Personal Jurisdiction: State Court Application of Ford Motor Co. v. Montana Eighth Judicial District Court

The Court rejected a strict causation requirement, but the analysis remains fact-intensive. The opinion appears to indicate that defendants may still be able to defeat the contention that the court has specific personal jurisdiction when their intended footprint is regional or their contacts are limited to certain persons or products. We review the Ford decision below and discuss how state courts in Illinois, Texas, and California have applied it.

The Ford Decision

In two products liability suits,[2] about which we previously wrote, plaintiffs allegedly were injured when their vehicles crashed in their home state. The defendant, however, originally sold these particular vehicles to other consumers in different states. Relying on the Court’s 2017 Bristol-Myers Squibb (BMS) decision,[3] the defendant argued that specific personal jurisdiction was lacking because it did not design, manufacture, or sell the vehicles in the forum. This was a so-called “strict causation” theory.

The court unanimously disagreed. Justice Kagan, writing for a five-member majority,[4] held (consistent with BMS) that specific jurisdiction requires (1) that defendants purposefully availed themselves of the forum state and (2) that plaintiff’s claims “arise out of or relate to” the defendant’s forum conduct. However, while emphasizing the “or” preceding “relate to,”[5] the Court rejected a strict causation requirement and explained that specific jurisdiction contemplates “relationships…without a causal showing.”[6] The Court also explained that “relatedness” encompasses “real limits,” but left the development of this concept to lower courts in the first instance.[7]

The Court noted the defendant’s contacts within each forum state: marketing and advertisement campaigns, operating dealerships, offering life-of-the-car support, and distributing parts. These actions, the Court held, encouraged residents — including plaintiffs — to drive the automaker’s vehicles. Even though the defendant did not directly sell the plaintiffs their cars, plaintiffs may have chosen to purchase their vehicles because of the automaker’s actions in the state. This, the Court explained, created a “strong relationship among the defendant, the forum, and the litigation,”[8] which permitted jurisdiction.

State Court Decisions

State courts have so far embraced the Court’s rejection of a strict causation requirement, but the analysis remains fact-intensive. Courts have asserted personal jurisdiction where plaintiffs could show that the defendant’s actions in the forum state led to the plaintiff’s alleged injuries or where the defendant sold or marketed similar products or services. However, defendant companies have successfully refuted specific jurisdiction when the record lacked a sufficient link between the defendant’s forum conduct and the plaintiff’s alleged injuries.

Illinois – Qualizza

In Qualizza v. Fischer Fine Home Building, Inc.,[9] the Illinois Appellate Court held that Illinois courts did have specific jurisdiction over Fischer, a Wisconsin company. Fischer contracted with an Illinois couple to serve as general contractor for a $3.35 million home project in Wisconsin. The contract required Fischer to work with an Illinois architectural firm, coordinate all subcontractors, and maintain safety at the work site. The plaintiff was allegedly injured while working at the site and claimed that Fischer’s negligence proximately caused his injuries. Fischer had never operated or otherwise derived revenue from Illinois. The company’s contacts with Illinois included the contract with the Illinois couple and Fischer’s communications with the Illinois-based architect and subcontractors — including 160 pages of emails.

The appellate court affirmed the trial court’s finding that Illinois had specific personal jurisdiction over Fischer. First, the court determined that Fischer voluntarily entered into a contract with the Illinois couple that required Fischer to work closely with an Illinois architect and contract with Illinois-based subcontractors. Through this agreement, Fischer “connected itself in a meaningful way to Illinois.”[10]

Second, the court found that the plaintiff’s claims arose out of Fischer’s Illinois contacts, particularly the contract with the couple. The court applied a “but-for” analysis: had Fischer not contracted with the Illinois couple, the company would not have assumed the duty to ensure the plaintiff’s safety.[11] Therefore, “this cause of action [arose] out of Fischer’s contacts with Illinois-based corporations and persons.”[12] Despite this but-for analysis, the court rejected the need for strict causation.

