Ford Motor Co. Supreme Court Decision Muddies Limits of Personal Jurisdiction

On March 25, the United States Supreme Court issued its decision in Ford Motor Co. v. Montana Eighth Judicial District Court et al., which addressed the threshold issue in every action—personal jurisdiction. 592 U.S. ___ (2021). In a decision touted by some as a “win” for the plaintiffs’ bar, the Supreme Court appeared to open a new front on the personal jurisdiction battlefield by asking whether the plaintiff’s action was sufficiently “related” to defendant’s contacts in the forum state instead of asking whether plaintiff’s action “arose out of” the defendant’s contacts.

Ford appealed the two decisions of the Minnesota and Montana Supreme Courts, where each court decided it had jurisdiction to hear a case concerning a car accident in its state involving a resident of its state and a vehicle manufactured and sold by Ford Motor Company in another state. Ford admitted it purposefully availed itself of the privilege of conducting activities in Minnesota and Montana, as it heavily advertised and marketed its vehicles, owned dealerships that sold and repaired Ford vehicles, fostered ongoing relationships with Ford vehicle owners, and distributed and sold Ford vehicle parts in those states. Ford argued, however, the state courts lacked jurisdiction because the plaintiffs’ claims did not “arise out of or relate to” these contacts. In Ford’s view, the link between its contacts with the forum state and plaintiffs’ causes of action must be causal in nature, meaning jurisdiction exists “only if the defendant’s forum conduct gave rise to the plaintiff’s claims.”

The Court disagreed and rejected Ford’s “causation-only approach.” Relying on precedent, the Court reiterated that jurisdiction exists if plaintiff’s action “arise[s]out of or relate[s] to the defendant’s contacts with the forum.” According to the majority, Ford placed too much emphasis on the first half of that rule relating to causation, while ignoring the second half, which “contemplates that some relationships will support jurisdiction without a causal showing.”

In applying its new standard, the Court found Ford purposefully availed itself of the forum states’ markets because Ford’s activities in the forum states, including marketing, selling, and servicing the same models of vehicles at issue, encouraged residents to purchase Ford vehicles. It then held plaintiffs’ suits related to this conduct because “Ford had systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs allege[d] malfunctioned and injured them in those States.” There was “a strong relationship among [Ford], the forum, and the litigation—the essential foundation of specific jurisdiction.”

Although the result might be correct on the facts presented in the Ford matters, the majority decision did little to clarify the limits of personal jurisdiction. Instead, it muddied those limits and added layers to an already complicated analysis.

For example, the Court unnecessarily parsed the “arise[s] out of or relate[s] to the defendant’s contacts” rule, which previously was viewed as one test. As Justice Alito pointed out in his concurring opinion, the Court “recognize[d] a new category of cases in which personal jurisdiction is permitted: those in which the claims do not ‘arise out of’ (i.e., are not caused by) the defendant’s contacts but nevertheless sufficiently ‘relate to’ those contacts in some undefined way.” The Court asserted “the phrase ‘relate to’ incorporates real limits” but stopped short of explaining what those limits were. Justice Alito noted the difficulty this new basis for specific jurisdiction presents: “the phrase ‘relate to’ is a broad one,” thus application of the phrase is “doomed to failure, since, as many a curbstone philosopher has observed, everything is related to everything else.”

The Court did not describe how, in a less obvious example, one would know whether the plaintiff’s claim was sufficiently related to the defendant’s conduct—because, to some degree, everything relates to everything. Importantly though, the Court did place a limitation here, and rejected the idea that “a state court should have jurisdiction over a nationwide corporation like Ford on any claim, no matter how unrelated to the State or Ford’s activities there.”

Nor did the Court describe how the volume of a defendant’s contact with the forum state may impact the analysis. What about the case where the defendant has some contact with the forum state but not as much as Ford? One could argue that a finding of jurisdiction would be less appropriate in a case where the defendant has less voluminous contact with the forum than Ford. Again, the Court did seem to limit the scope of its holding in this regard. In a footnote, the Court differentiated between “isolated or sporadic transactions” and “continuous ones” and said that “[n]one of this is to say that any person using any means to sell any good in a State is subject to jurisdiction there if the product malfunctions after arrival.”

Likewise, the Court created further confusion when it stated “arise out of or relate to the defendant’s contacts,” “put just a bit differently,” meant “there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place there.” Its explanation of this repeated equivalence fell short of clarity. Is the plaintiff’s or claim’s affiliation with the forum state another factor to be considered in the jurisdictional analysis? Maybe so—the Court considered that plaintiffs were residents of the forum states, the accidents occurred in the forum states and so there was “an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place there.” It noted that while the place of a plaintiff’s injury and residence may not create a defendant’s contact with the forum state, “those places still may be relevant in assessing the link between the defendant’s forum contacts and the plaintiff’s suit.”

Thus, one could argue the relationship between the defendant, forum, and litigation would be weaker in the forum where the product was purchased than in the forum where the product caused injury, because as the Court noted, the forum where the injury occurred is the most “natural state” in which to bring litigation. Maybe the result would be different if the plaintiff was a resident of the forum but the accident occurred elsewhere, or if the accident occurred in the forum but the plaintiff resided elsewhere.

The Court did explain though that its opinion did not disrupt its finding in Bristol-Myers Squibb Co. v. Superior Court of Cal., where it found jurisdiction lacking over claims by nonresident plaintiffs against a nonresident defendant whose product allegedly injured the plaintiffs. 137 S. Ct. 1773 (2017). The Court distinguished Bristol-Meyers on the ground that the plaintiffs there were not residents of the forum state, had not purchased the product in the forum, and had not suffered any harm there.

The opinion also did not disrupt the Court’s finding in Walden v. Fiore, where it found that for specific personal jurisdiction to be conferred, “the relationship must arise out of contacts that the ‘defendant himself’ creates with the forum State.” 571 U.S. 277 (2014). The Court distinguished Walden, stating the defendant there had not purposefully availed himself of the forum state’s protections: the defendant “never traveled to, conducted activities within, contacted anyone in, or sent anything or anyone to [the forum].” Thus, “the Court had no occasion to address the necessary connection between” the defendant’s nonexistent contact with the forum and the plaintiff’s claims.

Following Ford, both the courts and practitioners will be tasked with determining the precise bounds of the Court’s opinion. Future litigation will be spent analyzing the questions the Court left unanswered while applying the limitations given by the Court.  The Court tends to decide issues incrementally, and that is exactly what it did here.

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If you have questions concerning this topic or would like to discuss in further detail, please contact the authors Gerhard Dietrich or Molly Spakowski.

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