts Ford may have on the standard.

Specific Jurisdiction and Purposeful Availment:  An Overview

Personal jurisdiction is a limitation on a court’s powers over nonresident defendants.  In keeping with this limitation, the exercise of personal jurisdiction must comport with the due process guarantees of the U.S. Constitution.  Courts assess the due process question through two lenses: (1) specific (“case-linked”) jurisdiction; and (2) general (“all-purpose”) jurisdiction.  Recent case law has limited the reach of general personal jurisdiction to entities whose contacts with the forum state are so “continuous and systematic” that it can fairly be regarded as “at home.”[1]  Specific jurisdiction, on the other hand, carries with it a more complicated assessment.

Specific jurisdiction is “confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.”[2]  It comports with due process only where a nonresident corporation (1) purposefully directed its activities at the forum state, and (2) the litigation arises out of or relates to those activities.[3]  When there is no connection between the plaintiff’s claims and the defendant’s in-state contacts, “specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.”[4]

An easy example of specific personal jurisdiction arises when a nonresident driver gets into a car accident in the forum state.  The forum state will have specific jurisdiction over the out-of-state driver to the extent the claims stem from the car accident; these claims “arise out of or relate to” the defendant’s contact with the forum state, i.e., his driving on roads in the state.

The analysis is thornier when a product is blamed for the injury and the product was not manufactured or sold in the state of injury.  Take the same car wreck example as above, but include a products claim against the manufacturer of the plaintiff vehicle’s brake system for failing to stop the car in time to avoid the crash.  If (a) the brake system was not manufactured in the state of injury, and (b) the plaintiff unilaterally brought the vehicle into the state of injury, can the component part manufacturer be sued in that state? What about the car manufacturer?  As outlined above, the answer lies in part on whether each manufacturer “purposefully availed” itself of the forum.  For decades, two tests have been used to assess purposeful availment in products cases: (1) “stream of commerce”; and (2) “stream of commerce plus.”

The Development of the Stream of Commerce and Stream of Commerce “Plus” Tests

“Stream of commerce” refers generally to the movement of goods from manufacturer to end consumer.[5]  The Supreme Court first coined the phrase in World-Wide Volkswagen Corp. v. Woodson.[6]  It explained:

[I]f the sale of a product of a manufacturer or distributor . . . is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others.[7]

Seven years after World-Wide Volkswagen, the Court revisited “stream of commerce” in Asahi Metal Industry Co. v. Superior Court of California, which produced two separate plurality opinions that were divided on how the concept should be applied.  In Justice O’Connor’s view, the “placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State.”[8]  Advancing what courts now refer to as the “stream of commerce plus” test, Justice O’Connor explained that courts should focus on whether the defendant has engaged in “additional conduct” that “indicates an intent or purpose to serve the market in the forum State,” such as by “designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor” in the forum state.[9]

Justice Brennan disagreed.  In his view, “a defendant who has placed goods in the stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State’s laws that regulate and facilitate commercial activity.”[10]  Because “these benefits accrue regardless of whether that participant directly conducts business in the forum State,” he argued, minimum contacts exist where the defendant places a good into the stream of commerce with awareness “that the final product is being marketed in the forum state.”[11]

Neither Justice’s viewpoint carried the day in Asahi; the opinion had no majority.  And although the Court returned to the issue 25 years later in J. McIntyre Machinery, Ltd. v. Nicastro, that case produced another divided opinion with no prevailing majority.[12] With no further stream of commerce pronouncements from the Supreme Court, the two competing views advanced in Asahi have lived on, and courts across the country apply various formulations of one view or the other—all of them, of course, before the Supreme Court issued Ford.

