Legal Insights

In a recent 8-0 decision, the United States Supreme Court made it easier for plaintiffs to bring product liability actions in the state where the injury occurred even if the defective product was designed, manufactured, and sold elsewhere.

The Supreme Court’s decision involved two underlying cases, each involving accidents in vehicles manufactured by Ford. In the first action, Markkaya Gullett was killed while driving her 1996 Ford Explorer in her home state of Montana after the tread separated from a tire. In the second action, Adam Bandemer was injured in a 1994 Ford Crown Victoria in his home state of Minnesota when the airbag failed to deploy in a road traffic accident. Both plaintiffs filed suit against Ford in their home state.

Ford challenged specific jurisdiction in each case, citing the two main requirements for exercising specific personal jurisdiction: first, the defendant must have purposefully availed itself of doing business within the forum state, and second, the plaintiffs’ claims “must arise out of or relate to the defendant’s contacts” with the forum. Ford did not dispute that it had purposefully availed itself of doing business within Montana and Minnesota. Rather, it argued that specific jurisdiction was improper because its activities within the forum states did not give rise to the plaintiffs’ claims. Specifically, Ford noted that the particular vehicles at issue were neither newly sold, manufactured, or designed in the forum state and had arrived in the forum states only after various resales and relocations by consumers. In fact, the Explorer was designed in Michigan, manufactured in Kentucky, and sold in Washington and the Crown Victoria was designed in Michigan but manufactured in Canada and sold in North Dakota. In sum, Ford’s ultimate position was that jurisdiction was improper because its activities in the state had no bearing on the plaintiff’s specific claims.

The Court rejected Ford’s challenge to jurisdiction, and in doing so refused to adopt an exclusively causal test of connection. Looking to the plain language of the current case law, the Court noted that specific jurisdiction is proper so long as, inter alia, “the plaintiff’s claims . . .arise out of or relate to the defendant’s contacts with the forum [state].” The Court reasoned that the phrase “or relate to” does not require a strict causal relationship between the defendant’s in-state activ­ity and the litigation, i.e. proof that the plaintiff’s claim came about a direct result of the defendant’s in-state conduct. Instead, there need only be a strong “relationship among the defendant, the forum, and the litigation” for the defendant’s activity to relate to the claim and to form the “essential foundation” for exercise of specific jurisdiction.
The court held that because Ford had advertised, sold, and serviced the two car models claimed to be defective in both states for many years, it has systematically served a market in Montana and Minnesota for the very model of vehicles that the plaintiffs allege malfunctioned. The Court held that Ford’s decision to market the specific model of vehicles at issue in the litigation formed the requisite strong “relationship among the defendant, the forum, and the litigation” for purposes of establishing specific jurisdiction. It did not matter that Ford’s connections to the state did not involve the specific cars in the accidents; it was sufficient that its forum-based connections related to the models of cars at issue.

In addition to rejecting the strict causal test of connection, the Court also questioned Ford’s assumption that its in-state activities had not resulted in the plaintiffs purchasing the specific vehicles at issue. The Court found that Ford’s in-state activity was designed to encourage Minnesota and Montana residents to drive Ford vehicles in those states – and that the plaintiffs may have been convinced to buy a secondhand Ford through the in-state advertising, active resale market, and convenient network dealers and service stations, all of which were promoted by and fostered by Ford.

Finally, the Court specifically distinguished the U.S. Supreme Court Case of Bristol-Myers Squibb (“BMS”). In BMS, plaintiffs from all over the country filed a class action lawsuit in California state court against pharmaceutical manufacturer Bristol-Myers Squibb Company for injuries allegedly caused by a drug called Plavix. The Court in BMS held that jurisdiction was improper as to the out-of-state residents because there was no connection between the forum and the specific claims at issue – specifically, those plaintiffs had not sustained their injuries in California, nor had they purchased, ingested, or been prescribed Plavix in California. The Court distinguished BMS from the cause sub judice, noting that Mr. Bandemer and Ms. Gullett both lived, drove their Ford vehicles, and suffered their injuries in the forum states. Accordingly, the Court concluded that, unlike the plaintiffs in BMS, Mr. Bandemer and Ms. Gullett’s estate had brought suit in the most natural state, rendering specific jurisdiction over Ford proper.

