18th Annual Workplace Class Action Report - 2022 Edition

620 Annual Workplace Class Action Litigation Report: 2022 Edition Minnesota. The Supreme Courts of Minnesota and Montana both held that their state’s courts had specific jurisdiction over Defendant as its activities had the requisite connection to Plaintiff’s allegations that the defective automobile caused their in-state injury. Defendant challenged these rulings before the U.S. Supreme Court. Defendant admitted that it had purposefully availed itself of the privilege of conducting activities in both States. However, Defendant maintained that jurisdiction was improper because it activities in Montana and Minnesota were insufficiently connected to the suits such that the States lacked specific jurisdiction. Defendant contended that due process requires a causal link locating jurisdiction only in the State where it sold the car in question, or the States where it designed and manufactured the vehicle. As such, because none of these things occurred in Montana or Minnesota, Defendant argued that those States’ courts had no power over these cases. The U.S. Supreme Court rejected Defendant’s argument and determined that when a company like Defendant serves a market for a product in a State and that product causes injury in the State to one of its residents, the State’s courts may entertain the resulting suit. The Supreme Court held that the connection between Plaintiffs’ product liability claims, arising out of car accidents in each Plaintiff’s State, and Defendant’s activities in the forum States was close enough to support specific jurisdiction, even though the cars were manufactured and sold outside the forum States and later resold to Plaintiffs, since Defendant had advertised, sold, and serviced those car models in both States for many years. In so ruling, the Supreme Court held that Defendant’s demand for an “exclusively causal connection test” as to specific jurisdiction was inconsistent with the Supreme Court’s precedents, under which specific jurisdiction attached when a company served a market in the forum State and the product malfunctioned there. Id . at 1026. Further, the Supreme Court held that in conducting so much business in the forum States, Defendant had enjoyed the benefit and protection of their laws, which created a reciprocal obligation that the car models it marketed there be safe for their citizens to use. In sum, the Supreme Court determined that the connection between Plaintiffs’ claims and Defendant’s activities in those States was close enough to support specific jurisdiction. In Re Toyota Hybrid Brake Litigation, 2021 U.S. Dist. LEXIS 124918 ( E.D. Tex. July 6, 2021). Plaintiff brought a putative class action alleging that Defendants Toyota Motor Sales, U.S.A., Inc. ("TMS"), Toyota Motor North America, Inc. ("TMNA"), Toyota Engineering & Manufacturing North America, Inc. ("TEMNA"), and Toyota Motor Corp. ("TMC"), improperly designed and manufactured a part that led to braking failures in certain vehicles. Defendant TMC moved to dismiss pursuant to Rule 12(b)(2), on the grounds that the Court lacked personal and specific jurisdiction over TMC. The Court granted TMC’s motion in part and denied the motion in part. Specifically, the Court granted Defendant’s motion to dismiss as to the non-Texas Plaintiffs’ claim, but denied the motion as to Texas-based Plaintiffs. As to their claims, Plaintiffs contended that TMC had established sufficient minimum contacts with Texas in three ways by: (i) conducting business activities through its subsidiaries as its alter egos; (ii) conducting business activities in conjunction with its subsidiaries as its agents; and (ii) casting itself into the stream of commerce through distribution of Toyota vehicles in the United States. In sum, the Court found that Plaintiffs had not established sufficient minimum contacts through it alter-ego or agency theories. However, after analyzing the relationship among TMC, Texas, and the causes of action that Plaintiffs pleaded, the Court found that two claims, i.e. , those of the Texas Plaintiffs alleging that TMC violated the Deceptive Trade Practices Consumer Protection Act (“DTCPA”) in Count II, and committing fraud by concealment in Count V, arose out of or were related to TMC’s contacts with Texas. Thus, as to those claims the Court found that Plaintiffs had established that the Court had jurisdiction over TMC through the stream-of- commerce theory of specific jurisdiction. However, the Court found that with respect to the claims of the non- Texas Plaintiffs, the claims did not rise out of or relate to TMC’s contacts with Texas. Therefore, the Court dismissed the claims of non-Texas Plaintiffs. Since Plaintiffs had shown TMC to have minimum contacts with Texas in this litigation, the Court considered whether TMC demonstrated that asserting jurisdiction over it would offend traditional notions of fair play and substantial justice. Considering the relevant factors in light of the steep burden TMC faced, the Court held that TMC had not made out a compelling case that the exercise of jurisdiction over it was unreasonable. The Court concluded that Texas had several interests in adjudicating actions, including that Texas had a strong interest in providing a forum for litigation when a product, such as the Class Vehicles, allegedly caused economic injury within the state. Even more broadly, the Court opined that Texas also had a general, manifest interest in providing effective means of redress for its residents. Finally, even though the Court did not possess specific jurisdiction over the remaining Counts I, III, IV, and VI, which were predicated on the contracts that the Texas-based Plaintiffs entered into upon purchasing the vehicles, the Court decided to exercise pendent personal jurisdiction over TMC as to these claims. In sum, at this stage of the