For any company facing a product liability lawsuit, it is critical at the outset to assess whether the forum court actually has the power to render a judgment against the defendant company (i.e., personal jurisdiction). A court with general jurisdiction over a defendant can hear any and all claims against that defendant. Absent unusual circumstances, general jurisdiction only applies in those states where a company is incorporated or has its principal place of business. Assessing whether a court can exercise specific personal jurisdiction over a defendant is a trickier exercise. Exercising specific personal jurisdiction requires that the defendant “purposely availed” itself of the privilege of conducting activities within the forum state and that plaintiff’s claims “arise out of or relate to the defendant's contacts.” It is this latter requirement of relatedness that the U.S. Supreme Court is attempting to clarify with its recent decision in Ford Motor Company v. Montana Eighth Judicial District Court.
This consolidated case stems from two separate accidents involving Ford vehicles in different states: Montana and Minnesota. Plaintiffs each sued Ford in their respective home states, bringing a number of claims, including products liability, design defect, and negligence. Ford moved to dismiss the two suits for lack of personal jurisdiction, arguing that because the vehicles involved were not manufactured, designed, or sold in the forum states, Ford was not subject to personal jurisdiction in either state. Both the Montana and the Minnesota Supreme Courts (affirming lower court decisions) rejected Ford's argument, noting that Ford’s ongoing activities in the forum states encourage residents to drive Ford vehicles, and when that driving results in an in-state injury, the ensuing claims have enough of a tie to Ford’s activities to support specific jurisdiction.
On March 25, 2021, the U.S. Supreme Court also rejected Ford’s argument, holding that the connection between the plaintiffs’ claims and Ford's extensive activities in Montana and Minnesota was “close enough” to support specific jurisdiction under due process principles, even though the particular vehicles involved were not manufactured or originally sold in those states. In reaching that decision, the Court pointed out that the plaintiffs are residents of the forum states, used the allegedly defective products in the forum states, and suffered injuries when those products allegedly malfunctioned in the forum states. The Court reasoned that “each of the plaintiffs brought suit in the most natural State—based on an ‘affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that t[ook] place’ there.”
Citing its prior decisions, the Court explained that when a company deliberately extends its business into the forum state, it has notice and may reasonably anticipate that it will be hauled into court based on its products causing injury there. The Court further rejected any framing of the specific jurisdiction inquiry as always requiring proof of causal link between the defendant’s contacts and the plaintiff’s claims. The Court was careful to point out, however, “[t]hat does not mean anything goes,” adding that “the phrase ‘relate to’ incorporates real limits, as it must to adequately protect defendants foreign to a forum.” The Court further limited its holding by specifying “we do not here consider internet transactions, which may raise doctrinal questions of their own.”
Personal jurisdiction has become a hot topic of late, with the Court by and large restricting its exercise over nonresident corporate defendants. We previously reviewed the Supreme Court’s personal jurisdiction jurisprudence and noted that specific jurisdiction requires a direct connection between the plaintiff’s claim, the defendant’s conduct, and the forum. Though it remains to be seen how narrowly lower courts will interpret the holding in Ford Motor Company, the latest addition to the Supreme Court’s jurisprudence on personal jurisdiction is sure to have a significant impact on product liability actions. Under Ford Motor Company, a major manufacturer’s contacts with a forum state need not be the direct cause of a plaintiff’s injuries for specific jurisdiction to be proper. As a result, companies may be sued nationwide, as opposed to only in states where their products are designed, manufactured, and sold.