Throughout the opinion, the Court relied on those fundamental principles of sensible and effective administration of justice to encourage resolution of claims in states with a reasonable connection to the litigation. The Court also repeatedly stressed that its decision was in keeping with the underlying policies of treating defendants fairly and protecting “interstate feder­alism.” By conducting substantial business in Montana and Minnesota, Ford had enjoyed the benefits and protection of their laws, such as the enforcement of contracts, the defense of property, the resulting formation of effective markets. In return, the court found that Ford had assumed reciprocal obligations — notably that the car models Ford so extensively marketed in those states would be safe for their citizens to use there. In addition, the Court relied on Word World Volkswagen to explain that Ford should not be surprised by the Court’s exercise of specific jurisdiction in Montana and Minnesota, noting that while portions of that decision were technically obiter dicta, it has since become the paradigm example of jurisdiction in many Supreme Court cases.

Finally, the Court noted that Montana’s and Minnesota’s interests in adjudicating the underlying cases (i.e. providing their residents with a convenient forum for redressing injuries suffered within its borders and enforcing their own safety regulations) were much greater than the interests of the states that first sold the vehicles (i.e. Washington and North Dakota, whose only connection to the case was the initial owner who had purchased the car there many years ago). The Court also specifically considered the fact that one state’s sovereign power to try a suit may prevent “sister States” from exercising their like authority. The Court reminded the parties that the law of specific juris­diction seeks to ensure that states with “little legiti­mate interest” in a suit do not encroach on states more af­fected by the controversy, and as such Mr. Bandemer and Ms. Gullett had initiated their lawsuits in the proper jurisdictions.

Of course, how these rules are interpreted remained to be seen.
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In one parenthetical, the Court asked the reader to “[c]ontrast a case . . . in which Ford marketed the models in only a different State or re­gion.” Although the Court specifically declined to address that case, the comment appears to suggest that if the model of vehicle connected to the plaintiff’s claim does not have a connection to the state, jurisdiction would still be improper. Unfortunately, that does little to suggest the extent of the connection necessary before jurisdiction would be constitutional. True, the Supreme Court opinion specifically noted that sporadic transactions are treated differently than continuous ones, but the area in between the extremes is still untested. In the case at issue, for example, the evidence showed that Ford had sold over 2000 Crown Victorias in Minnesota. While the Court made clear that a single sale of a Crown Victoria model (assuming, of course, it was not the specific vehicle at issue) would be unlikely to create specific jurisdiction over Ford, but we are left to wonder how many sales would vest the state with jurisdiction. Indeed, as Justice Alito mentions in concurrence, recognizing actions that “relate to” the plaintiff’s claim as an independent basis for specific jurisdiction (i.e. distinct from the more exacting requirement that the plaintiff’s claim “arises out of” the defendant’s action) risks needless complications, citing to Supreme Court case law for the proposition that "[t]he 'ordinary meaning' of the phrase 'relate to' 'is a broad one.'" Justice Alito concludes that that the phrase "relate to" does not, as the majority would suggest, "incorporate real limits," and that without any indication what those limits might be the lower courts will struggle to place meaningful, consistent, or definitive limits on jurisdiction.
Similarly, issues could arise as to how a manufacturer of a component part would be treated when it incorporates a component part into some but not all cars in a particular model, or when the component part at issue does not directly cause the injury. The Court’s jurisprudence regarding questions of specific jurisdiction suggests, however, that, if the claim does not arise from the subject product, jurisdiction would be improper.

Please contact Simon Baker with any questions. A full copy of the Supreme Court opinion is available here.