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On The Case

Supreme Court struggles over broad jurisdictional rule in Ford crash cases

(Reuters) - During oral arguments Wednesday in a pair of product liability cases against Ford, U.S. Supreme Court Justice Samuel Alito rather heatedly described the court’s dilemma in confronting personal jurisdiction in the internet age.

The Supreme Court’s seminal ruling on the intersection of personal jurisdiction and due process fairness for defendants was 1945’s International Shoe v. State of Washington (66 S.Ct. 154), in which the justices held that corporations can be sued in states where they conduct significant business “according to our traditional conception of fair play and substantial justice.”

But it’s not 1945 anymore, Justice Alito said, in a nod to other justices’ questions about how the internet has expanded interstate commerce for even the smallest of businesses. (Chief Justice John Roberts, for instance, proposed a hypothetical about whether a duck decoy artisan in Maine who advertised his decoys on the internet could be sued wherever they’re sold.) And in the 1945 International Shoe decision, Justice Alito said, the Supreme Court did not even attempt to discern what due process meant when the Fourteenth Amendment was adopted, instead applying its own notion of fair play.

So what is today’s court supposed to do, Justice Alito asked Deepak Gupta of Gupta Wessler, who represents two plaintiffs who sued Ford in their home states after they were injured in crashes involving second-hand Ford vehicles. “We could perhaps decide this case within the contours of our existing cases because there’s nothing particularly 21st century about what happened here,” the justice said. “But we’re in a strange situation … The world in 2020 is completely different. You may just say, ‘Well, decide this on the basis of your existing case law and not propose anything grander.’ But if you have a solution to the bigger problems that have been framed by some of the questions, it would be interesting to hear it.”

Based on Wednesday’s arguments, that’s the crux of the Supreme Court’s challenge in the Ford cases: There’s no clear path to a grand resolution. Should the court sidestep what Justice Neil Gorsuch called “the difficulties our doctrinal tests have created” to articulate a whole new framework based on an originalist view of due process? Should the justices build on the court’s own precedent to adopt a sweeping new test for personal jurisdiction – even though Gupta and Ford counsel Sean Marotta of Hogan Lovells proposed completely different tests, both purportedly rooted in Supreme Court precedent? Or, alternatively, should the justices rule narrowly to avoid imposing a problematic new test?

“I don’t know which way it’s going to go,” said Fordham law professor Howard Erichson. “Maybe this is not the case for redefining personal jurisdiction.”

University of Connecticut law professor Alexandra Lahav agreed that the justices seemed to struggle with the consequences of every available path. “They seemed to have difficulty figuring out how much they want a general rule and how much they want to do justice in the individual cases,” she said.

Erichson wrote in a pre-argument blog post that Ford was offering the court “an aggressive but superficially plausible reading” of the Supreme Court’s recent precedent restricting jurisdiction. As Marotta explained the proposed test on Wednesday, the court’s precedent in such cases as 2017’s Bristol-Myers v. Superior Court of California (137 S.Ct. 1773) and 2014’s Walden v. Fiore (134 S.Ct. 1115) lead to the conclusion that to establish specific jurisdiction plaintiffs must show defendant’s conduct within the state where they have sued caused their injuries. It’s “irrelevant,” Marotta said, that Ford marketed, sold and serviced cars in Minnesota and Montana, where it was sued in the cases before the Supreme Court. Ford did not design, manufacture or sell the vehicles involved in the crashes at the heart of the two cases in Minnesota or Montana, Marotta said. (The vehicles in both cases were second-hand so they were not sold by Ford dealers.) Under Ford’s causation test, Marotta said, Montana and Minnesota did not have jurisdiction over claims that the vehicles were defective.

Justice Elena Kagan offered the most forceful opposition to Marotta’s proposed test. In the Bristol-Myers case, she pointed out, the Supreme Court said plaintiffs with no connection to California could not participate in a mass tort action filed in California state court. By contrast, Justice Kagan said, the plaintiffs suing Ford lived in, used Ford vehicles and were injured in the states where they sued.

Justice Clarence Thomas said Marotta’s proposed test left him “a little confused – how do we get from the Due Process Clause to your proximate cause argument?”

Justice Stephen Breyer pointed out that the court’s jurisdictional doctrine is intended to prevent unfairness to defendants who shouldn’t be haled into court at the whim of plaintiffs. Ford, he said, does a lot of business in Minnesota and Montana, and even if it did not sell the exact vehicles involved in the crashes in the two cases within state lines, it sells lots of cars and trucks of the same model. “Since they do a lot of business with the same kinds of cars there, they have to be prepared to defend against this kind of suit,” Justice Breyer said. “So what’s unfair about it?”

Plaintiffs’ counsel Gupta said Ford’s proposed test would turn jurisdiction into “an irrelevant scavenger hunt,” introducing complexity and unfairness into what should be a simple regimen. He offered the justices a different test: Plaintiffs must show that a defendant has “purposefully availed” itself of the opportunity to conduct business in a state and that their suit is “related to” the defendant’s conduct in the forum. When Justice Thomas asked Gupta to clarify his definition for “related to,” Gupta said plaintiffs can meet the test by showing that defendants sold the same products at issue in their cases within the state. (Even if Ford did not sell the exact vehicles involved in the Minnesota and Montana cases, in other words, plaintiffs’ claims were related to Ford’s marketing, sale and service of cars and trucks of the exact same make and model.)

But the justices posed hypotheticals showing that Gupta’s test has its own complexities. Justice Alito asked if, say, a rebuilt, customized car should fit the definition. Justice Gorsuch homed in on whether the relevant product is the finished car or a part within the vehicle. Justice Breyer wanted to know if Gupta had in mind a standard for how many identical products a defendant would have to sell to meet his standard.

In his rebuttal, Ford counsel Marotta highlighted the problems that could arise from the relatedness test, which he said was ungrounded in common law (or even in the records of the Montana and Minnesota cases). “Is a similar product sufficient? Does it have to be the same features that are alleged to be defective in the case?” Marotta said. “And how long does this have to take place? One year of sales, many years of sales? These are the questions that are going to trouble the lower courts for years if you adopt that test.”

Of course, as Fordham prof Erichson said, the justices could opt to institute no new test at all, simply deciding on the fact of the Montana and Minnesota cases whether those state supreme courts properly determined that they had jurisdiction. (As Gupta mentioned during Wednesday’s argument, Justices Alito and Breyer actually cautioned against adopting broad jurisdictional rules that might have unintended consequences in their concurrence in J. McIntyre Machinery v. Nicastro, 131 S.Ct. 2780.)

The eight justices who heard Wednesday’s arguments, Erichson predicted, will sorely miss Justice Ruth Bader Ginsburg as they grapple with this case. “She would have been the dominant voice,” he said.

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