United States: Navigating A Foggy Future Post-Ford Motor Co. V. Montana Eighth Judicial District Court

THIS ARTICLE WAS ORIGINALLY PUBLISHED IN VOL. 18, ISSUE 1 OF DRI'S STRICTLY SPEAKING ON JULY 6, 2021. ACCESS THE ORIGINAL PUBLICATION  HERE.

On March 25, 2021, the United States Supreme Court issued its opinion in Ford Motor Company v. Montana Eighth Judicial District Court,¹ attempting to further elucidate what forum contacts would be sufficient to subject a defendant to specific personal jurisdiction. Whether the Court was successful is certainly up for debate, as the decision has left many with more questions about specific jurisdiction than they had before.² Under Ford, manufacturers may be subject to personal jurisdiction regardless of whether a plaintiff's alleged injuries are causally connected to the manufacturer's forum activity, so long as there is an "affiliation" between the claim and the forum.

Ford is both concerning to manufacturers and defense attorneys, and confusing for courts and litigants who are now charged with determining how Ford will affect personal jurisdiction law. As Justice Gorsuch explained in his concurring opinion, "[l]oosed from any causation standard, we are left to guess."

Courts and litigants have already begun tackling these issues, and new trends and strategic concerns, discussed in depth below, are becoming apparent:

1. Strict "but-for" causation tests have been abrogated.
2. Defendants should be aware of some of the more extreme applications of Ford.
3. Many pre-Ford principles and cases remain good starting points for analyzing the sufficiency of forum contacts.
4. Ford notwithstanding, passionate advocacy and a thorough understanding of other jurisdictional law can help define the path forward.

The goal of this article is to highlight the most notable developments and efforts in applying the law in light of Ford, in hopes to assist practitioners faced with personal jurisdiction issues.

FORD MOTOR COMPANY V. MONTANA EIGHTH JUDICIAL DISTRICT COURT, 141 S. CT. 1017 (2021).

The starting point for any specific jurisdiction analysis post-Ford is knowing exactly what the Court ruled in Ford. In Ford, the Court rejected Ford Motor Company's "demand for an exclusively causal test of connection."¹ The Court underlined the "or" in "arise out of or relate to,"² finding that the Supreme Courts of Minnesota and Montana properly held that they could maintain personal jurisdiction over Ford, regardless of whether "but-for" causation tests had been satisfied.³

Using principles of fairness and interstate federalism as a guide, the Court found Ford's position "inconsistent with our caselaw," and held that Ford's contacts with the forum States were substantial enough to subject Ford to personal jurisdiction.⁴ The Court explained that Ford's business in both states was "substantial," and that it "actively seeks to serve the market for automobiles and related products in those States."⁵ Therefore, although the exact vehicles in question were not purchased, designed, or manufactured in either state, Ford's contacts with those states were extensive enough to "support jurisdiction without a causal showing."⁶ What exactly the phrase "relates to" means is unclear, but we do know that if an "affiliation," "relationship," or "connection" exists between the defendant and the forum state, maintaining personal jurisdiction over that defendant may be proper.⁷

This is a troubling development for manufacturers and their attorneys, but understanding how courts and litigants have already been handling personal jurisdiction will help practitioners to advocate effectively for their clients in this new climate.

EXCLUSIVELY "BUT-FOR" CAUSATION TESTS ABROGATED

Predictably, Ford seems to have abrogated a strict causation standard that many courts interpreted "arises out of or relates to" to require. For example, the Ninth Circuit's previous test "exclusively 'rel[ied] on a but-for test to determine whether a particular claim arises out of forum-related activities."⁸ This was also true in the Eleventh Circuit, where the United States District Court for the Southern District of Florida explained that the Eleventh Circuit's previous "but-for" test was abrogated by Ford.⁹

In Lewis v. Mercedes-Benz USA, LLC, various plaintiffs brought a putative class action against Mercedes-Benz USA, LLC; its German parent company, Daimler; and headrest manufacturer Grammer AG, alleging 16 claims premised on alleged headrest defects.¹⁰ Daimler moved to dismiss for lack of personal jurisdiction, and the Supreme Court issued Ford during the motion's pendency.¹¹ The Southern District of Florida held that (1) Daimler was subject to personal jurisdiction under Ford, and (2) Ford abrogated the Eleventh Circuit's previous "but-for" interpretation of "arises out of or relates to."¹² The court explained that, similar to Ford's forum activities, Daimler directed sales of vehicles to Florida, maintained (through a subsidiary) a parts distribution center in Florida, and "specifically targeted Floridian consumers" with advertising which gave rise to the plaintiffs' state-law deceptive trade practices claim.¹³