“Stream of commerce plus” jurisdictions include the Fourth and Sixth Circuits, as well as the state of Texas, concluding that a defendant must create “a substantial connection to the forum state by action purposefully directed toward the forum state or otherwise invoking the benefits and protections of the laws of the state” in order to be haled into court in that forum.[13]  These courts have recognized that the more expansive approach would “subject defendants to judgment in locations based on the activity of third persons and not the deliberate conduct of the defendant, making it impossible for defendants to plan and structure their business contacts and risks.”[14]

In “stream of commerce” jurisdictions, on the other hand, the analysis focuses on whether the manufacturer reasonably expected, at the time it placed its product into the stream of commerce, that the part would make it into the forum state.  Jurisdictions such as the Fifth and Eighth Circuits (and again several states) subscribe to this view.[15]  From a policy standpoint, advocates of this approach rely on the notion that a defendant who placed parts into the stream of commerce benefits from the retail sale of a final product in the forum state.[16]  As such, “the possibility of a lawsuit there cannot come as a surprise,” and the litigation will not “present a burden for which there is no corresponding benefit.”[17]

Ford’s (Unintentional?) Impact on “Stream of Commerce” Jurisprudence

Prior to Ford, component part manufacturers typically escaped liability under both stream of commerce tests.  The “stream of commerce” courts often found jurisdiction lacking when the product exited the “stream of commerce” before entering the forum state.  The Fifth Circuit recently held, for example, that the defendant who manufactured a component of a motorcycle’s braking system was not subject to jurisdiction in Mississippi because the bike was originally sold to a consumer in Florida.[18]  Because the bike exited the “stream of commerce” before entering Mississippi, the manufacturer had not “purposefully availed” itself of Mississippi law.[19]  End product manufacturers oftentimes also avoided jurisdiction on this basis, although not as consistently as component part manufacturers.[20]

But what about now?  As noted above, Ford purportedly focused on the “arise out of or relate to” test, i.e., part two of the two-pronged specific jurisdiction analysis.  (As a reminder, even where a defendant purposefully avails itself of the benefits and protections of the forum state, specific personal jurisdiction is not proper unless the plaintiff’s claims also “arise out of or relate to” the defendant’s contacts with the forum state).[21]  If Ford doesn’t even mention “stream of commerce,” how could it impact that part of the analysis?

Back to our car wreck example from earlier.  Ford is that example, with the added fact that the car’s manufacturer regularly distributed and sold its cars in the forum states (note: Ford consisted of two consolidated cases).  The cars involved in the crashes, however, were originally designed, manufactured, and sold outside of the forum states.  Under these facts, is the car manufacturer subject to jurisdiction in the states of injury? And what role does the manufacturer’s conduct in regularly distributing and selling other cars in the states of injury play in the analysis?

In Ford, the Supreme Court found Ford’s in-state conduct sufficient to meet the “arise out of or relate to” test.  It said Ford’s promotion, sales, and servicing of vehicles in the forum states “ma[de] it easier to own a Ford” and thereby “encourage[d residents] to become lifelong Ford drivers.”[22]  Because the plaintiffs may never have bought their Fords but for Ford’s conduct in the states of injury, the Supreme Court said the “relationship among the defendant, the forum[s], and the litigation,” was “close enough” to exercise specific jurisdiction.[23]

There appears to be a fundamental flaw in the Court’s reasoning.  Think about the evidence the Supreme Court is relying on to find the plaintiffs’ claims “arise out of or relate to” Ford’s conduct:  regularly conducted business in the forum, i.e., “purposeful availment” evidence.  The Court does not even shy away from calling out the test:

Small wonder that Ford has here conceded ‘purposeful availment’ of the two States’ markets.  By every means imaginable—among them, billboards, TV and radio spots, print ads, and direct mail—Ford urges [residents] to buy its vehicles …. Ford cars—again including those two models [at issue in the lawsuits]—are available for sale, whether new or used, through the States …. The company’s dealers in [the forum states] (as elsewhere) regularly maintain and repair Ford cars, including those whose warranties have long since expired.  And the company distributes replacement parts both to its own dealers and to independent auto shops in the two States.  Those activities, too, make Ford money.[24]

In other words, the Supreme Court found Ford’s “purposeful availment” so strong that it automatically satisfied the “relatedness” requirement because of a slight correlation between the nature of the claims and the defendant’s contacts.

So, has the Court conflated the two-part test that we discussed earlier in this article?  If evidence of purposeful availment is sufficient to satisfy the “arise out of or relate to” test, is there even a two-part test anymore? And did the Court intend to drastically alter some of its age-old axioms that have appeared in opinion after opinion?

