When a new personal injury lawsuit comes in, the “W” questions come out.

• Who was involved? Do we belong in this lawsuit? Has the correct corporate entity been named? Should additional parties be brought in?
• What happened?
• When did it happen? When was the lawsuit filed and served? Do we have a statute of limitations or a statue of repose defense?
• Why did it happen? Who was at fault?
• Where did it happen? Where was the lawsuit filed? Are we subject to personal jurisdiction there?

As you might guess, this article focuses on the “where” and, more specifically, on whether a defendant is subject to personal jurisdiction in the forum State. It is by no means intended to be a law review type dissertation on personal jurisdiction replete with case cites and footnotes. Instead, it’s meant to provide an overview of the relevant issues in plain English, and in a manner that will help you ascertain whether you should challenge personal jurisdiction in a given case. And because there are other important issues related to the location of the accident and the lawsuit, a few of those are also identified and briefly discussed at the end.

Rather than bury the lede, I’ll lead with it. The U.S. Supreme Court recently addressed personal jurisdiction in Ford Motor Co. v. Montana Eighth Judicial District Court, in which the Court decided two consolidated cases (one from Montana and one from Minnesota) that presented similar facts. In each, a resident-plaintiff was injured in an in-state accident allegedly caused by a defect in a Ford vehicle. Ford challenged personal jurisdiction because it was neither at home in the forum State, nor had it designed, manufactured or sold the allegedly defective vehicle there. The Court disagreed.

Referring back to its “canonical decision” in International Shoe Co. v. Washington, the Court reaffirmed the guiding principle that personal jurisdiction requires that the defendant possess sufficient “contacts” with the forum State so as to make the court’s exercise of authority over it reasonable. The focus of that inquiry has long been the nature and extent of the defendant’s relationship with the forum State. And that focus has led the Court to recognize two kinds of personal jurisdiction: general and specific.

In its opinion, the Court reaffirmed the “at home” test for general jurisdiction and clarified the “arise out of or relates to” test for specific jurisdiction. Its analysis is depicted in this flowchart.

General Jurisdiction

General (sometimes called all-purpose) jurisdiction conveys on a court authority to hear any and all claims brought against a defendant, regardless of whether the defendant’s actions and/or the accident took place there. A court has that broad jurisdiction over a defendant only where it is “essentially at home,” meaning its place of incorporation or principal place of business. If, for example, a defendant is incorporated under the laws of Delaware and headquartered in Michigan, as is Ford, then it can be sued in those states even for conduct that occurred elsewhere. That is, a defendant can be sued in its home state(s) even for claims that are entirely unrelated to its activities there. (See the blue boxes in the flowchart.)

All parties agreed that Ford was not subject to general jurisdiction in either Montana or Minnesota because it is not at home in either place.

Specific Jurisdiction

Specific (sometimes called case-linked) jurisdiction is narrower and requires an adequate connection between the plaintiff’s claims and the defendant’s in-state conduct. The decision in Ford turned on the nature of that in-state conduct and whether its relationship to the litigation was “close enough to support specific jurisdiction.” As discussed below, the Court decided that it was sufficiently close because Ford purposefully availed itself of the privilege of doing business in the forum States and its in-state conduct was sufficiently related to the plaintiffs’ claims even though that conduct admittedly did not give rise to (did not cause) the plaintiffs’ accidents.

“Purposeful Availment”

Specific jurisdiction requires “purposeful availment,” which means that the defendant deliberately reached out beyond its home State and conducted business in the forum State, such as by entering into contractual relationships there. Those contacts must be purposeful and not merely “random, isolated, or fortuitous.” (See the green box in the flowchart.)

Ford conceded “purposeful availment.” It regularly conducts business in the forum States, including advertising and (through dealerships) selling vehicles there.

“Arise Out Of”

A showing of purposeful availment is not enough. Rather, there must also be “an affiliation” between the defendant’s in-state conduct and the claims made in the litigation. That is, it must be shown that the plaintiff’s claims “arise out of or relate to the defendant’s contacts” with the forum.

“Arise out of” involves a cause-and-effect relationship. And so whether the defendant’s in-state actions gave rise to the plaintiff’s claims depends on whether those actions caused the plaintiff’s accident or injuries. (See the yellow box in the flowchart.)

