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02/20/2022

Patrick Borchers: Ford Motor Co. v. Montana Eighth Judicial District Court and 'Corporate Tag Jurisdiction' in the Pennoyer Era
Michael Ramsey

Patrick J. Borchers (Creighton University School of Law) has posted Ford Motor Co. v. Montana Eighth Judicial District Court and 'Corporate Tag Jurisdiction' in the Pennoyer Era (Case Western Reserve Law Review, Vol. 72, No. 1, 2021) (46 pages) on SSRN.  Here is the abstract:

In its seventh personal jurisdiction decision since 2011, the Supreme Court in Ford Motor Co. v. Montana Eight Judicial District Court ruled for the plaintiff and found jurisdiction, after six straight victories for defendants. All eight of the participating Justices found the "minimum contacts" test (which has been the central test for personal jurisdiction since 1945) satisfied, though the rationale was splintered with five signing Justice Kagan's majority opinion, Justice Alito concurring only in the judgment, and Justice Gorsuch (joined by Justice Thomas) also concurring only in the judgment.

The opinion involved two consolidated cases presenting similar facts. In each, a Ford automobile, designed and manufactured outside the forum state, was initially sold in a state neighboring the forum state, and then resold in a private transaction to a forum-state resident, where it became involved in an accident injuring the plaintiff due to an alleged defect in the vehicle. In each forum state, defendant Ford Motor Co. had substantial business contacts (dealerships, sales of new and used cars, sales of replacement parts, automobile service centers, etc.). However, under the Supreme Court's now-restrictive view of "general jurisdiction" (jurisdiction based on contacts with the forum state unrelated to the claim) the plaintiffs could not establish general jurisdiction in the forum states of Montana and Minnesota, because neither was the principal place of business or the state of incorporation of Ford.

The plaintiffs had to establish "specific jurisdiction," meaning that they had to show that their claims "arose out of or related to" Ford's forum-state activities. Although all eight Justices agreed that there was the necessary relationship between the contacts and the forum states, they divided on what relationship suffices; the majority offered a nebulous "affiliation" test while the other Justices preferred a causation test, whereby the defendant's forum-state activities must be a cause of the events giving rise to the claim..

This article does not closely examine the Supreme Court's minimum contacts analysis. Rather, it accepts the invitation of Justice Gorsuch to examine the historical justification (if any) for the Due Process Clause limiting jurisdiction over corporations. As Justice Gorsuch noted, corporate defendants have fared well under the minimum contacts test. He asked why this is so and whether there is an originalist or textualist justification for the solicitous treatment of them.

This article argues that case for requiring purposeful, related contacts by defendants (including corporate defendants) is ahistorical and unfair in operation. It focuses in particular on New York's "Pope" rule, which in the late 1800's and early 1900's allowed for jurisdiction over corporations if a corporate officer were served in the forum state, even if casually and the corporation lacked substantial business connections with New York. The U.S. Supreme Court refused to strike down "Pope" assertions of jurisdiction until 1915, almost a half century after ratification of the 14th Amendment. Even after that, the Supreme Court continued to allow jurisdiction over corporations under corporate registration statutes that required the corporation to appoint an in-state agent for service of process.

Given the weak historical justification for closely regulating jurisdiction under the Due Process Clause, this article argues for subsuming jurisdictional due process norms under procedural due process. Under the proposed test, an assertion of jurisdiction would be unconstitutional only if the choice of forum imposed costs on the parties or created a risk of an inaccurate resolution disproportionate to the stakes involved in the case.