This court followed the Ford decision’s rejection of strict causation. The court’s use of a “but-for” analysis, however, demonstrates the relative lack of guidance from the Supreme Court on exactly how to apply the law articulated in Ford and BMS to the facts of a particular case. In this instance, the court developed its own “but-for” test to exercise personal jurisdiction over a company with arguably few connections to Illinois. Other service-oriented companies contracting with out-of-state entities should consider the potential risk that courts may exercise personal jurisdiction based on the contents of those contracts — even where the company’s active business remains out-of-state.

Texas – LG Chem Trio

In three separate cases,[13] plaintiffs sued LG Chem (LGC), a South Korean company, alleging that they were injured when a lithium-ion battery in their e-cigarettes exploded in their pockets. Plaintiffs bought the batteries in Texas and their alleged injuries occurred in Texas.

LGC uses an American subsidiary to sell, market, and distribute lithium-ion batteries throughout the United States. LGC also has a long-term relationship with a Texas-based power tool company that uses LGC batteries as a component part—including the type that allegedly injured plaintiffs.

In each case, LGC filed a special appearance to contest personal jurisdiction, each time attaching an affidavit of a senior manager that detailed the company’s lack of connections to Texas. The records before the appellate court included briefs on the special appearance, affidavits, and exhibits. Notably, one of the three appellate decisions was issued before the Ford decision.

The Texas court that issued its decision before Ford credited a factual record that showed LGC served the Texas market for lithium-ion batteries and that the plaintiffs’ claims arose from that conduct.[14] Plaintiff offered spreadsheets detailing numerous battery shipments into multiple Texas ports. LGC also sent batteries to multiple Texas recipients. The court held that these actions demonstrated LGC’s intent to serve the Texas market for batteries more broadly and its intent to distribute batteries to Texas consumers, beyond only the power tool company.[15] On these facts, the court found that Texas could exercise personal jurisdiction over LGC and subsequently denied LGC’s motion for rehearing, post-Ford, on October 7, 2021. But on November 19, 2021, the Texas Supreme Court extended the time for LGC to file a petition for review to December 22, 2021.

In the wake of Ford, the other two appellate courts determined that the record did not demonstrate how plaintiffs’ claims arose from or related to LGC’s Texas contacts.[16] These courts found that LGC had not directed efforts to distribute, sell, or market batteries throughout Texas, nor that its relationship with one power tool company demonstrated an intent to serve the broader Texas market. Because LGC did not serve the Texas market for batteries, the courts concluded that the plaintiff’s defective battery claims did not relate to LGC’s actual contacts with the state. Further, the record did not suggest that LGC’s shipments to the power tool company included the batteries that injured plaintiffs, so the plaintiffs’ claims did not “arise from” LGC’s conduct in the state (i.e., shipping batteries to the power tool company). Both post-Ford decisions declined to exercise personal jurisdiction over LGC.

These cases, however, illustrate how fact-intensive the specific jurisdiction analysis continues to be. To dispute personal jurisdiction, companies must develop a factual record to show a lack of purposeful availment of the forum’s market and a lack of connection between the plaintiff’s injury and the defendant’s conduct in the forum. Comparing similar cases can help defendants understand what the Ford court meant by the “real limits” that constrain specific jurisdiction. For example, the affidavits, exhibits, and briefs relied upon in Turner and Granger, decided after Ford, suggest that state courts may decline to assert specific jurisdiction when a company’s contacts with the forum state are related to specific, limited business relationships.[17]

California – Blue Bird

In Rossa v. Blue Bird Body Company,[18] a California man was allegedly injured when the retracting steps of a library bookmobile crushed his foot. Blue Bird, a Georgia company, had manufactured the original vehicle (a bus), but had sold it to an Ohio company, which then converted it into a bookmobile. Blue Bird had three California-based employees, multiple California dealers and service centers, conducted nationwide advertising and marketing campaigns, offered nationwide training programs, and maintained a national inventory. The plaintiff propounded jurisdictional discovery, but received minimal responses from the defendant. The trial court granted Blue Bird’s motion to quash based on lack of specific jurisdiction.

