Can calls from a Florida business to a Vermont phone number subject that Florida business to a national class action lawsuit in Colorado? Yes, according to the recent decision of the Tenth Circuit in Hood v American Auto Care, LLC, US Application 2021. LEXIS 38400 (10th Cir. Dec. 28, 2021).
Mr Hood claims to have bought a used car and soon after ‘started receiving pre-recorded calls on his mobile phone claiming his car warranty was about to expire and offering to sell him an extension warranty”. Not interested in the warranty, but annoyed by the calls, Mr. Hood sued the Florida company in Colorado for its (allegedly) illegal calls.
The catch: Mr. Hood’s phone number has a Vermont area code.
Highlighting this wrinkle, the district court dismissed it for lack of personal jurisdiction. He ruled that the call to Mr. Hood’s phone number in Vermont did not “arise from or relate to the company’s calls in Colorado”. There was therefore no personal jurisdiction over the Florida company.
Citing the recent Court decision in Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S.Ct. 1017 (2021), the tenth circuit reversed. Let us recall that in Ford, the automaker argued it couldn’t face lawsuits in Montana or Minnesota for defects that killed and maimed in those states because no vehicle was first designed, manufactured or sold. times in the state where the accident occurred. The Court rejected this argument, explaining that specific jurisdiction arises when a defendant “serves a market for a product in the forum state and the product malfunctions there”.
To apply Ford, the Tenth Circuit rejected the Florida company’s argument that personal jurisdiction requires causality link[…]this jurisdiction is exercised only if the conduct “gave rise” to the complaint. Instead, in line with the Court’s analysis in Ford, the Tenth Circuit ruled that a court may exercise personal jurisdiction over an out-of-state defendant who injured a resident plaintiff if:
the defendant deliberately directed the activity to market a product or service to a forum resident, and
the plaintiff’s claim arises out of essentially the same type of activity, even though the activity that gave rise to the claim was not directed against forum residents.
Applied to the trial of Mr. Hood, “Ford makes it clear that specific jurisdiction is appropriate when a resident is harmed by the very type of activity that a non-resident directs against residents of the forum state – even if the activity that gave rise to the claim was not itself directed against the forum State”.
This case is a good reminder that specific jurisdiction requires that the conduct “arises out of or relates to” the harm complained of. But it does not This means that the plaintiff must prove the existence of a direct causal link to maintain the case in the forum he has chosen.
© Copyright 2022 Squire Patton Boggs (USA) LLPNational Law Review, Volume XII, Number 18