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Where to Sue a Car Company for Defects? SCOTUS Might Weigh in

Jan. 9, 2020, 9:55 AM

People injured by cars and other products sold outside the state where they live would have a lot on the line if the U.S. Supreme Court agrees to take two Ford Motor Co. cases, product liability attorneys say.

Ford argues it shouldn’t face a lawsuit in Minnesota for Minnesota resident Adam Bandemer’s injury there, or in Montana for the death of a Montana driver, Markkaya Jean Gullett.

Plaintiffs in both cases blame alleged defects in used Ford vehicles that were originally sold in other states.

Ford says those courts in Minnesota and Montana shouldn’t be able to exercise specific personal jurisdiction over the company, because the connections between Ford’s activities there and the plaintiffs’ claims aren’t tight enough.

While those two states’ top courts disagreed, Ford and others have had some success with that argument elsewhere, including with three federal district courts that recently dismissed similar cases involving Fords sold out of state. Two other automakers and a motorcycle maker have also gained dismissals under the same logic.

The Supreme Court will consider whether to hear the cases at a Jan. 10 conference of the justices.

Were Ford to succeed in getting the high court to take the cases and adopt its narrower view of specific jurisdiction, that would mark a significant change, attorneys who aren’t involved in the cases say.

“The idea that it would be unfair for Ford to have to defend a case in Minnesota,” where it made money by selling cars, is “absolutely contrary to the rules of procedure that have governed our country for decades,” plaintiffs’ attorney Bruce R. Pfaff told Bloomberg Law. Pfaff is with Pfaff, Gill & Ports Ltd. in Chicago.

“For plaintiffs, it would be a sea change,” defense attorney Lisa J. Savitt of The Axelrod Firm PC in Washington said.

A change in the requirements for general personal jurisdiction based on a corporation’s state of incorporation or principal place of business has already made it harder for plaintiffs, particularly in cases against non-U.S. corporations, she said. Savitt has represented aircraft and part manufacturers in product liability litigation.

“If they tighten specific jurisdiction along the lines of what Ford is arguing, it will make it more difficult overall for plaintiffs,” Savitt said. If there’s no specific jurisdiction, “the plaintiff will be faced with having to go after the manufacturer under general jurisdiction principles,” she said.

Statutes of Limitations

If Ford were to win on its jurisdictional argument, limitations periods would be an immediate concern for the plaintiffs whose suits are dismissed under a stricter rule, the attorneys said.

“Say plaintiff files suit in Minnesota and Ford prevails in its argument that there’s no jurisdiction” to sue it there, Pfaff said. If the statute of limitations has expired in the state where the plaintiff refiles, “of course Ford is going to argue the time is run,” he said.

Savitt said impending limitations deadlines might lead plaintiffs to file protective actions in different states, unless those states have laws allowing suits that “relate back” to earlier ones.

Some states allow for statutes of limitations to be paused on fairness grounds, and “savings statutes” allowing an opportunity to re-file might apply, she added.

Defendants have their own strategic concerns if a case might move, Savitt said, including whether they could lose having a co-defendant in that other state, whether the law in that state is more or less favorable to them, and the precedent that might be set.

Michigan Laws

For suits against Ford and some other automakers, “the biggest hurdle will be the restrictive product liability laws in Michigan,” where those companies are headquartered and where the suits might have to be filed, said Jeffrey G. Wigington, of Wigington Rumley Dunn & Blair LLP in Corpus Christi, Texas.

The Michigan Legislature has enacted laws favorable to large corporations “because of the lobbying that the automobile manufacturers have done in their home state,” he said. The laws make it more likely that a case won’t get to a jury, he said.

“Some remedies may not even exist in Michigan,” Wigington said. “They may not be able to pursue the case.”

Pfaff said one aspect of Michigan law that favors defendants is damages. He had a case in Illinois, where there are no damages caps, he said. The automaker defendant sought to move the case to Michigan, which had significant caps, he said.

Costs, Fairness

When plaintiffs’ cases are dismissed, “they have to find new counsel willing to take their case within the statute of limitations,” and they incur filing expenses and travel expenses, Wigington said. The costs of litigating in another state will accumulate, he said.

Pfaff said the plaintiff will have to start over with new lawyers, adding that the first law firm may be uncompensated or partially compensated.

He gave Ford poor odds for succeeding in its bid for a more favorable jurisdictional rule. “The idea that one of the world’s largest corporations—that sells vehicles in every county in the U.S.—can’t be called to defend throughout the U.S. is just laughable,” he said.

The cases are Ford Motor Co. v. Bandemer, U.S., No. 19-369, certiorari conference scheduled 1/10/20 and Ford Motor Co. v. Mont. Eighth Judicial Dist. Ct., U.S., No. 19-368, certiorari conference scheduled 1/10/20.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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