On appeal and prior to Ford, Blue Bird argued for a strict causation requirement for the second prong of specific jurisdiction, arguing the claims were unrelated to its forum contacts because it had “manufactured the bus out-of-state, sold it to an out-of-state third party, and had no control over the modifications or the vehicle’s resale to a California buyer.”[19]

The court recognized that Ford “definitively repudiated this narrow view of the nexus required to establish specific jurisdiction.”[20] The court remanded the case to the trial court to consider the facts in light of Ford and to conduct further jurisdictional discovery. But the court mentioned that there appeared to be many similarities between Ford and this case.

The Court of Appeal also suggested that Blue Bird’s concessions that it manufactured the school bus and that it served the California school bus market were sufficient to connect the plaintiff’s claims to the defendant’s conduct, but instructed the lower court to allow continued discovery on the issue.

Conclusion

When an out-of-state plaintiff asks the forum court to assert personal jurisdiction over an out-of-state defendant, Bristol-Myers Squibb remains the controlling law. And under this standard, the defendant’s conduct in the forum must be alleged to have caused the plaintiff’s injury. This is why the California-based plaintiffs in Bristol-Myers Squibb were able to assert specific personal jurisdiction, but the out-of-state plaintiffs were not. For resident plaintiffs, Ford provided minimal clarity for just when a defendant’s actions “relate to” its forum contacts. Specific jurisdiction remains an intensely fact-based analysis. Defendants should carefully assess whether their intended footprint is regional, whether their forum contacts are limited to specific persons or businesses, and whether they market, sell, distribute, or service the product or similar products in the forum state. However, for companies that have a national presence — companies that sell, market, and distribute their products and services broadly across multiple states — it may be difficult to refute jurisdiction after Ford when an injury is alleged to have occurred in the forum.

* Matt Kulju was a 2021 summer associate in Schiff Hardin’s Chicago office and a law student at the University of Wisconsin Law School, working under the supervision of Malerie Ma Roddy.

[1] 141 S.Ct. 1017 (2021).

[2] Brett F. Clements & Elizabeth Runyan Geise, Supreme Court Will Address Personal Jurisdiction After State Courts Interpret BMS Decision, Products Liability & Mass Torts Blog (Apr. 7, 2020).

[3] Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1773 (2017).

[4] Justices Alito, Gorsuch, and Thomas concurred in the judgment, but expressed concerns over the majority’s discussion of “real limits” without providing guidance.  Justice Barrett did not participate in this decision.

[5] 141 S.Ct. at 1026.

[6] Id.

[7] Id.

[8] Id. at 12.

[9] No. 1-20-1242, 2021 IL App (1st) 201242-U (Ill. App. Ct. June 24, 2021).

[10] Id. at *7.

[11] Id.

[12] Id.

[13] LG Chem America, Inc. v. Morgan, No. 01-19-00665, 2020 WL 7349483 (Tex. App. Dec. 15, 2020); LG Chem, LTD v. Granger, No. 14-19-00814, 2021 WL 2153761 (Tex. App. May 27, 2021); LG Chem, LTD v. Turner, No. 14-19-00326, 2021 WL 2154075 (Tex. App. May 27, 2021).

[14] Morgan, supra note 13.

[15] LGC also argued that specific causation was lacking because the plaintiffs may not have purchased the batteries that allegedly injured them.  The court sidestepped the issue by inferring that the shipments included the batteries the plaintiffs purchased.

[16] See Turner and Granger, supra note 13.

[17] The Texas Supreme Court also considered Ford in Luciano v. Sprayformpolymers.com, LLC, 64 Tex. Sup. Ct. J. 1482 (2021), and upheld specific jurisdiction for an out-of-state company with an in-state sales representative selling the product that allegedly injured the plaintiffs.

[18] No. 18CIV05767, 2021 WL 2659207 (Cal. Ct. App. June 29, 2021).

[19] Id. at *8 (parentheticals omitted).

[20] Id. at *8.