Is Personal Jurisdiction "Built for the Road Ahead?" A Closer Look at Ford v. Montana
On March 25, 2021, the Supreme Court held in Ford Motor Company v. Montana Eighth Judicial District Court that Montana and Minnesota courts could exercise jurisdiction over the global auto manufacturer for certain in-state vehicle accidents, even if Ford sold, designed, and manufactured the allegedly defective automobiles outside those forums.1 The Ford decision sparked immediate questions about the direction of the Court's personal jurisdiction jurisprudence, especially after a decade of decisions restricting the exercise of jurisdiction over out-of-state defendants. Does Ford signal a return to the days of expansive jurisdiction or was it simply a tried-and-true application of existing principles? In other words, how worried should defendants be that the International Shoe is now on the other foot? In this analysis, we look under Ford's hood to see what lies ahead for personal jurisdiction and begin thinking about Ford's practical impact.
A "Paradigm" Fact Pattern
Plaintiffs in the two consolidated actions were injured, one fatally, when components of the Ford vehicles they were driving or riding in allegedly malfunctioned, either causing a crash (the Montana case) or increasing the severity of one (Minnesota). Ford moved to dismiss both lawsuits on the grounds that the Montana and Minnesota courts lacked personal jurisdiction over Ford because Ford's conduct in each state had not given rise to the plaintiffs' claims.
The high courts of both states disagreed, and the US Supreme Court affirmed, holding that Ford's contacts with the two states were sufficient to establish personal jurisdiction. Because Ford is neither incorporated nor headquartered in Montana or Minnesota, those states lacked "general" jurisdiction over Ford for claims that arise elsewhere. (General jurisdiction permits an out-of-state defendant to be sued for any and all claims, even if the claim has nothing to do with the defendant's activities in the forum state. Because of its all-encompassing nature, the Supreme Court previously limited general jurisdiction to only those places where the defendant is "essentially at home" in the forum. For companies, that largely means in its principal place of business or place of incorporation.) With general jurisdiction off the table, the question was whether Ford's contacts with Montana and Minnesota were sufficient to permit "specific" jurisdiction, which requires that "[t]he plaintiff's claims . . . 'arise out of or relate to the defendant's contacts' with the forum."2
This test, the Court explained, has two components. First, the defendant must have purposefully availed itself of the privilege of conducting activities in the forum state. Or put another way, the defendant must have "deliberately 'reached out beyond' its home—by, for example, 'exploiting a market' in the forum State or entering a contractual relationship centered there."3 Here, Ford conceded that it does extensive business in Montana and Minnesota and has purposefully availed itself of the privilege of conducting activities in both states by, among other things, advertising, selling and servicing the vehicle models at issue in these lawsuits.
Ford's concession focused the Court's attention on the second element: whether the plaintiffs' claims "arise out of or relate to" Ford's in-state activities. Ford maintained these lawsuits did not arise from its general commercial dealings in the two states. According to Ford, the Supreme Court's prior cases imposed a causal connection requirement, meaning that the defendant's conduct in the forum must give rise to the plaintiffs' claims. Ford asserted that personal jurisdiction was thus precluded because Ford first sold the vehicles at issue in Washington and North Dakota rather than in the forum states. In other words, Ford's activities with respect to these particular vehicles took place exclusively outside Montana and Minnesota. The vehicles' original owners subsequently sold them to individuals who, unbeknownst to Ford, later relocated or resold the vehicles, which ended up in Montana and Minnesota.
The Court rejected Ford's argument, holding that "Ford's causation-only approach finds no support in this Court's requirement of a 'connection' between a plaintiff's suit and a defendant's activities."4 The Court explained that its specific jurisdiction test, as articulated in prior cases, can be satisfied when the suit either "arises out of" or "relates to" the defendant's contacts with the forum. "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.'"5
Stated otherwise, a plaintiff need not prove that a claim "came about because of the defendant's in-state conduct" as long as the claim "relates to" that conduct.6 The Court left the precise contours of "relate to" unclear, though cautioned that "in the sphere of specific jurisdiction, the phrase 'relate to' incorporates real limits, as it must to adequately protect defendants foreign to a forum."
