The Supreme Court of the United States recently affirmed two state court judgments that had permitted plaintiffs to assert jurisdiction over Ford Motor Company for injuries stemming from allegedly-defective cars. In an 8-0 decision discussing civil procedure classics such as International Shoe and World Wide Volkswagen, and recent seminal law including Bristol-Myers Squibb, Justice Elena Kagan issued the Court’s opinion finding the connection between the plaintiffs’ claims and Ford’s activities in Montana and Minnesota supported specific jurisdiction. Ford Motor Co. v. Montana Eighth Judicial Dist. Court, 592 U. S. ____ (March 25, 2021).
The Montana plaintiff claimed she was driving a Ford Explorer when the tire tread broke. Likewise, the Minnesota plaintiff claimed his air bag failed to deploy. Plaintiffs brought separate suits asserting causes of action sounding in products liability, negligence, and breach of warranty. Ford moved to dismiss the lawsuits arguing that the state courts lacked personal jurisdiction. The Montana and Minnesota Supreme Courts affirmed judgments rejecting Ford’s arguments.
Ford, which is incorporated in Delaware and headquartered in Michigan, insisted it did not design, manufacture, or sell the cars in Montana and Minnesota. It agreed that it “purposefully availed” itself of the privilege of conducting business in those states. But Ford contended its conduct in Montana and Michigan did not give rise to plaintiffs’ claims. Put another way, Ford argued it did nothing wrong in those states. So, therefore, it could not be subject to jurisdiction there. The Supreme Court likened Ford’s argument to a causation-only approach, but the Court rejected Ford’s claim that none of its business activities in Montana or Minnesota were the “proximate cause” of either accident.
In rejecting Ford’s arguments, the Court focused on specific jurisdiction. Unlike general jurisdiction where a defendant is “essentially at home” in a state, specific jurisdiction requires a party to “purposefully avail” itself of the privilege of conducting business in a state. The Court noted that Ford aggressively marketed its products in Montana and Minnesota. It also maintained 120 dealerships between the states that sold, maintained, and repaired Fords. What is more, Ford distributed replacement parts to the states. In doing so, Ford subjected itself to state court jurisdiction.
The Court distinguished Ford from the landmark ruling in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017). There, a group of mostly non-California residents sued BMS in California state court alleging the company’s drug caused health problems. BMS, which is incorporated in Delaware and headquartered in New York, did not market, develop, or conduct meaningful work on the drug in California. Nor did the plaintiffs allege they received the drug in California or that they treated there. The Supreme Court held California lacked jurisdiction for the non-residents’ claims because the forum state, and BMS’s activities there, lacked any connection to the plaintiffs’ claims, unlike in Ford where plaintiffs were residents of the forum state, used the allegedly defective products in the states, and suffered injuries when those products allegedly malfunctioned there.
This ruling may make it easier for plaintiffs to bring state court lawsuits against other carmakers and product manufacturers that do business nationwide. The Court noted companies can seek to alleviate risks by procuring insurance, passing on costs to customers, or ceasing to conduct business in a state altogether.
This alert does not purport to be a substitute for advice of counsel on specific matters.
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