Smith, Gambrell & Russell, LLP

A unanimous U.S. Supreme Court held in Ford Motor Co. v. Montana Eighth Judicial District Court that the connection between Ford’s activities in a forum state and products liability claims was close enough to support specific jurisdiction. The 8-0 decision (Justice Barrett not participating) rejected Ford’s arguments that the state courts lacked jurisdiction because it had not designed, manufactured, or sold the particular vehicle involved in a car accident.

The Montana Eighth Judicial District Court case was consolidated with Ford Motor Co. v. Bandemer. Montana Eighth Judicial District Court case involved a Ford Explorer that had originally been purchased in Washington that through subsequent repurchases placed the Explorer in Montana. The driver of the Explorer was killed in an accident in Montana and driver’s estate sued Ford in Montana state court.

Bandemer involved a Crown Victoria that was originally purchased in North Dakota. A passenger in that Crown Victoria suffered brain injuries in Minnesota when the Crown Victoria rear ended a snowplow and the airbags failed to deploy. The passenger sued in Minnesota for products liability in Minnesota.

Ford, incorporated in Delaware and headquartered in Michigan, moved to dismiss both the Minnesota and Montana state claims for lack of personal jurisdiction. Ford argued that the state courts had jurisdiction only if the company’s conduct in those states gave rise to the plaintiff’s causes of action. Such a causal link would exist only if the company had designed, manufactured, or sold the particular vehicle involved. The Explorer and Crown Victoria were designed in Michigan. The Explorer was manufactured in Kentucky while the Crown Victoria was manufactured in Canada. With the original sales not having occurred in the forum states, Ford argued that the cases could not be decided in those courts. The Minnesota and Montana Supreme Courts affirmed lower courts’ decisions rejecting Ford’s arguments. The US Supreme Court affirmed the state Supreme Courts, holding that Ford was subject to jurisdiction in theses cases.

Justice Elana Kagan, a former civil procedure professor, began her opinion at International Shoe v. Washington where a tribunal’s authority was said to depend on the defendant’s having such “contacts” with the forum State that the “maintenance of the suit” is “reasonable in the context of our federal system of government” and “does not offend traditional notions of fair play and substantial justice.”

In looking to the nature and extent of the defendant’s relationship to the forum state, the Court has recognized two types of personal jurisdiction: general and specific. The former can be exercised when a defendant is “essentially at home in the state”. For a corporation, that is state of incorporation or its principal place of business.

Specific jurisdiction, on the other hand, covers a defendant less intimately connected with a state but only as to a narrower set of claims whereby the defendant “purposefully availed” themselves of “the privilege of conducting activities within the forum state.” Because the defendant is not at home, the forum state may only exercise jurisdiction when plaintiff’s claims arise out of or relate to the defendant’s contacts with the forum. Stated otherwise, “there must be ‘an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.’”

Although Ford conceded that it had purposefully availed itself of the privilege of conducting activities in both Minnesota and Montana, it claimed that those activities did not sufficiently connect it to the suits. The required links must have been causal in nature where jurisdiction attached “only if the defendant’s forum conduct gave rise to the plaintiff’s claim.” In these cases, Ford argued that because it did not sell the cars in the states where the accidents occurred, nor did it design or manufacture the cars in those states, it was not subject to specific jurisdiction. The places of the accidents and injuries were immaterial.

The Supreme Court rejected Ford’s causation only approach where plaintiff’s claim came about because of the defendant’s in-state conduct. Rather, it pointed to its formulation of the rule that specific jurisdiction exists if a suit arises out of or relates to defendant’s contacts with the forum. When a suit arises out of a defendant’s contacts, it does so because of caution. Arising out, however, is only the first half of the standard. The Court looked to the “or,” the second half where a claim “relates to” a defendant’s contacts where some relationships will support jurisdiction without a casual showing. Specific jurisdiction was never framed to always require proof of causation.

The Court found that Ford was subject to jurisdiction as the accidents were related to Ford’s contacts with the states. Ford regularly conducts business in Montana and Minnesota, urging Montanans and Minnesotans to buy its vehicles “by every means imaginable – among them billboards, TV and radio spots, print ads and direct mail.” Crown Victorias and Explorers are available at 36 Montana dealerships and 84 Minnesota dealerships that not only sell new cars but also repair and maintain Ford cars. The company also distributes replacement parts to both its own dealers and independent auto shops. “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.”

In allowing for jurisdiction, Ford is treated fairly. In conducting so much business in Montana and Minnesota, Ford enjoys the benefits and protections of those states’ laws – “the enforcement of contracts, the defense of property, the resulting formation of effective markets.” “All that assistance to Ford’s in-state business creates reciprocal obligations—most relevant here, that the car models Ford so extensively markets in Montana and Minnesota be safe for their citizens to use there.”

The Court also went on to explain that its decision is reinforced by its prior decisions in Bristol-Myers Squibb Co. v. Superior Court of California and Walden v. Fiore. In Bristol-Myers non-resident plaintiffs brought claims in California state court against a manufacturer of a nationally marketed prescription drug. The plaintiffs did not buy the drug in California nor had they used or suffered any harm from the drug in California but in an attempt to forum shop thinking that California courts would be plaintiff-friendly, brought suit in California. Although Ford, like Bristol-Myers, sold its specific products in other states, plaintiffs in the Ford cases were residents of the forum states who had used the alleged defective products in the forum states, suffering injuries in those forum states when the products malfunctioned. Plaintiffs therefore brought suit in their most “natural” states “based on an ‘affiliation between the forum and the underlying controversy, principally, an activity of an occurrence that took place there’” (citing Bristol-Myers).

In Walden, a Georgia police officers working at an Atlanta airport seized money from two Nevada residents who were on their way to Las Vegas. The passengers sued the officer in Nevada, arguing that their injury, the inability to use the seized money, occurred in the state they lived. The Court held the exercise of jurisdiction to be improper as the defendant-officer had never taken any acts to form a contact with Nevada. Without any purposeful availment by the defendant, the Court had no occasion to address the necessary connection between a defendant’s in-state activities and the plaintiff’s claims. Justice Kagan contrasted this with Ford’s “veritable truckload of contacts with Montana and Minnesota.” The only issue was whether those contacts were related enough to plaintiffs’ suits.

Plaintiffs in Montana and Minnesota had alleged they suffered in-state injury because of Ford’s defective products that had been extensively promoted, sold, and serviced in those states. The relationship among the defendant, the forum, and the litigation was close enough to support specific jurisdiction.

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