Burr & Forman

09.29.2021   |   Articles / Publications

“Arising Out Of or Relating To”: The Supreme Court Expands Application Of “Relate To” for Specific Personal Jurisdiction Framework

The Supreme Court’s recent opinion[1] regarding its specific personal jurisdiction framework could have far-ranging implications for parties objecting to a lawsuit on jurisdictional grounds.

In Montana Eighth, multiple plaintiffs sued a national automaker alleging defects in their model vehicles caused injuries, in one instance fatal, in Montana and Minnesota. Montana Eighth, 141 S. Ct. at 1019. However, in both underlying cases, the defendant did not design or manufacture the vehicles in Montana or Minnesota, and did not sell the subject vehicles to a dealer in those states. Id. The vehicles involved in the two underlying accidents had made their way to Montana and Minnesota through subsequent sales, re-sales, and relocations by various consumers, including the plaintiffs, none of which involved the defendant. Id.

The defendant automaker moved to dismiss for lack of specific personal jurisdiction, arguing that the standard requiring that plaintiffs’ claims “arise out of or relate to” a defendant’s contacts with the forum was a causative standard. Id. at 1026 (“[defendant’s] claim is instead that those activities do not sufficiently connect to the suits, even though the resident-plaintiffs allege that [defendant’s] cars malfunctioned in the forum States. In [defendant’s] view, the needed link must be causal in nature . . .” Id.).  The defendant read the “arise out of or relate to” language conjunctively to require a causal relationship between a defendant’s contacts with the forum and the plaintiff’s injuries or claims. As the Supreme Court itself has stated: “there must be ‘an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.’” Id. at 1025 (citation omitted). Thus, the defendant automaker contended that these standards required that the defendant’s contacts be causally-related to the plaintiffs’ injuries.

The plaintiffs focused on the automaker’s other contacts with Montana and Minnesota and the “relate to” language present in the standard. The Court noted that the automaker’s contacts met the “purposeful availment” standard in both forum states because “[b]y every means imaginable—among them, billboards, TV and radio spots, print ads, and direct mail—[defendant] urges Montanans and Minnesotans to buy its vehicles [including the models in the underlying litigation].” Id.  Here, the automaker sold cars in Montana and Minnesota, had dealers who maintained and repaired the automaker’s vehicles in the states, and distributed replacement parts to its dealers in those states. Id. Plaintiffs contended that these contacts, though technically unrelated to the particular two vehicles at issue, provided sufficient “relation” between the plaintiffs’ injuries and claims and the automaker’s contacts because those contacts illustrate that the automaker had purposefully cultivated a market in Montana and Minnesota for its vehicles – including the model vehicles at issue. Id. at 1028-29.

The Supreme Court ultimately sided with Plaintiffs, citing several of its own precedents such as World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 100 S. Ct. 580, 62 L. Ed. 2d 490 (1980) and Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., 582 U.S. ––––,137 S. Ct. 1773, 198 L. Ed. 2d 395 (2017)). The Supreme Court reasoned that the prior precedent did not create a causal-relationship requirement. Id. at 1026 (“But [defendant’s] causation-only approach finds no support in this Court’s requirement of a “connection” between a plaintiff’s suit and a defendant’s activities . . . None of our precedents has suggested that only a strict causal relationship between the defendant’s in-state activity and the litigation will do.” (internal citations omitted)). In so doing, the Court explicitly stated its decision to read the “arise out of or relate to” standard disjunctively, as two separate standards by which a defendant may be hailed into a given forum based on plaintiffs’ injuries suffered in that forum. Id. (“As just noted, our most common formulation of the rule demands that the suit “arise out of or relate to the defendant’s contacts with the forum . . . the first half of that standard asks about causation; but the back half, after the ‘or,’ contemplates that some relationships will support jurisdiction without a causal showing.” (emphasis in original)). Thus, because the automaker cultivated a market for its vehicles, including the model vehicles in issue, in Montana and Minnesota via dealerships, advertisements, repair services, and the like, the Court held that these contacts sufficiently “related to” the plaintiff appellees’ injuries and claims to confer jurisdiction. Id. at 1032 (“Here, resident-plaintiffs allege that they suffered in-state injury because of defective products that [defendant] extensively promoted, sold, and serviced in Montana and Minnesota. For all the reasons we have given, the connection between the plaintiffs’ claims and [defendant’s] activities in those States . . . is close enough to support specific jurisdiction.”).

