US Supreme Court clarifies scope of specific personal jurisdiction over corporations: Ford Motor Co. v. Montana Eighth Judicial District
In Ford Motor Co. v. Montana Eighth Judicial District, the US Supreme Court handed down a unanimous ruling that attempts to clarify the scope of specific personal jurisdiction over corporations and to resolve confusion in the lower courts as to the familiar requirement that a plaintiff’s claim “arise out of or relate to the defendants’ contacts with the forum.”
Ford Motor is the most recent case in the Court’s specific personal jurisdiction jurisprudence
US Supreme Court precedent has established two types of personal jurisdiction: general jurisdiction, pursuant to which a defendant can be brought into court in any state where it is essentially “at home,” and, as relevant here, specific jurisdiction. See Bristol-Myers Squibb Co. v. Superior Ct. of California, San Francisco Cty., 137 S. Ct. 1773, 1779 (2017).
Nonresident defendants are subject to a court’s personal jurisdiction when two requirements are met. First, the defendant must have purposefully availed itself of the benefits of conducting activities within the forum state ̶ for example, by deliberately doing business within the state and enjoying the protections of its laws. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). Second, in Bristol-Myers, the Court reemphasized that the suit must arise out of or be related to the defendant’s contacts with the forum. Bristol-Meyers, 137 S. Ct. at 1780 (quoting Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014)).
The Bristol-Myers Court left open the question of whether this second requirement imports a causation standard into the personal jurisdiction analysis, and if so, whether the standard is “but for” or proximate causation. A split developed among the Circuits, with some Circuits requiring “but for” causation, and others requiring proximate causation. See, e.g., Menken v. Emm, 503 F.3d 1050, 1058 (9th Cir. 2007) (requiring “but for” causation); Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 278-79 (4th Cir. 2009) (same); Tatro v. Manor Care, Inc., 416 Mass. 763, 770 (1994) (same); Shute v. Carnival Cruise Lines, 113 Wash. 2d 763, 772 (1989) (same); see also Harlow v. Children's Hosp., 432 F.3d 50, 61 (1st Cir. 2005) (requiring proximate causation); Beydoun v. Wataniya Restaurants Holding, Q.S.C., 768 F.3d 499, 507-08 (6th Cir. 2014) (same). Still other courts found specific jurisdiction so long as the plaintiff’s claims were sufficiently related to the defendant’s in-state conduct, even if they were not directly caused by it. See, e.g., Snowney v. Harrah's Ent., Inc., 35 Cal. 4th 1054, 1068 (2005); Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1337 (Fed. Cir. 2008); TV Azteca v. Ruiz, 490 S.W.3d 29, 52-53 (Tex. 2016); Shoppers Food Warehouse v. Moreno, 746 A.2d 320, 335-36 (D.C. 2000).
The cases below
Ford Motor came before the US Supreme Court in the form of two consolidated state court cases, one from Montana and one from Minnesota. Ford Motor Co. v. Montana Eighth Judicial Dist., 592 U.S. __, __ (slip op., at 1) (2021). Each case involved product liability claims brought against Ford based on accidents involving its vehicles. Id. In both cases, the accident occurred in the state where the suit was brought, and the plaintiff was a resident of that state. Id. Further, Ford conducted substantial business in each state, “among other things, advertising, selling, and servicing the model of vehicle” involved in each accident. Id. In each case, however, the vehicle at issue was purchased out of state, and then brought into the state before the accident occurred. Id. at __ (slip op., at 3). Neither car was designed, manufactured, or sold in the forum state. Id.
Ford argued in both cases that “the state court . . . had jurisdiction only if the company’s conduct in the State had given rise to the plaintiff’s claims . . . [a]nd that causal link existed . . . only if the company had designed, manufactured, or – most likely – sold in the State the particular vehicle involved in the accident.” Id. In each case, the state’s highest court disagreed, finding that Ford’s extensive contacts with the state, coupled with the fact that the accident occurred in the state and involved residents of the state, was sufficient to establish specific jurisdiction over Ford. Id. at __ (slip op., at 3-4).
The Supreme Court’s ruling
The US Supreme Court held that “[w]hen 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.” Id. at __ (slip op., at 1-2). Ford conceded that the first requirement for specific jurisdiction was met because it had “purposefully avail[ed] itself of the privilege of conducting activities’ in both [states]” by doing “substantial business” therein. Id. at __ (slip op., at 7-8) (internal quotations omitted). The Court’s focus was on the second requirement – whether the plaintiffs’ claims “‘[arose] out of or relate[d] to the defendant’s contacts’ with the forum.” Id. at __ (slip op., at 6) (quoting Bristol-Myers, 137 S. Ct. at 1779). The Court explained, “[t]he 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.” Id. at __, (slip op., at 8). Thus, the Court rejected Ford’s argument, explaining that even though plaintiffs “did not in fact establish, or even allege, . . . causal links” between Ford’s contacts with the forum state and their injury, specific jurisdiction could be based on the close relationship between the two. Id. at __, __ (slip op., at 12-13). Citing its prior cases, the Court explained that when a company deliberately extends its business into the forum state, it has notice and may reasonably anticipate that it will be haled into court based on its products causing injury there. Id. at __ (slip op., at 10).
Next, the Court reasoned that specific jurisdiction over Ford was proper, focusing on Ford’s extensive connections to the forum states and explaining that “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. . . . [s]o there is a strong ‘relationship among the defendant, the forum, and the litigation[.]’” Id. at __ (slip op., at 12) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 104 S. Ct. 1868, 1872 (1984)). Further, “allowing jurisdiction in these cases treat[ed] Ford fairly,” because “[i]n conducting so much business in Montana and Minnesota, Ford ‘enjoy[ed] the benefits and protection of [their] laws[.]’” Id. at __ (slip op., at 14) (quoting Int'l Shoe Co. v. State of Wash., Off. of Unemployment Comp. & Placement, 326 U.S. 310, 319-20 (1945)). Importantly, the Court added that, though “the place of a plaintiff’s injury and residence cannot create a defendant’s contact with the forum state . . . [t]hose places still may be relevant in assessing the link between the defendant’s forum contacts and the plaintiff’s suit[.]” Id. at __ (slip op., at 18).
Under Ford Motor, a defendant’s contacts with a forum state need not be the direct cause of a plaintiff’s injuries for specific jurisdiction to be proper there. Courts may consider the affiliation between a defendant’s in-state conduct and the nature of the plaintiff’s injury in making this determination.
However, the Supreme Court was careful to point out that this “does not mean anything goes[,]” nor does it mean that “any person using any means to sell any good in a State is subject to jurisdiction there if the product malfunctions after arrival.” Id. at __ (slip op., at 8-9, 12 n.4). Rather, “the phrase ‘relate to’ incorporates real limits” and “isolated or sporadic transactions” within a forum state may not support specific jurisdiction there. Id. Importantly, the Court also limited its holding by specifying “we do not here consider internet transactions, which may raise doctrinal questions of their own.” Id. at __ (slip op., at 12 n.4).
Though it remains to be seen how narrowly lower courts will interpret this holding, the latest addition to the Supreme Court’s line of cases on personal jurisdiction is sure to have a significant impact on product liability actions.
To learn more about the implications of this case, please contact the authors or your DLA Piper relationship attorney.