Ford argued that it was not subject to personal jurisdiction because its in-state activities (advertising and selling other vehicles there) did not give rise to the plaintiffs’ claims. The plaintiffs claimed that their accidents were caused by defects in Ford vehicles, the Explorer (in the Montana lawsuit) and the Crown Victoria (in the Minnesota lawsuit). Ford was potentially liable because it designed, manufactured, and sold those vehicles. But Ford did not design, manufacture, or sell them in the forum States: it designed them in Michigan; it manufactured them in Kentucky and Canada; and it originally sold them to dealerships in Washington and North Dakota. Since Ford did not design, manufacture, or sell the allegedly defective vehicles in the forum States, it argued it should not be subject to personal jurisdiction because it did not engage in any in-state activities that could possibly have caused (given rise to) the plaintiffs’ accidents. Stated alternatively, it argued that there was an insufficient connection between its in-state conduct and the plaintiffs’ lawsuits because all of its pertinent conduct (designing, manufacturing, and selling the plaintiffs’ vehicles) took place out-of-state, and none of its in-state conduct (advertising and selling other vehicles) even arguably caused the plaintiffs’ accidents.

The Court disagreed. It noted that its most common formulation of the rule governing specific jurisdiction is that the suit must “arise out of or relate to” the defendant’s in-state activities. While the former (arise out of) may require a causal connection, the latter (relate to) does not. And so the Court rejected Ford’s “causation-only” approach and went on to consider whether the plaintiffs’ claims were sufficiently related to, even though not caused by, Ford’s in-state conduct.

“Relate To”

The Court began its discussion of the “relate to” alternative by recognizing that, while some relationship between a defendant’s in-state conduct and the plaintiff’s claims can support jurisdiction without a causal showing, “relate to” must nonetheless be interpreted to have “real limits” because it certainly “does not mean anything goes.”

So what are those limits? First, the defendant must “serve a market” for the product in the forum State, meaning that the defendant advertises, sells, and/or services it there. In this context, the “product” does not refer only to the specific one involved in the accident, but instead refers more generally to the same model product. Ford, for example, had not sold in the forum States the specific vehicles involved in the plaintiffs’ accidents, and for that reason its in-state conduct did not give “rise to” those crashes.

But the “relate to” inquiry is broader and asks whether Ford advertised, sold, and/or serviced those model vehicles (the Explorer and the Crown Victoria) in the forum States (Montana and Minnesota respectively). The Court found that it did: “. . . Ford has systematically served a market in [the forum States] for the very vehicles that the plaintiffs allege malfunctioned and injured them in those States. So there is a strong ‘relationship among the defendant, the forum, and the litigation’. . . .” (Note that the Court was careful to limit its holding to that scenario in which the defendant serves a market for the same model product in the forum state: “Contrast a case, which we do not address, in which Ford marketed the models in only a different State or region.”)

. . . “relate to” must nonetheless be interpreted to have “real limits” because it certainly “does not mean anything goes.”

Serving a market for the product in the State, however, is still not enough to satisfy the “relate to” prong of the test and subject a defendant to personal jurisdiction there. Rather, the Court went on to consider two more factors: the place of the accident and the residency of the plaintiff. Both cases before the Court involved in-state accidents and resident-plaintiffs. And that was enough to convince the Court that the “relate to” prong of the test had been met: “Here, resident-plaintiffs allege that they suffered in-state injury because of defective products that Ford extensively promoted, sold, and serviced in [the forum States]. . . .[T]he connection between the plaintiffs’ claims and Ford’s activities in those States . . . is close enough to support specific jurisdiction.” (See the small red boxes and the final gray box in the flowchart.)

Whether the presence of one or the other but not both of those factors is enough to support personal jurisdiction (e.g., an out-of-state accident involving a resident-plaintiff) is to be determined by future cases.

Does the Shoe Still Fit?

A state court’s exercise of personal jurisdiction must comport with the Fourteenth Amendment’s Due Process Clause. Since its decision in 1945 in International Shoe, the Supreme Court of the United States has held that the dispositive question is whether the defendant has such “contacts” with the forum State so as to make a local tribunal’s authority “reasonable” and consistent with “traditional notions of fair play and substantial justice.” And that, the Court has found, turns largely on “the nature and extent of ‘the defendant’s relationship to the forum State.'”

In Ford, the Court applied those principles to the facts before it and held: “When a company like Ford serves a market for a product in a State and that product caused injury in the State to one of its residents, the State’s court may entertain the resulting suit.”

But why? The Court provided several reasons.

• When a company serves a market for a product in a State and thereby enjoys the benefits and protection of that State’s laws (e.g., to enforce contracts), it has a “reciprocal obligation” to ensure that its products are safe for the citizens of that State to use there.
• Such a company cannot claim surprise at being held accountable there. A manufacturer that markets a product in a State has “clear notice” that it will be subject to jurisdiction in that State if the product malfunctions there.
• Principles of interstate federalism support a State’s right to adjudicate lawsuits brought by its residents for injuries allegedly caused by out-of-state actors.
• And the place where an accident occurs is “the most natural State” in which to bring a lawsuit.