Consider this: prior to Ford, the Supreme Court consistently held that a defendant could not be subjected to specific personal jurisdiction based on the unilateral activity of the plaintiff.[25]   But in Ford, wasn’t it the unilateral activities of the plaintiffs (or other consumers) that brought the cars into the forum states?  Even setting aside the notion that Ford’s activities in those states (advertising, maintaining service centers, etc.) increased the likelihood that a plaintiff would purchase a Ford, the company didn’t ship these cars into the states of injury.  They were both brought into the forum states by the independent actions of consumers, long after they had originally left Ford’s possession (or even that of a separate Ford dealership).  It’s true that the subject matter of the plaintiffs’ claims bared resemblance to Ford’s in-state activities, but none of Ford’s actions directly contributed to the cars’ presence in the forum states.

For some defendants, then, Ford takes away the stream of commerce test.  As we have discussed, jurisdictions applying the more expansive approach typically hold that a product effectively exits the “stream of commerce” once it is sold to a final consumer.  If that consumer later brings the product into the forum state, the defendant is off the hook (unless it’s “at home” or has some other connection that would subject it to jurisdiction).  Under Ford, if the manufacturer’s purposeful availment of the forum is sufficiently extensive, it does not matter that the product exited the stream of commerce before arriving in the forum.  In fact, the Court arguably created a new type of personal jurisdiction for companies like Ford—pseudo general jurisdiction (where a large company can be subject to jurisdiction on any claims that resemble its activities in the forum state).

But stream of commerce will still live on for others.  For component part manufacturers that sell only to the end product manufacturer and do not control, or otherwise have a role in, where the end product is sold—such as the company who manufactured the component of the bike’s braking system in the Fifth Circuit case discussed earlier—“stream of commerce” should still matter for them.  In other words, if they did not otherwise “purposefully avail” themselves of the forum state, it would not be fair to hale that manufacturer into court in the forum.

Ford and the fairness consideration

The Court’s overarching focus in assessing personal jurisdiction – in Ford and all personal jurisdiction challenges – is whether the “maintenance of the suit [would] offend traditional notions of fair play and substantial justice.”[26]  In other words, is it fair for the defendant to defend itself in the forum?  In his concurrence in Ford, Justice Alito said this “standard [was] easily met here” based on Ford’s longstanding and heavy presence in the forum states—could “anyone seriously argue,” he asked,” that requiring Ford to litigate these cases . . .would be fundamentally unfair?”[27]  Justice Alito’s answer was, of course, “no.”  This focus on fundamental fairness may indeed prove to be a lifeline for many defendants who, unlike Ford, do not engage in the type of systematic activity in the forum state described in the Court’s opinion.

Keep in mind, Ford is a global company that engages in the type of “systematic” campaigns discussed by the Court to serve the markets in every state in the U.S., and its product is, by its nature, mobile and transient.  It is certainly foreseeable that a car purchased in one state would make it into another.  As the majority mentioned, and as Justice Alito took a step further in his concurrence, the “whole point of th[ese] activities was to put more Fords . . . on Minnesota and Montana roads.”[28]  Justice Alito found it “reasonable to infer that

the vehicles in question here would never have been on the roads in Minnesota and Montana if they were some totally unknown brand that had never been advertised in those States, was not sold in those States, would not be familiar to mechanics in those States, and could not have been easily repaired with parts available in those States.[29]

The relationship between Ford’s activities and the lawsuits, in Justice Alito’s view, was “causal in a broad sense of the concept, and personal jurisdiction can rest on this type of link without strict proof of the type Ford would require.”[30]

With that said, the Ford decision may present significant difficulties for large manufacturers of end-user products that are heavily marketed to consumers, and that are likely to move from one state to another.  Component part manufacturers—particularly those who do not advertise or intentionally engage in systematic campaigns to increase the presence of their parts in a given state—will likely be able to continue relying on the “stream of commerce” principles discussed above.  A company that makes, distributes, and sells snowmobiles in Canada, for example, isn’t likely to be haled into a Louisiana court.  And it’s also worth noting that the Ford Court specifically mentioned that Ford had targeted the specific models at issue (a Crown Victoria and an Explorer) in the forum states.  If the car had been of the sort that Ford only targets to certain states, the analysis may have been different.

