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Briefing

Ford Motor Co. v. Montana Eighth Judicial District Court: The Ever-Evolving Reach of U.S. Courts

On March 25, 2021, the U.S. Supreme Court decided Ford Motor Co. v. Montana Eighth Judicial District Court, refusing to further limit the jurisdictional reach of U.S. courts. The Supreme Court declined to accept Ford’s argument that because the vehicle in question was purchased outside the state where an accident occurred, there was insufficient nexus between the claim and the state, particularly in light of Ford’s efforts to cultivate a market for those vehicle in that state. In so holding the Court resolved a split among lower courts over whether specific personal jurisdiction is proper only if the defendant’s forum contacts caused the plaintiff’s injuries.

Key Takeaways:

  • U.S. courts exercise two types of personal jurisdiction: general (or all-purpose) jurisdiction and specific (or case-linked) jurisdiction. This case concerned specific jurisdiction.
  • While a causal link between a defendant’s forum contacts and a plaintiff’s injury may suffice for specific personal jurisdiction, it is not necessary. A defendant might still be haled into court in states where they cultivate a market for a product that causes an injury in that state, even if the product is acquired elsewhere.
  • Although the Court noted that a causal relationship may satisfy the “arises from” prong, it did not opine on whether the defendant’s forum contacts must be a proximate (or direct) cause of the harm, as opposed to “but for” cause of the harm (meaning that the harm would not have occurred but for the defendant’s conduct).
  • The Court expressly left open whether a different test for relatedness might apply in cases involving products sold on the internet. E-commerce cases are therefore likely to be the next frontier in the specific-jurisdiction case law.
  • Overall, Ford represents a pull back from the restrictive interpretation of specific jurisdiction often ascribed to the Supreme Court’s previous precedent Walden v. Fiore, 571 U.S. 277 (2014). In light of Ford, we expect to see more litigation over what conduct in a state is sufficient to “serve the market” for a company’s product in that state, such that product defects may be said to “relate to” the company’s contacts with the state. Companies seeking to avoid an unexpected brush with U.S. courts and U.S. law should bear in mind that extensively marketing their goods or services in a forum may force them to answer in that forum for problems with their goods and services. They should therefore carefully decide where they will cultivate a market for what they sell.

Background

This case arises from two car accidents: one in Montana (where one plaintiff lived) and one in Minnesota (where the other plaintiff lived). The plaintiffs were injured in those accidents when the Ford automobiles they were driving or riding in crashed. Although Ford did not design, manufacture or sell either vehicle to anyone in Montana or Minnesota, the plaintiffs sued Ford in those two states. Plaintiffs contended that Ford is subject to specific jurisdiction in Montana and Minnesota because, in each state, Ford advertised the types of vehicles involved in plaintiffs’ crashes.

Ford moved to dismiss plaintiffs’ claims for lack of personal jurisdiction. Ford argued that it was not subject to specific (or case-linked) jurisdiction in either state. As Ford explained, an exercise of specific jurisdiction is constitutional only if the plaintiff’s claim “arises out of or relates to” the defendant’s forum contacts—as the Supreme Court reiterated in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017). In Ford’s view, the “arises out of or relates to” standard requires a plaintiff to show that the defendant’s forum contacts caused the plaintiff’s injury. And according to Ford, plaintiffs’ had not alleged that Ford’s in-state advertising caused them to purchase a Ford vehicle or otherwise caused their injuries.

Both Montana and Minnesota high courts sided with the plaintiffs, finding they had personal jurisdiction over Ford because it marketed to customers in their states, sold and repaired vehicles through dealerships there, and otherwise provided services, such as driver assistance and recall notices, to state residents who owned Ford cars or trucks. The Supreme Court of Montana applied the “stream of commerce plus” theory to conclude that Ford had “purposefully availed itself of the privilege” of doing business in Montana. The court also found that the plaintiff’s claims “relate to” Ford’s activities in Montana because Ford “makes it convenient for Montana residents to drive Ford vehicles.” Similarly, the high court in Minnesota found that Ford’s activities in data collection, advertising and provision of repair and recall assistance to owners of Ford vehicles in the state were sufficient contacts to establish personal jurisdiction over the automaker. In its ruling, the Court outright rejected Ford’s causal link argument, holding that no causal connection was required between Ford’s contacts with the forum and plaintiff’s claims.

