By David R. Geiger, a partner, former litigation department chair, and chair of the Product Liability and Complex Tort Practice Group at Foley Hoag LLP. He is an elected member of the American Law Institute and is a sustaining member of the Product Liability Advisory Council (PLAC) and its Case Selection Committee. Mr. Geiger submitted an amicus brief on behalf of PLAC in the Ford case.
In its recent decision in Ford Motor Company v. Mont. Eighth Judicial Dist. Court, 141 S. Ct. 1017 (2021) (“Ford”), the United States Supreme Court reversed its decade-long practice of making the due process limits on state courts’ exercise of personal jurisdiction over non-resident corporations more objective and predictable. In so doing, the Court purported to rely on precedent and principles that did not in fact support its decision, and allowed jurisdictional sympathy to prevail over logic.
In Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), and Daimler AG v. Bauman, 571 U.S. 117 (2014), the Court made clear that state courts could exercise “general jurisdiction” over a corporation, i.e., jurisdiction with respect to any and all claims, only if the corporation was “at home” in the forum state, which generally required that it either be incorporated or have its principal place of business there. And in cases culminating in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (“BMS”), the Court made clear that state courts could exercise “specific jurisdiction” over a corporation that was not “at home” in the forum, i.e., jurisdiction with respect to the specific claims at issue, only if the corporation had purposefully availed itself of the privilege of conducing activities within the forum and plaintiff’s claims “arise out of or relate to” those activities. What was left unresolved was what contacts satisfied the “arise out of or relate to” criterion.
Ford involved consolidated cases in which forum residents sued an out-of-state vehicle manufacturer for injuries sustained in accidents that occurred in the forum. Plaintiffs alleged their injuries were due to defects in defendant’s vehicles, but defendant had not designed, manufactured, or sold plaintiffs’ specific vehicles in the forum; rather, the vehicles only entered the forum through resales and owner relocations. Defendant argued that “arise out of or relate to” required its in-state conduct to have been the cause of plaintiffs’ claims, a condition not satisfied in the cases. The Montana and Minnesota Supreme Courts disagreed and concluded that defendant’s other in-state conduct—which included advertising and selling the vehicle models at issue and maintaining dealerships at which they could be serviced—was sufficiently “related” to plaintiffs’ claims that the exercise of jurisdiction satisfied due process.
In an 8-0 decision (Justice Barrett did not participate) that was supported by a five-justice opinion of the Court, plus concurrences as to the result by Justices Alito and Gorsuch (the latter joined by Justice Thomas), the Supreme Court agreed. The Court rejected defendant’s causal test for specific jurisdiction as ignoring the “or relate to” portion of the Court’s prior language, and noted that in cases such as World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), the Court had used the hypothetical—albeit in dicta—of a national vehicle manufacturer that regularly advertised and sold products in the forum as a paradigm example that permitted jurisdiction. In short, where “resident-plaintiffs allege that they suffered in-state injury because of defective products that [defendant] extensively promoted, sold, and serviced in [the forum,] . . . the connection between the plaintiffs’ claims and [defendant]’s activities in [the forum] . . . is close enough to support specific jurisdiction.”
Unfortunately, on close examination Ford is not supported by the precedent or principles on which it relied, and has only re-introduced confusion into an area that the Court’s last decade of opinions had increasingly clarified.
The Court primarily asserted that its decision followed from principles of “reciprocity” inherent in its “canonical” decision in International Shoe Co. v. Washington, 326 U.S. 310 (1945) (“International Shoe”). According to the Court, International Shoe held that “[w]hen (but only when) a company ‘exercises the privilege of conducting activities within a state’—thus ‘enjoy[ing] the benefits and protections of [its] laws’—the State may hold the company to account for related misconduct,” and here defendant’s in-state conduct was sufficiently related. The Court also justified its decision as consistent with principles embodied in prior jurisprudence of providing “clear notice” that allows a corporation to “structure [its] primary conduct” to determine where it will be subject to jurisdiction, and of “interstate federalism” that aim to prevent a state having “’little legitimate interest’ in a suit” from asserting jurisdiction over it. Here, defendant’s “regularly marketing [the accident] vehicle in [the forums]” provided clear notice, and those states had “significant interests at stake—‘providing [their] residents with a convenient forum for redressing injuries inflicted by out-of-state actors,’ as well as enforcing their own safety regulations.”
But the Court’s characterization of International Shoe’s reciprocity principle in fact truncated the Court’s relevant language and thus ignored its true governing principle. What International Shoe actually said was that where a defendant conducts activities in a state, those activities “may give rise to obligations, and so far as those obligations arise out of or are connected with the activities within the state,” it comports with the “traditional conception of fair play and substantial justice,” or is not “undue,” to “require the corporation to respond to a suit brought to enforce” those “obligations.” In other words, there is “reciprocity” between benefits the state affords a defendant for in-state activities and jurisdictional burdens it may impose on defendant only if both benefits and burdens are based on the in-state conduct. In Ford, of course, defendant’s in-state activities had created no obligations whatsoever with respect to plaintiffs or their vehicles, and any such obligations were created in other states where defendant had designed, manufactured, and sold the allegedly defective vehicles.
