The Fifth Circuit held that the 15-year Texas statute of repose barred a family’s claims regarding the rollover of a truck. The court was required to interpret the statutory language “date of the sale of the product,” finding that the repose period started when the automaker transferred the truck to the dealership, and not when it was first sold by the dealer to a customer. The court also held that the Texas tolling exception for minors does not apply to the product liability statute of repose.
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 Little v. Kia Motors America, Inc., docket no. A-24-18, the New Jersey Supreme Court recently set out the examination New Jersey courts must undertake before admitting aggregate proof of damages, rather than individualized proof, in a class action. Siding with defendant Kia in a vehicle defect suit, the Court ruled that admission of aggregate proof of damages at trial was inappropriate because an unknown number of class members would have received a windfall, and the formula used to estimate such damages was unreliable. This case reviews the key principles courts and litigants should consider when choosing between individualized or aggregate proof of damages in a class action.
An Illinois federal judge dismissed a trio of certified putative class actions involving 220,000 Jeep Cherokee drivers from Missouri, Michigan, and Illinois for lack of standing. The decision underscored a key principle: Theoretical injury is not enough for purposes of standing.
In Flynn, et al. v. FCA US LLC, et al., Case No. 15-cv-855, the plaintiffs alleged that defendants FCA US LLC and Harman International Industries Inc. installed defective “UConnect” infotainment systems in Jeep Cherokees and other vehicles which could be hacked by outsiders and subsequently remotely controlled. The class actions arose from a single 2015 hack of the UConnect system executed by two highly skilled researchers in a controlled experiment, as reported by Wired magazine. None of the other “1.2 million subject vehicles with the purported defects” had been hacked.
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.