U.S. Supreme Court’s Upcoming Decisions Address Stream of Commerce Plus Theory – Does Plaintiff’s Accident Arise from Defendant’s Conduct Within the State?
There are two matters currently before the U.S. Supreme Court that could potentially change the future landscape in the defense of vehicle manufacturers in product liability lawsuits here in the United States. A challenge to a court’s personal jurisdiction over a defendant manufacturer in a product liability lawsuit is an issue that is often litigated. However, the SCOTUS decision in these cases will be particularly interesting to manufacturers of products that, in simple terms, do not stay in one place and travel with the user.
In both Ford Motor Co. v. Montana Eighth Judicial District Court (Montana Eighth) and Ford Motor Co. v. Bandemer (Bandemer), the plaintiffs are responding to an appeal brought by Ford that challenges a trial court’s denial of Ford’s motion to dismiss for lack of personal jurisdiction. In both cases, Ford is arguing it is not subject to the jurisdiction of the state court because it did not design, manufacture or sell the vehicle in question in the forum state. In both cases, the lawsuits arise from accidents involving a Ford vehicle. However, the vehicles in question did not originate within the forum state and were delivered by Ford to the vehicles’ previous owners in states other than where the lawsuit was filed. Since a plaintiff essentially has to show it was injured as a result of the defendant’s conduct within the state, to establish that the court has personal jurisdiction over the defendant, Ford and its lawyers identified an area where jurisdiction could be challenged, because the vehicle involved in these accidents was sold outside of the forum state.
Both matters revolve around the issue of whether the out-of-state forums can assert specific personal jurisdiction against an out-of-state manufacturer (Ford). However, Ford’s limited in-state activity may call for the U.S. Supreme Court to refine the definition of “minimum contacts” when analyzing the concept of personal jurisdiction.
In Montana Eighth, Montana resident Markkaya Jean Gullet died in a car accident after the tire tread on her Ford Explorer separated while she was driving along a Montana Highway.1 The personal representative of Gullet’s estate sued Ford in Montana state court. Id. In response, Ford moved to dismiss the suit for lack of personal jurisdiction, arguing that Due Process considerations prohibited the Montana Supreme Court from exercising jurisdiction over the matter.
Similarly, in Bandemer, Adam Bandemer was severely injured in Minnesota while riding in the passenger seat of a Ford Crown Victoria.2 The vehicle rear-ended a snow plow and the airbag failed to deploy – leaving Adam Bandemer with lasting injuries. Adam Bandemer sued Ford in Minnesota state court, asserting claims of product liability and negligence. Similarly, Ford moved to dismiss the suit for lack of personal jurisdiction.
In both matters, the site of Ford’s production and initial sale of the vehicles was conducted in a state other than where the case was filed. In Montana Eighth, the vehicle was initially sold in Washington but the accident occurred in Minnesota, where the action was filed. In the Bandemer action the vehicle was sold in North Dakota but the accident occurred in Montana, where the action was filed. These decisions will impact the scope to which vehicle manufacturers and manufacturers of transient products can be sued outside their home states. These decisions will determine whether the courts can exercise specific personal jurisdiction over not only the motor company giant but also its competitors.3
A state’s exercise of specific jurisdiction complies with due process if the defendant has certain “minimum contacts” with the state, such that the maintenance of the suit will not offend the traditional notions of fair play and substantial justice.4 Additionally, the “minimum contacts” must be the defendant’s suit-related contacts.5 This means that (1) the defendant must have purposefully availed itself to the forum and (2) the plaintiff’s suit must arise out of or relate to the defendant’s contacts within the state.6 Essentially, for Montana and Minnesota to exercise personal jurisdiction, Ford must have minimum contacts with the respective states and the plaintiff-respondent’s injuries must arise from these contacts. If the vehicles in question were designed, manufactured and sold in different states than where the action was filed, Ford has the right to challenge the state’s long-arm personal jurisdiction.