Having disposed of Ford's causation argument, the Court concluded that Ford was subject to specific jurisdiction. Ford "regularly conducts [business] in Montana and Minnesota" by advertising its vehicles heavily in both states, including the models at issue here; selling its vehicles, both new and used, at dozens of dealerships in the states; repairing its vehicles at those dealerships, including older vehicles; and distributing replacement parts to its own dealers and independent repair shops.7 These practices "mak[e] it easier to own a Ford" and "encourage Montanans and Minnesotans to become lifelong Ford drivers."8
These forum activities, the Court held, were sufficiently "related" to the plaintiffs' claims—for in-state injuries caused by defective manufacturing of Ford automobiles—to subject Ford to suit there. In short, "Ford had systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs alleged malfunctioned and injured them in those states," thus establishing a "strong 'relationship among the defendant, the forum, and the litigation'—the 'essential foundation' of specific jurisdiction."9 Indeed, the Court emphasized that "this exact fact pattern (a resident-plaintiff sues a global car company, extensively serving the state market in a vehicle, for an in-state accident)" constituted "a paradigm example . . . of how specific jurisdiction works."10
A New Test for Personal Jurisdiction?
One pressing question is whether Ford announces a new, expanded test for assessing specific jurisdiction. The Court's opinion disclaims any doctrinal shift, insisting that the Court is adhering to historical and recent precedents. The concurring opinions of Justices Alito and Gorsuch imply otherwise, suggesting that the Court's "relate to" test unnecessarily (and imprudently) expands the number of forums that may exercise jurisdiction over a defendant.
To parse this question, let's take stock of what we know and don't know from the Ford opinion.
What We Know
Causation is not necessary. In order to establish specific jurisdiction, a plaintiff does not need to prove that his injury was caused by the defendant's in-state activity. Throughout the case, Ford maintained that its activities in Montana and Minnesota had no "causal link" to the plaintiffs' injuries because Ford did not design, manufacture or sell the particular vehicles involved in the accidents in those states. Ford may have marketed and serviced the very same vehicle models in Montana and Minnesota, but (in Ford's view) the plaintiffs' injuries would have happened regardless of its activities—thus, no causation. Justice Kagan did not beat around the bush in rejecting this theory: "Ford's causation-only approach finds no support in this Court's requirement of a 'connection' between a plaintiff's suit and a defendant's activities."11 Going forward, plaintiffs need not establish that their claims "came about because of the defendant's in-state conduct."12
Relatedness is key. Though plaintiffs don't need to show causation, Justice Kagan emphasized that the specific jurisdiction test still "incorporates real limits, as it must to adequately protect defendants foreign to a forum."13 It's not true that "anything goes."14 The relationship between the forum state, the parties, and the case still matters, and if the relationship isn't strong enough, there will be no jurisdiction.
To flesh out this point, the Court articulated some types of "relatedness" that will matter in future tort cases. Two relevant connections include the location of the injury and the residency of the plaintiff. Justice Kagan thought it obvious that a California court could not hear a claim against Ford brought by an Ohio plaintiff based on an accident occurring in Ohio involving a car purchased in Ohio.15 That claim, according to Justice Kagan, did not sufficiently "relate to" Ford's business dealings in California. In contrast here, the Court emphasized that Ford had "served a market in Montana and Minnesota for the very vehicles that the plaintiffs allege malfunctioned and injured them in those States."16 As such, manufacturers in future cases likely will argue that the marketing of products or services in the forum that differ from those that injured the plaintiff are insufficient to establish the necessary relationship with the forum. (Though as discussed below, just how different the product or service must be remains an open question.)
The Court also took pains to emphasize that relatedness between a defendant's in-state contacts and the claim at issue will prevent blurring the line between general and specific jurisdiction. Simply doing business in a forum—even extensive business—will not subject a defendant to suit there for claims unrelated to the forum. For such "general jurisdiction" to lie, a defendant must be "essentially at home" there. The Court's decision in Ford dealt only with specific jurisdiction. Thus, even after Ford, general jurisdiction over corporations is almost always limited to suits filed in their place of incorporation or principal place of business.
