SUMMARY

On March 25, 2021, the Supreme Court issued its newest ruling on personal jurisdiction, in the consolidated cases of Ford Motor Company v. Montana Eighth Judicial District Court and Ford Motor Company v. Bandemer. The Court held that Ford could be sued in Montana and Minnesota (respectively) after its cars were involved in accidents in those states. The Court rejected Ford's argument that personal jurisdiction was lacking because the specific cars in question were neither designed, nor manufactured, nor sold within the forum state-meaning there was no direct causal link between Ford's in-state activities and the plaintiffs' claims. It was enough, the Court explained, that Ford cultivated and served a market in both states for the car models involved in the accidents, and that the plaintiffs' claims were closely "related to" those in-state activities.

Plaintiffs will surely attempt to spin Ford as a relaxation of the Due Process Clause's limits on personal jurisdiction. The opinion is best read, however, as an application of the Supreme Court's longstanding precedents-not as new authorization for suits in states with scant connection to the dispute. For starters, the decision addresses only "specific jurisdiction," which concerns claims connected to the forum state. The Due Process Clause's strict limits on all-purpose "general jurisdiction" remain fully intact-a corporation can be sued for any and all claims only where it is "essentially at home," usually just the state(s) where it is incorporated or has its headquarters. And the Court did not sketch new standards that departed from its existing precedent; it emphasized that it was simply resolving the cases at hand, not other questions like the extent to which internet commerce might give rise to personal jurisdiction. Moreover, several aspects of the Court's analysis underscore that Ford should not be read to meaningfully expand the number of states in which corporate defendants can be sued. These issues nonetheless are likely to be the subject of much discussion and litigation in the months and years ahead.

BACKGROUND

The modern understanding of the Due Process Clause's limits on personal jurisdiction begins with International Shoe Co. v. Washington, 326 U.S. 310 (1945). There, the Supreme Court held that a corporation based in one state could be sued in another as long as the corporation had "certain minimum contacts with [the other State] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." The Court said the corporation must have "such contacts" with the state "as make it reasonable" for the corporation to defend a suit there. And it explained that it usually would be reasonable when the "obligations" at issue "arise out of or are connected with the [corporation's] activities within the [S]tate."

The Supreme Court clarified International Shoe in later decisions. The Court emphasized that a defendant must "purposefully avail[] itself of the privilege of conducting activities within the forum State" before it may be sued there. Hanson v. Denckla, 357 U.S. 235 (1958). A plaintiff's "unilateral activity" does not suffice. Nor is it enough, without more, that a corporation's product might injure someone in the state, or that it might be convenient to litigate there. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980). The corporation itself must establish meaningful contacts with the state, and-as the Court has repeatedly put it-the suit must "arise[] out of or relate[] to" those contacts. Daimler AG v. Bauman, 571 U.S. 117 (2014).

The Court applied these precedents most recently in BristolMyers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017). There, the Court held specific jurisdiction lacking where plaintiffs sued concerning a product that the corporate defendant actively marketed and sold in the forum state, but the plaintiffs themselves neither used the product in that state nor resided there.

THE DECISION IN FORD

In many respects, Ford presents a straightforward application of the Court's precedents. Every Justice-except Justice Barrett, who joined the Court too late to participate-agreed on the outcome.

In each of the consolidated cases, a Ford car was in an accident in the forum state, the victim resided and was injured in the state, and Ford did substantial business in the state, including by marketing the car models in question and creating a service network to maintain those models. Using the language of past decisions, Justice Kagan, writing for the Court, held that Ford had "purposefully availed itself of the privilege of conducting activities" within each state, and the suits "ar[o] se out of or relate[d] to" the contacts Ford had cultivated in each state. The "connection" between Ford's in-state activities and the plaintiffs' claims was enough to allow the forum state's courts to adjudicate the claims.

