Schnader Harrison Segal & Lewis LLPThe Supreme Court issued its much-anticipated opinion in Ford Motor Co. v. Montana Eight Judicial District last Thursday. While the Court clarified certain aspects of its specific personal jurisdiction jurisprudence – clarifying that a causal link to in-forum conduct of the defendant is not a prerequisite to specific personal jurisdiction – it left or raised (depending on who you ask) many unanswered questions. As a result, it can be expected that lower courts will continue to struggle with this issue in the coming years, and defendants in all sectors likely will continue to face different results depending on the court and judge involved.

After accidents involving Ford cars in Montana and Minnesota, Plaintiffs, who were residents of those states, brought product liability lawsuits against Ford Motor Company in the courts of those states. There being no dispute that the state courts did not have general personal jurisdiction over Ford for these actions, Ford argued that it was not subject to specific personal jurisdiction because the cars involved in the accidents were first sold in other states and were neither designed nor manufactured in the forum states. The state courts rejected Ford’s arguments and exercised jurisdiction.

Ford argued in the Supreme Court that the state courts would have specific personal jurisdiction over it only if the plaintiffs’ causes of action arose directly from the company’s conduct in the forum states, adding that the necessary contacts did not exist because the accident vehicles were not designed, manufactured, or initially sold in the forum states. In other words, Ford argued that there must be a direct causal connection between a defendant’s forum contacts and the plaintiff’s claims.

The Supreme Court rejected Ford’s arguments. It explained that, while due process requires a “connection” between a plaintiff’s suit and a defendant’s in-forum activities, that connection need not be causal. Instead, the Court explained that its requirement that a court may exercise jurisdiction when the claims “arise out of or relate to” the defendant’s forum contacts may be read in the disjunctive: “The first half of that standard asks about causation; but the back half, after the ‘or,’ contemplates that some relationships will support jurisdiction without a causal showing.”

The Court found such a relationship existed between Ford’s extensive contacts with the forum states and the plaintiffs’ claims. Ford conceded that it purposefully availed itself of the privilege of conducting activities in the forum states. Ford extensively marketed its automobiles, sold its automobiles, and maintained a dealer network that serviced its automobiles in Montana and Minnesota. The Court found it immaterial that the accident vehicles were first sold in other states, explaining that its decisions long made clear that a corporation that continuously and deliberately exploits a state’s market has to reasonably anticipate being haled into court there to defend actions based on its products causing injuries there.

The Court noted that “Ford’s proposed rule would make [the States of first sale] the most likely forums,” even though “[f]or each of those States, the suit involves all out-of-state parties, an out-of-state accident, and out-of-state injuries,” meaning that “the suit’s only connection with the State is that a former owner once (many years earlier) bought the car there.” This, the Court held, “would undermine, rather than promote ... the Due Process Clause’s ‘jurisdiction-allocating function.”

Ultimately, because the plaintiffs alleged in-state injuries caused by allegedly defective products Ford had promoted, sold, and serviced in Montana and Minnesota, the relationship among the defendant, the forums, and the litigation was sufficient to support jurisdiction. In this, the Court explained that the facts distinguished this case from Bristol-Myers, where plaintiffs who had no connection to California were “forum shopping,” their claims having nothing at all to do with the defendant’s actions there.

As the Court and the concurring justices explained, nothing about its decision creates a shift in the principles underpinning states’ exercise of jurisdiction. Instead, as Justice Alito described it in his concurring opinion, the Court merely put a gloss—which he does not consider necessary—on its prior “arising out of or relating to” rule by focusing on the “relating to” aspect of the rule. Justice Gorsuch, joined by Justice Thomas, took aim at International Shoe and its general/specific jurisdiction dichotomy as ill-suited to the realities of modern business practiced by “global conglomerates” that “boast of their many ‘headquarters.’” They viewed the majority opinion as going too far by focusing on “relating to,” unmooring the analysis from causation, and possibly creating problems for future courts and litigants wrangling with personal jurisdiction issues.

Corporations, especially those in the aviation sector, should take note of the potential ramifications of this decision. It will be interesting, for example, to see how important the location of an accident or occurrence will be to the personal jurisdiction analysis, especially where that location is fortuitous, as often is the case in aviation. It similarly will be interesting to see how this decision is applied outside the product liability context. The one question that seems simplest to answer is whether this decision once and for all sets forth a clear standard that easily can be applied by courts and litigants. Unfortunately, that answer is a resounding no. Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. ___ (2021).

[View source.]

×