This article first appeared in the May 2012 issue of the Newsletter of the North American Regional Forum of the
Legal Practice Division of the International Bar Association (Vol 3 No 1), and is reproduced by kind permission
of the International Bar Association, London, UK. © International Bar Association.
THE SUPREME COURT REINS IN STATES’ AGGRESSIVE ASSERTION OF PERSONAL JURISDICTION
The Supreme Court reins in
states’ aggressive assertion
of personal jurisdiction
Timothy
Goodson
+NOBBE-ARTENS
/LSON"EAR
San Francisco
timothy.goodson@
kmob.com
Irfan Lateef
Introduction
In an era when even modest sized companies
routinely reach across national borders to
market their products and services, it seems
anachronistic to focus on a defendant’s
activities or ‘presence’ within a particular
state to determine whether it can be sued
there. Yet the US constitutional doctrine of
personal jurisdiction does just that. Personal
jurisdiction can be established in two ways:
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jurisdiction even for claims unrelated to the
defendant’s forum-related activities; and
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degree of forum-related activities but only
confers jurisdiction for claims stemming
from those forum-related activities.
Two recent decisions from the US Supreme
Court clarify the scope of these two prongs of
personal jurisdiction. The Court’s fractured
decision on specific jurisdiction portends
further development in the lower courts
and perhaps the Supreme Court as the
courts struggle with how to apply a timeworn
constitutional doctrine to the modern context
of global commerce.
General jurisdiction: Goodyear Dunlop
Tires Operations, SA v Brown
In Goodyear, two 13-year-old boys from North
Carolina died from injuries sustained in a
bus crash outside Paris. Their parents sued in
North Carolina for wrongful death, claiming
that the bus tires were defective.1 The
defendants in the case were Goodyear Tire
and Rubber Company, based in Ohio, and
three of its subsidiaries that manufacture tires
for the European and Asian markets.2 The
three foreign subsidiaries moved to dismiss
for lack of jurisdiction. The North Carolina
courts held that, because the subsidiaries
sold tires that eventually were sold into North
Carolina, the foreign subsidiaries were subject
to jurisdiction in North Carolina.3
The US Supreme Court unanimously
reversed, holding that the three foreign
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subsidiaries were not subject to jurisdiction in
North Carolina.4 Justice Ginsberg’s decision
criticised the North Carolina courts’ opinions
for improperly blending the concepts of
specific and general jurisdiction.5 The fact
that a small percentage of the products of
the foreign subsidiaries passed into North
Carolina through the stream of commerce
was not enough, by itself, to subject these
entities to general jurisdiction in that state.6
To establish general jurisdiction, a plaintiff
must show that the defendant’s operations
in the forum state are so substantial that the
defendant can be considered ‘at home’ in the
forum state.7
Goodyear demonstrates that constitutional
due process requires personal jurisdiction
to be founded on specific or general
jurisdiction, not a hybrid of the two.
Specific jurisdiction: J McIntyre Machinery,
Ltd v Nicastro
In Nicastro, an industrial scrap metal machine
manufactured by an English company, J
McIntyre Machinery, Ltd, severed four
fingers from the hand of an operator in New
Jersey. The operator sued in New Jersey on a
products liability theory.8 J McIntyre moved
to dismiss for lack of jurisdiction, arguing
that it manufactured the machine abroad and
did not sell the machine directly into New
Jersey. The plaintiff argued that J McIntyre
was subject to jurisdiction because it regularly
sent employees to US trade shows and had
engaged a distributor to sell its products
throughout the US. The New Jersey courts
held that jurisdiction was appropriate because
J McIntyre knew or should have known that
its products might be distributed throughout
the United States.9 In a 6-3 decision, the
US Supreme Court reversed and held that
J McIntyre was not subject to jurisdiction in
New Jersey.
Justice Kennedy wrote the plurality opinion.
