Complex Litigation & Dispute Resolution Alert | March.26.2021
In Ford Motor Co. v. Montana Eighth Judicial District Court and Ford Motor Co. v. Bandemer, issued Wednesday, the United States Supreme Court rejected Ford Motor Company’s challenge to two state courts’ assertion of specific personal jurisdiction over it on products liability claims.
The two cases arose from car accidents, one occurring in Montana, the other in Minnesota. In each case, the plaintiff was a resident of the forum state. And the injury, allegedly caused by the Ford vehicle, occurred in the forum state. In neither case, however, was the car at issue originally sold in that state. Instead, they were initially sold elsewhere, and only later brought into the forum states because of resales and moves.
Ford contended that this fact deprived the state courts of specific personal jurisdiction over it (general jurisdiction was not at issue). Under established law, specific personal jurisdiction demands two things: First, the defendant must “purposefully avail” itself of the opportunity to do business in a state. Second, the plaintiff’s claims must “arise out of or relate to” the defendant’s conduct in the state. Ford conceded that it purposefully availed itself of the opportunity to do business in the States of Montana and Minnesota. The Court noted that Ford’s activities (relating to the marketing, selling, and servicing of vehicles—including the very makes and models involved in the accidents at issue) were extensive.
Ford argued that plaintiffs could not satisfy the second element—that claims must “arise out of or relate to” the defendant’s conduct in the state. Ford, reflecting a view held by most of the courts of appeals, asserted that this element demanded a direct, causal connection between a defendant’s in-state activities and the plaintiff’s claims. Hence, the fact that Ford sold other cars in Montana and Minnesota did not, according to Ford, give the courts of those states jurisdiction over claims based on cars sold elsewhere and later brought into those states by third parties.
The Supreme Court, in an opinion by Justice Kagan (joined by Chief Justice Roberts and Justices Breyer, Sotomayor, and Kavanaugh), focused on the second half of the “arise out of or relate to” requirement. Whereas the “first half of that standard asks about causation” in some form (which the opinion did not specify), the second half “contemplates that some relationships will support jurisdiction without a causal showing.” The Court concluded that, where “Ford had systematically served a market in Montana and Minnesota for the very vehicle that the plaintiffs allege malfunctioned and injured them in those states,” Ford’s activities in the states were sufficiently “related to” the plaintiffs’ claims to give rise to jurisdiction.
Justice Kagan distinguished the Court’s prior ruling in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty., 137 S. Ct. 1773 (2017), saying: “We found jurisdiction improper in Bristol-Myers because the forum State, and the defendant’s activities there, lacked any connection to the plaintiffs’ claims.” The plaintiffs in Bristol-Myers, the Court explained, were not residents of California. They had not been prescribed the drug at issue in California. They had not ingested the drug in California. And they had not sustained their injuries in California. Justice Kagan concluded that the plaintiffs in Bristol-Myers were “engaged in forum-shopping—suing in California because it was thought plaintiff-friendly, even though their cases had no tie to the State.” The Court said none of that was true in the Ford cases. The Court noted that “here, the plaintiffs are residents of the forum States. They used the allegedly defective products in the forum States. And they suffered injuries when those products malfunctioned in the forum States. In sum, each of the plaintiffs brought suit in the most natural State.”
The Court’s decision was unanimous (Justice Barrett did not participate), but three Justices concurred separately. In one concurrence, Justice Alito criticized the “potentially boundless reach of ‘relate to’” as an independent basis for jurisdiction, without a requirement of even a “rough causal connection.” But he insisted that this was an easy case because the relationship between Ford’s extensive business activities in Montana and Minnesota was “causal in a broad sense of the concept.”
A second concurrence—by Justice Gorsuch and joined by Justice Thomas—echoed Justice Alito’s criticism of the uncertainty resulting from treating “or relate to” as a distinct basis for jurisdiction. Justice Gorsuch parted ways with Justice Alito, however, in calling for a more fundamental rethinking of personal jurisdiction jurisprudence. Justice Gorsuch speculated that many of the difficulties in personal jurisdiction cases derived from the inherent challenge in figuring out where a corporate defendant may been deemed to be “present,” and from an intuition that it would be unfair to subject an individual defendant to jurisdiction in a forum state on the same basis as a corporate defendant.
The Court’s opinion, while addressing the specific facts of the Ford cases, and finding personal jurisdiction, also still strongly condemns forum shopping, and distinguishes the scenario where the plaintiff did not buy, use, or suffer injury from the defendant’s product in the forum state. We expect cases with such forum shopping facts to find strong support from Ford to support the conclusion that the exercise of personal jurisdiction is improper.
Beyond clear cases of forum shopping, the Ford decision leaves a good bit of uncertainty. The Court listed factors relevant to the “relate to” inquiry, but did not provide an explanation of the requirement that would allow parties to do more in jurisdictional litigation than identify which of the factors were present or missing from their own cases. The Court stated that the absence of a causal requirement “does not mean anything goes,” and that “the phrase ‘or relate to’ incorporates real limits.” But it said little about what those limits are. Exactly what it takes for a defendant’s contact with the forum state to “relate to” a plaintiff’s claims, therefore, is likely to become a focal point of future jurisdictional challenges. Likewise, the Court did not clarify how strong a causal relationship must be to satisfy the “arise out of” prong of the test, leaving open the possibility that proximate causation is required (an issue that has divided the courts of appeals). Thus, there can be expected to be further litigation on that front as well.