Civil Procedure Bonanza Results in Big Loss for Corporations
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Corporations Suffer Huge Loss at Supreme Court as Justices Unanimously Make It Easier to Sue Over Defective and Dangerous Products

The U.S. Supreme Court on Thursday released a unanimous 8-0 ruling in a civil procedure case sure to result in a collective series of groans from first-year law students while keeping law school textbook manufacturers relevant and in furs for the foreseeable future.

Justice Elena Kagan delivered the opinion of an engaged but ultimately undivided court. Justice Samuel Alito wrote an opinion concurring in the judgment—as did Justice Neil Gorsuch. Justice Amy Coney Barrett did not take part in the case because she was still unconfirmed during oral argument.

The basic thrust of the controversies here — and the high court’s ultimate determination of them — is actually fairly simple and is lucidly explained in the very first paragraph of Kagan’s opinion. But to be clear, the decision in the case stylized as Ford Motor Co. v. Montana Eighth Judicial District Court, is actually two cases rolled into one due to their substantially similar issues of fact and the law at stake.

“In each of these two cases, a state court held that it had jurisdiction over Ford Motor Company in a products liability suit stemming from a car accident,” Kagan notes. “The accident happened in the state where suit was brought. The victim was one of the state’s residents. And Ford did substantial business in the state — among other things, advertising, selling, and servicing the model of vehicle the suit claims is defective. Still, Ford contends that jurisdiction is improper because the particular car involved in the crash was not first sold in the [state where Ford was sued], nor was it designed or manufactured there.”

“We reject that argument,” the opinion continues. “When a company like Ford serves a market for a product in a State and that product causes injury in the state to one of its residents, the state’s courts may entertain the resulting suit.”

But the logic and simplicity of the ruling is, as is often the case in law, belied a bit by the analytical method used to achieve the result.

In civil procedure law, the Supreme Court has essentially staked out two methods for bringing lawsuits against huge corporations: (1) general jurisdiction; and (2) specific jurisdiction.

General jurisdiction, as precedent holds, is useful to plaintiffs looking to sue for “any and all claims” related to a corporation’s activity — but it requires an actual presence in the state where they are being sued like corporate headquarters or the actual manufacturing base. This method wasn’t at issue in the case before the justices.

Specific jurisdiction, which is the method at issue here, gives a court jurisdiction over a corporate defendant for the purposes of adjudicating a plaintiff’s claim if their lawsuit is sufficiently related to the defendant’s in-state activities. Under longstanding Supreme Court precedent, those activities can be as few as one activity.

So, what were the activities here? And what are the disputes actually about?

Justice Kagan explains the basic facts of the cases:

Accidents involving two of Ford’s vehicles—a 1996 Explorer and a 1994 Crown Victoria—are at the heart of the suits before us. One case comes from Montana. Markkaya Gullett was driving her Explorer near her home in the State when the tread separated from a rear tire. The vehicle spun out, rolled into a ditch, and came to rest upside down. Gullett died at the scene of the crash. The representative of her estate sued Ford in Montana state court, bringing claims for a design defect, failure to warn, and negligence. The second case comes from Minnesota. Adam Bandemer was a passenger in his friend’s Crown Victoria, traveling on a rural road in the State to a favorite ice-fishing spot. When his friend rear-ended a snowplow, this car too landed in a ditch. Bandemer’s air bag failed to deploy, and he suffered serious brain damage. He sued Ford in Minnesota state court, asserting products-liability, negligence, and breach-of-warranty claims.

Ford claimed that they couldn’t be sued because the Explorer and Crown Victoria were originally sold in Washington and North Dakota, respectively, and only came to be in Montana and Minnesota because of subsequent resales and relocations by consumers. Additionally, the car company pointed out, they had manufactured both vehicles in Kentucky and Canada, respectively.

The original states where the cars were bought and conceived, Ford argued, meant that Montana and Minnesota had no causal link to the company in the two lawsuits and therefore those states’ courts were both improper places to be sued.

The court, spread across the relatively brief opinion and two concurrences, squarely rejected Ford’s causal link argument.

The majority opinion notes [emphasis in original]:

Ford’s causation-only approach finds no support in this Court’s requirement of a “connection” between a plaintiff ’s suit and a defendant’s activities. That rule indeed serves to narrow the class of claims over which a state court may exercise specific jurisdiction. But not quite so far as Ford wants. None of our precedents has suggested that only a strict causal relationship between the defendant’s in-state activity and the litigation will do…our most common formulation of the rule demands that the suit “arise out of or relate to the defendant’s contacts with the forum.”

Key here is that Ford actually does have a substantial connection with both Montana and Minnesota. Importantly, but not determinatively, Ford even owned up to their connection with both states.

Namely, as Kagan notes, Ford “does substantial business in Montana and Minnesota” and “actively seeks to serve the market for automobiles and related products in” both states. And, for the nation’s high court, that’s quite enough because Ford “business deliberately extended” to both Montana and Minnesota.

The majority explains that this is also a very fair result:

For related reasons, allowing jurisdiction in these cases treats Ford fairly, as this Court’s precedents explain. In conducting so much business in Montana and Minnesota, Ford “enjoys the benefits and protection of [their] laws”— the enforcement of contracts, the defense of property, the resulting formation of effective markets. All that assistance to Ford’s instate business creates reciprocal obligations—most relevant here, that the car models Ford so extensively markets in Montana and Minnesota be safe for their citizens to use there.

Specific jurisdiction, has in the past often been described by the courts as requiring certain “minimum contacts” with the state where the defendant is being sued — and Justice Alito spends his concurrence detailing this time-honored method of determining whether jurisdiction is proper over a corporation.

Those contacts are analyzed according to a series of tests. When minimum contacts are found to be sufficiently related to the cause of action, a given court may exercise jurisdiction over such claims. Finally, the courts look to the reasonableness of the underlying lawsuit, which precedent describes as not offending “traditional notions of fair play and substantial justice.” In other words, it must make basic sense for the state to oversee the case for both the plaintiff and the defendant.

“That standard is easily met here,” Alito notes.

In his own concurrence Justice Gorsuch, who was joined by Justice Clarence Thomas, stakes out even more plaintiff-friendly territory.

“The parties have not pointed to anything in the Constitution’s original meaning or its history that might allow Ford to evade answering the plaintiffs’ claims in Montana or Minnesota courts,” Gorsuch argues. “No one seriously questions that the company, seeking to do business, entered those jurisdictions through the front door. And I cannot see why, when faced with the process server, it should be allowed to escape out the back.”

The majority points out the upshot of Gorsuch’s view in a combative footnote.

“[W]e reject Justice Gorsuch’s apparent (if oblique) view that a state court should have jurisdiction over a nationwide corporation like Ford on any claim, no matter how unrelated to the state or Ford’s activities there,” Kagan writes.

But in his own footnote, Gorsuch’s view is far from oblique at all:

What’s the majority’s real worry anyway—that corporations might lose special protections? The Constitution has always allowed suits against individuals on any issue in any State where they set foot. Yet the majority seems to recoil at even entertaining the possibility the Constitution might tolerate similar results for “nationwide corporation[s],” whose “business is everywhere.”

[Image via Stefani Reynolds/Getty Images]

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