U.S. Supreme Court Eases Restrictions On Specific Personal Jurisdiction

In March 2021, in Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S.Ct. 1017, 1022 (2021), the U.S. Supreme Court further developed the evolving standard for personal jurisdiction in the federal district courts (and by virtue of New Jersey’s “long-arm” statute, New Jersey state courts).

As brief background, in International Shoe v. Washington, 326 U.S. 310 (1945), the Court held that an out-of-state defendant can be sued only if the defendant has “minimum contacts” with the state (unless the defendant consents to the court’s jurisdiction). After International Shoe, the Court found two ways of finding minimum contacts: general jurisdiction and specific jurisdiction. Within the last ten years, the Court has narrowed the circumstances under which either general or specific jurisdiction may be proper.

In Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) and Daimler AG v. Bauman, 571 U.S. 117 (2014), the Court held that general jurisdiction exists only when a defendant is “essentially at home” in the state. With respect to an individual, general jurisdiction would be proper where the person is domiciled. For a corporation, general jurisdiction is generally proper where it is incorporated or has its principal place of business.

Specific jurisdiction, on the other hand, generally exists where the defendant’s contacts with the state give rise to the cause of action. In Walden v. Fiore, 571 U.S. 277 (2014), the Court restricted specific jurisdiction by finding that a defendant must have contacts with the state where suit is brought and it is not sufficient that the defendant’s conduct would foreseeably cause injury in the state. In Bristol-Myers Squibb Co. v. Superior Court of Cal., 137 S. Ct. 1773 (2017), the Court held that, for specific jurisdiction, there must be an affiliation between the forum state and the underlying controversy – an activity or occurrence that takes place in the state that would subject the defendant to the state’s regulation. The Court noted that personal jurisdiction is not solely about fairness to the defendant, and that it also concerns the constitutional reach of the state’s territorial authority. In short, the trend was in limiting personal jurisdiction, making it harder for plaintiffs to sue defendants in the plaintiffs’ preferred forum.

In Ford Motor Co. v. Montana, however, the Court held that a strict causal nexus between contacts and claim is not necessary to support personal jurisdiction where a plaintiff’s claims share a sufficiently strong affiliation with – and thus “relate to” – a defendant’s systematic contacts with the forum state. Applying this test, the Court determined that the subject courts could exercise jurisdiction over the plaintiff for claims alleging an “in-state injury” caused by defective products that the plaintiff “extensively promoted, sold, and serviced” in the forum states – even though the particular products at issue were sold by the plaintiff outside of the forum states and then later resold by consumers to the in-state plaintiffs. The Court noted two factors in finding specific jurisdiction: purposeful availment and relatedness. The Court found that the plaintiff purposely availed itself of the forum states by marketing, selling and servicing its products in the states. The Court found relatedness because the products malfunctioned and caused injury in the forum states. Importantly, on relatedness, the Court noted that it has “never framed the specific jurisdiction inquiry as always requiring proof of causation.” Ford Motor Co., 141 S.Ct. at 1026; see also id. at 1033 (Alito, J., concurring) (plaintiff “asks us to adopt an unprecedented rule under which a defendant’s contacts with the forum State must be proven to have been a but-for cause of the tort plaintiff’s injury. The Court properly rejects that argument . . .”). Thus, a defendant’s forum contacts must “relate to” the plaintiff’s claims, but not necessarily be the “cause” of the plaintiff’s claims – leaving lots of wiggle room for both sides to argue the issue.

Multiple courts have applied Ford Motor to date, with mixed results. In Kearney v. Bayerische Motoren Werke Aktiengesellschaf, No. 17-13544 (D.N.J. Mar. 31, 2021), the plaintiffs sued the defendant parent corporation in New Jersey for an alleged defective product purchased by the plaintiffs from the defendant’s subsidiary, which is located in New Jersey. The plaintiffs’ alleged injuries occurred outside of New Jersey. The plaintiffs argued, among other things, that personal jurisdiction over the defendant parent corporation because all of the products sold in the United States pass through New Jersey via the subsidiary corporation. The court found that the parent corporation conducts no marketing or sales activities in New Jersey and that none of the respective plaintiffs resides, purchased a vehicle, or suffered injury in New Jersey. Based on these facts, the court stated that the “strong affiliation between contacts and claim present in Ford Motor is therefore wholly lacking here.” Therefore, the court found that the plaintiffs failed to establish personal jurisdiction over the corporate parent in New Jersey.

Recently, the Northern District of Illinois issued Edelson PC v. Girardi, No. 20 C 7115 (N.D. Ill. July 19, 2021). In Edelson, the defendant attorneys, who were from California, retained the plaintiff law firm to serve as local counsel in Illinois and assist in litigation relating to the Lion Air Flight 610 tragedy. Under the parties’ contracts, the plaintiff was to receive certain percentages of the total attorneys’ fees recovered by two specific portions of the clients. The underlying case settled, but the plaintiff alleged that the defendants did not pay the plaintiff its share of the attorneys’ fees. The defendants moved to dismiss the plaintiff’s complaint to recover the alleged fees owed, arguing that there was no personal jurisdiction. The court denied the defendants’ motion, concluding that the defendants purposefully availed themselves of the privilege of conducting business in the forum state by executing the fee-sharing contract and by creating continuing relationships and obligations with citizens of the forum state. The court further found that the defendants requested pro hac vice admission in the forum state, thus submitting themselves to the state’s attorney regulations, and participated in mediations in the forum state. Relying on Ford Motor, the court rejected the defendants’ argument that there was no personal jurisdiction because the claimed wrongdoing took place in California. The court specified: “It may be true that many, if not all of, the alleged actions regarding [defendants’] involvement in withholding the attorneys’ fees took place in California. If so, however, that would only shut down the ‘arises out of’ route to personal jurisdiction, not the ‘or related to’ route” that was noted in Ford Motor. Citing Ford Motor, the court ruled that “this suit has the ‘essential foundation’ for specific jurisdiction: a strong relationship between [defendants], Illinois, and the claims presented.”

Obviously, the case-specific circumstances will determine whether jurisdiction is proper over an out-of-state defendant. The restrictions that seemed to have been tightening since Goodyear and Walden, however, appear to have slowed.

To discuss complex litigation matters with this article’s author, please contact:

Jonathan P. Vuotto, Esq.

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