Jurisdiction Over a Defendant Based on Marketing a Product Line?

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Benjamin B. Folsom
Director, Litigation Department
Published: New Hampshire Bar News
December 15, 2021
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The United States Supreme Court this year found that state courts can exercise jurisdiction over an out-of-state defendant that markets a vehicle model in that state, even if the specific vehicle alleged to be defective was not sold, designed, or manufactured there.  In Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S.Ct. 1017 (March 25, 2021), the high court rejected the argument that jurisdiction must be predicated on a “causal link” between the defendant’s conduct in the forum state and the plaintiff’s claims.  Instead, the defendant’s forum conduct need only sufficiently “relate to” the plaintiff’s claims, which it does if the defendant markets and services a particular model of vehicle in a state—even if the specific allegedly defective vehicle was not originally sold there.

The opinion addressed two appeals brought by Ford Motor Company, one each from state courts in Minnesota and Montana.  In each case, the plaintiff was a resident of the forum state who alleged harm resulting from an auto accident involving Ford vehicles that occurred in the forum state.  Plaintiffs asserted products liability and negligence claims against Ford.

In both cases, the particular vehicle involved in the accident was not designed, manufactured, or sold in the forum state.  The vehicles were originally sold in other states and ended up in Minnesota and Montana via resales.  However, Ford, as a global manufacturer and distributor of vehicles, did substantial business in Minnesota and Montana, including advertising, selling, and servicing the vehicle models (if not the specific vehicles) involved in the accidents—the Crown Victoria and the Explorer.

Ford argued that the state courts only had jurisdiction if the company’s conduct in the forum states gave rise to the plaintiffs’ claims.  There had to be, Ford said, a causal connection between its forum conduct and the claims.  Since Ford did not design, manufacture, or sell the specific vehicles involved in the accidents in the forum states, it asserted a causal link between its conduct in the forum states and claims was missing.

The Supreme Court disagreed, finding that the state courts had specific (or case-based) jurisdiction over Ford for these cases.  (The Court determined, consistent with its recent precedent, that general (or “all purpose”) jurisdiction was lacking, because Ford was neither incorporated nor had its principal place of business in Montana or Minnesota and therefore was not “essentially at home” in either state.)

For specific jurisdiction to attach, a defendant must take some act to “purposefully avail” itself of conducting activities in the forum state, a deliberate reaching out such as exploiting a market or entering a contract centered there.  Even then, a state court may exercise specific jurisdiction only where the claims “arise out of or relate to the defendant’s contacts” with that state.  Ford admitted that it purposefully availed itself of conducting business in Montana and Minnesota, so its argument rested on its asserted lack of a nexus between its conduct there and the plaintiffs’ claims due to the fact that the allegedly defective vehicles were not designed, manufactured, or sold in the forum states.

In rejecting Ford’s argument for an “exclusively causal test of connection,” the Court found the requisite nexus between Ford’s forum-state conduct and plaintiffs’ claims through the extensive relationship Ford cultivated with consumers in Minnesota and Montana regarding the vehicle models at issue.  Ford sold new and used Crown Victoria and Explorer model vehicles within those states.  Ford urged consumers to buy its vehicles, including those models, “by every means imaginable” through its extensive advertising in the forum states.  It “systematically” served the market in those states for these models, including maintaining and repairing vehicles at dealerships and distributing replacement parts to independent auto shops.

Given that the accidents involving allegedly defective Ford vehicles occurred in the respective forum states, the plaintiffs were residents of those states, and Ford encouraged and facilitated the sale, acquisition, and ownership of the vehicle models at issue in the forum states, the Court found that Ford’s conduct in Minnesota and Montana sufficiently related to plaintiffs’ claims such that the state courts could exercise jurisdiction over Ford with respect to those claims.

The result is fair to Ford, the Court says, because Ford enjoys the protection of the laws of Minnesota and Montana with respect to its products (such as the enforcement of contracts and property rights).  This comes with a reciprocal obligation on Ford’s part to ensure that the vehicle models that it extensively markets there be safe for their citizens to use.  Ford is subject to the state’s effort to enforce that obligation.  The Court further found the result is predictable such that Ford could structure its conduct to lessen or avoid litigation in those states’ courts—such as refraining from marketing, selling, or servicing the model vehicles in those states.

The Court explicitly left open the possibility that it may be a different case if Ford had marketed a vehicle model only in states outside the forum state.  Say, for example, Ford makes the strategic decision not to market or sell a convertible in Minnesota.  A Minnesota consumer who had acquired the convertible via resale in the state sues in Minnesota alleging the vehicle was defective.  The Court’s dicta implies a Minnesota state court may not have jurisdiction over Ford in that situation, even though Ford extensively markets and sells other vehicle models in Minnesota.  If so, the contours of what constitutes a different model—or in the non-auto context, a different product or product line—will have to be fleshed out in subsequent decisions.

For now, the lesson from Ford is that a business that markets, sells, and services a product in a state should expect to defend lawsuits by that state’s residents in the state’s courts alleging that a product is defective, even if the particular product alleged to be defective was sold or acquired outside the state.