In addition, there is a fundamental lack of temporal reciprocity in Ford. Logically, general jurisdiction over a corporation hinges on whether, at the time suit is filed, defendant is “at home” in the forum, as it is that residency that supports the state’s general power over its citizen. By contrast, however, whether a state can exercise jurisdiction only as to the specific claims in suit logically should hinge on defendant’s forum activities at the time of the events in question, not the present. Thus International Shoe’s holding was premised on the fact that the defendant’s in-state activities “were systematic and continuous throughout the years in question.” 326 U.S. at 320 (emphasis added). Yet the Court in Ford focused solely on defendant’s activities at the time of suit, as it consistently addresses those activities only in the present tense: “the business that the company regularly conducts” in the forum states, defendant “urges [forum] residents” to buy its vehicles,” defendant’s “cars,” including the two models at issue, “are available for sale,” defendant’s “dealers . . . regularly maintain and repair [defendant]’s cars,” and so on.
Besides the lack of reciprocity and hence fundamental illogic involved in this temporal disconnect, it is equally problematic on the “clear notice” and “structur[ing] . . . primary conduct” front. If a company—perhaps a newer but growing one—that initially deliberately conducted business only in one or a few jurisdictions later expands to conduct essentially the same business on a national scale, that intial “structur[ing] [its] primary conduct” will have been to no avail to limit its jurisdictional susceptibility, as the corporation’s present “related” activities will suffice to support jurisdiction nationally. Nor, at the time of its conduct at issue, will defendant have been on “clear notice” that years later it would be subject to nationwide jurisdiction for what was at the time geographically limited activity.
As for the federalism principles cited by Ford, at least in the punitive damages context the Court has recognized the primacy of the state in which the relevant acts were performed, holding that due process prohibits a state from “punish[ing] a defendant for conduct that may have been lawful [in another state] where it occurred.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 421 (2003). In addition, the interests of the states where the Ford plaintiffs resided, which was also where the accidents occurred, could at least potentially have been accommodated by having their substantive law applied if suit was brought where defendant designed, manufactured, or sold plaintiffs’ vehicles. Regardless, as Justice Gorsuch noted in his concurrence, the states where the vehicles were actually sold undoubtedly “would contend they have a strong interest in ensuring they don’t become marketplaces for unreasonably dangerous products.”
Yet another aspect of Ford that represents a departure from past jurisprudence, as well as logic, arises from its casual elision between the actions of the defendant and those of its dealers, as it was only the latter, and not defendant itself, that performed the in-state servicing of defendant’s vehicles on which the Court’s decision partly relied. It is apodictic that different corporations are separate legal entities, and the conduct of one is not to be imputed to another, absent some special evidence such as that which justifies piercing the corporate veil for liability purposes. Indeed, in BMS, the Court affirmatively rejected plaintiffs’ effort to rely on the in-state conduct of defendant’s in-state distributor, noting that “it is not alleged that [defendant itself] engaged in relevant acts together with [its distributor] in California,” or “that [defendant] is derivatively liable for [its distributor]’s conduct in California.”
At bottom, the result in Ford can only be explained by the fact that plaintiffs were residents of the forum and had suffered their injuries there. In BMS, defendant had sold $900 million of the very product at issue in-state over a six-year period, yet plaintiffs’ claim did not “arise out of or relate to” that conduct because plaintiffs themselves had not used and been harmed by the products in-state. In Ford, on the other hand, defendant’s years-later in-state promotion and sales of the products at issue were sufficient to support jurisdiction, as plaintiffs had used the products in-state and been injured there, even though defendant’s alleged liability-creating conduct occurred elsewhere.
While no one would lack sympathy for the injured plaintiffs in Ford, or their desire not to face undue difficulties in pursuing a claim, it was defendant, not plaintiffs, that was invoking the protections of due process, and Walden v. Fiore, 571 U.S. 277, 284 (2014), made clear that “[d]ue process limits on the State’s adjudicative authority principally protect the liberty of the nonresident defendant—not the convenience of plaintiffs.” Moreover, plaintiffs could readily have contacted contingency-fee counsel in their residential states who would have referred them to counsel in states where defendant could properly have been sued, and such counsel (assuming they thought the claims worthy of pursuit) would have advanced any suit costs, including as necessary to travel to the forum for deposition or trial. Indeed, plaintiffs’ counsel routinely sue outside their clients’ home states when they believe a different forum is more plaintiff-friendly, as was the case in BMS.
In short, the opinion in Ford is unsupported by its cited precedents and principles, is illogical, and only re-introduces confusion into a field that the Court had painstakingly clarified over the previous decade (save for the “arise out of or relate to” phrase), all to prevent an inconvenience to resident plaintiffs that their own counsel routinely find to be of little consequence. Going forward, did the Court really mean that jurisdiction over a claim regarding past events is determined by forum contacts at the time of suit? Did it really mean that contacts of one corporation may be imputed to another merely because the two entities have a contractual relationship? In a product liability suit, what contacts are sufficiently “related” to support jurisdiction: sales of the very product at issue, sales of the same or “similar” products, sales in the same general type of business, or something else? Will the contact be sufficiently “related” if plaintiff is a forum resident but her accident occurred outside the forum, or if plaintiff is a non-resident but her accident happened in the forum, or only if both plaintiff’s residence and accident were in the forum? What volume of contacts is sufficient for a corporation to have “purposefully availed” itself of the privilege of conducting activity in the forum? And so on.
Unfortunately, only one thing is now certain: much doctrinal confusion, and billions of litigation dollars and hours, will “arise out of or relate to” the decision in Ford.