Jurisdictional facts matter, maybe a lot. The Court did not purport to impose any new bright-line rule about specific jurisdiction. Indeed, the Court was careful to avoid implying that marketing one type of good in a state automatically opens a manufacturer to liability claims for any type of good marketed in that state. Quite the opposite—the Court emphasized several additional factors that supported jurisdiction in Montana and Minnesota: (1) the plaintiffs were state residents; (2) Ford had "systematically served" the markets in those states; (3) Ford marketed "the very vehicles that the plaintiffs allege malfunctioned"; and (4) these particular types of vehicle injured the plaintiffs in each state.17 From the Court's discussion of these factors, it seems likely that, going forward, lower courts should consider: whether the plaintiff is a state resident; the pervasiveness of the defendant's contacts with the state; the closeness of the type of product or service marketed to the one that injured the plaintiff; and the location of the events that injured the plaintiff.
In future cases where the location of the plaintiff and injury are objectively ascertainable—and with causation no longer serving as a limitation—courts will likely focus on the pervasiveness of the defendant's contacts and the degree of similarity between the products or services marketed in the forum and those at issue in the lawsuit. The Court's opinion in a footnote previewed the type of line-drawing dispute likely to come next: Justice Kagan contrasted Ford's extensive activities in Montana and Minnesota with "sporadic transactions" that a business might have with another state that likely would not suffice to support specific jurisdiction.18 Echoing a hypothetical discussed at oral argument, Justice Kagan suggested that a Maine resident who sells defective duck decoys on the Internet probably can't be sued in each and every state where the decoy causes harm.19 In other words, contacts made through "internet transactions" might not be systematic in the same way as Ford's contacts, although the Court expressly declined to "consider internet transactions, which may raise doctrinal questions of their own."20
What We Don't Know
What constitutes a sufficient "connection" between contacts and claims? We know that the relatedness test does not require a showing of factual causation. But how strong or "related" must the connection be between a defendant's forum contacts and the claims?
Justice Kagan's opinion made it clear that Ford was not some fly-by-night operator in Montana and Minnesota. She repeatedly emphasized that "Ford did substantial business in the State—among other things, advertising, selling, and servicing the model of vehicle the suit claims is defective,"21 noting that the company "conceded [its] 'purposeful availment' of the two States' markets."22 The Court further concluded that Ford's purposeful availment created strong bonds with Montana and Minnesota and its customers there. The company's advertising in the states "urg[ed] Montanans and Minnesotans to buy its vehicles, including (at all relevant times) Explorers and Crown Victorias," the precise models at issue.23 Plus, Ford cars, including these models, are available for sale "at 36 dealerships in Montana and 84 in Minnesota," and Ford also "works hard to foster ongoing connections to its car owners" by distributing replacement parts and, through its dealers, maintaining and repairing cars.24 These activities not only make Ford money, they also make it easier for customers in Montana and Minnesota to own Ford cars, even "encourag[ing] Montanans and Minnesotans to become lifelong Ford drivers."25
It is telling the extent to which the Court emphasized these connections that Ford sought to foster with Montana and Minnesota and its customers in those states. (Justice Kagan's impassioned recitation of the emotional bonds formed by Ford's advertising campaigns evokes images of Don Draper and his Mad Men cohort.26) But there is reason to think this description is more than just narrative color; rather, parties and courts will likely rely on this discussion to help demarcate the boundaries of specific jurisdiction.
The relatedness requirement raises other issues worth considering. First, in emphasizing that Ford had "systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs alleged malfunctioned and injured them in those States," the Court stated that it was not addressing a situation where Ford marketed the models only in a different state or region.27 Maybe the outcome would have been different if Ford had never sold the models at issue in Montana or Minnesota? Lower courts will need to clarify this issue, just as they will need to consider a second, related point. The Court repeatedly stated that Ford had extensively marketed in the forums "the very vehicles" that caused the plaintiffs' injuries. Would it have made a difference to the outcome if Ford had only marketed the 1995 and 1997 Explorers, but not the 1996 model year, in Montana? Again, the Court's opinion does not provide a great deal of guidance on just how similar the products need to be in order to support specific jurisdiction.
