Despite SCOTUS’s Daimler v. Bauman, Results Still Vary for One Defendant on General Jurisdiction

madison countyThe battle over general jurisdiction in a post-Daimler AG v. Bauman world continued as 2015 drew to a close, with lingering inconsistency. Two recent trial court decisions, Cahen v. Toyota Motor Corp. and Jeffs v. Anco Insulations, demonstrate how judges in different jurisdictions with different interests apply general jurisdiction differently, and in these cases, to the very same defendant. While a federal district court judge held that California could not exercise general jurisdiction over Ford Motor Co.—a company incorporated in Delaware and headquartered in Michigan—Circuit Judge Stephen Stobbs of Madison County, a perennial magnet jurisdiction for plaintiffs, found that his Illinois court could.

The WLF Legal Pulse has provided ongoing commentary on the 2013 Bauman decision (notably, here and here) and its repercussions. Briefly, in Bauman, the U.S. Supreme Court significantly narrowed the circumstances under which courts may exert general jurisdiction over defendants. Instead of the “continuous and substantial” contacts test, corporations are subject to general jurisdiction only in the states in which they are “at home.” For the most part, a corporation is only “at home” in a state where it is incorporated or has its principal place of business. While leaving open the possibility of general jurisdiction in a third state, the Court noted that such an application would be an “exceptional case.”

The district court in Cahen properly deferred to Supreme Court precedent. There, a class of plaintiffs sought damages for injuries allegedly caused by several major automobile manufacturers’ onboard computers. The plaintiffs contended that Ford’s computer systems were susceptible to hacking. In arguing for the court’s exercise of general jurisdiction over Ford, the plaintiffs nearly ignored Bauman, arguing that Ford’s continuous and systematic contacts with California granted the court jurisdiction. The court was not persuaded: “The plaintiffs’ reliance on pre-Daimler cases that use a ‘continuous and systematic’ analysis must be reconsidered in light of this relatively recent precedent.” Because of where Ford is incorporated and has its principal place of business, the plaintiffs could only rely on an “exceptional case” to establish general jurisdiction. The court properly applied Bauman and viewed Ford’s contacts with the state in the context of “[Ford’s] activities in their entirety, nationwide and worldwide” and ruled that it was not at home in California.

As Madison County jurists tend to do, Judge Stobbs took a far less deferential approach. The plaintiff in Jeffs v. Anco Insulations sought damages for his mesothelioma, which he allegedly contracted through exposure to asbestos while working in one of Ford’s Michigan plants. Ford moved to dismiss for lack of personal jurisdiction. The trial court correctly identified that Bauman fundamentally changed personal-jurisdiction jurisprudence, limiting general jurisdiction to those states where the defendant is “essentially at home.” Despite that acknowledgement, the court reasoned that because Ford conducts business, owns real property, has employees in Illinois, and had in the past acquiesced to personal jurisdiction from the state, Ford had substantial contacts with the forum. Citing an amicus brief that Ford had filed in another case before the Illinois Supreme Court where Ford noted that it “‘conducts substantial business in Illinois,’” and identified the capital and manpower it invests in the state, the court in Jeffs declared that general jurisdiction was appropriate: “Ford’s contacts with the State of Illinois are substantial, therefore significantly more than the minimum contacts required by federal due process standards.”

However, the Jeffs ruling ignores the most basic tenets of the Bauman decision. Because Ford neither is incorporated nor has its principal place of business in Illinois, that state’s courts cannot exercise general jurisdiction over it, barring the exceptional case which was not present here. To adhere to Bauman, courts must view a defendant’s substantial business and infrastructure within the state in context of its contacts with all other states, something that the Jeffs court did not do because it could never have found general jurisdiction under such a test. Ford’s previous litigation before Illinois courts is immaterial.

In the wake of Bauman, corporate defendants hoped that the days of mass-tort forum shopping and “unacceptably grasping” trial courts were a thing of the past. Thankfully, many trial court judges have applied Bauman correctly and thrown out cases where plaintiffs attempt to bootstrap defendants into mass-tort litigation in preferable forums. However, as the Jeffs decision reflects, some judges still cling impermissibly to pre-Bauman general jurisdiction. Appellate courts throughout the country should reject such flagrant attempts to ignore Supreme Court precedent.

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