Conclusion

Ultimately, Ford’s precise impact remains to be seen.  The decision undoubtedly changes the landscape for the worldwide car manufacturer and other companies like it, but component part manufacturers and other companies who do not systematically avail themselves of the state of injury, or who do not produce mobile products, should be able to rely on stream of commerce jurisprudence to defend against future litigation.  And so long as fundamental fairness remains the essential inquiry, defendants whose contacts do not rise to the level of Ford’s should be safe.

[1] See Daimler AG v. Bauman, 571 U.S. 117, 138-39 (2014) (explaining that unless exceptional circumstances dictate otherwise, defendants are only amenable to suit via general jurisdiction in its state of incorporation or the state where its principal place of business is located).

[2] Bristol-Myers Squibb Co. v. Super. Ct. of Cali., 137 S. Ct. 1773, 1780 (2017).

[3] Alpine View Co. Ltd. v. Atlas Copco AB, 205 F.3d 208, 215 (5th Cir. 2000).

[4] Bristol-Myers Squibb Co., 137 S. Ct. at 1781.

[5] J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 881 (2011).

[6] 444 U.S. 286 (1980)

[7] Id. at 297.

[8] Asahi Metal Indus. Co., Ltd. v. Super. Ct. of Cali., 480 U.S. 102, 112 (1987) (O’Connor, J., plurality opinion).

[9] Id. at 112.

[10] Id. at 117 (Brennan, J., plurality opinion).

[11] Id.

[12] See Nicastro, 564 U.S. 873.

[13] Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 945-46 (4th Cir. 1994) (“To permit a state to assert jurisdiction over any person in the country whose product is sold in the state simply because a person must expect that to happen destroys the notion of individual sovereignties inherent in our system of federalism.”); Bridgeport Music, Inc. v. Still N The Water Publ’g, 327 F.3d 472, 479–80 (6th Cir. 2003) (“we make clear today our preference for Justice O’Connor’s stream of commerce ‘plus’ approach”); Semperit Technische Produkte Gesellschaft M.B.H. v. Hennessy, 508 S.W.3d 569, 577 (Tex. App. 2016) (noting Texas courts apply “stream of commerce plus” approach).

[14] In re Celotex Corp., 124 F.3d 619, 629 (4th Cir. 1997).

[15] Ainsworth v. Moffett Eng’g, Ltd., 716 F.3d 174, 177 (5th Cir. 2013) (“In cases involving a product sold or manufactured by a foreign defendant, this Circuit has consistently followed a ‘stream-of-commerce’ approach to personal jurisdiction.”); Clune v. Alimak AB, 233 F.3d 538, 542-545 (8th Cir. 2000) (holding personal jurisdiction proper where foreign manufacturer delivered products into stream of commerce with knowledge they would enter forum).

[16] See Asahi Metal Indus. Co., 480 U.S. at 116-17 (Brennan, J., plurality opinion).

[17] Id.

[18] Stubblefield v. Suzuki Motor Corp., 826 F. App’x 309, 313-15 (5th Cir. 2020).

[19] Id.

[20] See,.e.g., Eddy v. Printers House (P) Ltd., 627 F. App’x 323, 327 (5th Cir. 2015) (affirming dismissal of printing press manufacturer for lack of jurisdiction whose product exited stream of commerce when it was sold to consumer outside of forum); DeJesus v. BRP US Inc., No. 1:18-CV-0010-RP, 2019 WL 2563844, at *3 (W.D. Tex. Mar. 25, 2019), report and recommendation adopted, No. 1:18-CV-10-RP, 2019 WL 2563832 (W.D. Tex. Apr. 16, 2019) (granting motion to dismiss for lack of personal jurisdiction where it was unclear whether allegedly defective outboard motor was still in stream of commerce when it entered forum state).

[21] Bristol-Myers Squibb Co., 137 S. Ct. at 1785-86.

[22] Ford Motor Co., 141 S. Ct. at 1028.

[23] Id. at 1032.

[24] Id. at 1028..

[25] World-Wide Volkswagen Corp., 444 U.S. at 297-98; Walden v. Fiore, 571 U.S. 277, 284-85 (2014).

[26] Ford Motor Co., 141 S. Ct. at 1032 (Alito, J., concurring).

[27] Id. (Alito, J., concurring).

[28] Id. at 1033 (Alito, J., concurring).

[29] Id. (Alito, J., concurring).

[30] Id. (Alito, J., concurring).