In the Third Circuit, the United States District Courts for the District of New Jersey and the Western District of Pennsylvania vary on their Ford impact analyses. The District of New Jersey explained that the Third Circuit "requires causation, with the level of causation depending on the claim."¹⁴ That court therefore held that the Third Circuit's causation requirement could not be reconciled with Ford.¹⁵

In contrast, the Western District of Pennsylvania held that Ford neither expressly nor impliedly overruled the Third Circuit's "causation-focused" test, but rather "highlighted that there are two methods of showing a sufficient connection between a plaintiff's claims and the defendant's contacts with the forum."¹⁶ This is because, unlike the Ninth and Eleventh Circuits' tests, the Third Circuit's "but-for" test was only directed towards the "arises out of" analysis, and did not apply to the "relates to" analysis.¹⁷

So, how should practitioners respond? If your circuit previously had an exclusively "but-for" test for whether a claim "arises out of or relates to" a defendant's forum contacts, assume that test has been or will be abrogated, and do not rely solely on the lack of a causal connection. Proactively incorporate arguments for how the claim does not relate to your clients' forum activities, and do not wait for a Lewis-type decision in your jurisdiction to do so.

SOME COURTS HAVE TAKEN A MORE EXTREME APPROACH TO FORD

In the wake of Ford, defendants should be aware of the more extreme application approaches some courts have taken. For example, defendants should take note of the effect their pre-suit settlement-related conduct could have on specific jurisdiction analyses. In Trimble, Inc. v. PerDiemCo LLC,¹⁸ the United States Court of Appeals for the Federal Circuit ruled that Ford supported exercising personal jurisdiction in a noninfringement declaratory judgment action over a defendant who engaged in substantial pre-suit settlement negotiations.¹⁹

Plaintiff Trimble, Inc. and its subsidiary, both California residents, brought a declaratory judgment noninfringement action against Texas corporation PerDiemCo LLC in the Northern District of California.²⁰ PerDiemCo argued that its only California-directed activities were 22 pre-suit communications between the parties in which (1) PerDiemCo informed Trimble and its subsidiary of alleged infringement, and (2) attempted to negotiate a nonexclusive license for the patents at issue as a means of settlement.²¹ PerDiemCo argued that these contacts were insufficient to establish specific jurisdiction under the 1998 Federal Circuit decision Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.,²² where the court held that "[a] patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement" because "[g]rounding personal jurisdiction on such contacts alone would not comport with principles of fairness[.]"²³, ²⁴ The District Court agreed with PerDiemCo and dismissed the action for lack of specific personal jurisdiction.

The Federal Circuit reversed, explaining that three developments clarified Red Wing's scope: (1) later Supreme Court cases explaining that personal jurisdiction in patent cases does not rest solely on "special patent policies," (2) later Supreme Court cases holding that certain communications sent into a state may create personal jurisdiction, and (3) Ford "established that a broad set of a defendant's contacts with a forum are relevant to the minimum contacts analysis."²⁵ The Federal Circuit reasoned that the many communications with Trimble and its subsidiary, including negotiating nonexclusive patent licenses, were sufficient to support personal jurisdiction over PerDiemCo in in the same way that selling similar vehicles and having a forum dealership supported personal jurisdiction over Ford.

What can product liability practitioners take from this patent case? While it is unclear whether the Federal Circuit's decision in Trimble is limited to patent litigation and other similarly situated matters, this case tells us that Ford could have much broader implications than expected. As far as patent litigation is concerned, there is now a potential that pre-suit settlement negotiations could create substantial enough forum contacts to subject a defendant to specific jurisdiction. Though the reasoning in Trimble may not have any net effect for manufacturers in products cases, it may certainly affect our clients in patent cases. A few months in, we are still very much "left to guess" what Ford's full impact will be. Attorneys would be wise to think critically and creatively about how Ford may be used in unexpected ways in the near future.

MUCH PRE-FORD CASE LAW REMAIN INSTRUCTIVE

Though Ford has certainly changed the legal landscape for specific jurisdiction, pre-Ford case law regarding the sufficiency of a defendants' forum contacts is still instructive and a helpful starting point. For example, in Dakotah v. General Motors Co.,²⁶ the United States District Court for the Eastern District of California explained that Ford did not change the analysis for internet-based personal jurisdiction.

