Lower courts’ inability or refusal to confine cases to their proper fora compels the Supreme Court to spend precious docket space restating the rules governing personal jurisdiction
The Due Process Clauses of the Fifth and Fourteenth Amendments limit courts’ authority to exercise personal jurisdiction over defendants. Personal jurisdiction comes in two varieties: general and specific. A court with general jurisdiction over an out-of-state defendant can “hear any and all claims against” that defendant, but only if the defendant’s affiliations with the forum state “are so constant and pervasive as to render it essentially at home” there. Daimler AG v. Bauman, 134 S. Ct. 746, 751 (2014) (internal quotation marks and brackets omitted). On the other hand, a court may exercise specific jurisdiction over an out-of-state defendant only when the claims at issue “arise out of or relate to” the defendant’s in-state activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotation marks omitted). While those standards might sound clear enough, state and lower federal courts have continued to reach conflicting results. And, in recent years, the Supreme Court has repeatedly found it necessary to intervene. See Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017); BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017); Walden v. Fiore, 134 S. Ct. 1115 (2014); Goodyear Dunlop Tires Operations, S.A. v.Brown, 564 U.S. 915 (2011); J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873 (2011) (plurality opinion).
The latest chapter in this ongoing saga involves specific jurisdiction. The Supreme Court has agreed to hear two cases to address what “arise out of or relate to” really means. In Ford Motor Co. v. Montana Eighth Judicial District Court and Ford Motor Co. v. Bandemer, the Court will decide whether the requirements of specific jurisdiction are met when the defendant’s contacts with the state did not cause the plaintiff’s claims. In both cases, plaintiffs sued Ford for alleged defects (tires and airbags) in cars that were manufactured and originally sold outside the forum state, but that allegedly led to in-state injuries. Ford argued that courts in those states could not exercise personal jurisdiction in such circumstances just because the company engaged in some in-state business unrelated to the claims.
Both the Montana and Minnesota Supreme Courts disagreed. The Montana Supreme Court (the same court that was overruled in BNSF Railway) held that exercising personal jurisdiction was appropriate because Ford had availed itself of the privilege of doing business in Montana by placing its products in a stream of commerce that would foreseeably reach the state, and by advertising and selling other vehicles and parts there. Similarly, the Minnesota Supreme Court held that to establish personal jurisdiction, no causal relationship was necessary between a defendant’s forum contacts and the claims at issue. It was enough that Ford marketed and sold the same type of car in Minnesota, and that some of the relevant events giving rise to the suit occurred within the state. In dissent, two justices responded that the design, assembly, and sale of the allegedly defective vehicle took place in other states, and accused the majority of eliding the difference between general and specific jurisdiction.
If the Supreme Court were to adopt Montana’s or Minnesota’s looser approach to personal jurisdiction, the decisions wouldhave far-reaching consequences. Plaintiffs would likely argue that manufacturers should be subject to specific jurisdiction in every state where they sell their products, regardless of whether any specific claims directly relate to the defendant’s contacts in the forum state. Such a broad reading of the “relate to” standard would blur the line between general and specific jurisdiction. Given the high stakes, it is no surprise that the two cases have already attracted significant attention from stakeholders. The Chamber of Commerce and the Alliance of Auto Manufacturers filed amicus briefs at the preliminary stage in the Supreme Court, and more amici are sure to follow now that the Court has agreed to reach the merits.
The Supreme Court has consolidated Montana Eighth Judicial District Court and Bandemer, and is expected to hear a single hour of oral argument in April 2020. A decision is expected by the end of June 2020.
Morrison & Foerster associate Adam Sorensen assisted in the preparation of this client alert.