The Colorado Supreme Court has joined a number of other federal and state courts in limiting the extent to which product manufacturers can be subjected to a state’s general personal jurisdiction, even when the manufacturer's contacts with that state are substantial.

In the event that a state does have general personal jurisdiction, the court in Magill v. Ford Motor Co., also narrowed the number of potential venues for bringing suit against nonresident corporations, holding that, at least in Colorado, venue is not proper merely because a nonresident corporation has a registered agent that is located there.

In Magill, the plaintiff, John Scott Magill, a Colorado resident, was severely injured when his Ford Fusion collided with another vehicle in Douglas County, Colorado.

Mr. Magill thereafter filed a lawsuit against Ford Motor Company (Ford) in Colorado state court in the District of Denver. Mr. Magill alleged, among other things, that the Ford Fusion's "defective seat and restraint systems" contributed to the severity of his injuries. Mr. Magill contended that Ford—as manufacturer of the Fusion—was liable for his injuries in tort.

In response to Mr. Magill's complaint, Ford filed two motions—a motion to dismiss for lack of personal jurisdiction, and, in the alternative, a motion to transfer venue. The trial court denied both motions, holding that Mr. Magill had sufficiently demonstrated that Ford was "at home" in Colorado such that the company was subject to the general personal jurisdiction of the state, and that venue was proper because, under the applicable statute, Ford was considered to be residing in the same county as its registered agent, Denver County, and that is where the case was filed.

Ford filed a special appeal directly to the Colorado Supreme Court that focused on two issues— whether, in light of the U.S. Supreme Court’s decision in Daimler v. A.G. v. Bauman, Ford was subject to general personal jurisdiction in Colorado; and whether venue was proper.

Reviewing the first issue de novo, the Colorado Supreme Court held that the trial court erred in finding that Ford was subject to general personal jurisdiction in Colorado. In coming to its conclusion, the court relied on Daimler, which recently clarified what level of contacts a nonresident corporation must have with a state to be considered "at home" so as to confer general jurisdiction. In Daimler, the Supreme Court held that despite a Daimler subsidiary having substantial contacts with the forum state—contacts which the Court assumed were imputable to Daimler for the purpose of determining jurisdiction, and which included maintaining regional offices and other facilities there, and generating 10 percent of its national sales and 2.4 percent of its worldwide sales there—Daimler was still not subject to the general jurisdiction of that state. The Court's reason—it is improper to consider a nonresident corporation at home in a state if its contacts "represent a relatively small portion of [its] national or international reach." Put another way, a nonresident corporation will not be subject to a state's general jurisdiction unless its contacts render the forum in some manner equivalent to a principal place of business.

Adopting this reasoning, the Colorado Supreme Court held in Magill that Ford was not subject to the general jurisdiction of Colorado. The Court acknowledged that, by any standard, Ford had substantial contacts with the state. Ford sold vehicles at more than 30 dealerships in Colorado, maintained offices and other facilities there, and even trained mechanics within the state to deal specifically with Colorado consumers. Still, the court was not satisfied that Ford's contacts with the state rose to a level that justified exercising general jurisdiction over it. According to the court, the plaintiff "failed to present any evidence that Ford's contacts with Colorado [were] somehow different or more substantial than its contact with other states where it sells cars." Simply put, the court did not consider Ford "at home" in Colorado.

The court did not, however, go as far as to dismiss the case outright. It instead remanded the case back to the trial court to determine whether the Colorado had specific personal jurisdiction over Ford.

Turning to the second issue raised on appeal, the court held that the trial court abused its discretion by denying Ford's motion to transfer venue.

The trial court found venue to be proper because at least one defendant, Ford, "resided" there. Based on case law from other states, the trial court determined that, for purposes of determining venue, a nonresident corporation resides in the county where its registered agent is located.

The Colorado Supreme Court disagreed. It pointed out that the trial court's reliance on other states' case law was misplaced because, unlike in those states, Colorado does not have a statute specifically defining venue for nonresident corporations. Absent such a statute, the trial court did not have legal grounds for concluding that Ford resided in Denver County merely because its registered agent was located there.

Having concluded that Ford did not reside in Denver County, and noting also that none of the other defendants in the case resided there, the court held that venue was improper. The court remanded the case with instructions for the trial court to transfer it to the appropriate venue.

The court's holding in Magill reflects the increasing reluctance of both state and federal courts to find that states are entitled to exercise general personal jurisdiction over nonresident corporations. To the extent courts do have jurisdiction over nonresident corporations, Magill provides some comfort that, at least in Colorado, venue will not be decided solely based on the county in which the corporation’s registered agent is located.

Ballard Spahr's Product Liability and Mass Tort Group has substantial experience representing automotive companies in a wide range of litigation and counseling matters, including class actions and regulatory compliance.

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