On The Case

Stakes are high for businesses, products liability plaintiffs in Supreme Court’s new Ford cases

(Reuters) - On Friday, the U.S. Supreme Court agreed to hear two cases in which Ford is challenging rulings by state supreme courts that allowed state residents involved in in-state car accidents to proceed with product liability suits against Ford. The company and its amici from the U.S. Chamber of Commerce, the National Association of Manufacturers and other business groups are hoping that the Supreme Court uses the cases to establish that plaintiffs in personal injury suits cannot establish specific personal jurisdiction unless they can show that defendants’ actions within the jurisdiction led directly to the claims in the case.

How big a deal would such a ruling be? Very big indeed, said trial lawyer Kyle Farrar of Kaster Lynch Farrar & Ball, who represents the plaintiff in one of the Ford cases the Supreme Court will hear. “These cases could fundamentally change products liability law in this country forever,” Farrar said.

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It’s easier to understand Ford’s arguments when you know the particulars. Back in 2014, the Supreme Court ruled in Daimler AG v. Baumann that defendants’ due process rights restricted the general jurisdiction of U.S. courts against foreign corporations. The justices concluded that plaintiffs could not establish California's general jurisdiction over Daimler simply because the corporation conducted business in the state. The Daimler court expressly distinguished between general and specific jurisdiction, but Ford’s lawyers at Hogan Lovells came up with the theory that they could use Daimler to cast doubt on the premise that plaintiffs can establish specific jurisdiction by merely pointing to a defendant’s business activities.

Ford’s argument crystallized around suits involving used cars and trucks that were purchased in the secondary market. In the Supreme Court’s 1980 ruling in World-Wide Volkswagen Corp v. Woodson the court held that defendants are subject to a court’s personal jurisdiction if they have placed an allegedly defective product into the “stream of commerce” with the expectation that the product will be purchased by consumers in that forum. The court toughened the standard a bit in 1987’s Asahi Metal v. Superior Court of California, demanding some additional showing that defendants intended to serve the forum’s market. But Ford’s lawyers, led by Hogan’s Sean Marotta, argued that plaintiffs had to do still more under Daimler and the Supreme Court’s 2017 decision restricting personal jurisdiction in Bristol-Myers Squibb v. Superior Court of California: To comply with defendants’ due process rights, plaintiffs had to show that their allegations arose directly from Ford’s conduct.

Yes, Ford said, the company markets its cars and has dealerships across the country. But if Ford didn’t sell plaintiffs the cars or trucks at the heart of their claims, the company argued, then its conduct cannot not give rise to plaintiffs’ claims. Ford can only be tagged with liability for designing, manufacturing and selling allegedly defective vehicles, the company contended. Plaintiffs can’t rely on vague “stream of commerce” arguments, according to the company, to establish specific jurisdiction if they didn’t buy their cars from Ford.

State supreme courts in both Minnesota, in Bandemer v. Ford, and Montana, in Ford v. Montana 8th Judicial District Court, rejected Ford’s theory in 2019 decisions. The courts both found that Ford subjected itself to their jurisdiction by marketing to customers in their states, selling and repairing cars and trucks through dealerships in their states and otherwise providing services, such as driver assistance and recall notifications, to state residents who own Ford vehicles.

In Ford’s petitions for certiorari in the Minnesota and Montana cases, Hogan Lovells emphasized a split in both state and federal courts over whether – and to what extent – a plaintiff must show, in order to establish specific jurisdiction, that the conduct of an out-of-state defendant caused the plaintiff’s alleged injuries. Some states, including Montana and Minnesota in their 2019 Ford rulings, have said plaintiffs need not show a causal link. But other state and federal courts have required plaintiffs to show a direct link between a defendant’s conduct and a plaintiff’s alleged injuries – some imposing a “but-for” standard, some insisting on a more stringent proximate cause standard and still others not specifying what causation test they would apply.

“These different approaches give plaintiffs every reason to bring suit in the courthouse they believe will be more receptive to their claims,” Ford argued. “That is particularly easy to do in products-liability suits like this one; a plaintiff’s attorney will usually have no trouble finding an in-forum defendant who has had some contact with the product and whose joinder will destroy complete diversity.”

The Chamber’s amicus brief, written by Mayer Brown, echoed that theme, arguing that plaintiffs have learned to plead specific jurisdiction to engage in “rampant” forum-shopping at the expense of defendants’ due process rights. The no-causation approach of the Minnesota and Montana courts in the Ford cases, the brief said, “means that companies that do business in a large number of states would have no ability to predict where, and to what extent, they might be haled into court. States would be newly empowered to regulate conduct that occurred entirely outside their borders — contrary to the principles of federalism that animate this court’s personal jurisdiction precedents.”

In opposition, Minnesota plaintiff Adam Bandemer, represented by Farrar of Kaster Lynch, and Montana plaintiff Charles Lucero, represented by Deepak Gupta of Gupta Wessler, argued that the state supreme courts had faithfully applied U.S. Supreme Court precedent. The opposition briefs pointed out that no state supreme court or federal appellate court has adopted Ford’s view that plaintiffs can’t establish specific jurisdiction without showing that their cars were designed, manufactured or originally sold in their chosen forum.

“Ford does not even attempt to ground its strict causation standard in the original meaning of the Due Process Clause or in any historical tradition,” the Bandemer opposition brief said. “And its rule likewise finds no justification in fairness or federalism, the two principles that have animated the Court’s modern personal jurisdiction doctrine.”

If the Supreme Court adopts Ford’s standard, Farrar said, it will create high hurdles for products liability plaintiffs attempting to sue makers of component parts, who would be able to argue against specific jurisdiction because their parts were first sold to manufacturers, not to consumers. Farrar, who said that he’s brought Gupta into his case for briefing on the merits, also predicted that if the justice agree with Ford, defendants will try to structure sales to restrict jurisdiction to favorable forums.

But Farrar said he’s confident the Supreme Court will side with plaintiffs. “We’re going to put an end to this question,” he said.