March 26, 2021

U.S. Supreme Court Rules Against Ford in Personal Jurisdiction Battle

The U.S. Supreme Court issued an important decision impacting personal jurisdiction yesterday in Ford Motor Co. v. Montana Eighth Judicial District Court et. al. and Ford Motor Co. v. Adam Bandemer, a pair of cases about whether due process requires a causal link between a defendant’s contacts with the forum state and a plaintiff’s claims. The Court ruled 8-0 against Ford, holding that the connection between the plaintiffs’ claims and Ford’s activities in the forum states was “close enough” to support specific jurisdiction.

The cases arose out of accidents involving two of Ford’s vehicles. Plaintiffs, a Montana resident and a Minnesota resident, sued in Montana state court and Minnesota state court, respectively. Ford moved to dismiss the suits for lack of personal jurisdiction, arguing that a state court has jurisdiction only if the company’s conduct in the state had given rise to the plaintiff’s claims. Ford argued this causal link existed only if the company had designed, manufactured, or sold in the state the particular vehicle involved in the accident — all of which Ford had done out-of-state in the present cases. Both the Montana and Minnesota Supreme Courts (affirming lower court decisions) had rejected Ford’s argument.

In the U.S. Supreme Court’s ruling, which included a majority opinion authored by Justice Kagan and separate concurring opinions from Justice Alito and Justice Gorsuch (Justice Barrett did not participate), the Court agreed with the state Supreme Courts. The Supreme Court rejected Ford’s “causation-only approach,” pointing out that the most common formulation of the specific jurisdiction rule “demands that the suit ‘arise out of or relate to the defendant’s contacts with the forum.’” The second part of that standard “contemplates that some relationships will support jurisdiction without a causal showing.”

The Court stated that there was a “strong ‘relationship among the defendant, the forum, and the litigation,’” as Ford had systematically served a market in Montana and Minnesota through its dealerships, maintenance and repair of Ford cars, and distribution of replacement parts in those states. Allowing jurisdiction in these cases treats Ford fairly, the Court explained, because “in conducting so much business in Montana and Minnesota, Ford ‘enjoys the benefits and protection of [their] laws.’” Given its regular marketing activities in those States, Ford had “clear notice” that it could be subject to jurisdiction in the states’ courts when products malfunction there.

The Supreme Court squared this decision with its 2017 decision in Bristol-Myers Squibb Co. v. Superior Court of California, stating that jurisdiction in Bristol-Myers was improper because the plaintiffs were not residents of the forum state and had not sustained their injuries there. Thus, that case was a clear instance of forum-shopping. By contrast, both of the Ford lawsuits, in which the plaintiffs were residents of the forum states and were injured in those states, were brought in “the most natural State.”

Justice Alito, in his concurrence, disagreed with the Supreme Court’s bifurcation of the phrase “arise out of or relate to the defendant’s contacts with the forum,” wary of recognizing “a new category of cases” in which the claims do not “arise out of” the defendant’s contacts. 

In a separate concurrence (joined by Justice Thomas), Justice Gorsuch similarly disagreed with the majority’s focus on the use of “or” in the context of “arise out of or relate to.” Justice Gorsuch’s concurrence also noted that the majority opinion gives little guidance about what kind of affiliation with a State will suffice for specific jurisdiction. In today’s world, when “even an individual retiree carving wooden decoys in Maine can ‘purposefully avail’ himself of the chance to do business across the continent” by using an online store, this ambiguity poses questions that Justice Gorsuch expects “future litigants and lower courts will help us face.”

Notably, yesterday’s decision did not address the “stream-of-commerce” theory of personal jurisdiction, which asserts that a state has personal jurisdiction over a nonresident defendant that delivers products into the stream-of-commerce with the expectation that they will be purchased by consumers in the forum state. The plaintiffs argued this theory at the certiorari stage, but did not rely on it at the merits stage. This omission, combined with the Court’s acknowledgment, in a footnote, that “internet transactions… may raise doctrinal questions of their own”, and Justice Gorsuch’s question whether modern technologies render the International Shoe test a relic of an earlier age, leaves open many personal jurisdiction questions to be navigated by future litigants.

The Ford decision is not all that surprising, given the facts of the case: consumers were injured by the defendant’s products and sued in their own states of residence where the injuries also occurred. And the Supreme Court suggested it involved little more than a direct application of its 1980 decision in World-Wide Volkswagen. But the concurring opinions may be prescient in predicting that Ford will leave it to lower courts to continue to apply general notions of fairness and federalism to myriad new modern factual patterns.