Ford vs. Forum Shopping: The Attempt to Limit Personal Jurisdiction to a “Causation Only” Analysis
Ford vs. Forum Shopping: The Attempt to Limit Personal Jurisdiction to a “Causation Only” Analysis
Personal jurisdiction is perhaps one of the most complicated areas in litigation. Each successive case since International Shoe Co. v. Washington, seems to create more new questions than answers, and the unanimous decision in Ford Motor Company v. Montana Eighth Judicial District Court, 2021 WL 1132515, Nos. 19-368 and 19-369 (March 25, 2021) is no exception. In Ford Motor Company v. Montana, the United States Supreme Court appears to have reinforced the established principles of World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) and Daimler AG v. Bauman, 134 S.Ct. 746 (2014) regarding personal jurisdiction over automobile manufacturers, but, at the same time, may have expanded the reach of personal jurisdiction.
The Due Process Clause of the Fourteenth Amendment limits a state’s power to exercise jurisdiction over a defendant. Id. In International Shoe Co. v. Washington, 326 U.S. 310 (1945) the Court “held that a tribunal’s authority depends on the defendant’s having such ‘contacts’ with the forum State ‘that the maintenance of the suit’ is ‘reasonable, in the context of our federal system of government,’ and ‘does not offend traditional notions of fair play and substantial justice.’” Id.
In order for a court to exercise personal jurisdiction over a case “[t]he defendant . . . must take ‘some act by which [it] purposefully avails itself of the privilege of conducting activities within the forum State.’” Hanson v. Denckla, 357 U.S. 235, 253 (1958). Stated another way, a “plaintiff’s claims . . . must arise out of or relate to the defendant’s contacts with the forum.” Bristol-Meyers Squibb Co. v. Superior Court of Cal., San Francisco Cty., 137 S. Ct. 1773, 1779 (2017) (emphasis added). Ultimately, “there must be ‘an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulations.” Id. at 1780.
Ford v. Montana Eighth Judicial District Court and Ford v. Bandemer – Facts
The matter before the United States Supreme Court involved two separate cases. The facts of each case were substantially similar, and not unique. In each case, the injured party filed suit in the state court where they lived, where the vehicle was purchased secondhand, and where the crash occurred, Montana and Minnesota respectively.
In Ford v. Montana Eighth Judicial District Court, the plaintiff, a Montana resident, purchased a used Ford Explorer from a dealership in Montana. The plaintiff drove the Explorer in Montana and the plaintiff was injured in a crash in Montana. The Explorer was originally sold to its first retail purchaser in Washington. In Ford v. Bandemer, the plaintiff, a Minnesota resident, was a passenger in a used Ford Crown Victoria that was purchased used in Minnesota and involved in a crash in Minnesota. The Crown Victoria was originally sold to its first retail purchaser in North Dakota.
Ford’s Argument for a “Causation Only” Approach to Personal Jurisdiction
Ford moved to dismiss each of the above cases on the grounds that neither of the state courts could exercise jurisdiction over it because Ford’s conduct was not a “but for” cause of either crash. Ford argued that personal jurisdiction was only proper: (1) in the state where Ford first sold the vehicle; (2) where the vehicle was designed; or (3) where the vehicle was manufactured.
In proposing this “causation only” approach Ford relied on the Court’s decision in Bristol-Meyers Squibb Co. v. Superior Court of Cal., San Francisco Cty. There the Court rejected non-residents’ attempts to file a lawsuit in California over their use of the prescription drug Plavix. Bristol-Meyers Squibb, 137 S.Ct. at 1778, 1783 – 1784. However, neither the plaintiffs nor Bristol-Meyer’s Squibb were California residents. The Plaintiffs were not prescribed Plavix in California, they did not purchase Plavix in California, they did not ingest Plavix in California, and there was no allegation that they suffered any harm from Plavix in California. Id. at 1778. The California Supreme Court originally accepted jurisdiction of the case because Bristol-Meyers Squibb sold Plavix to other persons in California and was actively defending other lawsuits in the state. The United States Supreme Court disagreed and held that California violated Bristol-Meyers Squibb’s rights under the Fourteenth Amendment. Id. at 1783 – 1784.
Here, Ford claimed the Court’s reasoning in Bristol-Meyers Squibb was equally applicable to these cases. While Ford did not dispute that it sold vehicles in Montana and Minnesota, it argued that it did not sell these specific vehicles in Montana or Minnesota, and Plaintiffs therefore lacked a “but for” causational link to Ford.