And so, does the International Shoe still fit? Yes. The Court did not change the test in Ford; rather it provided clarity as to what it considers to be “fair play” in the context of a case in which an out-of-state defendant’s in-state conduct is related to, albeit not causative of, an in-state accident involving a resident-plaintiff.

Other Personal Jurisdiction Issues

Products Versus Services

The Ford case involved a product liability action, pursuant to which a manufacturer is held strictly liable if its product is found to be defective and a cause of plaintiff’s injuries. The focus in such an action is on the product. But what about a negligence or professional liability action in which the focus is not on a product but on the defendant’s conduct? The Ford Court did not address that, but the analysis should be the same. (That is why I included “product/service” in the large red box in the flowchart.)

Assume, for example, a case involving an out-of-state truck repair shop that is alleged to have negligently repaired a truck’s brakes in State-A, and the brakes later failed causing an accident in State-B where a lawsuit is filed. Since the company is not at home in State-B, it is not subject to general jurisdiction there. And since it did not repair the brakes in State-B, it is not subject to specific jurisdiction there under the “arise out of” portion of the test. And so (as in Ford) that brings us to the “relate to” part of the test. But here, instead of asking whether the defendant serves a market for the product in State-B, the inquiry would be whether it serves a market for its services in State-B. That is, does it advertise and sell its truck repair services in State-B? If it does not, it should not be subject to personal jurisdiction in State-B simply because it performed a service elsewhere that later caused an accident there.

Foreign Parents of Domestic Subsidiaries

Be careful to distinguish related corporates entities. A foreign parent company that designs and manufactures a product is, for purposes of assessing personal jurisdiction, very different from a domestic subsidiary that imports and distributes the product to retailers throughout the United States. The latter may be subject to personal jurisdiction based on advertising and sales activity in a given State, but that does not mean that its parent, which may not conduct any business in the forum (or anywhere else in the United States), is also subject to personal jurisdiction. They are very different, albeit related, corporate entities and therefore they have to be treated as such for purposes of assessing personal jurisdiction.

Individual Defendants

The same is true for individual defendants. A corporation may be a “person” in the eyes of the law, but a person is very much not a corporation. And so if claims are made against both a company and one or more of its employees (e.g., a design engineer employed by a product manufacturer, or a truck driver employed by a motor carrier), be careful to separately assess personal jurisdiction as to each. Just because an out-of-state corporation serves a market in the forum State, that does not mean an out-of-state employee of that company is also subject to personal jurisdiction there. Unless his allegedly negligently bad acts occurred in the forum State, he probably is not.

Component Part Manufacturers

Also be careful to consider the differences between a final product and a component part. Ford, for example, may advertise and sell the Explorer in the forum State and therefore be subject to personal jurisdiction there, but the manufacturer of a component part or system in those vehicles (e.g., the seatbelts) may not advertise or sell its product in that State and may therefore not be subject to personal jurisdiction there. If the component manufacturer’s part or system is proven to be defective, it may owe indemnity to the manufacturer or seller of the final product, but liability and personal jurisdiction are two different things and one does not trigger the other.

State Long-arm Jurisdiction

Before jumping to Due Process issues, be sure to check your forum State’s long-arm jurisdiction statute. It may provide another basis upon which to challenge personal jurisdiction over an out-of-state defendant.

Service of Process

Similarly, be careful not to overlook service of process. Proper service is necessary to trigger jurisdiction.

Waiver

Finally, personal jurisdiction is a defense that can be waived. So be careful to evaluate it at the outset of your case and to check your local rules about how and when it must be raised.

Other “Where” Issues

Personal jurisdiction is an important “where” issue, but it is not the only one. Others include:

• Federal Jurisdiction: If you are an out-of-state defendant and there is complete diversity among the parties or the case is predicated upon a federal statute, consider removing the matter from state to federal court.
• Forum Non Conveniens: If your client is subject to personal jurisdiction, consider whether you have grounds for seeking a forum non conveniens dismissal. Even if the forum State has jurisdiction over the parties, the court still has the discretion to dismiss the case if it is convinced that another forum is much better suited to hear it.
• Venue: Being subject to jurisdiction does not mean that the plaintiff can properly bring the action in any district or county of his choosing. So check your local or federal rules to determine whether you may be entitled to a change of venue.
• Choice of Law: Finally, don’t forget about choice of law. If the accident happened out-of-state, and/or if the plaintiff resides out-of-state, do not assume that the forum State’s law applies. And be sure to separately evaluate choice of law as it applies to liability and damages.

Conclusion

Personal jurisdiction is a sometimes overlooked and often misunderstood defense that can be waived if it is not spotted and raised early in the litigation. I hope that this article takes some of the mystery out of it and helps you assess whether it is a viable defense in your case and whether there are other forum or venue issues worth raising.