Supreme Court revisits specific jurisdiction requirements
The standard for specific jurisdiction may feel like a moving target for courts, litigants and especially for growing businesses reaping both the benefits and the risks of being present throughout the U.S. Most recently, the U.S. Supreme Court weighed in on the requirements for ensuring that a defendant’s due process rights are not offended by the courts’ exercise of specific jurisdiction. In Ford Motor Co. v. Mont. Eighth Judicial Dist. Court, the Supreme Court found that Ford could be sued in Minnesota and Montana state courts. The Supreme Court ruled that a strict causal connection was not necessary for personal jurisdiction, so long as the defendant’s activities in the forum “relate to” the plaintiff’s claim. There is no bright-line test for what activities are sufficiently related to a plaintiff’s claim. However, based on the Ford decision, service and maintenance activities are likely sufficiently related to a plaintiff’s product defect claim, even if the product was not designed or manufactured in the state and particularly when the plaintiff was injured in that state. In other words, each party and lower court must continue to evaluate on a case-by-case basis whether a defendant’s activities in the forum are sufficiently related to a plaintiff’s claim for the court to exercise personal jurisdiction.
Basics of personal jurisdiction
The Fourteenth Amendment’s due process clause limits a court’s ability to exercise personal jurisdiction over defendants. International Shoe Co. v. Washington in 1945 is still the leading decision regarding personal jurisdiction. In International Shoe, the court held that the authority of the forum state depends on the defendant having such “contacts” that it “does not offend traditional notions of fair play and substantial justice.”
There are two types of personal jurisdiction: (1) general and (2) specific. A court has general jurisdiction over a corporation where it is “at home” in the forum state (Goodyear Dunlop Tires Operations, S.A. v. Brown). A corporation is widely recognized to be “at home” where it is incorporated and where it has its “principal place of business,” most often its headquarters (Daimler AG v. Bauman).
By contrast, a court may only exercise specific jurisdiction where a defendant has “purposefully availed” itself of conducting business in the forum state (Burger King Corp. v. Rudewiz). This is a narrower test: “the plaintiff’s claims must arise out of or relate to the defendant’s forum contacts.” (Bristol-Myers Squibb Co. v. Superior Court). No matter how “continuous” a corporation’s activity within the forum state, it is not enough for the forum state to assert specific jurisdiction where there is not “an affiliation between the forum and the underlying controversy.” Many courts interpreted this decision as requiring a company’s conduct in the forum state to be an alleged cause of the injury to support specific jurisdiction.
Ford Motor Co. v. Mont. Eight Judicial Dist. Court
The issue before the Supreme Court was whether Minnesota and Montana state courts had properly exercised personal jurisdiction over Ford. In each of the state court cases consolidated before the Supreme Court, a Ford vehicle was involved in a crash in the forum state where the plaintiff resided and was injured. Ford conducted business in the forum states, including advertising, selling and servicing the vehicle models the plaintiffs claimed were defective, but the subject vehicles were not originally sold, manufactured or designed in the forum state.
Ford claimed that the state courts only had specific jurisdiction where the company designed, manufactured or sold the particular vehicle involved in the accident. According to Ford, Bristol-Myers demands that type of causal link between the company’s conduct in the state and the plaintiff’s claims.
The Montana and Minnesota Supreme Courts disagreed. They assessed the various ways that Ford purposefully engaged in and benefitted from business in Minnesota and Montana. The courts referenced, among other things, sales numbers, influential advertising and marketing in the area, number of dealerships and certified repair, replacement and recall services.
The U.S. Supreme Court agreed with the state supreme courts, finding that the strict causal link advocated by Ford was not required to satisfy personal jurisdiction.
Two avenues for establishing specific jurisdiction
The Supreme Court’s opinion revisits the specific jurisdiction requirement that a plaintiff’s claim must “arise out of or relate to the defendant’s contacts with the forum” in order for the court to exercise personal jurisdiction. According to the court, that standard and the word “or” allow specific jurisdiction to be established in one of two ways: (1) based on a causal relationship or (2) a connection demonstrating that the defendant’s conduct in the forum state sufficiently “relates to” the plaintiff’s claim.
The court recognizes that the “arise out of” language refers to a causal connection. However, the “relates to” portion of the standard supposes that some relationship will support jurisdiction without a causal showing. In other words, specific jurisdiction is not foreclosed, as Ford argued, once the causal test fails. A court may still have jurisdiction because of other activities or occurrences “involving the defendant” that take place in the forum.
Although it may appear as if the Supreme Court is relaxing or expanding the standard for establishing specific jurisdiction, the court is, of course, mindful of due process and reiterates that the standard “has real limits” and “does not mean anything goes.” Moreover, the court does not overrule its prior specific jurisdiction jurisprudence.
The court distinguishes Bristol-Myers Squibb
The Supreme Court previously found that a California court’s exercise of personal jurisdiction was improper in Bristol-Myers. In that case, the California court was not permitted to exercise specific jurisdiction in a product liability class action involving plaintiff class members who resided outside the forum state. The Supreme Court found that there must be an affiliation between the forum and the underlying controversy, like an act that takes place in the forum state.
