On March 25, the U.S. Supreme Court decided Ford Motor Co. v. Montana Eighth Judicial District Court, revisiting the issue of due process limitations on the exercise of personal jurisdiction, most recently addressed by the Court in 2017 in Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1783 (2017) (“BMS”). A unanimous Court (8-0, with Justice Barrett not participating) held in Ford Motor that courts in Montana and Minnesota could hear claims by residents of those states alleging injuries sustained in accidents that occurred there involving Ford vehicles. Relying on Ford’s extensive contacts with those states, which consisted of efforts to create and serve local sales and service and repair markets for the same kinds of vehicles, the Court concluded these plaintiffs’ claims were sufficiently “related to” Ford’s local contacts, even though the actual vehicles in the accidents were designed, manufactured and initially sold in other states. (We commented here on the state court decisions in these cases before Ford sought certiorari.)
In an important decision in accord with the U.S. Supreme Court’s 2017 landmark ruling on personal jurisdiction in Bristol-Myers Squibb Co. v. Superior Court of Calif., 137 S. Ct. 1773 (2017) (BMS), the Illinois Supreme Court held that Illinois courts may not exercise personal jurisdiction over claims of out-of-state plaintiffs for personal injuries suffered outside of Illinois from a device manufactured outside of Illinois. Rios v. Bayer, 2020 IL 125020 (June 4, 2020).
Courts have struggled for decades to define the constitutional limitations on personal jurisdiction over major product manufacturers who sell their products nationwide. The central tension has been determining the validity and potential scope of the “stream of commerce” theory in a world of advancing technology and associated evolution of business operations and practices. That tension is increasing as state courts decide what kind of nexus is required, between a defendant’s “forum-directed” commercial activities and the plaintiff’s claim, to justify the exercise of specific jurisdiction. Specifically, how purposefully forum-directed and how closely tied to the specific claim must the activities be?
Stream of commerce theory posits that a defendant that has placed a product into the nationwide channels of commerce should anticipate that its products will thereby be “swept” into any state and if it causes injury there, it will be subject to suit. In its purest form, the theory collides to some degree with the fundamental limiting requirement that a defendant may be haled into a forum to litigate only where it has “purposely availed” itself of the privilege of doing business by, for example, directing its products into the forum.
Defendants and courts have seen a variety of arguments set forth in attempts to demonstrate specific personal jurisdiction. One argument seen with increasing frequency in medical products cases is that specific jurisdiction exists over an out-of-state defendant for the claims of non-resident plaintiffs because the defendant conducted clinical trials of the product at issue in the forum state. Courts have consistently rejected this argument. Continue reading