Jurisdictional Expansion: Specific Personal Jurisdiction Just Got Broader

ABSTRACT: The United States Supreme Court expands the application of personal jurisdiction and those actions creating sufficient contacts with a forum.

Courts around the country have held a defendant is not subject to specific personal jurisdiction in a forum unless the claims asserted arose out of the defendant’s contacts with the forum. In product liability cases, typically unless the product arrived in the forum through the defendant’s actions, the courts found no specific personal jurisdiction existed.  However, the United States Supreme Court has broadened the scope of contacts sufficient for a court to exercise personal jurisdiction over a defendant.  In doing so, it has weakened a powerful defense. 

There are two types of personal jurisdiction—general and specific.  Where general personal jurisdiction applies, a court may hear any claims against a defendant, even those unrelated to the forum.  Barring an exceptional case, corporations are subject to general personal jurisdiction in any state in which they are incorporated or their principal place of business is located.  Specific personal jurisdiction is more limited.  A court may only exercise specific personal jurisdiction if the claims brought arise out of or relate to a defendant’s contacts with the forum.  The new decision focuses on specific personal jurisdiction. 

In two related cases - Ford Motor Co. v. Montana Eighth Judicial District Court, et al. and Ford Motor Co. v. Bandemer -the plaintiffs brought product liability claims against Ford arising from auto accidents that occurred in Montana and Minnesota respectively.  The plaintiffs were residents of those states.  However, the vehicles at issue were not originally sold by Ford in Montana or Minnesota.  The cars were designed in Michigan, manufactured in Kentucky and Canada, and first sold in Washington and North Dakota.  The cars arrived in the forum states through the actions of third-parties.

Ford argued the states lacked personal jurisdiction over it because Ford did not first sell the vehicles in the forums.  Ford claimed there must be a causal link between the contacts and the claims. The plaintiffs asserted that Ford’s vast connections with the states, including dealerships, advertising and repair shops, provided a sufficient connection to the forums establishing that Ford purposefully availed itself of the privilege of conducting business there.

In a majority opinion authored by Justice Kagan, the Supreme Court rejected Ford’s causal link argument.  The Court held the case law did not require solely a causal link but also allowed jurisdiction when the claims “relate to the defendant’s contacts with the forum.” The Court noted the significant advertisements used by Ford to urge residents of Montana and Minnesota to buy its products, including the same type of vehicles at issue.  Similarly, the number of authorized dealers in the states along with Ford sending replacement parts to those dealerships and independent repair shops throughout the forums demonstrated Ford had purposefully availed itself of benefits of doing business there. 

Justices Alito, Gorsuch and Thomas concurred in the judgment with Justice Barrett taking no part in the consideration or decision of the case.  Justice Gorsuch, joined by Justice Thomas, lamented the majority opinion’s failure to provide adequate guidance to lower courts regarding what amount of contacts would support a forum exercising personal jurisdiction over a defendant, and a lack of clarity as to whether any causal link is necessary. 

Justice Gorsuch further questions why national corporations would not be subject to personal jurisdiction in every state in which they do business.  He notes “the Constitution has always allowed suits against individuals on any issues in any State where they set foot.”  Id. n.5.  He posits, why should corporations receive more jurisdictional protections than individuals?

So, how will this decision impact cases?  First, the decision reaffirms that a nonresident plaintiff may only file suit in a forum in which there is a connection to the claims asserted.  The majority suggests that had plaintiffs tried to file suit in some other state unrelated to the incident or the vehicles in question, personal jurisdiction would be improper.  This reaffirmation should continue to help limit forum shopping by plaintiffs.  However, nonresident plaintiffs may still file suit in a corporation’s home states where it is subject to general personal jurisdiction.

Second, regional companies would still be protected from suits in other jurisdictions in which they do not conduct their businesses.  However, the decision will likely expand the scope of permissible jurisdictional discovery allowed by trial courts particularly in those states where plaintiff bears the burden of proving personal jurisdiction exists.

Third, national companies may essentially be subject to personal jurisdiction in any state in which a resident plaintiff is injured.  However, it is unclear from the opinions what limitations, if any, exist.  For example, if a manufacturer sells its products through a national retailer, does this fact mean the manufacturer is subject to personal jurisdiction everywhere the national retailer is?  Would the exercise of personal jurisdiction depend on how the product gets to the retailer—i.e. does the manufacturer send the product to a third-party distributor who then sends it to the individual stores or does the manufacturer deliver the products to the stores directly? 

Similarly, how much advertisement is sufficient? Will it matter if the advertisement is directed to the state or nation as a whole—such as television commercials or billboards—or if it is narrowly tailored to a specific type of audience such as sponsorship signs on team uniforms, at a ballpark, or in a trade magazine?  What if the advertising is purchased in a national magazine rather than a local newspaper? 

Finally, there was no guidance issued for e-commerce sales.  Will a single sale to a forum be sufficient? Is it a number of sales or the percentage of the overall business’s sales that are relevant? Will a critical factor be whether the website accessed was the manufacturer’s or a third-party’s?