Ford Motor Co. v. Bandemer: Recent Developments in Personal Jurisdiction in Product Liability Actions
By M. Jansen Voss
Christian & Small, LLP
Personal jurisdiction issues frequently arise in product liability actions. The following is a common scenario: A resident of Alabama alleges she was injured in Alabama by a product sold in Mississippi, manufactured in Georgia by a company with its principal place of business in North Carolina. The question arises: In what state, or states, can the Plaintiff file suit against the North Carolina based product manufacturer? That question starts with the well-known United States Supreme Court's opinion in International Shoe Co. v. Washington, 326 U. S. 310 (1945) and ends with the Court's recent opinion in Ford Motor Co. v. Bandemer, 140 S. Ct. 916 (2020)
Fundamentally, a court may enter a valid judgment against an out-of-state product manufacturer only if the court has personal jurisdiction over the product manufacturer. The Fourteenth Amendment’s Due Process Clause limits a state court’s ability to exercise jurisdiction and enter a binding judgment. In International Shoe Co. v. Washington,—a case fundamental to an understanding of personal jurisdiction—the United States Supreme Court held that a court’s authority to exercise personal jurisdiction depends on the defendant having “contacts” with the jurisdiction such 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.” 326 U. S. 310, 316-317 (1945). In subsequent decisions, the Court focused on the nature and extent of “the defendant’s relationship to the forum State.” Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1770 (2017). That focus led to the Court's recognition of two categories of personal jurisdiction: general jurisdiction and specific jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U. S. 915 (2011).
General jurisdiction exists when a product manufacturer has such a presence in the jurisdiction that the manufacturer is "at home" in the jurisdiction. Daimler Ag v. Bauman, 571 U.S. 117, 118 (2014) (finding that a corporation is typically only “at home” in its “place of incorporation and principal place of business”); BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1559 (2017) (holding no general personal jurisdiction over BNSF in Montana, where BNSF was not incorporated in Montana and did not maintain its principal place of business there); Waite v. All Acquisition Corp., 901 F.3d 1307, 1318-22 (11th Cir. 2018) (ruling registration to do business in Florida-without more—did not subject the product manufacturer to jurisdiction in the state).
Specific jurisdiction may be invoked even when a product manufacturer is not "at home" in the state. However, specific jurisdiction applies to a narrower class of cases. Goodyear, 564 U.S. at 924-25. Specific jurisdiction exists when the product manufacturer performs “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). To invoke a court's personal jurisdiction over an out-of-state product manufacturer, a plaintiff must show the product manufacturer deliberately “reached out beyond” its home—by, for example, “exploi[ting] a market” in the jurisdiction or entering a contractual relationship centered in the jurisdiction. Walden v. Fiore, 571 U. S. 277, 285 (2014). Even when a product manufacturer purposely avails itself of conducting business in a particular jurisdiction, a plaintiff must also establish the claims “arise out of or relate to the defendant’s contacts” with the forum. Bristol-Myers, 137 U. S., at 1786.
The United States Supreme Court in Bristol-Myers Squibb (“BMS”) limited the jurisdictions in which specific jurisdiction may be invoked to those connected to a particular plaintiff’s claims. Id. A group of plaintiffs sued BMS in California state court alleging product liability claims. Id. Only 20% of the plaintiffs resided in California. Id. at1778. The Court allowed the plaintiffs who lived, purchased, or were prescribed BMS's drugs in California to pursue their claims in California state court. Id. at 1779. However, out-of-state plaintiffs whose claims had no relation to California were not permitted to piggyback on the in-state plaintiffs' claims. Id. at 1782.
Federal districts across the country applied BMS limiting forum shopping by out-of-state plaintiffs asserting product liability claims. BMS may also limit specific jurisdiction where plaintiffs’ alleged injuries only occurred in the jurisdiction as a result of a product traveling there through the “stream of commerce.” Under the “stream of commerce” theory, plaintiffs allege that minimum contact with the state is established merely because defendant’s product ultimately reaches that jurisdiction and the product allegedly causes injury in that jurisdiction.
But, in a recent decision, the United States Supreme Court seems to have reversed course making it easier for plaintiffs to forum shop. On March 25, 2021, the Court held that Ford Motor Company is subject to product liability lawsuits in Montana and Minnesota in connection with automobile accidents occurring in those states even though the subject vehicles were manufactured and sold in other states. Ford Motor Co. v. Bandemer, 140 S. Ct. 916 (2020). The Court noted that Ford markets and sells vehicles identical to the vehicles involved in the automobile accidents in Montana and Minnesota. Id. Justice Kagan concluded that Ford’s business activities in Montana and Minnesota were pervasive, and close enough to the automobile accidents to support specific personal jurisdiction. Id.
