The United States Supreme Court handed down a decision yesterday that expands the reach of state courts over companies involved in interstate commerce. While the decision, Ford Motor Co. v. Montana Eighth Judicial District Court, No. 19-368 (March 25, 2021), involves automobiles, it will have a substantial impact on the aviation industry.
Under longstanding precedent, a state or local court can only exercise jurisdiction over a company in accordance with the limits of the Fourteenth Amendment’s Due Process Clause. This clause permits two types of jurisdiction, general and specific. A court has general jurisdiction over a company when the company is “at home” in that state, usually where it is incorporated or has its headquarters. In the case of Ford Motor Company, that would be the state of Delaware, where it is incorporated, and Michigan, where it maintains its headquarters.
Every state other than Michigan and Delaware can only exercise “specific jurisdiction” over Ford. In order for a court to have specific jurisdiction over a company, that company must have taken some action in the state that amounts to the “purposeful availment” of the “privilege of conducting activities within the forum State.” Id. at 5. In addition, the lawsuit must arise out of or relate to the company’s actions in the state.
Based on these principles, Ford moved to dismiss two different lawsuits against it for accidents involving Ford cars. The first suit involved a 1996 Ford Explorer in Montana, and the second involved a 1994 Crown Victoria in Minnesota. The plaintiffs in both cases alleged that the vehicles were defective when originally sold by Ford. Based on these claims, Ford argued that the only states that could exercise jurisdiction over it were the states where the cars were designed, manufactured, or originally sold by Ford, none of which were Minnesota or Montana. Ford argued that the fact that it has numerous dealerships and advertises in Minnesota and Montana was not enough to establish specific jurisdiction because those activities had no causal connection to the actual accidents. Both the Minnesota and Montana Supreme Courts rejected Ford’s argument, and Ford appealed to the United States Supreme Court.
The Supreme Court affirmed the state court rulings, and in doing so, has taken a more expansive view as to what conduct can support specific jurisdiction. The Court rejected Ford’s position that its conduct in the state has to be “causally connected” to, or a proximate cause of, the injury. Instead, the Supreme Court noted that the conduct must merely “relate to” the suit. The Court then examined Ford’s conduct in Minnesota and Montana, and noted that Ford advertises there “by every means imaginable . . . .” Id. at 11. In addition, both new and used Explorers and Crown Victorias are available for sale at dozens of dealerships in both states. The Court also gave weight to the fact that Ford “works hard to foster ongoing connections to its car’s owners,” regularly maintains and repairs such cars, and distributes replacement parts to Minnesota and Montana. Id. As a result, the Court held that because Ford sells and services the same model cars as those involved in the accidents in both Montana and Minnesota, the suit is “related to” Ford’s conduct, even though the plaintiffs never alleged any specific causal link between those activities and the accident. Id. at 14.
This decision has broad implications for the aviation industry. Aircraft, engine, and aviation parts manufacturers share many of the same attributes as a car company. The products are highly mobile and can be found virtually any place in the United States after they leave the control of the manufacturer. Under the specific jurisdiction test expanded on in this case, the company’s dealer network, the locations of repair stations that provide service, and its advertising can be used in a much more direct way to establish state court jurisdiction over a claim arising from an accident that occurs while the aircraft is in transit over a state. Similarly, air carrier operations touch many states in the course of a single transportation. Under this standard, it will be easier for a plaintiff to sue for an injury in states beyond the traditional jurisdictions of departure, arrival, and where the contract for carriage was made.
As with any important Supreme Court decision, its true impact will only be known after years of contentious litigation in the trial and appellate courts. As the old saying goes, if there is one thing the Supreme Court is good at, it is making more work for lawyers.
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