Arguably, neither Montana nor Minnesota can exercise specific personal jurisdiction in the aforementioned law suits because Ford does not have sufficient minimum contacts with the state as it relates to the product in question. The Due Process Clause explains that a state court is permitted to exercise specific personal jurisdiction over a nonresident defendant only when the plaintiff’s claims “arise out of or relate to” the defendant’s forum activities.7 In a product liability action, the court must decide whether there is a connection between the product and the defendant’s in-state activities, and whether the defendant could have reasonably foreseen its product being used in the forum state.
For instance, in Montana Eighth, the Ford Explorer was assembled in Kentucky, sold by Ford to an independent Washington state Ford dealership and then sold to an Oregon consumer.8 The Ford Explorer arrived in Montana after several subsequent transactions not involving Ford.9 Similarly, in Bandemer, the Ford Crown Victoria was manufactured in Canada, sold at a North Dakota Ford dealership and then registered in Minnesota. In both cases it is abundantly clear that Ford did not produce or intentionally sell its products within either state where the lawsuits were filed. Therefore, Ford has argued that the plaintiffs’ claims did not “arise out of or relate to” Ford’s activities within the aforementioned states.
The plaintiff-respondents have argued that their injuries, which arose from the operation of Ford vehicles within the forum state, established Ford’s minimum contacts with the state. However, the Supreme Court has held in the past, that the “mere injury to a forum resident is not a sufficient connection to the forum.”10 To establish minimum contacts, therefore, the plaintiff-respondents’ in-state accidents will likely not provide the sufficient nexus or minimum contacts to support the exercise of specific personal jurisdiction over Ford.
At this juncture, the U.S. Supreme Court must decide whether specific personal jurisdiction can extend to product manufacturers in states where the manufacturers conduct business but do not design, produce, distribute or sell the product in question within the forum state. The matter of Bandemer is a prime example of the difficulty surrounding this issue: (1) Ford marketed a number of its products in Minnesota, (2) the first Ford dealership was established in Minnesota in 1903 and (3) Ford has sold more than two thousand Crown Victoria cars in Minnesota.11 However, the plaintiff-respondent’s Ford vehicle, the product in question, did not enter Minnesota through Ford’s actions but rather through secondary resellers not affiliated with Ford. Therefore, Ford has rightfully argued that its contacts with the state do not have a nexus to plaintiff’s accident or resulting injuries.
If the Supreme Court finds that the marketing of a product satisfies the minimum contacts standard, then this could set the precedent of subjecting out-of-state manufacturers to the jurisdiction of every state wherein they advertise. Considering that companies now advertise across the internet and social media platforms, a manufacturer could be subject to personal jurisdiction nationwide. Such a decision could encourage plaintiffs to forum shop and file actions where they believe they can achieve the most plaintiff-friendly court and jury panel.
Consequently, a SCOTUS decision affirming the denial of Ford’s motions to dismiss for lack of jurisdiction would raise significant due process concerns for manufacturers across the country. As held in World-Wide Volkswagen, due process limits on a state’s adjudicative authority principally protects the liberty of the nonresident defendant – not the convenience of the plaintiff.12 Additionally, a finding for the plaintiff-respondents also may impede the doctrine of forum non conveniens because this doctrine prevents defendants from being required to litigate in a forum that would cause considerable inconvenience or expense.13 Ultimately, the resolution of Bandemer and Montana Eighth could set a precedent of subjecting out-of-state manufacturers to increased liability across the United States.
1See Gullet Pet. App. 3a.
2See Bandemer Pet. App. 3a.
3See International Show Co. v. Washington, 326 U.S. 310, 316 (1945)
5See Walden v. Fiore, 571 U.S. 277, 284 (2014).
6See World-wide Volkswagen v. Woodson, 444 U.S. 286, 297 (1980); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-473 (1985).
7See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985).
8See J.A. 41, 46; Gullet Pet. App. 24a
9See Gullet Pet. App. 3a, 24a.
10See Walden, 571 U.S. at 277
11See Bandemer Pet. App. 43a-56a; see also NPR, The World’s Oldest Ford Dealer: Minnesota Family Celebrates a Century of Selling Cars, June 16, 2003; JA 101.
12See World-Wide Volkswagen, 444 U.S. at 291-292.
13See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-509 (1947).