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Bandemer v. Ford Motor Co.

Supreme Court of Minnesota

July 31, 2019

Adam Bandemer, Respondent,
v.
Ford Motor Company, Appellant, Eric Hanson, et al., Defendants.

          Court of Appeals Office of Appellate Courts

          Michael R. Carey, Bowman & Brooke LLP, Minneapolis, Minnesota; and Sean Marotta, Hogan Lovells U.S. LLP, Washington, D.C., for appellant.

          Kyle W. Farrar, Mark Bankston, Kaster, Lynch, Farrar & Ball, LLP, Houston, Texas; and Steven D. Lastovich, Steven Lastovich Ltd., Baxter, Minnesota, for respondent.

          Andrew J. Pincus, Archis A. Parasharami, Mayer Brown LLP, Washington, D.C., and William Michael, Jr., Mayer Brown LLP, Chicago, Illinois, for amicus curiae The Chamber of Commerce of the United States of America.

         SYLLABUS

         The exercise of specific personal jurisdiction by a Minnesota court is proper when: (1) the defendant established minimum contacts in the forum by selling a particular type of vehicle in Minnesota, directing advertising and marketing activities at Minnesota, and collecting data relevant to redesigns and repairs from dealerships in Minnesota; (2) that type of vehicle was in an accident in Minnesota; and (3) the plaintiff and other defendant-driver are Minnesota residents-even though the individual vehicle was designed, manufactured, and first sold by the defendant outside of Minnesota.

          OPINION

          McKEIG, JUSTICE.

         Appellant Ford Motor Company (Ford) appeals from a court of appeals decision affirming a district court's exercise of specific personal jurisdiction over Ford in a products liability case. Central to the litigation is a Ford vehicle that was involved in a car crash in which the passenger was seriously injured and an airbag in the vehicle allegedly failed to deploy. Ford argues that its contacts with Minnesota were not sufficiently connected to the current litigation because the car at issue was designed, manufactured, and sold outside of Minnesota. Because the claims here arise out of or relate to Ford's contacts with Minnesota, we affirm the court of appeals.

         FACTS

         In January of 2015, Respondent Adam Bandemer, a Minnesota resident, was a passenger in a 1994 Ford Crown Victoria driven on a Minnesota road by defendant Eric Hanson, a Minnesota resident. Hanson rear-ended a Minnesota county snow plow, and the car ended up in a ditch. Minnesota county law enforcement responded to the crash, and Bandemer alleges that he suffered a severe brain injury as a result of the passenger-side airbag not deploying. He was treated for his injuries by Minnesota doctors in Minnesota. Bandemer alleges that the airbag failed to deploy because of a defect, and that the accident was caused by Hanson's negligence. He filed a complaint in district court alleging products liability, negligence, and breach of warranty claims against Ford and negligence claims against Hanson and his father, who owned the car.

         Ford moved to dismiss Bandemer's claims for lack of personal jurisdiction. See Minn. R. Civ. P. 12.02(b). Ford does not dispute the quantity and quality of its contacts with Minnesota, nor does it dispute the reasonableness of personal jurisdiction under the circumstances. But it argues that, because the Ford car involved in the accident was not designed, manufactured, or originally sold in Minnesota, Ford cannot be subject to personal jurisdiction in Minnesota on this claim.

         Ford's contacts include sales of more than 2, 000 1994 Crown Victoria cars-and, more recently, about 200, 000 vehicles of all kinds in 2013, 2014, and 2015-to dealerships in Minnesota. Ford's advertising contacts include direct mail advertisements to Minnesotans and national advertising campaigns that reach the Minnesota market. Ford's marketing contacts include a 2016 "Ford Experience Tour" in Minnesota, a 1966 Ford Mustang built as a model car for the Minnesota Vikings, a "Ford Driving Skills for Life Free National Teen Driver Training Camp" in Minnesota, and sponsorship of multiple athletic events in Minnesota. Ford also collects data from its dealerships in Minnesota for use in redesigns and repairs. Finally, Ford has employees, certified mechanics, franchises, and real property, as well as an agent for accepting service, in Minnesota.[1]