“When there was no [act or other] such connections, specific jurisdiction is lacking regardless of a defendant’s unconnected activities in the State.” It was not enough for specific jurisdiction that Bristol-Myers profited from substantial sales in California and participated in substantial advertising in California. Bristol-Myers “did not develop [the product] in California, did not create a marketing strategy for [the product] in California, and did not manufacture, label, package, or work on the regulatory approval of the product in California.”
In contrast, in Ford Motor Co., the Supreme Court found plaintiffs were residents of the forum states, they used the allegedly defective products in the forum states, and they were injured when those products malfunctioned in the forum states. Accordingly, the Supreme Court found that Ford’s contacts with Minnesota and Montana were sufficiently connected to the plaintiffs’ claims for those state courts to exercise specific jurisdiction.
The court distinguishes Walden
Like Bristol-Myers, the Supreme Court also distinguished Walden v. Fiore, because only the plaintiffs had contacts with Nevada. In Walden, a police officer seized money in Georgia from two airline passengers headed to Nevada. The Nevada passengers sued the police officer, and the Nevada state court exercised personal jurisdiction because the plaintiff passengers “felt the effect” of the harm in Nevada.
In Walden, the Supreme Court found that the Nevada court did not properly exercise specific jurisdiction because the police officer had not purposefully availed himself of Nevada’s jurisdiction. He did not “reach out beyond” his home, “exploit a market” in Nevada, or enter into a contractual relationship there. The court explains that because the officer neither had contacts, conducted activities, traveled to, nor sent anything to anyone in Nevada, the court did not need to address the necessary connection between a defendant’s in-state activity and the plaintiff’s claims.
Based on Walden, Ford argued that plaintiff’s residence and place of injury did not support the court’s exercise of specific jurisdiction over a defendant. But the Supreme Court in the Ford case distinguished Walden based on the many contacts that Ford had with Montana and Minnesota. Further, the Supreme Court found that even though a plaintiff’s injury and residence do not create a defendant’s contact with the forum state, those places are still relevant to assess the link between the defendant’s contact with the forum and the plaintiff’s claims.
According to the Supreme Court, the relationship between Ford’s activities in Minnesota and Montana and the plaintiffs’ claims were strong enough to support specific jurisdiction. There are at least three takeaways from this case:
1. A strict causal connection between a defendant’s activities and plaintiff’s claims is not necessary for specific jurisdiction. Although the “arise out of” language admittedly implies a causal relationship between a defendant’s activities and the forum state, courts must also consider whether a defendant’s forum state activities sufficiently “relate to” a plaintiff’s claim for the court to exercise specific jurisdiction.
2. There is no bright-line test for the court’s “relate to” avenue to specific jurisdiction. The Supreme Court did not answer how much contact would be necessary to create a connection with the forum state under the “relate to” means to specific jurisdiction. As Justice Samuel Alito points out in his concurrence, the court does not indicate what the limits of the “relates to” phrase are, which leaves the lower courts with little meaningful guidance.
3. A case-by-case analysis of specific jurisdiction is necessary and leaves the door open for more challenges to personal jurisdiction. The Supreme Court did not reverse or invalidate its prior personal jurisdiction decisions like Bristol-Myers, Walden and World-Wide Volkswagen v. Woodson. The Ford case did not involve a state court’s exercise of personal jurisdiction over a foreign manufacturer. The Supreme Court also expressly acknowledged that its decision does not apply to sporadic or isolated transactions in a forum state or address internet transactions that result in sales of a product to customers in a forum state. As such, each court and litigant must still evaluate on a case-by-case basis whether the exercise of specific jurisdiction is proper or offends due process.
For more information, please contact Chelsea Weaver, Elizabeth Moyo, Joyce Edelman or any member of the Product Liability practice group.
 See e.g., Napoli-Bosse v. GM LLC, 453 F.Supp. 3d 536 (D. Conn. 2020); Shuker v. Smither & Nephew, PLC, 885 F.3d 760 (3rd Cir. 2018); Coates v. Ford Motor Co., 2020 U.S. LEXIS 84666 (D.V.I. 2020); Wallace v. Yamaha Motors Corp., U.S.A., 2019 U.S. Dist. LEXIS 2011235 (D.S.C. 2019); Fung Retailing Ltd. v. Toys “R” Us, Inc., 593 B.R. 724 (E.D.V.A. 2018); Gigi’s Cupcakes, LLC, 2020 U.S. Dist. LEXIS 38033 (N.D. Texas 2020); Wang v. YCMG Brand, LLLC, 2017 U.S. Dist. LEXIS 190574 (S.D. Ohio 2017); SC Johnson & Son Inc. v. Henkel Corp., 2019 U.S. Dist. LEXIS 87549 (E.D. Wisc. 2019); In re NHL Players’ Concussion Injury Litig., 2019 U.S. Dist. LEXIS 175978 (D. Minn. 2019); LegalForce RAPC Worldwide P.C. v. Glotrade, 2019 U.S. Dist. LEXIS 197835 (N.D. Cal. 2019); VidAngel, Inc. v. Sullivan Entm’t Grp., 20218 U.S. Dist. LEXIS 126352 (D.C. Utah 2018); Hinkle v. Cont’l Motors, Inc., 268 F. Supp. 3d 1312 (M.D. Fla 2017).