After decades of losses before the Supreme Court of the United States, plaintiffs finally won a case upholding the jurisdiction of state courts over non-resident corporate defendants. In a decision in which all voting Justices agreed on the result, the Court found that state courts in Montana and Minnesota had specific jurisdiction over Ford Motor Company for in-state accidents involving used vehicles despite the absence of in-state activities directly connecting Ford to the specific vehicles involved. Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017 (March 25, 2021). Does this decision suggest the winds of change are blowing in the jurisprudential fields of personal jurisdiction? Perhaps.
For three-quarters of a century, first-year law students have discussed personal jurisdiction in terms of “minimum contacts” and “traditional notions of fair play and substantial justice,” thanks to the venerable U.S. Supreme Court case of International Shoe Co. v. Washington, 326 U.S. 310 (1945). “Minimum contacts” in turn has yielded discussions of “general jurisdiction” and “specific jurisdiction.” But the world has changed since International Shoe, decided just after the end of World War II. Ford Motor Co. may indicate the Court is open to reconsidering how to analyze personal jurisdiction.
Two Approaches to Specific Jurisdiction—“Arise out of” or “Be Related to”
The facts in Ford Motor Co. were not particularly complicated and the holding was not particularly surprising. The appeal was a consolidation of two personal injury cases involving claims by plaintiffs who resided and were injured in the forum states of Montana and Minnesota in accidents involving used Ford vehicles that were purchased in the forum states. Ford argued there was no general jurisdiction because it was not “at home” in either Montana or Minnesota (a term of art coined in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011)). Ford also claimed there was no specific jurisdiction because it had not designed, manufactured, or sold either vehicle in Montana or Minnesota.
Ford essentially urged a “but for” version of specific jurisdiction, relying on the long-established and oft-quoted phrase that the plaintiff’s claim must “arise out of or be related to” the defendant’s contacts with the forum. By Ford’s reasoning, this meant the plaintiffs’ claims had to arise from Ford’s in-state activities related to the specific vehicles involved in the accidents. Because all of Ford’s involvement with the specific vehicles occurred out of state, i.e., designing, manufacturing, and selling, Ford reasoned that the plaintiffs’ claims did not “arise out of or relate to” anything Ford did in the forum states.
The Court decided 8-0 (Justice Amy Coney Barrett not participating) that Montana and Minnesota had specific jurisdiction. Justice Elena Kagan, writing for five justices, readily dispensed with Ford’s arguments, holding they offered too restrictive a view of specific jurisdiction. Even if the plaintiffs’ claims did not directly “arise out of” Ford’s activities in the states, they at least “related to” those activities. Justice Kagan explained: “The first half of that standard asks about causation; but the back half, after the ‘or,’ contemplates that some relationships will support jurisdiction without a causal showing.” Ford employed “every means imaginable” to market its products and services to residents of the forum states, which Justice Kagan concluded created a “strong ‘relationship among the defendant, the forum, and the litigation’—the ‘essential foundation’ of specific jurisdiction.”
How Related Must “Related” Be?
Justice Kagan’s parsing of the phrases “arises out of” and “related to” is interesting in and of itself, because it raises questions of whether courts will now broaden the view of specific jurisdiction by focusing on a defendant’s general activities in the state, even if unconnected to the controversy before the court. In years past, defendants could fairly readily wall off those unconnected activities. How well that will work in the future is not so clear.
In the few short months since Ford Motor Co.’s publication, state and federal court opinions have discussed or cited it more than 175 times. While acknowledging the Court’s new “relatedness” test, courts do not seem to be obliterating the need to connect the plaintiff’s claim to the defendant’s activities in the forum state. For example, the Fifth Circuit held that beer manufacturers’ extensive sales and marketing of their products in a state were not related to a plaintiff’s claim that they were conspiring to poison him: “Selling beer and poisoning beer are unrelated activities.” Alexander v. Anheuser-Busch, LLC, 2021 WL 3439131, *3 (5th Cir. Aug. 5, 2021). The Seventh Circuit held that an Indiana police officer’s posting of a fugitive warrant on a national police database was insufficient to create jurisdiction in Iowa for a plaintiff who was wrongfully arrested there based on that warrant. Rogers v. City of Hobart, Indiana, 996 F.3d 812, 820 n.14 (7th Cir. 2021). The Ninth Circuit held the absence of any link between the plaintiff’s investment in a particular transaction and the defendant national securities brokerage firm’s widespread business activities in the forum state failed the “relatedness” test. Johnson v. UBS AG, 2021 WL 2935953, *3 (9th Cir. July 13, 2021). An Ohio federal district court held the general link between the use of hotels and motels as sites for sex trafficking of minors was too attenuated to create specific jurisdiction over a non-resident hotel chain for an event that occurred in Florida involving people who were not citizens of Ohio. C.T. v. Red Roof Inns, Inc., 2021 WL 2942483 (S.D. Oh. July 1, 2021). The Oregon Supreme Court recognized that Ford Motor Co. required a new approach to specific jurisdiction beyond simple causation but nevertheless held that “relatedness” continues to incorporate the concept of foreseeability. Cox v. HP, Inc., 368 Or. 477, 2021 WL 3417045 (Or. Aug. 5, 2021).
On the other hand, a Delaware federal district court used Ford Motor Co. to justify jurisdictional discovery in consumer class action cases against the German-based parent companies of BMW and Audi. See Rickman v. BMW of North America LLC, No. 18-04363, 2021 WL 1904740 (D.N.J. May 11, 2021) and Opheim v. Aktiengesellschaft, No. 20-02483, 2021 WL 2621689 (D.N.J. June 25, 2021). Despite the carefully constructed hierarchy of parent and subsidiary companies that separates the parent manufacturer from its distribution and marketing subsidiary, the court found the plaintiffs had made “plausible” cases connecting the parent manufacturers to the forum state, which justified discovery on the threshold issue of jurisdiction. In the same vein, a Delaware state court found it had specific jurisdiction over a Colorado company based on its contract with Facebook to check the veracity of information posted on users’ Facebook pages. Owens v. Lead Stories, LLC, CA No. S20C-10-016, 2021 WL 3076686, *9 (Del. Super. Ct. July 20, 2021). Regardless of whether the plaintiff’s claims “arose from” the in-state conduct of the Colorado defendant, they undoubtedly “related” to the defendant’s systematic and continuous presence in the state by its contract with Facebook.
Time to Replace International Shoes?
As interesting as Justice Kagan’s analysis was, of even greater interest were the concurring opinions of Justice Samuel Alito and Justice Neil Gorsuch. After explaining the reasons he differed from Justice Kagan’s analytical approach to the “arises out of or be related to” language, Justice Alito added some musings about whether the International Shoe method for analyzing jurisdiction “is well suited for the way in which business is now conducted” and commended Justice Gorsuch’s “thoughtful” concurring opinion on that subject.
For his part, Justice Gorsuch, with Justice Clarence Thomas joining, expressed even greater concern about the continued viability of International Shoe, describing its conceptualization of general jurisdiction as “almost quaint,” and stating that “some of the old [personal jurisdiction] guardrails have begun to look a little battered.” Although he had complete confidence in the correctness of the result reached in the Ford case, he candidly admitted to leaving the case “with even more questions than I had at the start,” and invited “future litigants and lower courts” to help the Court “face these tangles and sort out a responsible way to address the challenges posed by our changing economy in light of the Constitution’s text and the lessons of history.”
In sum, from uncomplicated facts and an unremarkable holding, Ford Motor Co. may well indicate that the Court is ready to try on some new “personal jurisdiction shoes” to replace the time-worn footwear of International Shoe.