U.S. Supreme Court Rules on Due Process Limitation of Specific Jurisdictions

U.S. Supreme Court Rules on Due Process Limitation of Specific Jurisdictions

In the matter of Ford Motor Co. v. Monatana Eight Judicial District Court, the U.S. Supreme Court in exercising personal jurisdiction on March 25, 2021, decided on the issue of due process limitations on the exercise of personal jurisdiction. A similar issue was decided in the case of Bristol-Myers Squibb v. Superior Court by the Court in the year 2017. In the present case, a unanimous Court held that the courts in Montana and Minnesota could hear claims by resident of these states, wherein injuries sustained in accidents involving Ford vehicles were alleged. The court took into consideration Ford’s extensive contact with these states. The contact consisted of efforts to create and serve local sales and service, and repair markets for same vehicles. Considering the same, the Court held that the plaintiff’s claims were sufficiently related to local contacts of Ford, even when the vehicles in question were designed, manufactured and initially sold in other states.

Ford accepted that it “purposefully avail[ed] itself of the privilege of conducting activities” in these states, but then argued that for personal jurisdiction, a causal connection is required between Ford’s local contacts and plaintiff’s injury. As per Ford, the same was not the case as the vehicles were designed, manufactures and first sold elsewhere. However, to plaintiff’s relief, the Court rejected Ford’s argument that due process mandates a “strict causal relationship” and held that the correct test is whether the claim “arise[s] out of or relate[s] to the defendant’s [forum] contacts,” and that it “relates to” half of the disjunctive phrase meaning that “some relationships will support jurisdiction without a causal showing.” It further held that a “strong relationship” or “affiliation” existed among Ford, the forum states, and the litigation as Ford had “systematically served” the states’ market for the types of cars which were allegedly malfunctioned and injured the plaintiffs in the mentioned states. The Court in its decision relied on World-Wide Volkswagen Corp. v. Woodson. In this case, the court held that Oklahoma could not exercise jurisdiction over a New York car dealer when a car it sold in New York caught fire in Oklahoma after some time. In dicta, the Court suggested that the manufacturer of the car could be sued in Oklahoma if it involved in systematic activities to create and serve the local automobile market. It applied the twin “values” underlying the due process limits on specific jurisdiction and found that the exercise of jurisdiction was fair to Ford as its extensive activities to serve the local markets led to reciprocal obligations under which residents who used Ford products were to be protected and therefore, accounted for defects causing injury. Also, such activities provided “clear activities” that Ford could be dragged to the court in these states for faults in the products it markets. The Court further held that the jurisdiction also comported with the value of “interstate federalism”. In conclusion, the Court put in use the comparative interest analysis and held that the states of accident, injury, and residence were more at stake than the state where the product was manufactured or initially bought. Also, a causal link was observed where the purchases would have been influenced by Ford’s marketing activities and the convenient availability of service and repair in the states. But the Court clarified that such link was not required as the “jurisdiction should not ride on” reasons for purchase of a product. Vide its decision, the Court deferred from BMS and Walden case.

Through this case, the U.S. Supreme Court defined the due process limits of specific jurisdiction over manufacturers having national markets. In its decision, the Court emphasized the systematic and continuous nature of product-related activities of manufacturers, contrasting “isolated or sporadic” contacts that would not give rise to jurisdiction from “continuous” contacts- thereby negating the pure “steam of commerce” theory of jurisdiction over product manufacturers.