         The district court held that the exercise of jurisdiction over Ford was proper, and Ford appealed. The court of appeals, applying our decision in Rilley v. MoneyMutual, LLC, 884 N.W.2d 321 (Minn. 2016), cert. denied, __U.S.__, 137 S.Ct. 1331 (2017), held that the district court did not err in denying Ford's motion to dismiss for lack of personal jurisdiction because Ford's marketing contacts with Minnesota "established a 'substantial connection between the defendant, the forum, and the litigation, such that [it] purposefully availed [itself] of the forum'" and those contacts "sufficiently relate[] to the cause of action . . . ." Bandemer v. Ford Motor Co., 913 N.W.2d 710, 715 (Minn.App. 2018) (quoting Rilley, 884 N.W.2d at 332). The court of appeals rejected Ford's arguments that the Supreme Court's decisions in Walden v. Fiore, 571 U.S. 277 (2014), and Bristol-Myers Squibb Co. v. Superior Court of California, __U.S.__, 137 S.Ct. 1773 (2017), require a more direct connection between and among the defendant, the forum, and the litigation than the standard articulated by this court in Rilley. 913 N.W.2d at 715-16. This appeal followed.

         ANALYSIS

         "Whether personal jurisdiction exists is a question of law, which we review de novo." Rilley, 884 N.W.2d at 326 (citation omitted) (internal quotation marks omitted). After a defendant challenges a court's exercise of personal jurisdiction, the plaintiff must make a prima facie showing that personal jurisdiction is proper. Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565');">682 N.W.2d 565, 569-70 (Minn. 2004). When reviewing a motion to dismiss for lack of personal jurisdiction, we accept all of the factual allegations in the complaint and supporting affidavits as true. Rilley, 884 N.W.2d at 326. In a close case, we resolve any doubt in favor of retaining jurisdiction. Hardrives, Inc. v. City of LaCrosse, 240 N.W.2d 814');">240 N.W.2d 814, 818 (Minn. 1976).

         Minnesota's long-arm statute prevents personal jurisdiction over a nonresident defendant if it would "violate fairness and substantial justice." Minn. Stat. § 543.19, subd. 1(4)(ii) (2018). We may "simply apply the federal case law" because Minnesota's long-arm statute "extend[s] the personal jurisdiction of Minnesota courts as far as the Due Process Clause of the federal constitution allows." Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410-11 (Minn. 1992). The Due Process Clause of the Fourteenth Amendment limits the ability of a state to exercise its coercive power by asserting jurisdiction over non-resident defendants. Bristol-Myers Squibb Co., __U.S. at__, 137 S.Ct. at 1779. A state may not exercise personal jurisdiction unless the defendant has "minimum contacts" with the state and maintaining the lawsuit "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted) (internal quotation marks omitted).

         We analyze five factors to determine whether the exercise of personal jurisdiction is consistent with federal due process:" '(1) the quantity of contacts with the forum state; (2) the nature and quality of those contacts; (3) the connection of the cause of action with these contacts; (4) the interest of the state providing a forum; and (5) the convenience of the parties.'" Rilley, 884 N.W.2d at 328 (quoting Juelich, 682 N.W.2d at 570). This five-factor test is a means for evaluating the same key principles of personal jurisdiction established by the Supreme Court-reasonableness in light of traditional notions of fair play and substantial justice. See K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011); Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983). The first three factors determine whether Ford has sufficient "minimum contacts" with Minnesota, and the last two factors determine whether jurisdiction is otherwise "reasonable" under concepts of "fair play and substantial justice." Juelich, 682 N.W.2d at 570.

         I.

         We will first address factors one through three, which determine whether minimum contacts are present. A defendant has sufficient "minimum contacts" to support personal jurisdiction if the defendant "purposefully avails itself" of the privileges, benefits, and protections of the forum state, such that the defendant "should reasonably anticipate being haled into court there." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958), and World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). "In determining whether a defendant has sufficient 'minimum contacts,' we consider the contacts alleged by the plaintiff in the aggregate and not individually, by looking at the totality of the circumstances." Rilley, 884 N.W.2d at 337. The forum State" 'does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State' and those products subsequently injure forum consumers." Burger King Corp., 471 U.S. at 473 (quoting World-Wide Volkswagen Corp., 444 U.S. at 297-98).

         The "minimum contacts" inquiry necessary to support specific[2] personal jurisdiction over the defendant focuses on "the relationship among the defendant, the forum, and the litigation." Walden, 571 U.S. at 284 (citation omitted) (internal quotation marks omitted). The "defendant's suit-related conduct must create a substantial connection with the forum State." Id. Physical presence by the defendant in the forum state is not required for specific personal jurisdiction-rather, sufficient minimum contacts may exist when an out-of-state defendant "purposefully direct[s]" activities at the forum state, and the litigation "arise[s] out of or relate[s]" to those activities. Burger King Corp., 471 U.S. at 472 (citation omitted) (internal quotation marks omitted). This minimum-contacts inquiry must "look[] to the defendant's contacts with the forum State itself" and not the defendant's "random, fortuitous, or attenuated" contacts with "persons affiliated with the State" or "persons who reside there." Walden, 571 U.S. at 285-86. Substantial contacts with the forum do not compensate for a lack of a connection "between the forum and the specific claims at issue." Bristol-Myers Squibb, __U.S. at__, 137 S.Ct. at 1781.