Both the Montana and Minnesota Supreme Courts rejected Ford’s arguments. In addition to the fact that each of the claimed injuries occurred in the state where the case was brought, each court also looked to Ford’s contacts within the state and took notice of Ford’s multiple dealerships, service centers, and marketing campaigns within their states.
The Supreme Court of the United States
The United States Supreme Court granted Ford’s petition for a writ of certiorari of the decisions from the Montana and Minnesota Supreme Courts. Ford then presented these same arguments to the United States Supreme Court, and in an 8-0 decision the Supreme Court affirmed the rulings of the Montana and Minnesota courts. The Supreme Court noted that Ford’s “causation only” approach sought the adoption of “an unprecedented rule under which a defendant’s contacts with a forum State must be proven to be a but-for cause of the tort of Plaintiff’s injury.” Ford v. Montana, 2021 WL 1132515 *10 (Concur J. ALITO). This was unanimously and summarily rejected, and the Justices took care to reiterate past precedent and confirm that personal jurisdiction “attaches in cases identical to the ones here – when a company like Ford serves a market for a product in the forum State and the product malfunctions there.” Id. at *6.
Moreover, the Court maintained the limitations on forum shopping which were affirmed in Bristol-Meyers Squibb and distinguished the facts of each of the underlying cases. The Court took care to specifically note that in Bristol-Meyers Squibb neither the plaintiffs nor the defendant had any contact with California as it related to plaintiffs’ alleged injuries. Whereas, in the cases under review, both the plaintiffs and Ford had multiple contacts with the chosen forum as it related to each of the plaintiffs’ individual injuries. The Court also noted that Ford’s argument that personal jurisdiction is only proper in Michigan or the states where the vehicles were first sold would include either Washington or North Dakota, and require these states to hear a lawsuit of out-of-state parties, on an out-of-state accident, and out-of-state injuries. Ford v. Montana, 2021 WL 1132515 *8. This would ultimately create jurisdiction in a forum with a far less significant relationship to the cases than those chosen by the plaintiffs. Id.
Although the Court’s decision was unanimous, the Justices were divided as to whether the Court’s opinion broadened the test for personal jurisdiction. Both Justice Alito and Justice Gorsuch filed concurring opinions that were critical of the majority for applying statutory interpretation principles to the International Shoe opinion, and its finding that personal jurisdiction can attach to cases which “arise out of or relate to” the defendant’s contacts with the forum, the key phrase being “or relate to.”
The concerns raised in the concurring opinions are that applying statutory interpretation principles to a Court opinion’s use of the disjunctive phrase “arise out of or relate to” will open the door for state courts to exercise personal jurisdiction over matters where the defendant’s contacts with the forum are more tenuous. Both concurring opinions note that the majority’s use of the phrase “or relate to” needed defined limitations, but the majority never actually sets out what these limitations are. The concurring Justices argue that the majority’s interpretation of International Shoe was unnecessary because both of these cases could be squarely decided based on the current state of the law, as set forth in World-Wide Volkswagen Corp., 444 U.S. 286 and Daimler AG, 134 S.Ct. 746. Still, the footnotes to the majority’s opinion reflect the rejection of the concurring Justices’ concerns. In its footnotes, the majority reaffirmed that isolated or sporadic transactions are to be treated differently than continuous ones, and flatly dismissed the idea that a state court should be able to exercise jurisdiction over a national corporation on any claim, no matter how unrelated to the state or a defendant’s activities there. The facts underlying this opinion do not provide much guidance for resolving those personal jurisdiction questions which lie on the periphery, because they represent clear examples of when personal jurisdiction was likely proper under previous precedent. Still, the concurring opinions may provide ammunition for arguments in support of both the expansion or restriction of personal jurisdiction over an individual matter. Because of the questions raised by the concurring Justices, a defendant asserting lack of personal jurisdiction should continue to highlight facts which demonstrate that its contacts with a forum, as they relate to the alleged claims or tort, are isolated or sporadic, do not have any relevance to the alleged injuries, and do not arise out of or relate to the specific contacts. After all, as repeated in the Court’s opinion, fundamental fairness and the avoidance of forum shopping still remain at the heart of personal jurisdiction analysis.