Ford itself agreed with the first part of the Court's analysis. It acknowledged it had "purposefully availed itself of the privilege" of conducting business in Montana and Minnesota through extensive advertising and its dealer and service networks. But Ford argued that these in-state activities were not adequately connected to the plaintiffs' claims. In Ford's view, a state could assert jurisdiction over an out-of-state corporation like itself only when the corporation's activities "gave rise to the plaintiff's claim." Ford thus contended that it could not be sued in Montana and Minnesota because the cars at issue were designed, manufactured, and sold elsewhere. Ford's activity in Montana and Minnesota, however extensive, did not cause the plaintiffs' injuries.

The Court rejected Ford's argument, explaining that its precedents had never required such a "strict causal relationship between the defendant's in-state activities and the litigation." The Court reiterated that specific personal jurisdiction can be established in two ways: The suit can "arise out of or relate to" the defendant's purposeful contacts with the forum. As the Court explained, the "or relate to" language in its well-worn test "contemplates that some relationships will support jurisdiction without a causal showing." But the Court was quick to reject the idea that "anything goes," and held that "the phrase 'relate to' incorporates real limits." Indeed, the Court insisted on a "strong relationship among the defendant, the forum, and the litigation"-what it called "the essential foundation of specific jurisdiction." But the Court held the cases satisfied that standard because Ford "systematically served a market in Montana and Minnesota for the very vehicles" the plaintiffs alleged "malfunctioned and injured them in those States." Its in-state activities were "related enough" to the plaintiffs' claims.

WHAT DOES "RELATED ENOUGH" MEAN?

The key question after Ford will be whether a corporate defendant's contacts with the forum state are "related enough" to the suit. As far back as International Shoe, the Court said that specific jurisdiction typically is appropriate when a plaintiff's claims "arise out of or are connected with" an out-of-state corporation's purposeful activities in the state. But not until Ford has the Court so clearly underscored that the "connected to" or "related to" standard can stand by itself.

Further, while the Court found that there was a "close enough" affiliation between Ford, the states, and the litigation for jurisdictional purposes, the Court's opinion may encourage some to test the boundaries of the "related enough" standard. Justice Gorsuch made this point in his concurrence in the judgment (joined by Justice Thomas). Justice Alito concurred in the judgment with his own opinion, expressing similar concerns.

LIMITING PRINCIPLES

No doubt Justice Gorsuch is right-litigation will follow. Plaintiffs likely will argue that their forum state of choice will do, because it is somehow "related to" the defendant's activities and the asserted claims. But several facets of the Court's opinion should give corporations comfort that they should not be exposed to suits in distant, inconvenient, or unfavorable forums, and that the Court's "related enough" standard has limits. Three possible lines of argument are highlighted below.

Ford Was a Straightforward Application of Past Precedents; It Changed Little

It is helpful that Ford involved what the Court considered to be relatively open-and-shut cases, and that the Court did not even purport to tweak the legal standard. Indeed, the Court simply applied the test first established in International Shoe itself-which said that a corporation may be sued in a state for claims that "arise out of or are connected with" its activities in that state. The Court rejected Ford's position only insofar as, in the Court's view, it gave insufficient weight to the "connected with" or "related to" language persistently present in the Court's decisions. Under Ford's causation-focused approach, the Montana and Minnesota plaintiffs-who sued in their home states, for injuries suffered in those states, because of alleged defects that manifested in those states-likely would have had to sue in Washington or North Dakota, simply because their vehicles were first sold to others in those states, and that first sale causally linked Ford to the claims.

As the Court pointed out, that approach not only pushed against the language of International Shoe, but was effectively foreclosed by hypotheticals discussed in two of its previous car-related personal-jurisdiction decisions-WorldWide Volkswagen and Daimler-in which the Court suggested it would be relatively noncontroversial for a carmaker to be sued in a state where it actively marketed its vehicles, when one of those vehicles injured a resident there. In relying on those decisions and others, the Court "proceed[ed] as the Court has done for the last 75 years-applying the standards set out in International Shoe and its progeny." Corporate defendants can ask lower courts to take the Court at its word, and recognize that Ford changed nothing.

To read the full article click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.