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Supreme Court’s Decision in Ford Motor Co. Makes it Easier for States to Exercise Personal Jurisdiction over Big Companies

Apr 7, 2021 - News by

The Supreme Court heard two cases involving Ford Motor Company during its October 2020 term and issued a ruling on these cases on March 25, 2021. Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 589 U.S. ____ (2020).  In each, the State’s highest court held that it had personal jurisdiction over Ford Motor Company in a products-liability lawsuit stemming from a car accident. The car accidents occurred in the State in which the suit was brought and the victim was one of the State’s residents. Ford did substantial business in the state, including advertising, selling, and servicing the model of the vehicle that the suit claimed was defected. Nonetheless, Ford averred that jurisdiction was improper because the car involved in the crash was not first sold in the forum State, nor was it designed or manufactured there. However, the Supreme Court rejected this argument, finding that 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 the State’s residents, the State’s courts may entertain the resulting lawsuit.

In a unanimous opinion written by Justice Kagan, the Court noted, in discussing Ford’s background, that while Ford is incorporated in Delaware and headquartered in Michigan, “its business is everywhere.” Two accidents involving two of Ford’s vehicles, a 1996 Explorer and a 1994 Crown Victoria were at the center of the two cases before the Court.  One case came from Montana, in which Markkaya Gullett was driving her Explorer near her home in Montana when the tread separated from a rear tire. The vehicle spun out, rolled into a ditch, and came to rest upside down. Gullett died at the scene of the crash. Id. The representative of her estate sued Ford in Montana State Court, alleging a design defect, failure to warn, and negligence. In the second case, which came from Minnesota, Adam Bandemer was a passenger in a Crown Victoria traveling on a rural road in Minnesota. The driver of the car rear-ended a snowplow and landed in a ditch. Bandemer’s airbag failed to deploy, and he sustained serious brain damage. He sued Ford in Minnesota state court, asserting claims for products-liability, negligence, and breach-of-warranty.

Ford moved to dismiss both suits for lack of personal jurisdiction on nearly identical grounds. Ford argued that the state court had jurisdiction only if the company’s conduct in the State gave rise to the plaintiff’s claim. Ford further argued that this causal link existed only if the company had designed, manufactured, or sold in the State the particular vehicle involved in the accident.  Here, neither Plaintiff could make that showing: Ford designed the Explorer and Crown Victoria in Michigan, and manufactured the cars in Kentucky and Canada respectively. In addition, the company originally sold the relevant cars outside the forum states: the Explorer was originally sold in Washington, and the Crown Victoria in North Dakota. Later resales and relocations by consumers brought the vehicles into Montana and Minnesota.

Both the Montana and Minnesota Supreme Courts rejected Ford’s argument, affirming the decisions of lower courts. In its opinion, the Montana Supreme Court detailed the myriad ways Ford “purposefully” sought to “serve the market in Montana” and said Ford’s conduct encouraged “Montana residents to drive Ford vehicles.” When that driving causes in-state injury, the resulting claims have sufficient ties to Ford’s Montana activities to support jurisdiction. The Minnesota Supreme Court agreed, highlighting how Ford’s “marketing and advertisements” influenced state residents to “purchase and drive more Ford vehicles.” The Supreme Court of the United States granted certiorari to consider if Ford is subject to jurisdiction in these cases and held that it is.

Ford argued that the Court’s jurisdictional rules precluded Montana and Minnesota from deciding these two cases. Ford did not contest that it does substantial business in Montana and Minnesota such that it had purposefully availed itself to the privilege of conducting activities in both places. Instead, Ford argued that those activities did not sufficiently connect to the Plaintiff’s suits, even though the resident-plaintiffs alleged that Ford cars malfunctioned in the forum States. Ford’s position was that the needed link must be causal in nature: jurisdiction attaches “only if the defendant’s forum conduct gave rise to the plaintiff’s original claims.” On this view, Ford contended that specific jurisdiction was located in the State where Ford sold, designed, or manufactured the vehicle in question, and that the place of accident and injury was immaterial.

The Court explained that Ford’s causation-only approach finds no support in its requirement of a connection between the plaintiff’s suit and the defendant’s activities. While the rule serves to narrow the class of claims over which a state may exercise specific jurisdiction, the Court explained that none of its precedents suggested that only a strict causal relationship between a defendant’s in-state activities and the litigation will do. Indeed, the most common formulation of the rule requires that the suit in question “arise out of or relate to the defendant’s contacts with the forum.” The Court noted that while the first half of that standard asks about causation, the second half, after the “or,” contemplates that some relationships will support jurisdiction without a causal showing.

