On March 25, 2021 the Supreme Court of the United States issued a decision in Ford Motor Co. v. Montana Eighth Judicial District Court, a case that led the Court to revisit the constitutional underpinnings of personal jurisdiction jurisprudence. 141 S. Ct. 1017 (2021).
The Fourteenth Amendment’s Due Process Clause limits a state court’s power to exercise personal jurisdiction over a defendant. As applied to an out-of-state defendant who harms an in-state plaintiff, the Due Process Clause limits the exercise of specific personal jurisdiction only to cases where the defendant has “purposely availed” itself of the privilege of conducting activities in the forum and where the plaintiff’s claims “arise out of or relate to” the defendant’s contacts with the state.
For nearly 40 years, the “arise out of or relate to” requirement has been interpreted by the majority of lower courts as requiring a direct, casual link between the defendant’s in-state contacts and the plaintiff’s claims. This interpretation, however, has finally come to an end in light of the Supreme Court’s recent holding in Ford, where the Court clarified that while the phrase “arise out of” connotes a causation requirement, the phrase “relate to” does not.
The Supreme Court’s holding in Ford arose out of two independent lawsuits, originating in Minnesota and Montana, where two plaintiffs were involved in automobile accidents due to defective Ford Motor Company (“Ford”) vehicles. The plaintiffs, who were both residents of the states in which they were injured, filed suit asserting products-liability and negligence claims against Ford. However, both of the cars at issue were initially sold outside of the plaintiff’s respective states, and only later brought into Minnesota and Montana because of resales and relocations by consumers.
In both cases, Ford moved to dismiss the lawsuits for lack of personal jurisdiction. Ford conceded that it had “purposefully availed” itself to the forum states by “systematically” advertising, selling, and repairing its vehicles, including the models at issue, in Minnesota and Montana. However, Ford argued that because it had not designed, manufactured or sold the particular vehicles involved in the accidents in the forum states, the plaintiffs’ claims did not “arise out of or relate to” its forum state activities. In a unanimous decision, the Court rejected this argument, noting 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.” Rather, the “relate to” standard “…contemplates that some relationships will support jurisdiction without a causal showing.”
With respect to Ford, the Court held that when an automobile company “serves a market for a product in a State and that product causes the injury in the State to one of its residents, the State’s courts may entertain the resulting suit.” In so holding, the Court considered the fact that Ford “‘regularly conducts [business] in Montana and Minnesota’ by advertising its vehicles heavily in both states, including the models at issue ; sell[s] its vehicles, both new and used, at dozens of dealerships in the states; repair[s] its vehicles at those dealerships, […]; and distribut[es] replacement parts to its own dealers and independent repair shops” all of which “make[s] it easier to own a Ford”. According to the Court, the plaintiffs’ might have never purchased the defective vehicles, and the suits might not have ever arisen, except for Ford’s contacts with their home states. Thus, the Court found that Ford’s activities were sufficiently “related to” the plaintiffs’ claims to support the exercise of specific personal jurisdiction.
For personal injury clients, the Court’s holding is significant as it is the first decision in nearly a decade that expands, rather than restricts, a state’s jurisdictional powers. By providing clarity regarding the scope of specific personal jurisdiction, defendants who conduct substantial business activities in a state may find it more difficult to evade lawsuits by asserting personal jurisdiction as a defense.