The Supreme Court’s Decision

The Court unanimously affirmed. Writing for the majority, Justice Kagan squarely rejected Ford’s causation-only interpretation of the “arising from or related to” inquiry for specific jurisdiction. Although the Court recognized that a forum contact that causes a plaintiff’s injury satisfies the “arise from” portion of the “arise from or relate to” test, it was not the only way to satisfy the test. The Court thus held that a forum contact that “relates to” the injury could suffice, even if that contact does not cause the injury. Even so, the Court explained that “the phrase ‘relate to’ incorporates real limits, as it must be read to adequately protect defendants foreign to a forum.”

Applying that test to the facts before it, the Court held that the plaintiffs’ injuries—accidents in vehicles that Ford advertised in Minnesota and Montana—related to Ford’s forum contacts. Not only did Ford market those vehicles in the states, but it also cultivated a market for them more broadly, including by providing service for those vehicles and after-market parts for them in both Minnesota and Montana. Thus, in the Court’s view, Ford “serve[d] a market” for the plaintiff’s vehicles in Montana and Minnesota “[b]y every means imaginable.” Based on those contacts, it was fair to require Ford to defend itself from claims in those states based on alleged defects with the vehicles it marketed there—regardless of whether Ford sold the vehicles at issue directly to the plaintiffs in Montana and Minnesota.

While the Court held that Ford served the Minnesota and Montana markets through its targeted advertising and other services for the vehicles at issue, it declined to “consider internet transactions, which may raise doctrinal questions of their own.” The Court accordingly left open whether internet retailers serve any state’s market by engaging in e-commerce.

Justice Alito concurred in the judgment but took issue with majority’s interpretation as “relate to” as an independent basis for specific jurisdiction. In Justice Alito’s view, removing altogether any kind of causal relationship requirement was an unnecessary “innovation” to existing law, bound to sow confusion in the lower courts. In Justice Alito’s view, removing the causal component was unnecessary, because the facts of the case showed (or easily could have shown) that Ford’s advertising in Minnesota and Montana caused the plaintiffs to buy their vehicles on the secondary market. Justice Alito also mused that “there are...reasons to wonder whether” the Court’s personal-jurisdiction case law “is well suited for the way in which business is now conducted,” but found no reason to answer that question, because “there is nothing distinctively 21st century” about the Ford case. Justice Alito, like the majority, thus left open whether e-commerce somehow compels different rules.

Implications

Uncertainty over the Supreme Court’s “arise from or relate to” test has caused litigants and courts to focus extensively on the degree of causation between a defendant’s forum contacts and a plaintiff’s injury. Some courts required only but-for cause; others required a meaningful causal link. But now that the Supreme Court has clarified that causation is not required—and that a defendant’s forum contacts need only “relate to” the plaintiff’s injury—many lower courts will now be deciding in the first instance what it means for an injury to relate to a forum contact. We expect that much of the jurisdictional fighting will be over the contours of relatedness. While those contours remain unclear, one thing that is clear from Ford is that a state’s resident’s injuries from the use of a product relate to a defendant’s extensive marketing of that product within the state. Companies that wish to avoid a state’s jurisdictional reach can therefore try to shield themselves by avoiding extensive advertising of their products within a forum.

Beyond the product-liability arena, companies seeking to avoid personal jurisdiction will now need to consider how their forum contacts might relate to claims that do not arise from those contacts. For instance, a plaintiff might now invoke Ford to claim that a tort committed by its out-of-state contractual counterparty “relates to” the parties’ contract, even though the conduct was independent of (and thus not caused by) the parties’ contract. Whether such an argument can carry the day is an open question after Ford. But it’s one that parties looking to avoid jurisdiction should bear in mind as they order their affairs.