Where Can We Be Sued? The Supreme Court Steers Away from a Clear Answer in Ford Motor Co.

Smith Anderson

Smith Anderson

A driver bought a used Ford Crown Victoria in Minnesota. Later, while driving on a rural road with a friend in the passenger seat, he collided with a snow plow. The car landed in a ditch, and its passenger-side air bag did not deploy. The passenger suffered serious injuries and sued Ford in Minnesota. The passenger and Ford then fought for years—in a dispute that ended recently with the Supreme Court’s Ford Motor Co. decision—over whether Minnesota was the right place for the lawsuit.

The two sides were arguing over "personal jurisdiction": a series of court-made rules that limit, for due process purposes, where a person or entity can be sued. These rules all stem from considerations of "substantial justice" and "fair play."

A company can be sued in any state (including in federal courts within the state) where the company is incorporated, or has its principal place of business. That bright-line rule is known as "general jurisdiction." But a company can also be sued (based on "specific jurisdiction") in any other state where the claims in the lawsuit "arose out of" or "relate to" the company’s business activities within the state—business activities that the company conducts on purpose to exploit the state’s market, not just on a random basis or by chance.

Ford argued it should not have to defend the lawsuit in Minnesota because the specific car involved in the crash had not been sold by Ford in Minnesota. Ford sold it in North Dakota, and it ended up in Minnesota, five owners later. The car had been designed and manufactured outside Minnesota (those steps took place in Michigan and Canada, respectively). So, nothing about Ford’s actions in Minnesota had given rise to the claims; it just happened that the car had ended up there and crashed there.

But, as the Supreme Court pointed out, Ford sells plenty of Crown Victorias in Minnesota, even if not the one involved in the crash. Ford advertises heavily in Minnesota, ships parts there, and services cars there. Essentially, Ford encourages Minnesotans to buy Fords, including Crown Victorias.

That is enough of a connection. The lawsuit still "relates to" Ford’s conduct in Minnesota. "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."

The Supreme Court did not draw a bright-line rule in this case. Instead, determining whether a company has a sufficient connection to a state to be sued there will involve a fact-intensive analysis to determine whether there is enough of a connection to the state where the case is filed. That analysis often will be challenging, especially for companies that have the capacity to sell everywhere but in practice do not routinely serve every state.

While the Supreme Court in Ford Motor Co. found the exercise of specific personal jurisdiction proper under those facts, it is worth noting that the Supreme Court in Bristol-Myers Squibb found that specific personal jurisdiction was not proper where there is no relationship between the claims and the forum state. Plaintiffs could not sue Bristol-Myers Squibb in California because all the relevant events—the prescription, the purchase, the consumption, and the adverse effects—occurred outside California. It is also worth noting that the Ford Motor Co. decision explicitly avoids addressing the situation in which a company sells products or services through a website (theoretically accessible in every state), but does not engage in significant marketing or sales in the state where the company is sued. Where a company can be sued in that situation—like many other questions that arise in this context—is a question yet to be resolved by the Supreme Court.

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.

© Smith Anderson | Attorney Advertising

Written by:

Smith Anderson

Smith Anderson on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.