Another Roadside Attraction: The Supreme Court’s Latest Route Guidance on Personal Jurisdiction in Products Liability Cases

Faegre Drinker Biddle & Reath LLP

On March 25, the U.S. Supreme Court decided Ford Motor Co. v. Montana Eighth Judicial District Court, revisiting the issue of due process limitations on the exercise of personal jurisdiction, most recently addressed by the Court in 2017 in Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1783 (2017) (“BMS”).  A unanimous Court (8-0, with Justice Barrett not participating) held in Ford Motor that courts in Montana and Minnesota could hear claims by residents of those states alleging injuries sustained in accidents that occurred there involving Ford vehicles.  Relying on Ford’s extensive contacts with those states, which consisted of efforts to create and serve local sales and service and repair markets for the same kinds of vehicles, the Court concluded these plaintiffs’ claims were sufficiently “related to” Ford’s local contacts, even though the actual vehicles in the accidents were designed, manufactured and initially sold in other states.  (We commented here on the state court decisions in these cases before Ford sought certiorari.)

Ford acknowledged that it “purposefully avail[ed] itself of the privilege of conducting activities” in both states, but argued that personal jurisdiction required a causal connection between Ford’s local contacts and the plaintiff’s injury – that Ford’s specific forum contacts must give rise to the claims.  Ford argued they did not because the vehicles were designed, manufactured and first sold elsewhere.  But the Court rejected the argument that due process requires a “strict causal relationship,” holding that the test is whether the claim “arise[s] out of or relate[s] to the defendant’s [forum] contacts,” and that the “relates to” half of the disjunctive phrase means that “some relationships will support jurisdiction without a causal showing.”

The Court concluded that a “strong relationship” or “affiliation” existed between Ford, the forum states, and the litigation, because Ford had “systematically served” the states’ markets for the very types of cars that allegedly malfunctioned and injured the plaintiffs in those states.  The Court cited and emphasized dicta in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980), a case holding only that Oklahoma could not exercise jurisdiction over a New York car dealer when a car it sold in New York later caught fire in Oklahoma.  Jurisdiction over the manufacturer was not contested there, but in dicta, the Court suggested that the manufacturer could be sued in Oklahoma if it engaged in systematic activities to create and serve the local automobile market.

Applying the twin “values” underlying the due process limits on specific jurisdiction, the Court first found the exercise of jurisdiction fair to Ford because its extensive activities to serve the local markets created reciprocal obligations to protect residents who used Ford products and account for defects causing injury there (fairness to the plaintiff was not discussed as part of the calculus), and those activities provided “clear notice” that Ford could be haled into court in those states for alleged defects in the products it markets within the state.  Jurisdiction also comported with the value of “interstate federalism”; the Court applied a comparative interest analysis and concluded that the states of accident, injury, and residence had more at stake than the state where the product was initially bought by a stranger to the suit.

The Court also observed that a causal link was possible on this record, that the purchases might well have been influenced by Ford’s marketing activities and the prospects of convenient ability to service and repair the vehicle locally.  But the Court reiterated that no such link was needed – “jurisdiction should not ride on” establishing the reasons for purchase (emphasis ours).

Perhaps of most interest for pending and future cases, the Court distinguished BMS and Walden v. Fiore, 571 U.S. 277 (2014), both relied on by Ford.  BMS held that California could not hear claims alleging defects in a medication, brought by plaintiffs who did not live in California, were not prescribed and did not take the medication there, and did not sustain any injuries there, even though the drug was sold nationwide.  The Court found it inapposite because the forum and the manufacturer’s local activities “lacked any connection to the plaintiffs’ claims”; plaintiffs had no tie to the state and were simply “engaged in forum-shopping—suing in California because they thought it was plaintiff-friendly.”  In contrast, here there was a legitimate basis to file suit in the states, as plaintiffs were forum residents who had used, and been injured, by the product there.

Walden involved Georgia police officers who allegedly wrongfully seized the property of plaintiffs, Nevada residents, at a Georgia airport, and were sued in Nevada.  The Court held that plaintiffs’ residence was not a sufficient basis for jurisdiction.  The Ford Motor Court distinguished Walden as revolving around the defendants’ lack of any contacts with Nevada; in contrast, Ford here had a “truckload of contacts” with the forum states.  (Emphasis ours)

The concurring opinions by Justice Alito and by Justice Gorsuch (joined by Justice Thomas) criticized the majority’s unnecessary and unwise “innovation” in adopting an amorphous “affiliation” test shorn of the need for “any kind of” causal link.  Both opinions accused the majority of parsing the judge-made phrase “arising out of or related to” like a statute, and predicted the test would cause lower court confusion.

Ford Motor is another case defining the due process limits of specific jurisdiction over product manufacturers with national markets.  But its impact is likely to be limited, confined mostly to durable mobile products likely to be sold in one state but that allegedly malfunction and cause injury in another.  It does not signal any retreat from BMS’s limits on litigation tourism; indeed, it reinforces them by relying heavily on the fact that plaintiffs were forum residents injured in the forum.  It also emphasized the systematic and continuous nature of the manufacturer’s product-related activities in the form, contrasting “isolated or sporadic” contacts that do not give rise to jurisdiction from “continuous” contacts – another nail in the coffin of the pure “stream of commerce” theory of jurisdiction over product manufacturers.  Accordingly, Ford Motor would seem no basis for jurisdiction in a suit over non-causal, remote, and temporary or occasional product-related activities.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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