Live by the "Or," Die by the "Or": Ford v. Montana and the Corporate Personal Jurisdiction Standard

by Ian Hughes | April 12, 2021

Introduction

The Supreme Court has once again tinkered around the edges of personal jurisdiction, a concept that always seems close to settled but never quite there. The case, Ford Motor Co. v. Montana Eighth Judicial District Court, is a relatively straightforward application of specific jurisdiction, except for one problem: a mischaracterization of the role the defendant's activities in the forum state play in the calculus of personal jurisdiction. This imprecision complicates what should be a fairly simple analysis: establishing a causal relationship between the subject matter of the lawsuit and the defendant's contacts with the relevant state.

Overview of Ford v. Montana

Ford v. Montana is a consolidation of two similar cases: a Montana resident and a Minnesota resident, each injured by a Ford vehicle bought but not manufactured or originally sold in that state, sue Ford under products liability law in their home states. Ford moves to dismiss, arguing that its advertisements, dealerships, repair services, and other business within the states are not enough because it had no state connection with respect to the particular vehicles at issue. Both states' Supreme Courts reject this argument and find personal jurisdiction because Ford encourages the selling of its vehicles (including those particular models) within the states, even if the two cars at issue were first purchased elsewhere and only arrived in the plaintiffs' hands through third-party sales.

Personal jurisdiction is a doctrine derived from the ideals of "fair play and substantial justice" implicit in the Due Process Clause of the Fourteenth Amendment. International Shoe Co. v. Washington, 326 U.S. 310 (1945). Roughly summarized, it holds that a state may not exercise judicial authority over a person unless it is fundamentally fair to do so. Such authority is fair when (a) the court is located in the state where the party was physically served, (b) the party is at home in the forum state, or (c) the party voluntarily appears or otherwise submits to jurisdiction. If the defendant is sued under any of these circumstances, the court has personal jurisdiction for all of the claims in the suit (this is known as general jurisdiction).

Additionally, a party is subject to jurisdiction as to certain claims (specific jurisdiction) if the claims "arise out of or relate to" the party's contacts with the forum state. Bristol-Myers Squibb Co. v. Superior Court, 137 S.Ct. 1773, 1786 (2017), quoting Helicopteros Nacionales De Colombia v. Hall, 466 U.S. 408 (1984). General jurisdiction was off the table for the Ford plaintiffs, given that Ford was not at home in either Montana or Minnesota, had not submitted to those courts' jurisdiction, and was not served there; thus, Ford could be held to account in Montana or Minnesota court, if at all, only through its activities in those two states out of which the plaintiffs' claims arose or to which they related.

According to the Ford majority, Ford's business in Minnesota and Montana had connections to the claims (in that the company marketed its vehicles, including the models that crashed, in those two states), but did not directly lead to them (because Ford designed and manufactured the cars in other states). Therefore, the question before the Court was whether specific jurisdiction requires a causal connection between the defendant's contacts and the cause of action. In other words, does Bristol-Myers' phrase "arise out of or relate to" (and, by implication, the precedent on which it is based, for example International Shoe's "arise out of or are connected with" test) mean that, in some way, the defendant's activities in the state must cause the injury?

Justice Kagan, writing for the majority, said no. According to Justice Kagan, the "arise out of or relate to" test is disjunctive (because of the use of the word "or"). The "arise out of" half incorporates a causal requirement: the effect arises out of the cause. The "relate to" alternative, however, "contemplates that some relationship will support jurisdiction without a causal showing." According to the majority, Ford had just such a relationship: Ford's activities in Minnesota and Montana, though apparently not the reason for the injuries, were linked enough to the case that Ford is open to suit.

Justice Alito disagreed with the majority as to the necessity of a causal relationship, and thus, the meaning of Bristol-Myers' "arise out of or relate to" language. By his interpretation, "'arise out of' and 'relate to' overlap and are not really two discrete grounds for jurisdiction." Instead, they express the same test: a test requiring the plaintiff to show that the defendant's conduct in the forum state contributed to the plaintiff's injury. This, Justice Alito felt, the plaintiffs had accomplished: "It is reasonable to infer that the vehicles in question here would never have been on the roads in Minnesota and Montana if they were some totally unknown brand that had never been advertised in those States." Thus, Justice Alito reached the same result as the majority, but through a cause-and-effect analysis rather than from the existence of a mere relationship.

Analysis

The problem with Justice Kagan's analysis of Bristol-Myers is that it misunderstands the word "or" in "arise out of or relate to." As the Oxford English Dictionary recognizes, "or" can be used in two distinct ways: to "link alternatives" or to "introduc[e] a synonym or explanation of a preceding word or phrase." In other words, contra Justice Kagan's implied reasoning, "or" is not necessarily disjunctive. And it's not disjunctive here.