         A.

         Although Ford does not contest the quality or quantity of its contacts with Minnesota, a description of those contacts is necessary for us to determine "the relationship among the defendant, the forum, and the litigation." Walden, 571 U.S. at 284 (citation omitted) (internal quotation marks omitted). "[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State . . . ." Hanson, 357 U.S. at 253. The court of appeals held that Ford's regional advertising and marketing activities in Minnesota were contacts that were not "random, fortuitous, or attenuated" and through those contacts, Ford "purposefully availed [itself] of the forum . . . ." Bandemer, 913 N.W.2d at 715 (citation omitted) (internal quotation marks omitted). We agree.

         Ford's data collection, marketing, and advertising in Minnesota demonstrate that it delivered its product into the stream of commerce with the intention that Minnesotans purchase such vehicles. Ford collected data on how its vehicles perform through Ford dealerships in Minnesota and used that data to inform improvements to its designs and to train mechanics.[3] Ford has sold more than 2, 000 1994 Crown Victoria vehicles in Minnesota. It sold about 200, 000 vehicles of all types in Minnesota during a three-year period. It conducted direct-mail advertising in Minnesota and directed marketing at the state. This suit's connection with Minnesota is beyond "the mere 'unilateral activity of those who claim some relationship with a nonresident defendant, '" World-Wide Volkswagen Corp., 444 U.S. at 298 (quoting Hanson, 357 U.S. at 253); rather, the connection is based on Ford's own actions in targeting Minnesota for sales of passenger vehicles, including the type of vehicle at issue in this case.

         Therefore, the court of appeals did not err in holding that the quality and quantity of Ford's contacts with Minnesota were sufficient to support personal jurisdiction.

         B.

         The first two factors establish that Ford has purposely availed itself of the privileges, benefits, and protections of the state of Minnesota. We turn to the third factor in our personal jurisdiction inquiry: the connection of the cause of action to Ford's contacts with the state. A corporation's "single or isolated items of activity in a state . . . are not enough to subject it to suit on causes of action unconnected with the activities there." Int'l Shoe Co., 326 U.S. at 317 (emphasis added) (citation omitted).

         The court of appeals relied in part on our decision in Rilley to determine that there was an adequate connection between Ford's contacts with Minnesota and the cause of action, so as to support personal jurisdiction over Ford. Bandemer, 913 N.W.2d at 714-15. In Rilley, we noted disagreement among courts about how to apply the connectedness factor, distinguishing between a test that looks to whether the plaintiff's claim was "strictly caused by or arose out of the defendant's contacts" on the one hand, and a test that looks to whether "the contacts are substantially connected or related to the litigation" on the other hand. 884 N.W.2d at 336 We observed that although there was no evidence that certain ads "actually caused any of the claims," nevertheless the ads were "sufficiently related to the claims of respondents to survive a motion to dismiss," id. at 337, because they were the "means by which" the defendant, MoneyMutual, solicited Minnesota residents to apply for an allegedly unlawful loan. Id. at 336. We concluded that those ads were "a relevant contact with the Minnesota forum for the purpose of the minimum contacts analysis." Id. at 337.

         Ford urges us to change course and instead adopt a "causal" standard for this prong, under which "the defendant's contacts with Minnesota [must] have caused the plaintiff's claims" for personal jurisdiction over the defendant to be proper. It argues that Supreme Court jurisprudence consistently applies a "giving rise to" standard, consistent with a requirement of causation, and therefore, the "relating to" standard that we applied in Rilley is incorrect. It further argues that a causal standard is clearer and easier to apply. Bandemer disputes Ford's characterization of Supreme Court precedent and argues that eliminating the "relating to" possibility would be a "radical" shift in specific personal jurisdiction law. We agree with Bandemer.

         First, Ford argues that our "related to" conclusion in Rilley is dicta. It argues that we held that the email contacts that MoneyMutual made with Minnesota residents were sufficient by themselves to satisfy the minimum contacts question. See Rilley, 884 N.W.2d at 337. If this assertion is true, Ford reasons, then the ad analysis was not necessary to the holding and is therefore dicta that may be reconsidered without upsetting precedent. Even if our ...


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