US Supreme Court expands the scope of personal jurisdiction
On March 25, 2021, the Supreme Court issued its opinion in Ford Motor Company v. Montana Eighth Judicial District Court, et al., expanding the criteria for the exercise of personal jurisdiction over defendants that transact business in multiple states.
The case arises from two products-liability suits filed against Ford. The first suit alleged that a 1996 Ford Explorer had malfunctioned, killing Markkaya Gullett in Montana when the tread separated from a rear tire. The second suit alleged that a 1994 Ford Crown Victoria was defective, and Adam Bandemer was injured in a collision when his airbag failed to deploy. Courts in both cases exercised personal jurisdiction over Ford, despite Ford’s arguments that the plaintiffs were unable to prove that Ford’s conduct in the states had given rise to the plaintiffs’ claims, as the specific vehicles involved had been designed, manufactured, and sold outside of the forum states. They were only brought to the forum states through later resales and relocations.
In an 8-0 opinion written by Justice Kagan, the Court affirmed the rulings of the lower courts, holding that the connection between the plaintiffs’ claims and Ford’s activities in the forum states is close enough to support specific personal jurisdiction.
The Court recognized that in order to exercise jurisdiction over a foreign defendant, the defendant must have 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 examining those contacts, the courts typically look to the nature and extent of the defendant’s relationship to the forum state. In cases where a defendant takes some action by which it purposefully avails itself of the privilege of conducting activities within the forum state, the court may exercise specific personal jurisdiction over cases in which the plaintiff’s claims “arise out of or relate to” those actions.
The Court emphasized Ford’s status as a global company; Ford distributes millions of new vehicles yearly, fosters the repair and resale of its vehicles, and engages in vigorous promotion of its vehicles—including in the forum states. While Ford agreed that it does substantial business in Montana and Minnesota, it argued that plaintiffs’ claims did not arise out of that business. In rejecting Ford’s narrow reading of the rules regarding the exercise of specific personal jurisdiction, the Court recognized that the rules, particularly the language “or relate to,” contemplates that some relationships can support jurisdiction without a direct show of causation.
The Court referred to dicta in its decision in World-Wide Volkswagen Corp. v. Woodson, recognizing that specific personal jurisdiction would attach in cases where a manufacturer or distributor serves a market for a product in the forum state and the product malfunctions there. The Court stated—as in the situation described in World-Wide Volkswagen—that in advertising, selling, and servicing Ford Explorers and Crown Victorias in Montana and Minnesota for many years, Ford systematically served the markets in Montana and Minnesota for the vehicles that plaintiffs allege malfunctioned and injured them in those states. Because Ford’s business is so extensive in Montana and Minnesota, the court noted that Ford enjoys the benefits and protection of those states’ laws, thereby creating a reciprocal obligation to ensure that the car models marketed in those states are safe for their citizens to use there.
Since the plaintiffs alleged that they suffered in-state injuries because of defective products that Ford extensively promoted, sold, and serviced in Montana and Minnesota, the Supreme Court held that the connection between the plaintiffs’ claims and Ford’s activities in those states was sufficiently close to support specific personal jurisdiction over Ford.
This decision highlights the importance of considering the full scope of a company’s business activities when deciding where to commence litigation, or whether to seek a change of forum when defending a suit.