The Court pointed out that it has found that specific jurisdiction attaches in cases identical to the ones before it, when a company like Ford serves a market for a product in the forum State and the product malfunctions there. For example, in World-Wide Volkswagen, the Court held that while an Oklahoma court could not assert jurisdiction over a  New York car dealer just because a car it sold later caught fire in Oklahoma, the dealer’s position stood in contrast to that of the two other defendants, Audi, the car’s manufacturer, and Volkswagen, the car’s nationwide distributor. Neither of them contested jurisdiction, but the Court noted that if Audi and Volkswagen’s business deliberately extended into Oklahoma, the Oklahoma courts could hold companies accountable for a car catching fire there, even when the vehicle had been designed and made overseas and sold in New York. This was because, the Court explained, a company purposefully availing itself of the Oklahoma auto market had clear notice of its exposure in that State to suits arising from local accidents involving its cars.

While this conclusion in World-Wide Volkswagen was technically dicta, the Court pointed out that this conclusion has appeared in many cases since World-Wide Volkswagen. To understand why, in these cases, Ford is subject to jurisdiction in Minnesota and Montana, the Court counseled to first consider the business that the company regularly conducts in Montana and Minnesota. The Court pointed out that the Ford urges Montanans and Minnesotans to buy its vehicles by every means imaginable, including TV ads, direct mail, and print ads, and has numerous dealerships in both states. Beyond advertising and sales, Ford’s dealers in both Montana and Minnesota regularly repair and maintain Ford cars, even those which are long out of warranty. The Court also noted that the company distributes replacement parts both to its own dealers and independent auto shops in the two states. By making it easier to own a Ford, the Court pointed out, Ford encourages Montanans and Minnesotans to become lifelong Ford drivers.

Turning to how all of the Montana- and Minnesota-based conduct relates to the claims in these cases, brought by state residents in Montana’s and Minnesota’s courts, the Court first noted that in each complaint, the resident-plaintiff alleged that a defective Ford vehicle caused the crash and resulting harm. As explained above, Ford advertised, sold, and serviced those two car models in both states for many years. In other words, the Court explained, Ford had systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs alleged malfunctioned and injured them in those states. Stated another way, there was a strong “relationship among the defendant, the forum, and the litigation” – the “essential foundation” of specific jurisdiction.

Before concluding its opinion, the Court contrasted the facts of these cases from those underlying its decision in Bristol-Myers. In that case, non-resident plaintiffs brought claims in California state court against Bristol-Myers Squibb, the manufacturer of Plavix. The plaintiffs had not bought Plavix in California, nor had they used nor suffered any harm from the drug there. Nonetheless, the California Supreme Court thought it could exercise jurisdiction because Bristol-Myers Squibb solid Plavix in California and was defending identical claims in California brought by the State’s residents. The Supreme Court of the United States held that the exercise of jurisdiction in Bristol-Myers violated the Fourteenth Amendment because the forum State, and the defendant’s activities there, lacked any connection to the plaintiffs’ claims. The Court pointed out that the plaintiffs were not residents of California, had not been prescribed Plavix in California, had not ingested Plavix in California, and had not sustained their injuries in California. Essentially, the Court in Bristol-Myers found that the plaintiffs were engaged in forum-shopping and sued in California because they thought it was plaintiff-friendly, even though their cases had no tie to the State.

The same could not be said for the cases before the Court. The Court pointed out that in the cases before it, the plaintiffs were residents of the forum States and used the allegedly defective products in the forum States. In addition, they suffered injuries when those products malfunctioned in the forum States. Thus, the plaintiffs brought suit in the most natural state – “based on an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that took place there.”

The Court concluded by reiterating that in the cases before them, resident-plaintiffs alleged that they suffered in-state injuries because of defective products that Ford extensively promoted, sold, and serviced in Montana and Minnesota. For the reasons the Court gave above, the connection between the plaintiffs’ claims and Ford’s activities in those states, or, stated another way “the relationship among the defendant, the forum[s], and the litigation” – is close enough to support specific jurisdiction.

The upshot of this decision for larger companies is that plaintiffs will have an easier time bringing claims in their home states for injuries which occurred in their home state, even if the Defendant’s conduct or contacts in that state did not give rise to a plaintiff’s original claims. So long as a defendant’s contacts or conduct are related to the conduct which gave rise to the plaintiff’s claim, the state court of the plaintiff’s resident-state will be able to exercise personal jurisdiction over the defendant. For example, let’s say a plaintiff lives in Pennsylvania and drives a used Brand X car, in Pennsylvania, which he purchased in Pennsylvania, not from a Brand X dealership, but from a used car salesman. This plaintiff is then involved in an accident in Pennsylvania and sues Brand X alleging that design defects of the car caused the crash.

Even though the Plaintiff did not buy the car from Brand X in Pennsylvania, and even if the car was not designed or manufactured by Brand X in Pennsylvania, Pennsylvania courts can exercise personal jurisdiction over Brand X, so long as Brand X conducts significant business, advertising, and sales in Pennsylvania. Essentially, the Ford Motor Co. decision appears to broaden the relationship between a defendant’s forum contacts and conduct and a plaintiff’s claims that will allow the state court to exercise personal jurisdiction over the defendant. The defendant’s conduct in the forum need not have given rise to a plaintiff’s original claims. So long as a plaintiff’s original claims relate to the defendant’s conduct in the forum, this will be enough for a plaintiff to bring suit there.