In 2017, the Supreme Court issued an 8-1 opinion in Bristol-Myers Squibb holding that 592 plaintiffs who took the medication Plavix outside of California could not bring suit in California because personal jurisdiction was lacking.[i] At the time, it appeared to signal a trend in favor of raising the bar for personal jurisdiction.
But yesterday, in Ford Motor Co. v. Montana Eighth Judicial District, the Supreme Court issued a potentially landmark 8-0 personal jurisdiction ruling siding with plaintiffs. 592 U. S. __ (2021) (slip opinion). While the opinion arose in the products liability context, it has significant implications for personal jurisdiction in all types of cases and across industries and threatens to expand personal jurisdiction in unforeseen ways.
The decision creates a new standard for the second prong of the personal jurisdiction test that requires a defendant’s in-state activities to merely “relate to” the plaintiff’s claims. And in at least some instances, this new “relate to” standard does not require a causal connection. As highlighted in the concurrences to the decision, there is a serious lack of clarity around the new standard. As a result, defendants should be prepared to face more lawsuits outside their home states and engage in many lower court battles on this issue in the near future.
Background. The Supreme Court consolidated two cases against Ford Motor Company involving products liability suits stemming from car accidents. The accidents occurred in Minnesota and Montana, which is where plaintiffs filed their lawsuits. Ford of course generally sells cars in Minnesota and Montana, including the Explorer and Crown Victoria models involved in the accidents. But Ford did not sell the plaintiffs’ particular cars in Minnesota or Montana, nor were the cars designed or manufactured in those states.
Ford moved to dismiss both cases for lack of personal jurisdiction. Both cases made their way up to their respective state supreme courts, which concluded personal jurisdiction existed. The Supreme Court took both cases and heard oral argument on them together.
Personal Jurisdiction Basics. As a personal jurisdiction reminder: There are two types of personal jurisdiction, general jurisdiction and specific jurisdiction. A court has general jurisdiction only where a defendant is “essentially at home.” Claims brought in those jurisdictions need not relate to the forum state or the defendant’s activity there. A corporation’s states of general jurisdiction are its state of incorporation and the state of its principal place of business.
Ford involved specific jurisdiction. A court has specific jurisdiction over a defendant only if the forum state has some connection to the plaintiff’s claims. Determining whether jurisdiction exists in this context involves a three part test: (1) that the defendant purposefully directed its activities to the forum state; (2) that the plaintiffs’ claims “arise out of or relate” to the defendants’ forum activities; and (3) that the assertion of jurisdiction is reasonable and fair. Ford centered on the second prong of this test.
The Majority Opinion. Justice Kagan wrote the majority opinion, joined by Chief Justice Roberts and Justices Breyer, Sotomayor, and Kavanaugh. The Court concluded that personal jurisdiction existed in both lawsuits: “When a company like Ford 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 may entertain the resulting suit.” Id. at 9. But more important than the Court’s conclusion is the road the Court took to get there.
The Court first held that the “purposeful availment” prong of the personal jurisdiction was met, which the Court viewed Ford as conceding. The Court wrote: “By every means imaginable—among them, billboards, TV and radio spots, print ads, and direct mail—Ford urges Montanans and Minnesotans to buy its vehicles, including (at all relevant times) Explorers and Crown Victorias.” Id. at 11.
Thus, the Court focused on the “arise out of or relate to” prong of the test. Ford argued that the prong required a causal connection: that the defendant’s contacts with the forum state must be the alleged cause of the plaintiff’s claims. Many jurisdictions have required some form of causation, whether it be but-for causation[ii], something stronger than but-for causation[iii], proximate cause[iv], or refusing to pick sides.[v] Ford argued that the Court should adopt a proximate-cause test. The defendants in Bristol-Myers Squibb made nearly identical arguments; however, in that case, the Court reached its decision without addressing the role of causation in a personal jurisdiction analysis.
Now, confronted directly with the matter, the Supreme Court rejected Ford’s proximate-cause requirement: “None of our precedents has suggested that only a strict causal relationship between the defendant’s in-state activity and the litigation will do.” Id. at 8. For decades, the Court had not addressed whether “arise out of” and “relate to” were separate requirements or a single concept.[vi] But for the first time in Ford, the Court concluded that “relate to” has a different (and less strict) meaning than “arise out of.” The “relate to” component, according to the Court, “contemplates that some relationships will support jurisdiction without a causal showing.” Id. (emphasis added).
The Court then applied its new test to the cases before it: “Ford had systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs allege malfunctioned and injured them in those States. So there is a strong ‘relationship among the defendant, the forum, and the litigation’—the ‘essential foundation’ of specific jurisdiction.” Id. at 12.
Concurrences.Justices Alito, Gorsuch, and Thomas agreed with the outcome but disagreed with the majority’s analysis.
According to Justice Alito, the cases “can and should be decided without any alteration or refinement of our case law on specific personal jurisdiction.” He “agree[d] with the main thrust of the Court’s opinion.” Id. at 1 (Alito, J., concurring). His “quibble” was “with the new gloss that the Court puts on our case law.” He wrote the Court should not have disjoined “arise out of” and “relate to”: “This innovation is unnecessary and, in my view, unwise.” Id. at 3. Nevertheless, Justice Alito concluded a sufficient connection between the claims and the forum state existed for the exercise of personal jurisdiction in the cases at issue.
Justice Gorsuch joined by Justice Thomas questioned the over 75-year old test for personal jurisdiction and its usefulness in the modern era. “If it made sense to speak of a corporation having one or two ‘homes’ in 1945,” Justice Gorsuch wrote, “it seems almost quaint in 2021 when corporations with global reach often have massive operations spread across multiple States.” Id. at 2 (Gorsuch, J. concurring).