If the "or" in "arise out of or relate to" meant to announce a new item in a list rather than to simply expand the idea of the preceding one, we would expect the terms on either side to mean different things. But they don't. As the majority correctly recognizes, "arise out of" implies a causal relationship; if A arises from B, then B has caused A. But "relate to," when used in the context of A being related to B, means something very similar: "be causally connected." Therefore, Bristol-Myers' requirement that the subject of the suit "arise out of or relate to" the defendant's connection with the relevant state does not constitute two separate tests that are each sufficient to provide personal jurisdiction. It is one complete idea of cause and effect.

This interpretation is consistent with prior Supreme Court precedent on which the "arise out of or relate to" language is based. For example, the court in the International Shoe case held that the state of Washington had jurisdiction to tax a company because the tax obligations "ar[ose] out of the activities of its salesmen in Washington." 326 U.S. at 321. In World-Wide Volkswagen Corp. v. Woodson, the court rejected the argument for personal jurisdiction in Oklahoma because the plaintiff's claims did not "stem from a constitutionally cognizable contact with that State." 444 U.S. 286, 299 (1980). The list goes on, and the theme is clear: the courts look for a cause-and-effect relationship between the activities of the company in the forum state and the subject matter of the lawsuit.

But the proof that the majority in Ford was mistaken is not only by induction; it is by contradiction. If "relating to" encompasses a relationship which is not causal, that relationship must be based on something in the defendant's activities which does not affect the thrust of the plaintiff's case in any way. But then the defendant has done nothing in the state which has contributed to illegality. How then can it be fair to subject the defendant to jurisdiction? How can the defendant, to quote World-Wide Volkswagen, 444 U.S. at 297, "reasonably anticipate being haled into court"? The majority assures us that there are "real limits," but it's hard to see what those limits are. "Loosed from any causation standard," Justice Gorsuch writes, "we are left to guess."

This point was illustrated during oral arguments when Justice Thomas asked a question about the scope of the set of relationships that provide personal jurisdiction. "I think relatedness is asking about whether the reciprocal legal obligations at issue were created by the defendant's in-state contacts," the counselor replied. He then elaborated: "What you're really asking when you ask about the defendant's contacts are, what kind of legal obligations arose from that?" One might expect Ford's attorney to have said this, but it was actually the attorney for the plaintiffs. Even the plaintiffs hesitated to provide an explanation of "related to" that was divorced from the language of creation (and thus, causality). None of this is binding, of course. The Court is free to supply its own definition, but what that is at this point remains unclear.

The majority, not unreasonably, read the World-Wide Volkswagen case to come to the conclusion that the defendant's contacts with the forum state need not cause the injury. The World-Wide Volkswagen court, seemingly in making the undisputed point that an Oklahoma court had personal jurisdiction over a car manufacturer, had pronounced:

"If the sale of a product . . . is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others."

444 U.S. at 297. Relying on this decision, the Ford majority ruled that Ford could be sued in Montana and Minnesota courts, even though it may have played no role in the sale of those particular cars to those particular plaintiffs, because it marketed the same models in those two states.

But the Court is not bound to apply its own earlier refutation of claims that were neither raised nor briefed, and certainly not to deny the requirement of a causal connection that is inherent in its case law. As Justice Alito observed in his concurrence, World-Wide Volkswagen does not eliminate the need for a cause-and-effect relationship, at least "in a broad sense of the concept." This is simpler than one might imagine. It's not a given that the tort standards of but-for cause (wherein A is the cause of B if B would not have happened but for A) or proximate cause (wherein A is the cause of B if B is a natural, direct, uninterrupted consequence of A) must be applied. To the contrary, even a weak causal relationship should suffice. In other words, if Ford's advertising in Montana, its services in Montana, its encouragement of sales in Montana, or any similar conduct was just one factor among many that led to the Montana plaintiff's purchase, operation, or crash of her Ford, then Ford has had minimum contacts with Montana sufficient to justify the fair exercise of personal jurisdiction. This is because Ford could anticipate being haled into Montana court if one of these actions led to injury. Ditto, of course, for Minnesota.

Contrary to Justice Alito's interpretation of the facts, it does not appear that either the Montana or the Minnesota complaint alleged even this minimal level of causation, but they could have easily done so on remand. For example, they could have alleged that Ford's advertising presence in those states increased its reputation and brand recognition, thereby increasing the likelihood that the plaintiffs would select a Ford as their transport of choice. Or, to quote the majority, the plaintiff in either state could have "take[n] into account a raft of Ford’s in-state activities designed to make driving a Ford convenient there: that Ford dealers stand ready to service the car; that other auto shops have ample supplies of Ford parts; and that Ford fosters an active resale market for its old models." Instead, the Court allowed the case to proceed, thereby complicating a doctrine that already causes difficulties for the lower courts—lower courts that have in the past willingly applied a causal requirement. See Tamburo v. Dworkin, 601 F.3d 693, 708 (7th Cir. 2010) (collecting cases).

 

Ian Hughes is a third-year law student and the Online Production Editor of the Washburn Law Journal, Vol. 60.