Time for a New Shoe? Making Sense of Specific Jurisdiction: Ford Motor Co. v. Montana Eighth Judicial District Court.

• Author: Hylton, Jessica

1. INTRODUCTION

   Many of us can likely recall the uncomfortable feeling of a shoe that just does not fit. Whether too big or too small, it no longer offers the protection it was designed to provide and risks only pain and injury. Either way, it is time for a new shoe. Personal jurisdiction has its own shoe. In the groundbreaking case of International Shoe Co. v. Washington, the Supreme Court of the United States set out the necessary principles for a court to exercise personal jurisdiction over a defendant. These principles have endured for nearly 100 years. (1) However, recent expansions on personal jurisdiction doctrine have led some in the legal community to question if the International Shoe principles no longer fit the needs of plaintiffs injured by national and global corporations, or if the principles have been expanded to the point they are unrecognizable. International Shoe dealt specifically with specific jurisdiction, a type of personal jurisdiction pertaining to out-of-state corporate defendants.

   Ford Motor Co. v. Montana Eighth Judicial District Court is the latest in a line of cases deciding when personal jurisdiction over a corporate defendant is proper. (2) Ford analyzed claims derived from two separate car crashes, in which neither of the cars at issue in either crash were designed, manufactured, or produced in the state where the plaintiffs brought their claims. (3) In deciding whether personal jurisdiction was proper in both forum states, the Court revised the test for specific jurisdiction, breaking in two the prior test created in International Shoe that required that a plaintiff's claim "arise out of or relate to" a defendant's activities within a forum state. (4) In creating this "new" test, the Court potentially opened the door for claims against out-of-state corporate defendants to meet the requirements of specific jurisdiction when the same activities may not have passed muster under prior holdings. (5) While previously it was thought that "arise out of and relate to" described one broad, overlapping category that required some level of causal link, under the new standard these are seen as two separate ways for a claim to fall under a court's jurisdiction, one of which requires no causal showing. (6)

   Part II of this Note summarizes the facts and procedural background of Ford's claim that the state courts lacked personal jurisdiction. Part III explains the common-law evolution of specific jurisdiction and the emergence of the "arise out of or relate to test" and describes how lower courts have interpreted the rule prior to Ford. Part IV details the Ford Court's unanimous ruling, which ultimately held that Minnesota and Montana state courts properly exercised personal jurisdiction over Ford. Part V compares Ford to the Court's most recent prior case on specific jurisdiction, Bristol Myers Squibb, to question the necessity of a new test for specific jurisdiction, while raising concerns about the way lower courts will interpret the new test, how the new test will be applied to class actions, and if it is time for the Supreme Court to overrule the test for specific jurisdiction first articulated in International Shoe. (7)

2. FACTS AND HOLDING

   Ford Motor Co. v. Montana Eighth Judicial District Court arises from two separate products liability cases: one in Montana and another in Minnesota. (8) In the Montana case, Markkaya Gullet was driving her 1996 Ford Explorer when the vehicle spun out, rolled, and landed upside down after the tread separated from a rear tire. (9) Gullett was found dead at the scene of the crash, and a representative of her estate sued Ford Motor Company in Montana state court, alleging state-law claims of design defect, failure to warn, and negligence. (10)

   In the Minnesota case, Adam Bandemer was riding as a passenger in his friend's 1994 Ford Crown Victoria. (11) The two were driving on a rural road when the driver rear-ended a snowplow, causing the car to land in a ditch. (12) Bandemer's airbag did not deploy during the crash, causing him to suffer serious brain damage. (13) Bandemer sued Ford Motor Company, as well as the driver of the car in Minnesota state court, alleging state-law claims for products-liability, negligence, and breach of warranty. (14)

   Ford moved to dismiss both cases for lack of personal jurisdiction on essentially identical grounds--arguing only one of the two requirements for specific personal jurisdiction had been met. (15) While Ford admitted it had "purposefully availed" itself of each forum state by doing substantial business in them, Ford argued that the claims brought by the plaintiffs did not "arise out of or relate to" that substantial business. (16) Ford further insisted its activities in each state could only have given rise to the plaintiffs' claims if those activities actually caused the crashes in question. (17) Ford asserted that there could only be a causal link between its activities and crashes in the states where Ford designed, manufactured, and first sold the vehicles involved in the crashes. (18) Ultimately, Ford argued that although it did substantial business in both Montana and Minnesota, none of that business actually caused either of the crashes because the cars in question had been sold, designed, and manufactured outside the forum states. (19)

