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Over the last few years, the Supreme Court has had a reputation as very pro-business. Late last month, however, the Court handed consumers a rare win related to personal jurisdiction. The Court’s opinion has important implications regarding where an injured consumer can sue the manufacturer of a defective product.
Before we dive into the Court’s opinion, a crash course on personal jurisdiction is in order. Pursuant to the Constitution’s Due Process Clause, there are only two ways that a state court can exercise personal jurisdiction over a defendant: general jurisdiction and specific jurisdiction. General jurisdiction is where a person or an entity is “essentially at home.” Corporate defendants are “at home” where they are incorporated and where they maintain their headquarters. A consumer can always sue a corporation where it is incorporated and where it maintains its headquarters.
Specific jurisdiction deals with personal jurisdiction in states where a defendant is not “at home,” and allows courts to assert jurisdiction over defendants less intimately connected with a state. Specific jurisdiction permits a court to assert personal jurisdiction over a non-resident defendant if the non-resident defendant has sufficient “minimum contacts” with the state. A court may exercise personal jurisdiction over a non-resident defendant that has “purposely availed itself of the privilege of conducting activities in the state” so long as the plaintiff’s claims against the non-resident defendant “arise out of or relate to” the non-resident defendant’s contacts with the state. A court can exercise specific jurisdiction so long as it does not “offend traditional notions of fair play and substantial justice.”
The Ford1 opinion addresses two separate cases. In both cases, state courts in Montana and Minnesota asserted specific personal jurisdiction over Ford in products liability actions arising out of car accidents that occurred and injured a resident within each state. In the first suit, a Montana resident was killed when her Ford Explorer’s rear tire separated causing the Explorer to roll over. In the second suit, a Ford Crown Victoria’s airbag failed to inflate during an accident, which caused the car’s passenger to suffer a traumatic brain injury. In both cases, the plaintiff filed suit against Ford in the state where the plaintiff resided and where the accident occurred.
Ford moved to dismiss both lawsuits for lack of personal jurisdiction. Ford argued that the state court, whether in Montana or Minnesota, could only assert personal jurisdiction over Ford if the company’s actions within the state actually caused the plaintiffs’ claims. To make such a causal showing, Ford asserted that the plaintiffs must show that Ford designed, manufactured, or sold the vehicle involved in the accident in-state. Absent such a showing, Ford argued that the state was prohibited from exercising specific jurisdiction over Ford. Instead, the plaintiff was required to file suit in Delaware, where Ford is incorporated, in Michigan, where Ford maintains its headquarters, or in the state where the vehicle was first sold. In these cases, the plaintiffs could not make the causal showing because the vehicles were not manufactured, designed, or sold within the state. In each case, the vehicle at issue was purchased used in some other state and then moved to Montana or Minnesota.
Before the Supreme Court, Ford admitted that it does substantial business within both Montana and Minnesota. Ford advertises in both states, maintains new and used car dealerships with service departments in both states, and sells identical model cars in both states. However, Ford argued that the lack of a causal relationship between Ford’s in-state activities and the accidents at issue, prohibited the state’s exercise of specific jurisdiction.
The Supreme Court rejected Ford’s strict causation-only approach to specific jurisdiction. Instead, the Court noted that the plaintiffs’ claims need only “arise out of or relate to” Ford’s contacts within the state, and some relationships, particularly where extensive, will support specific jurisdiction in the absence of a causal showing. In so finding, the Court noted that Ford had a “veritable truckload” of contacts with Montana and Minnesota. Because Ford extensively promoted, sold, and serviced the vehicles at issue in Montana and Minnesota, the lawsuits were sufficiently related to Ford’s in-state activities to support specific jurisdiction.
Making Ford defend these suits in Montana and Minnesota is not unfair and does not offend “traditional notions of fair play and substantial justice.” Had the Court adopted Ford’s position, injured plaintiffs would be burdened with bringing suit in states they may never have even visited, despite the fact that the injuries and damages occurred in-state. The costs and logistical difficulties of initiating and maintaining an out-of-state lawsuit likely means meritorious claims would not be pursued. As an increasingly mobile society, the Court’s opinion protects consumers’ ability to have their day in court at home—a rare win to consumers.
The full opinion can be found here.
For any further questions, please contact Scott Hefner.
1 Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017 (2021)