On May 11, 2021, Judge Kevin McNulty of the District of New Jersey issued an order applying the Supreme Court’s recent personal jurisdiction decision in Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S. Ct. 1017 (2021), and denied a motion to dismiss for lack of personal jurisdiction filed by BMW AG, the German parent company of BMW North America, in its “clean diesel” litigation. The case represents an early example of a lower court grappling with Ford and its new gloss on the specific jurisdiction requirement that a plaintiff’s claims “must arise out of or relate to the defendant’s contacts” with the forum. (You can read our coverage of Ford in our last issue.)

• Plaintiffs brought a putative class action on behalf of consumers who purchased BMW diesel vehicles allegedly containing “defeat devices”—a software technology that alters the vehicle’s emissions control system when tested by regulators in a test environment. The suit named four entities: Bayerische Motoren Werke Aktiengesellschaft (“BMW AG”), the manufacturer and parent company based in Germany; BMW North America (“BMW NA”), BMW AG’s American distributor, based in New Jersey; Robert Bosch LLC, a car technology developer based in Michigan; and Robert Bosch GmbH, the parent company of Bosch LLC, based in Germany. Both German parent companies moved to dismiss under Rule 12(b)(2) for lack of personal jurisdiction.
• The court applied the Third Circuit’s three-part test for specific jurisdiction, as adopted from Supreme Court precedents. That test requires a plaintiff to show that (1) the defendant purposefully availed itself of the forum, (2) the claims arise out of or relate to at least one of the defendant’s forum activities, and (3) exercising personal jurisdiction comports with fair play and substantial justice.
• The court first determined that plaintiffs had plausibly pled that BMW’s German parent had purposefully availed itself of the privilege of doing business in New Jersey, but concluded that plaintiffs failed to make this showing as to Bosch’s German parent. This conclusion largely turned on the fact that the U.S. subsidiary of BMW was headquartered in the forum state, whereas the U.S. subsidiary of Bosch was not.
  • The court held that, while a subsidiary’s contacts cannot be imputed to a parent company for purposes of general jurisdiction under Daimler AG v. Bauman, 571 U.S. 117 (2014), “corporate relationships can be used to show that the parent purposefully availed itself of the subsidiary’s forum.” The court noted that, even though BMW AG does not itself have any presence in New Jersey, “BMW AG serves the American market through BMW NA,” and “[t]here are no BMW AG-made cars on American roads save those that are here by virtue of the BMW AG/BMW NA relationship.” Accordingly, “[b]ecause BMW NA is in New Jersey, BMW AG cannot say that its contacts with New Jersey are ‘random, isolated, or fortuitous’” under the Supreme Court’s purposeful availment test.
  • By contrast, the court determined that Bosch GmbH’s contacts as alleged in the complaint were not sufficient to show that it had purposefully availed itself of the privilege of doing business in New Jersey. Bosch GmbH’s contacts with its U.S. subsidiary were contacts with Michigan (i.e., the place of the subsidiary’s corporate headquarters), and plaintiffs alleged only that Bosch GmbH targeted the U.S. market generally. The court concluded that “general efforts to target a U.S. market do not suffice to demonstrate deliberate targeting of New Jersey in particular.” Thus, the court dismissed the claims against Bosch GmbH for lack of personal jurisdiction.
• The Court then assessed whether plaintiffs’ claims “arose out of or related to” BMW AG’s contacts with New Jersey—a question hinging on the application of Ford to the particular facts of the case.
  • In an issue of first impression, the court first held that the Third Circuit’s prior specific jurisdiction precedent—which required a causal relationship between a defendant’s contacts and the underlying claims—could not be squared with Ford, which “rejected the idea that ‘only a strict causal relationship between the defendant’s in-state activity and the litigation will do.’”
  • The court thus applied the “relatedness standard as articulated by Ford.” The difference between that test and the Third Circuit’s prior causation test ultimately proved dispositive—at least at the Rule 12 stage.
  • While BMW AG argued that plaintiffs had not plausibly alleged that any of the particular statements they relied on came from BMW AG, as opposed to BMW NA, the court determined that this was akin to the specific jurisdiction argument rejected in Ford. The court noted that even though the Ford plaintiffs’ particular cars did not have a connection to the relevant forums—because they were not designed, manufactured, or sold there—the Supreme Court nevertheless held that Ford’s contacts with the forum states were sufficiently “related to” the plaintiffs’ claims because Ford extensively served the car markets in those states.
  • The court similarly determined that the plaintiffs suing BMW plausibly pleaded that BMW AG’s forum-based conduct sufficiently related to the misrepresentation claims at issue, “even if Plaintiffs have not located the precise source of the particular statements they relied on.” The court agreed with plaintiffs that it was plausible that BMW AG developed the marketing concepts at issue and then provided them to BMW NA “to tailor to and deploy in the US market.”
• Finally, the court determined that “fair play and substantial justice” did not militate against jurisdiction either. According to the court, BMW AG’s burden to litigate in the forum was “not substantial” given that it “extensively targets the American market and chose to set up its American base in New Jersey.” Moreover, New Jersey had an interest in ensuring that companies headquartered within its borders comply with its law—and that interest extended to the companies from which New-Jersey-headquartered companies take direction. Meanwhile, it was “plainly inefficient” for the American parties to litigate in Germany, and BMW AG made no argument that Germany had a stronger interest in adjudicating the dispute.
• Ultimately, the court made clear that its ruling at the Rule 12 stage was not necessarily the last word on the subject, as jurisdictional discovery was necessary to “develop facts regarding minimum contacts” because plaintiffs had not “conclusively proven the existence of specific jurisdiction.” Namely, the court left open the possibility that jurisdictional discovery might show BMW AG did not meaningfully shape the sales and marketing of plaintiffs’ vehicles in the United States—in which case, BMW AG’s contacts with New Jersey might not sufficiently “relate to” plaintiffs’ claims under Ford.
• This case is an early—yet emblematic—example of the challenges lower courts face in attempting to faithfully apply the amorphous “relatedness” standard articulated in Ford.
  • Citing Justice Gorsuch’s concurring opinion in Ford, the court commented in a footnote that “[b]y weakening the required connection between the contacts and particular claims at issue, Ford may have eroded the distinction between general and specific jurisdiction to some degree. That distinction may someday give way, perhaps in favor of a single, more general test, and for some, perhaps, that day cannot come too soon.”
• The case is Rickman v. BMW of North America LLC, and the court’s opinion may be read here.