The Supreme Court’s decision in Montana Eighth could have wide-ranging implications on the development of specific personal jurisdiction in ways that both plaintiffs and defendants, particularly potential products liability plaintiffs and defendants, should take notice. For example, consider the Supreme Court’s precedents in World-Wide Volkswagen, 444 U. S. 286 and Bristol-Myers Squibb, 137 S. Ct. 1773. In World-Wide Volkswagen, the Supreme Court held that an automaker could not be hailed into an Oklahoma court when it sold a car in another state and that car subsequently caught fire in Oklahoma. 444 U.S. 286, 312. While the automaker in that case did not have contacts with Oklahoma, and in this case the automaker admittedly had substantial contacts in Montana and Minnesota, in Bristol-Myers Squibb the Supreme Court rejected a “sliding-scale approach” to specific personal jurisdiction as incompatible with its own precedents. 137 S. Ct. 1773, 1781 (“For this reason, the California Supreme Court’s ‘sliding scale approach’ is difficult to square with our precedents. Under the California approach, the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims.”). The decision in Montana Eighth, however, appears to implicitly invite such a “sliding scale” approach to evaluating a defendant’s overall contacts with the forum. How else are litigants to determine how many “related” contacts are enough to justify exercising jurisdiction over a defendant? How related is “related?”

Thus, the Supreme Court has invited interpretation from the lower courts and litigants as to the boundaries of personal jurisdiction. (Id. at 1039 (Alito, J., concurring: “The real struggle here isn’t with settling on the right outcome in these cases, but with making sense of our personal jurisdiction jurisprudence and International Shoe’s increasingly doubtful dichotomy. On those scores, I readily admit that I finish these cases with even more questions than I had at the start. Hopefully, future litigants and lower courts will help us face these tangles . . .”)). One particular implication worth noting is that the Supreme Court has, for the time being, effectively written the “arise out of” language out of the “arise out of or relate to” phrase. If this phrase is truly disjunctive, as the Court explained, then the “relate to” standard should seemingly always be broader and more inclusive than the “arise out of” standard, rendering the “arise out of” language redundant.

Given the exploration of contact “relatedness” lying ahead, parties, particularly defendants, will likely be forced to conduct thorough analyses of all of a defendant’s contacts in any given forum to prepare arguments regarding personal jurisdiction – even those contacts which, at first glance, don’t seem directly related to a plaintiff’s claims. Only time will tell how the Court’s reasoning in Montana Eighth will impact specific personal jurisdiction, but litigants can expect this case to be included in briefs and arguments “early and often,” as personal jurisdiction touches every case in the United States.[2]

[1] See Ford Motor Company v. Montana Eighth Judicial District, 141 S. Ct. 1017 (March 25, 2021).

[2] For other reactions to the Montana Eighth decision which highlight its potentially impactful reasoning and outcome, see https://www.abajournal.com/columns/article/chemerinsky-despite-scotus-ruling-questions-of-personal-jurisdiction-remain-unsettled; https://law.emory.edu/news-and-events/releases/2021/04/scouts-analysis-ford-motor-company-v.-montana-eighth-judicial-district-court.html; and https://www.mondaq.com/unitedstates/trials-appeals-compensation/1077856/supreme-court39s-decision-in-ford-motor-co-makes-it-easier-for-states-to-exercise personal-jurisdiction-over-big-companies.

 

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