Justice Gorsuch faulted the majority for providing little clarity regarding what kind of connection was sufficient to satisfy its new “relate to” test: “For a case to ‘relate to’ the defendant’s forum contacts, the majority says, it is enough if an ‘affiliation’ or ‘relationship’ or ‘connection’ exists between them. But what does this assortment of nouns mean? Loosed from any causation standard, we are left to guess. The majority promises that its new test ‘does not mean anything goes,’ but that hardly tells us what does.” Id. at 3.
Justice Gorsuch seemed to call for a full reset on personal jurisdiction jurisprudence. He described general and specific jurisdiction as an “increasingly doubtful dichotomy.” Id. at 11. He invited future litigants and lower courts to “help us face these tangles and sort out a responsible way to address the challenges posed by our changing economy in light of the Constitution’s text and the lessons of history.” Id.
Implications. The Supreme Court created a new standard for the second prong of the personal jurisdiction test that requires a defendant’s in-state activities to merely “relate to” the plaintiff’s claims. At least in some instances, this new “relate to” standard does not require a causal connection.
As Justice Gorsuch pointed out, the new standard does not provide a clear rule for what is, or is not, sufficient for personal jurisdiction—promising many lower court battles in the future. Plaintiffs will undoubtedly attempt to argue the broadest possible interpretation of “relate to,” while defendants will attempt to narrow it.
The Court’s decision also potentially presages a shift in personal jurisdiction perspective. The “relatedness” prong of specific jurisdiction has traditionally focused on the connection between the plaintiff’s claims and the defendant’s in-state conduct.[vii] The Court in Ford in fact states that its “most common formulation of the rule demands that the suit ‘arise out of or relate to the defendant’s contacts with the forum.’” Id. at 8 (emphasis added).
But in its analysis, the Court implicitly shifts the emphasis more towards the connection between the controversy and the forum, rather than the connection between the controversy and the defendant’s conduct in the forum. The Court stated that “each of the plaintiffs brought suit in the most natural State—based on an “affiliation between the forum and the underlying controversy.” Id. at 17 (emphasis added, internal quotation mark omitted). In its conclusion, the Court states that the “relationship among the defendant, the forum[s], and the litigation” is sufficient to support personal jurisdiction.” Id. at 18 (emphasis added).
The Court’s analysis of the states where Ford actually sold the cars at issue (Washington and North Dakota) demonstrates this potential shift of emphasis in the future. Those states have a strong connection between the defendant’s conduct and the lawsuit. It is in those states that Ford took affirmative actions that more directly relate to the plaintiffs and their particular claims. But the Court diminishes Washington and North Dakota’s appropriateness as fora because the states had a lesser connection to the claims: “For each of those States, the suit involves all out-of-state parties, an out-of-state accident, and out-of-state injuries; the suit’s only connection with the State is that a former owner once (many years earlier) bought the car there.” Id. at 15 (emphasis added). That analysis ignores the defendant’s in-state conduct in Washington and North Dakota.
Given the Court’s rejection of Ford’s “strict causal relationship” arguments, the new decision threatens to expand personal jurisdiction in unforeseeable ways. Defendants should be prepared to face more lawsuits filed outside the defendant’s home state, relying on Ford as a jurisdictional hook.
[i] Bristol-Myers Squibb Co. v. Superior Ct. of California, San Francisco Cty., 137 S. Ct. 1773 (2017).
[ii] See, e.g., Menken v. Emm, 503 F.3d 1050, 1058 (9th Cir. 2007) (“[T]he Ninth Circuit follows the ‘but for’ test.”); Tatro v. Manor Care, Inc., 625 N.E.2d 549, 553 (Mass. 1994) (adopting “a ‘but for’ test”); Shute v. Carnival Cruise Lines, 783 P.2d 78, 81-82 (Wash. 1989) (en banc) (“We adopt the ‘but for’ test.”).
[iii] See, e.g., O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 323 (3d Cir. 2007) (“[S]pecific jurisdiction requires a closer and more direct causal connection than that provided by the but-for test”); uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 430 (7th Cir. 2010) (“But-for causation would be ‘vastly overinclusive.’ . . . On the other hand, requiring proximate causation between contacts and claim would exclude too many claims”).
[iv] See, e.g., Beydoun v. Wataniya Rests. Holding, Q.S.C., 768 F.3d 499, 507508 (6th Cir. 2014) (“[T]he Supreme Court has emphasized that only consequences that proximately result from a party’s contacts with a forum state will give rise to jurisdiction.”); Harlow v. Children’s Hosp., 432 F.3d 50, 61 (1st Cir. 2005) (“[D]ue process demands something like a ‘proximate cause’ nexus”).
[v] See, e.g., Compania de Inversiones Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., 970 F.3d 1269, 1285 (10th Cir. 2020) (“This court on several occasions has declined to choose between but-for and proximate causation, finding that neither test was outcome determinative given the facts at hand.”).
[vi] See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 n.10 (1984) (“[W]e decline to reach the question [of] whether the terms ‘arising out of’ and ‘related to’ describe different connections between a cause of action and a defendant's contacts with a forum); In re Chinese-Manufactured Drywall Prod. Liab. Litig., 753 F.3d 521, 543 (5th Cir. 2014) (“The Supreme Court has yet to distinguish between the ‘arise out of’ and ‘relate to’ requirements.”).
[vii] Bristol-Myers Squibb Co., 137 S. Ct. 1773, 1780 (2017) (“[T]he suit [must] arise out of or relate to the defendants contacts with the forum.”).