   In Gullet's suit, the Montana Supreme Court affirmed the lower court decision denying Ford's motion to dismiss, finding that Ford not only "purposely availed itself" of the Montana market, but also that Ford placed its products into the "stream of commerce" in Montana and that a nexus existed between Gullet's use of her Ford Explorer and Ford's activities in Montana. (20) The court held that because Ford sold other vehicles in Montana, provided repair and maintenance services for Ford vehicles in Montana, and could foresee that its vehicles would cross state lines, Ford had encouraged Gullet to purchase and drive her Ford Explorer in Montana. (21)

   In Bandemer's suit, the Minnesota Supreme Court similarly affirmed the lower court decision denying Ford's motion to dismiss. (22) That court held that Ford's activities in Minnesota related to Bandemer's claims because Ford sold thousands of the same model of car that Bandemer was riding in, among thousands of other Ford vehicles in Minnesota; Ford collected data on car performance through its Minnesota dealers; and Ford marketed and advertised directly to Minnesota residents. (23)

   Ford subsequently petitioned for a writ of certiorari to the Supreme Court of the United States. (24) The Supreme Court consolidated the two cases and granted certiorari (25) The Court held that the state courts had properly exercised personal jurisdiction over Ford in each of the suits. (26) In deciding this, the Court revisited its past holding in Bristol-Myers Squibb Co. v Superior Court of California, (27) to determine whether Ford was correct that the test for specific personal jurisdiction required a strictly causal showing between a defendant's activities within a forum state and the injury claimed by a plaintiff. (28) The Court held that specific jurisdiction only demands that the suit "arise out of or relate to the defendant's contacts with the forum," which encompasses both relationships supported by causation and some that are not. (29)

3. LEGAL BACKGROUND

   Establishing personal jurisdiction is a crucial step for a case to move past the filing stage and avoid dismissal. (30) Personal jurisdiction refers to a court's decision-making power over the defendant in a case. (31) While personal jurisdiction is a necessary component of every case, courts throughout time have struggled to set a clear rule for when personal jurisdiction exists. (32) While personal jurisdiction standards have evolved over time, the core principles established in early cases remain a necessary foundation for current decisions. (33) Personal jurisdiction has its origins in the idea that there should be limits to when a court can exercise authority over nonresident defendants. (34) As for specific jurisdiction, the Supreme Court initially decided that the proper test centered around there being enough "minimum contacts" so as to not "offend standards of fair play and substantial justice" by subjecting a corporation to suit in a forum state. (35) The Court later added the idea that a corporation must "purposefully avail" itself of the forum state and that a suit must "arise out of or relate to" a defendant's contacts within that forum state for personal jurisdiction to be proper. (36) The Court has also debated adding a stream of commerce component to the test but has never been able to get a majority to agree on how precisely to define it. (37) In a 2017 case, the Supreme Court reviewed how specific jurisdiction applies to a mass-action suit, seemingly limiting when claims can arise out of or relate to a defendant's activities in a forum state; however the Court seemed to leave these limits, and how federal courts had applied the test, behind when deciding Ford. (38)

   1. Personal Jurisdiction Generally

      Starting in 1877, the Supreme Court recognized that the Due Process Clause prevents state courts from exercising personal jurisdiction over out-of-state residents when the nonresident has not taken steps to enter the state. (39) The Supreme Court found personal jurisdiction is necessary to protect state sovereignty, therefore, limiting states to exercise jurisdiction only over persons or property within their territory. (40) While the Court has since expanded beyond this idea, the notion that the Due Process Clause limits personal jurisdiction still remains. (41)

      There are two types of personal jurisdiction: general jurisdiction and specific jurisdiction. (42) A court with general jurisdiction can hear every kind of claim against a certain defendant. (43) General jurisdiction arises when the court in question is located either where the defendant is "at home" or...