In Dakotah, Plaintiffs sued General Motors Co. and software developer Decibel Insight, Inc., asserting various privacy-related claims arising out of GM using Decibel's software to collect data from Plaintiffs when they visited GM's website.²⁷ GM and Decibel moved to dismiss for lack of personal jurisdiction in California.²⁸ Plaintiffs argued that GM's marketing in California, using Decibel's software on its website, was sufficient to subject both to personal jurisdiction under Ford.²⁹ The court disagreed, pointing out that the Supreme Court specified that Ford "did not bear on the 'doctrinal questions' associated with personal jurisdiction in the online context."³⁰ As such, the court applied the Ford framework and the Ninth Circuit's "sliding scale" website analysis for personal jurisdiction and determined that GM contracting with non-resident Decibel for website software used nationwide was not a strong enough contact with California to subject either defendant to personal jurisdiction.³¹

Further, the United States District Court for the Middle District of Florida demonstrated in Israel v. Alfa Laval, Inc.,³²,³³ that the usual suspects for a personal jurisdiction analysis (i.e. Walden v. Fiore,³⁴ Bristol-Myers Squibb Co. v. Superior Court of California,³⁵ and Goodyear Dunlop Tires Operations, S.A. v. Brown,³⁶) are still the baseline for analyzing the sufficiency of minimum contacts. In Israel, an Idaho-resident plaintiff with lung cancer alleged his cancer was due to asbestos exposure during his 22-year Navy career.³⁷ Plaintiff sued dozens of defendants whom he alleged manufactured products which contained asbestos that caused his cancer.³⁸ Two defendants moved to dismiss, and the court found that neither defendant had contacts with Florida that were sufficient to trigger specific jurisdiction.³⁹

The court, using pre-Ford Supreme Court cases⁴¹ to aid its analysis, determined that none of the above factors created the requisite "strong relationship among the defendant, the forum, and the litigation."⁴²

Though litigants and courts were "left to guess"⁴³ after Ford, pre-Ford law is still good law and still the baseline for analyzing minimum contacts. The bounds of personal jurisdiction have certainly been broadened, but practitioners still have many of the same tools available to argue that facially deficient and unrelated contacts should still be analyzed under the same standards and should not subject a defendant to specific jurisdiction. Similarly, although litigants should anticipate their jurisdictions' exclusive "but-for" causation requirements to be abrogated, Ford made clear that the principles of fairness and interstate federalism are still paramount considerations.⁴⁴ Even if the "arises out of or relates to" element is satisfied, a court that would hold a defendant subject to personal jurisdiction must first find that (1) the defendant will be treated fairly, and (2) the principle of interstate federalism will be protected.

PASSIONATE AND THOROUGH ADVOCACY CAN HELP DEFINE THE PATH FORWARD

There is no getting around the fact that Ford was not a favorable decision for manufacturers. Many manufacturers will now be subject to personal jurisdiction when they would not have been before. Take for example the Godfried v. Ford Motor Co.⁴⁵ case out of Maine, and the Garlough v. FCA US LLC⁴⁶ case out of California-in each case, manufacturers who previously would not have been subject to personal jurisdiction were, by virtue of Ford. In the former, the court found personal jurisdiction proper where Ford advertised, sold, and serviced the class of lawn mowers at issue, despite no definitive indication that it sold the exact model at issue in Maine.⁴⁷ In the latter, an out of state car manufacturer that had previously served the California market for the type of car at issue was subject to personal jurisdiction in California despite the car being purchased in Texas.⁴⁸

This was similar to the result in Lewis, where Daimler was subject to specific jurisdiction in Florida where it would not have been one year earlier. However, Lewis serves as a reminder to attorneys of the power of strategic and thorough advocacy. Despite Ford's rendering Daimler subject to personal jurisdiction, many of the plaintiffs' claims were dismissed, and the motion to dismiss was a substantial value-add because it significantly narrowed the scope of the litigation and limited Daimler's potential exposure.⁴⁹ What Plaintiffs intended as a sixteen-claim nationwide class action against three defendants is now proceeding with two plaintiffs, one state-law claim, and two defendants.⁵⁰

So, what is the takeaway from this case, which shows the impact Ford has had on manufacturers? Look into every possible argument. Know all of your jurisdictional arguments and assert them as soon as possible. Know what is required for each claim plaintiffs assert-and investigate whether they meet the requirements. As manufacturers and defenders of manufacturers, Ford has prevented us from asserting what used to be a relatively easy and effective argument in many cases. But creative, dedicated, and passionate defense attorneys are still a force to be reckoned with. Do not let Ford discourage you-let it strengthen your resolve to fight even harder for your client.