The Montana case arose from the death of the plaintiff in an automobile accident in Montana involving a 1996 Ford Explorer. The deceased plaintiff's estate sued Ford Motor Company in Montana State Court alleging product liability claims. The plaintiff's vehicle was manufactured in Kentucky, sold by a dealer in Washington State, and then sold to the end user in Oregon.
The Minnesota case arose out of an automobile accident in Minnesota involving a 1994 Ford Crown Victoria. The plaintiff sued Ford in Minnesota State Court alleging product liability claims. The plaintiff's vehicle was designed in Michigan, assembled in Ontario, Canada, and subsequently sold to a dealer in North Dakota.
Justice Kagan summarized decades of personal-jurisdiction jurisprudence explaining that specific jurisdiction requires purposeful availment and relatedness. A defendant must purposefully avail itself of conducting business activities in the jurisdiction, including activities such as advertising, marketing, and sales. Relatedness requires that the plaintiffs’ claims arise out of or relate to the defendant’s business contacts in the jurisdiction. Further, there must be “an affiliation between the forum and the underlying controversy, principally, [an] activity or occurrence that takes place in the jurisdiction and is therefore subject to the State’s regulation.”
Ford admitted it conducted substantial business in Montana and Minnesota. However, Ford argued its activities in Montana and Minnesota did not sufficiently connect to the suit because its activities and the automobile accidents at issue lacked a causal connection. Ford implies that specific jurisdiction would only exist where Ford designed, manufactured, or sold the vehicle, without regard to where the automobile accident ultimately occurred.
The Court rejected Ford’s “causation-only approach.” The Court noted that Ford advertises, markets, and sells its vehicles in Montana and Minnesota, and it maintains “ongoing connections” to end users by providing maintenance, repairs, and sale of replacement parts. The Court found these connections created a “strong ‘relationship among the defendant, the forum, and the litigation,’ and were the ‘essential foundations of specific jurisdiction.’” Id.
The Court distinguished Ford from BMS and Walden. Many of the plaintiffs in BMS were residents of the jurisdiction and were not injured in the jurisdiction. In contrast, the plaintiffs in the Ford case were citizens of the jurisdiction and were injured in the jurisdiction. In Walden, the Court found jurisdiction lacking because only the plaintiff had contact with the jurisdiction. The defendant in Walden did not engage in any activity in the jurisdiction—in stark contrast with Ford's connections in Montana and Minnesota. Id.
Showing some restraint, the Court denied any intent to address e-commerce contracts. Id. The Court also noted that “[n]one of this is to say that any person using any means to sell any good in a State is subject to jurisdiction there if the product malfunctions after arrival.” Id. at 12 n.1.
Justice Alito and Justice Gorsuch concurred in the opinion. However, both Justices suggested the Supreme Court’s personal jurisdiction doctrine, developed in the first half of the 20th century through International Shoe and its progeny, may not be “well suited for the way in which business is now conducted” and may require rethought in light of fundamental changes to the nature of business. Id. at 1 (Alito, J., concurring); Id. at 2, 11 (Gorsuch, J., concurring). Gorsuch observed that “[t]he real struggle here isn’t with settling on the right outcome in these cases, but with making sense of our personal jurisdiction jurisprudence and International Shoe’s increasingly doubtful dichotomy.” He signaled a need “to address the challenges posed by our changing economy in light of the Constitution’s text and the lessons of history.” Id.
Justice Alito and Justice Gorsich also suggested the majority opinion’s test for specific jurisdiction will present difficulties for lower courts to apply given the relatively broad and ordinary meaning of the phrase “relate to." The Justices also questioned whether the majority opinion set any meaningful limits of the phrase. Id.
The contours of the phrase “relate to” remain unclear. Additionally, the question of how strong a causal relationship must be to satisfy the “arise out of” element of the test remains unanswered. Both issues are likely to generate district court and appellate court decisions in the coming years aimed at fleshing out a more concrete definition of these terms. Furthermore, it is not unreasonable to expect the United States Supreme Court to take up the task of tailoring International Shoe to address the realities of global commerce in the 21st century.