Goodyear and McIntyre: Two Supreme Court Decisions Refocus Personal Jurisdiction Inquiry for Foreign Manufacturers of Goods Sold in the United States
On June 27, 2011, the United States Supreme Court decided two significant product liability cases, both weighing on the question of when a state court may exercise personal jurisdiction over a foreign manufacturer. In these two decisions, the Court expressed its intention to rein in these unrestricted views of personal jurisdiction, and to reassert constitutional limits to the exercise of jurisdiction.
Personal Jurisdiction: General v. Specific
In both Goodyear Dunlop Tires Operations, S.A. v. Brown, No. 10-76 and J. McIntyre Machinery, Ltd. v. Nicastro, No. 09-1343, the Court examined the distinction between general personal jurisdiction and specific personal jurisdiction, noting the importance that the standards for each type of personal jurisdiction be applied separately, and not conflated.
- General personal jurisdiction (i.e., jurisdiction over an entity in any matter, regardless of a nexus between the claims at issue and in-state contacts – "all purpose" jurisdiction) must be supported by an affiliation between a defendant and the forum state that is "so 'continuous and systematic' as to render them at home in the forum State." Goodyear, No. 10-76, citing International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945).
- Specific personal jurisdiction ("case-specific" jurisdiction), in contrast, permits jurisdiction over an entity that does not have a "continuous and systematic" affiliation with the forum state, but only where there is a specific link between the claims at issue and activities or occurrences within the forum state. Specific personal jurisdiction must also be supported by adequate contacts between the defendant and the state to comport with the Due Process Clause of the Fourteenth Amendment to the United States Constitution.
In Goodyear and McIntyre, the Court stressed that the test for sustaining specific personal jurisdiction is purposeful availment of the protections of a state. While the foreseeability of a product's eventual sale within a particular state, and/or the manufacturer's conduct in putting the product into the "stream of commerce" are both factors in considering the existence of personal jurisdiction, neither is controlling.
In Goodyear Dunlop Tires Operations, S.A. v. Brown, No. 10-76, the Court considered a case in which Goodyear subsidiaries operating in Turkey, France and Luxembourg had manufactured tires alleged to be responsible for a bus accident in France that killed two children from North Carolina. Though some of the subsidiaries' products had been sold in North Carolina through Goodyear U.S. distributors, there was no nexus between these North Carolina sales and the accident in France. Therefore, specific personal jurisdiction was lacking. Furthermore, the sale of a small number of products in North Carolina was inadequate to constitute the sort of "continuous and systematic" contacts necessary to support general personal jurisdiction.
The Court cautioned that concepts of specific jurisdiction should not be imported into the general jurisdictional inquiry, and held that the mere insertion of a product into the "stream" of U.S. commerce is, without more, insufficient to support general jurisdiction. The Court therefore held unanimously that the subsidiaries were not properly subject to the jurisdiction of North Carolina courts with respect to the bus accident.
In J. McIntyre Machinery, Ltd. v. Nicastro, No. 09-1343,1 the Court considered a case in which a New Jersey plaintiff had injured himself while using a metal-shearing machine manufactured by J. McIntyre Machinery, Ltd., a British company. The machine was sold to the plaintiff's employer by an Ohio distributer for J. McIntyre. While J. McIntyre held a U.S. patent for the machine at issue, and directed its distributor with regard to U.S. advertising and sales, the Court held that, because J. McIntyre did not engage in activities demonstrating its purposeful availment of the protection of New Jersey laws, the state court lacked personal jurisdiction over it.
The holding demonstrates that a foreign company must direct its marketing intent to a particular state with some specificity in order to become susceptible to that state's jurisdiction. While J. McIntyre's direction of its business toward the United States generally was clearly purposeful, continuous and systematic, it was none of those things with regard specifically to New Jersey. A majority of justices rejected the notion, increasingly held by state courts in the U.S., that a manufacturer's insertion of a product into the general stream of U.S. commerce, coupled with foreseeability that the product would find its way to the forum state, is enough to support general jurisdiction. In place of this increasing reliance upon foreseeability in the jurisdictional inquiry, the Court reminded state and federal courts that general jurisdiction turns on a defendant's actions – not its expectations.
The plurality decisions in McIntyre leave unclear precisely how much state-specific targeting is required to support general jurisdiction. However, the McIntyre majority coalesced around the holding that general jurisdiction cannot be founded upon generalized targeting of the U.S. market alone, and will not exist absent some degree of specific targeting of the specific forum state – regardless of how foreseeable it may be that the product may move through the stream of U.S. commerce into the forum state. The plurality decisions expressly acknowledged that some foreign defendants who target the U.S. market generally, without specifically focusing upon individual state markets, may fall outside the scope of this jurisdictional inquiry.
Although the practical impact of Goodyear and McIntyre are not yet clear, they are instructive to parties that engage in international transactions and commerce because they mark the first decisions by the Supreme Court on the parameters of personal jurisdiction in more than 20 years. These decisions provide important guidance on constitutional boundaries that have become blurred by increasingly expansive views of general personal jurisdiction.
1 Notably, the Court's decision in this case was issued as a plurality, rather than majority, opinion – the lead opinion was joined by four justices, concurred with by two and disagreed with by three. As a result, the opinion does not have the full precedential weight of an opinion ascribed to by a judicial majority of five or more justices.