Update on Jurisdiction Cases Pending in Supreme Court
We alerted readers recently that the Supreme Court had granted review in two product liability cases that raise cutting edge personal jurisdiction issues that may not only impact foreign manufacturers but and may also alter due process/personal jurisdiction jurisprudence generally. See J. McIntyre Machinery Ltd. v. Nicastro, U.S., No. 09-1343 (certiorari petition granted 9/28/10); Goodyear Luxembourg Tires SA v. Brown, U.S., No. 10-76 (certiorari petition granted 9/28/10).
Personal jurisdiction, of course, addresses the reach of the court’s power over a party, and without such jurisdiction, any ruling by the court is not binding on the party. Plaintiff lawyers focus on personal jurisdiction as part of the equation where they can sue; defendants as part of where they can be sued properly. As a very general matter, a defendant can only be sued where it has sufficient minimum contacts with the state such that a suit there does not offend traditional notions of fair play and substantial justice.
The issue framed in Nicastro is: Whether, consistent with the Due Process Clause and pursuant to the stream-of-commerce theory, a state may exercise in personam jurisdiction over a foreign manufacturer when the manufacturer targets the general, overall U.S. market for the sale of its product and that product is purchased by a forum state consumer. The corresponding issue in Brown is: Whether a foreign corporation is subject to general personal jurisdiction, on causes of action not arising out of or related to any contacts between it and the forum state, merely because other entities distribute in the forum state products placed in the stream of commerce by the defendant.
"Stream of commerce" personal jurisdiction, debated frequently in the lower courts, if recognized by the Supreme Court, might allow any state to assume jurisdiction over any product manufacturer whose product found its way into the state, no matter how many independent, separate distributors the product had passed through in separate legal transactions. The original stream of commerce idea had included the element of a manufacturer's expectation that its products will be purchased in the specific forum state. Many foreign and out-of-state manufacturers reasonably should know that their products are distributed through a system that might result in sales in any given state. Should that be enough? Readers may recall that the Supreme Court took a look at "stream of commerce" jurisdiction over 20 years ago, and split with no majority decision. But a plurality rejected the "stream of commerce" concept in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987).
The foreign companies appealing the two state court rulings in two product liability cases recently filed merits briefs. See J. McIntyre Machinery Ltd. v. Nicastro, No. 09-1343 (U.S. brief submitted 11/12/10); Goodyear Luxembourg Tires SA v. Brown, No. 10-76 (U.S. brief submitted 11/12/10). There's a link to the Goodyear brief from the ABA Supreme Court Preview, and the McIntyre brief. Also, amici curiae filed briefs, including PLAC, Dow Chemical Canada ULC, the former ATLA now know as American Association for Justice, the Chamber of Commerce of the United States of America, and the Organization for International Investment and Association of International Automobile Manufacturers Inc.
In the NJ case, the defendant asks how a “new reality” of “a contemporary international economy” permits a state to exercise in personam jurisdiction over a foreign manufacturer pursuant to the stream of commerce theory solely because the manufacturer targets the US market for the sale of its product and the product is purchased by a forum state consumer? The petitioner argues that the analysis in Justice O’Connor’s concurring opinion in Asahi is the better view; first, it embodies the requirement of active engagement, of personal agency, that the Supreme Court has made the centerpiece of its formulations of personal jurisdiction limits under the Constitution. Second, it avoids the subjectivity that inheres in the test of mere awareness advanced by
Justice Brennan on the other side of the Asahi split. A concrete formulation is especially valuable in giving out-of-state actors the fair notice that the Court has deemed essential in allowing persons to conform their behavior to avoid, if they choose, the possibility of being haled into the courts of a state. A defendant must intentionally act and direct that action at, and sufficiently in, the very state that seeks to exercise power over that person. Only through purposeful availment a producer will have a fair opportunity to conform its conduct so as to avoid state power if the producer chooses. To predicate jurisdiction on anything less leads to a rule where every seller of chattels would in effect appoint the chattel his agent for service of process and his amenability to suit would travel with the chattel.
The Goodyear brief notes that, unlike specific jurisdiction—which inherently must adapt to the permutations raised by varying claims—general jurisdiction, which does not vary from claim to claim, is more susceptible to precise rules. Indeed, one of its primary functions is to provide a certain and predictable place where a person can be reached by those having claims against him. No Supreme Court decisions have held that a manufacturer’s mere participation in the stream of
commerce could create general jurisdiction wherever the manufacturer’s products were distributed. To the contrary, most courts have repeatedly indicated that injecting a product, even in substantial volume, into a forum’s stream of commerce, without more, does not support general jurisdiction. General jurisdiction based on the stream of commerce theory violates traditional notions of fair play and substantial justice because essentially universal jurisdiction would exist in every state’s courts over every significant seller of goods, foreign or domestic. Because general jurisdiction must be justified solely by reference to the relationship between the state and the defendant, that relationship must be so significant — sufficiently substantial and of such a nature — as to give the state a basis for global judicial authority over all of the defendant’s conduct, wherever it occurs.
The Supreme Court has set argument in the two cases for Jan. 11, 2011. They will be argued separately.
