Recently, the U.S. Supreme Court upheld the exercise of specific jurisdiction over a product manufacturer that marketed its product in the forum state where the product caused injury to a state resident and where the product was not first sold or manufactured in the forum state.
In Ford Motor Co. v. Montana Eighth Judicial District Court, the plaintiffs were injured in car accidents in their resident states of Montana and Minnesota, respectively, while riding in vehicles manufactured by Ford. Neither vehicle was manufactured nor first sold in Montana or Minnesota.
Take a Closer Look at Your Marketing Activities
Manufacturers and sellers should examine their sales, service, marketing, and promotional activities nationwide because these activities could create specific jurisdiction in states where they are not “at home.”
Manufacturers and sellers of products that regularly market products in multiple states should anticipate being subject to specific jurisdiction in those states where their products allegedly malfunction and harm state residents.
Under the U.S. Constitution personal jurisdiction over a defendant can be either general, or “all-purpose,” or specific, or “case-linked.” General jurisdiction is upheld in the state of incorporation or principal place of business for a corporation or in the state of domicile of an individual. Specific jurisdiction is upheld when a defendant purposefully avails itself of the benefits and protections of a state. A plaintiff’s claims “must arise out of or relate to the defendant’s contacts” with the state for specific jurisdiction to apply.
The plaintiffs sued Ford in their home states alleging defective vehicles. Ford moved to dismiss the suits for lack of personal jurisdiction, although Ford conceded it was conducting substantial business in both states. Nonetheless, Ford argued that the Montana and Minnesota state courts lacked personal jurisdictional over it because its alleged injury-causing conduct did not occur in either state.
The Supreme Court rejected Ford’s contention that a strict causal relationship must exist between the defendant’s in-state activities and the plaintiff’s claims and held that specific personal jurisdiction also exists when suits relate to the defendant’s contacts with the forum state.
The Supreme Court held that the connection between the plaintiffs’ product liability claims and Ford’s extensive marketing activities and selling and servicing of the same model vehicles in the forum states were close enough activities to support the exercise of specific jurisdiction.
The Supreme Court closely examined Ford’s in-state activities, observing that it had engaged in wide-ranging promotional activities, including television, billboard, radio, print, online, and direct-mail advertisements; maintained an active resale market for its older-model vehicles; and developed relationships with repair shops and dealerships across the country, including several in Montana and Minnesota, to distribute and sell its parts.
The Supreme Court also observed that Ford had advertised, sold, and serviced the same vehicle models involved in the car accidents in both states, creating a “strong ‘relationship among the defendant, the forum, and the litigation.’”