As Justice Gorsuch stated in his concurring opinion in Ford, "[h]opefully, future litigants and lower courts will help us face these tangles and sort out a responsible way to address the challenges posed by our changing economy in light of the Constitution's text and lessons of history."⁵¹ Although Ford has, in many ways, left us guessing, we are presented with an opportunity to pave the way forward. The boundaries of personal jurisdiction, though widened, are not without limits. As the Ford majority opinion explicitly stated, the added emphasis on "or relates to" does not mean "anything goes."⁵² It is our opportunity now as defense counsel to assist courts as they work to uphold the principles of fairness, due process, and interstate federalism required for personal jurisdiction.

Footnotes

1 Id. at 1029.

2 Id. at 1026 (emphasis added).

3 Id. at 1032

4 Id. at 1025.

5 Id. at 1022.

6 Id. at 1026.

7 Id. at 1034 (Gorsuch, J., concurring).

8 Clarke v. Dutton Harris & Co., No. 2:20-cv-00160-JAD-BNW, 2021 WL 1225881, *4 (D. Nev. Mar. 31, 2021) (quoting Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995)) (recognizing that Ford

9 Lewis v. Mercedes-Benz USA, LLC, - F. Supp. 3d -, No. 19-cv-81220-RAR, 2021 WL 1216897, *35 (S.D. Fla. Mar. 30, 2021).

10 Id. at *1-3.

11 Id. at *35.

12 Id.

13 Id.

14 Rickman v. BMW of N. Am. LLC, No. 18-04363, 2021 WL 1904740, *8 (D.N.J. May 11, 2021) (quoting O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 320 (3d Cir. 2007)).

15 Id.

16 Beemac, Inc. v. Republic Steel, No. 2:20-cv-1458, 2021 WL 2018681, *8 (W.D. Penn. May 20, 2021); Deemac, Inc. v. Republic Steel, No. 1:20-cv-1466, 2021 WL 2018716, *8 (W.D. Penn. May 20, 2021).

17 Beemac, 2021 WL 2018681, at *8; Deemac, 2021 WL 2018716, at *8.

18 - F.3d -, No. 2019-2164, 2021 WL 1898127 (Fed. Cir. May 12, 2021).

19 Id. at *6.

20 Id. at *1-2.

21 Id. at *2, 7.

22 148 F.3d 1355 (Fed. Cir. 1998).

23 Id., at 1361.

24 Trimble, 2021 WL 1898127, at *2.

25 Id., at *4-6.

26 No. 1:20-cv-01560-JLT, 2021 WL 2142728 (E.D. Cal. May 26, 2021).

27 Dakotah, 2021 WL 2142728, at *1

28 See id.

29 Id. at *4-7.

30 Id. at *6 (quoting Ford, 141 S. Ct. at 1028 n.4).

31 Id. at *4-7.

32 No. 8:20-cv-2133-WFJ-AAS, 2021 WL 1662770 (M.D. Fla. Apr. 28, 2020).

33 This case, acknowledging Lewis, found that the court could not maintain personal jurisdiction over the defendant despite Ford's impact on the Eleventh Circuit's "but-for" causation standard. Id. at *4 (citing Lewis, 2021 WL 1216897, at *35).

34 671 U.S. 277 (2014).

35 137 S. Ct. 1773 (2017).

36 564 U.S. 915 (2011).

37 Israel, 2021 WL 1662770, at *1

38 Id.

39 Id. At *4-7.

40 Id.

41 The court relied on Walden v. Fiore, 671 U.S. 277 (2014); Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017); and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) in analyzing whether the defendants' Florida contacts were sufficient to establish personal jurisdiction.

42 Id. at *7.

43 Ford, 141 S. Ct. at 1035 (Gorsuch, J., concurring).

44 See Ford, 141 S. Ct. at 1025.

45 No. 1:19-cv-000372-NT, 2021 WL 1819696 (D. Me. May 6, 2021).

46 No. 2:20-cv-01879-JAM-AC, 2021 WL 1534205 (E.D. Cal. Apr. 19, 2021).

47 Godfried, 2021 WL 1819696, at *5-6.

48 Garlough, 2021 WL 1534205, at *3-4.

49 Defense counsel in Lewis was able to shield Daimler from defending against a nationwide class action (Plaintiffs had no standing to represent a nationwide class for state-law claims); had the Magnuson-Moss Warranty Act claim dismissed (no subject matter jurisdiction to hear MMWA claim brought as a class with less than 100 named plaintiffs); removed an avenue for Plaintiffs to collect attorney fees through the MMWA; had the RICO claim dismissed (failure to state a claim); and had the nonresidents' claims dismissed (lack of jurisdiction because the claims had no relation to Florida). There were so many issues at play that the Ford discussion only merited 1 out of 60 pages.

50 Lewis, 2021 WL 1216897, at *36-37.

51 141 S. Ct. at 1039 (Gorsuch, J., concurring).

52 Id. at 1026 (emphasis added).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.