According to that opinion, merely placing a
product in the stream of commerce with the
knowledge that it might be sold in any of the
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+NOBBE-ARTENS
/LSON"EAR
San Francisco
irfan.lateef@kmob.com
THE SUPREME COURT REINS IN STATES’ AGGRESSIVE ASSERTION OF PERSONAL JURISDICTION
50 states is insufficient, by itself, to support
specific jurisdiction in any state where the
product is sold. Rather, the general rule is that
a defendant must purposefully avail itself of
the privilege of conducting activities within the
forum state.10 Thus, a defendant’s distribution
of its product permits jurisdiction only where
the defendant ‘targeted’ the forum or sought
to serve the market in the forum.11
Justice Breyer’s concurring opinion agreed
that jurisdiction was not appropriate in this
case, but he cautioned that the Court should
not commit to broad rules that may not apply
to the realities of modern commerce. For
example, Justice Breyer asked, what does it
mean to ‘target’ a forum in the context of
selling products from a website? And would
it matter if the products are sold through an
intermediary, such as Amazon.com?12
Justice Ginsburg wrote the dissenting
opinion, which argued that the majority’s
decision ‘turn[ed] the clock back’ on the
Supreme Court’s precedents by allowing a
foreign manufacturer to avoid jurisdiction by
having an independent distributor market
its products.13 Justice Ginsburg and the other
dissenters would have held that J McIntyre
purposefully availed itself of the US market
and that it undermines fundamental fairness
to allow them to escape accountability.14
Nicastro shows that the justices have differing
views on whether a defendant’s intent to
serve the entire US market confers specific
jurisdiction in a particular state. The divisions
in the Court’s opinion will leave room for
further development as the lower courts apply
this precedent to other circumstances, such
as the e-commerce context foretold by Justice
Breyer’s concurrence.
Conclusion
It is noteworthy for multinational companies
that in both of these cases, because the
US activities were conducted by separate
corporations, the foreign entities were outside
the jurisdiction of the US court in which they
were sued. Thus, the cases illustrate a benefit
of structuring corporate divisions along
national or regional boundaries.
The unanimity of the decision in Goodyear
makes it the more impactful of these two
cases. For example, Goodyear’s statement
that a defendant must be ‘at home’ in the
forum suggests a need for an actual physical
presence, and therefore casts doubt on
decisions in which lower courts found general
jurisdiction by virtue of regular business
contacts in the forum via the internet.15
The lack of a majority opinion in Nicastro
has caused some courts to treat the plurality
opinion as the governing standard for specific
jurisdiction.16 Other courts have reasoned
that the narrowest reason for supporting
the judgment represents the holding.17 Still
others have simply continued to apply other
precedents because Nicastro did not arrive
at ‘a majority consensus on a singular test’.18
While the immediate impact of Nicastro is
unclear, the diverging views of the justices
and the recurring nature of these issues in
our modern economy make it likely that the
Supreme Court will have another opportunity
to clarify the standard for specific jurisdiction.
Notes
1 Goodyear Dunlop Tires Operations, SA v Brown, Case No 1076, Slip Op at 1, 3–4 (27 June 2011).
2 Ibid, at 1, 4.
3 Ibid, at 5.
4 Ibid, at 3.
5 Ibid, at 10.
6 Ibid, at 13.
7 Ibid, at 7, 13.
8 J McIntyre Machinery, Ltd v Nicastro, Case No 09-1343, Slip
Op at 2 (27 June 2011) (Kennedy, J).
9 Ibid, at 3–4.
10 Ibid, at 2.
11 Ibid, at 7.
12 J McIntyre Machinery, Ltd v Nicastro, Case No 09-1343, Slip
Op at 4 (27 June 2011) (Breyer, J, concurring).
13 J McIntyre Machinery, Ltd v Nicastro, Case No 09-1343, Slip
Op at 2 (27 June 2011) (Ginsburg, J, dissenting).
14 Ibid, at 14.
15 Megan M La Belle, ‘The Future of Internet-Related
Personal Jurisdiction After Goodyear Dunlap Tires v.
Brown and J. McIntyre v. Nicastro,’ 15 No 7 J Internet Law
3, 7–8 (2012) (discussing Gator.com Corp v LL Bean, Inc,
341 F.3d 1072 (9th Cir 2003) and Gorman v Ameritrade
Holding Corp, 293 F.3d 506 (DC Cir 2002)).
16 Keranos LLC v Analog Devices, Inc, 2011 WL 4027427, at *10
(ED Tex 12 September 2011).
17 Windsor v Spinner Industry Co, 2011 WL 5005199, at *4 (D
Md 20 October 2011).
18 Lindsey v Cargotec USA, Inc, 2011 WL 4587583, at *7 (WD
Ky 30 September 2011).
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