Products Liability Law Daily ‘Stream of commerce plus’ theory supports jurisdiction over Ford in roll-over case
Wednesday, May 22, 2019

‘Stream of commerce plus’ theory supports jurisdiction over Ford in roll-over case

By Leah S. Poniatowski, J.D.

Montana’s high court held that specific personal jurisdiction for product liability claims is fair and reasonable over companies whose products are specifically designed for interstate travel when the purposeful availment and nexus tests are satisfied.

Ford Motor Company’s jurisdictional challenge to a products liability lawsuit filed against the automaker in Montana was unpersuasive in light of the U.S. Supreme Court’s "stream of commerce plus" theory in specific personal jurisdiction analysis, especially because the company had availed itself by its large commercial presence in the state, there was a nexus between Ford’s activities and the fatal Explorer roll-over accident, and the vehicle had been designed for interstate travel, Montana’s Supreme Court ruled, affirming the lower court’s decision that the exercise of personal jurisdiction was appropriate (Ford Motor Co. v. Montana Eighth Judicial District Court, May 21, 2019, McKinnon, L.).

A Montana resident died in 2015 after her 1996 Ford Explorer’s tires lost tread, causing her vehicle to veer off the road and roll over into a ditch. The vehicle had been assembled in Kentucky and originally had been sold in Washington but was resold and registered in Montana. The driver’s heirs filed a products liability lawsuit against Ford alleging strict liability for design defect and failure to warn, as well as negligence. Ford filed a motion to dismiss on the ground that personal jurisdiction against the company in Montana was not proper, asserting that there was no link between the legal claims and Ford’s contacts in the state.

The trial court determined that personal jurisdiction was proper. Ford filed a writ of supervisory control to the Montana Supreme Court seeking a reversal of the lower court’s decision and dismissal of the case. The state high court granted the writ, agreeing that the urgency of the circumstances would leave the normal appeal process inadequate and that constitutional issues of state-wide importance were involved.

Specific personal jurisdiction. The state high court agreed that the facts did not support general personal jurisdiction over Ford and, thus, the jurisdictional analysis had to focus on specific personal jurisdiction. In general, Montana courts apply a two-step test to determine when specific personal jurisdiction is proper: the first prong examines whether there is personal jurisdiction under the state’s long-arm statute and the second determines whether the exercise of personal jurisdiction is constitutional.

Long-arm statute. Montana’ long-arm statute provides that the state may exercise jurisdiction over any person in a claim "arising from …. the commission of any act resulting in accrual within Montana of a tort action." The state high court observed that the alleged design defect, failure to warn, and negligence of Ford had resulted in the accrual of a tort action in Montana. As such, the court held that the first step of the test was satisfied.

Due process. The second step examined whether Ford’s due process rights were protected, which was analyzed by considering whether: (1) the nonresident defendant had purposefully availed itself of the privilege of conducting activities in the state to invoke Montana law; (2) the underlying claim arose out of or related to Ford’s forum-related activities; and (3) the exercise of personal jurisdiction was reasonable. The state high court added that if Ford purposefully availed itself by virtue of conducting business in the state, then reasonableness was presumed, which Ford only could rebut by showing unreasonableness.

The high court determined that Ford purposefully availed itself to Montana law under the "stream of commerce plus" theory, as propounded by the U.S. Supreme Court in Asahi Metal Indus. Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102 (1987) and as later adopted by Montana’s high court. It was noted that Ford is registered to do business in the state and that it advertises, employs, and sells vehicles in Montana. Moreover, the company provides services for its automobiles in the state, which reflect the company’s established channels with Montana consumers and its expectation that they will drive Ford vehicles in the state.

Second, the high court held that the lawsuit arose out of or related to Ford’s forum-related activities. Although other states may agree with the company that there was no connection because it did not design or manufacture the at-issue vehicle in Montana, the high court took the side of other states that find a connection when Ford has other activities related to a state and could reasonably foresee the use of its product in that state.

The high court agreed that this question presented a challenging legal inquiry and construed the language "arise out of" or "relate to" as not requiring a direct connection between Ford’s conduct and the resulting claim in light of the fairness and reasonableness of asking the automaker to defend the case at bar. Ford had designed, manufactured, and sold a product that foreseeably would cross state lines, the court said, noting that because the Explorer had specifically been designed for interstate travel, it was fair and reasonable to require the automaker to defend a lawsuit in the state where the injury had occurred in light of the determination that the company had purposefully availed itself to Montana law by doing business in the state and there was a nexus between Ford’s in-state activity and the product. Thus, the heirs’ claims "related to" Ford’s Montana activities.

Finally, personal jurisdiction over Ford was reasonable, the high court determined, concluding that the presumption of reasonableness was established by finding that the company had purposefully availed itself to Montana law by its activities under the "stream of commerce plus" theory. The court concluded that Ford did not present a compelling rebuttal of that presumption after examining the seven factors, which weighed against the manufacturer. Consequently, the third factor was satisfied. Accordingly, the lower court’s decision was affirmed.

The case is No. OP 19-0099.

Attorneys: Ian McIntosh (Crowley Fleck, PLLP) for Ford Motor Co.

Companies: Ford Motor Co.

MainStory: TopStory JurisdictionNews MotorVehiclesNews MontanaNews

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