Finally, Justice Kagan observed that the two jurisdictions where the vehicles at issue were sold originally by Ford—Washington and North Dakota—arguably had even less connection to the claims at issue than Montana and Minnesota. She pointed out how anomalous it seemed for Ford to offer the place of original sale as the proper forum for litigation of the plaintiffs' claims. But, as Justice Gorsuch pointed out in his concurring opinion, the Court did not say that those states would lack specific jurisdiction over Ford for the plaintiffs' claims. This suggests that relatedness may be somewhat more encompassing than the Court's opinion implies, or it could mean that the line between when a claim "arises out of" or "relates to" the defendant's conduct is not clearly demarcated.
How will the fact-intensive inquiry affect threshold pleading and defenses? The Ford opinion does not offer guidance on how challenges to personal jurisdiction might unfold going forward, including when and what sort of jurisdictional discovery courts should permit. When a defendant uses a declaration or other evidence to dispute the plaintiff's jurisdictional allegations in support of a motion to dismiss for lack of personal jurisdiction, plaintiffs often seek permission to conduct jurisdictional discovery. But mindful that jurisdictional discovery can easily morph into full-blown merits discovery, many courts have attempted to maintain limits on the availability and scope of discovery that they allow before ruling on a defendant's challenge to personal jurisdiction.
Will Ford change this, altering how parties litigate and courts decide personal jurisdiction motions? The Court did not mention jurisdictional discovery in Ford—in fact, the word "discovery" does not appear in any of the three opinions. But it does not take a crystal ball to envision what will happen next. If personal jurisdiction after Ford increasingly turns on whether a defendant has pervasive contacts with a forum—including the type of its products that are sold in a forum and the relationships it cultivates within the forum with dealers and customers alike—then it is easy to see plaintiffs increasingly attempting to use jurisdictional discovery to explore disputed factual issues that relate to the merits, as well. This outcome could also invite forum shopping, making it more likely that plaintiffs file suit in their preferred forum and then use jurisdictional discovery to fill in the blanks to determine the extent of a defendant's forum contacts. If so, perhaps wary judges will become even more diligent in supervising jurisdictional discovery while trying to discourage the filing of lawsuits on jurisdictionally questionable grounds.
What about contracts? Does the Court's analysis of "relatedness" govern only in cases involving single-product tort injuries, like the ones against Ford? Much of the Court's analysis was tort-specific but not expressly so. Will Ford shake up the specific jurisdiction inquiry in contract and commercial cases, too? Traditionally, specific jurisdiction in these cases will focus on the place where the contract is performed or possibly where it was negotiated or executed. But is that focus now too narrow? Consider, for example, a contract dispute involving a product's purchaser and a manufacturer-supplier. Under Ford, would there be specific jurisdiction in the place where the manufacturer-supplier designed and manufactured the product, even if the purchaser is not located there and the contract was not negotiated or executed there?
Courts will have to wrestle with these questions in the coming weeks, months and perhaps years to come.
Changing of the Guard
For the past decade, Justice Ruth Bader Ginsburg has been the Court's standard-bearer on issues of personal jurisdiction. And she did so through consensus. Among her notable decisions, Justice Ginsburg wrote for a unanimous Court in Goodyear Dunlop Tires Operations, S.A. v. Brown28 and Daimler AG v. Bauman,29 and her opinion in BNSF Railway Co. v. Tyrell30 was joined by seven colleagues. Each of those decisions placed meaningful limits on courts' exercise of jurisdiction over out-of-state defendants. Those opinions also added welcome clarity in an area of law that often felt like we-know-it-when-we-see-it.
Ford is the current Court's first personal jurisdiction decision without Justice Ginsburg and it may signal a changing of the guard. Justice Kagan's opinion for the Court, like those of Justice Ginsburg, did not generate any dissent. That unanimity is particularly striking because Ford reverses the Court's modern trend of limiting a court's jurisdictional reach. Perhaps that unanimity signals that Ford is not a watershed moment for personal jurisdiction after all, but simply the application of established doctrinal principles to a familiar fact pattern. Certainly that is what Justice Alito thought; he concurred separately to emphasize that the Ford case could be decided without shifting anything in existing precedent.
One thing is certain, however. Battles over personal jurisdiction are far from over.
Arnold & Porter has a distinguished history of advising and representing clients on cross-border issues and personal jurisdiction, including the firm's win in the landmark case Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017).
© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.