Lady Justice

Courts continue to reject car manufacturers’ jurisdictional challenges related to vehicle sale

A court must have personal jurisdiction to impose a binding judgment on any Defendant. This requires a showing that the Defendant has some contacts with the State in which the court is located. Courts have developed what is known as the “stream of commerce test” to obtain jurisdiction over out-of-state manufacturers when one of their products causes injury in a forum where the manufacturer expects its product to be sold.

This test comes from World-Wide Volkswagen Corp. v. Woodson, a case involving a New York car dealership that did not sell, promote, or service any of its vehicles in Oklahoma. The U.S. Supreme Court found that specific jurisdiction was lacking because the dealership had never sold, promoted, or serviced its vehicles in Oklahoma.

The High Court noted in the opinion that a manufacturer is subject to jurisdiction in a forum where its product causes injury if the manufacturer directly or indirectly sought to serve the forum. A manufacturer seeks to serve a forum’s market when its products are regularly sold in the forum.

Hence if the sale of a product of a manufacturer or distributor . . . is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others.
World-Wide Volkswagen, 444 U.S. at 297-98.

Since 2012, courts have experienced a wave of jurisdictional challenges by auto manufacturers, arguing that personal jurisdiction cannot exist if the Plaintiff purchased the car outside the state even if the Plaintiff resided, and was injured, in the state. Car manufacturers, like Ford Motor Company, which profit hundreds of millions of dollars in every state, have argued that jurisdiction can only exist if they commit conduct inside the state that proximately causes the Plaintiff’s products liability claim. At least 15 courts have rejected this argument in the last few years.

For instance, just two weeks ago, the Supreme Court of Minnesota rejected Ford’s proposed “causal” standard in Bandemer v. Ford Motor Co., No. A17-1182, 2019 WL 3438980, at *4 (Minn. July 31, 2019). The Minnesota Supreme Court followed World-Wide Volkswagen in reasoning:

Were we to adopt Ford’s position here, we would be reading out of the World-Wide Volkswagen decision everything the majority wrote about the defendant’s lack of contacts with Oklahoma. If the particular vehicle was not designed, manufactured, or sold in Oklahoma, on Ford’s theory, then it would not have mattered if the defendant sold millions of cars in Oklahoma. We decline to adopt a rule that would render irrelevant so much of the Court’s reasoning.
Bandemer, 2019 WL 3438980, at *5 (emphasis added)

Likewise, the Montana Supreme Court rejected the same “sale” and “causation” argument in May of this year, holding, “due process does not require a direct connection; it only requires that the plaintiff’s claims ‘arise out of’ or ‘relate to’ the defendant’s forum-related activities.” Ford Motor Co. v. Montana Eighth Judicial Dist. Court, 443 P.3d 407, 415-416 (Mont. 2019). The Court reasoned that personal jurisdiction can be boiled down to fairness and reasonableness. Id. at 416. Is it fair and reasonable to ask an out-of-state Defendant to defend a specific lawsuit in any given State? According to the Montana Supreme Court,

When a company engages in the design, manufacture, and distribution of products specifically designed for interstate travel, it is both fair and reasonable to require the company to defend a lawsuit in a state where the product caused injury as long as the company has otherwise purposefully availed itself of the privilege of doing business in that state and if a nexus exists between the product and the defendant’s in-state activity. Where a company first designed, manufactured, or sold a vehicle is immaterial to the personal jurisdiction inquiry, and focusing on those limited factors would unduly restrict courts of this state from exercising specific personal jurisdiction that comports with due process over nonresident defendants in cases such as this one.
Id. at 416-417 (emphasis added).

As Courts across the country continue to reject auto manufacturers’ frivolous jurisdictional challenges, Plaintiffs are hopeful that Alabama courts will follow suit. Lawyers in Beasley Allen’s Personal Injury & Products Liability Section have successfully litigated complex jurisdictional issues involving international and domestic corporations.

For more information on personal jurisdiction, please contact Stephanie Monplaisir, a lawyer in our Personal Injury & Products Liability Section. Stephanie has successfully handled cases involving jurisdictional issues and will be glad to talk with you.


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