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    The Lawletter Blog

    CIVIL PROCEDURE: Supreme Court Rejects General Jurisdiction over Nonresident Defendants Under "Stream of Commerce" Theory

    Posted by Noel King on Wed, Sep 28, 2011 @ 13:09 PM

    The Lawletter Vol 36 No 2, September 30, 2011

    Paul Ferrer, Senior Attorney, National Legal Research Group

    The Due Process Clause of the Fourteenth Amendment sets the outer boundaries of a state court's authority to assert personal jurisdiction over a nonresident defendant.  The canonical decision in this area remains International Shoe Co. v. Washington, 326 U.S. 310 (1945).  International Shoe and its progeny have classified cases involving out-of-state corporate defendants into two categories, which have come to be known as "general or all-purpose jurisdiction" and "specific or case-linked jurisdiction."  Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011).  A court may assert general jurisdiction over foreign corporations to hear any and all claims against them "when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State," without regard to whether the claims arise out of the corporations' contacts with the State.  Id. (quoting Int'l Shoe, 326 U.S. at 317).  The paradigm bases for the exercise of general jurisdiction over a foreign corporation are domicile, place of incorporation, and principal place of business.  See id. at 2854.  In contrast to general jurisdiction, specific jurisdiction is confined to adjudication of issues arising from or related to the very controversy that establishes jurisdiction.  See id. at 2851.  For example, many states have enacted long-arm statutes authorizing their courts to exercise specific jurisdiction over out-of-state manufacturers whose products caused injury in the forum state, where the suit arose out of that injury.  See id. at 2855.

    This, however, was not the situation presented in Goodyear, a case in which an action was filed in North Carolina against foreign tire manufacturers to recover for fatal injuries suffered in France by North Carolina residents in a bus accident allegedly caused by faulty tires.  The North Carolina Court of Appeals nevertheless ruled that the trial court properly exercised general jurisdiction over the foreign corporations because some of the tires they manufactured abroad had reached North Carolina through the stream of interstate and foreign commerce, even though the manufacturers themselves had not taken any affirmative action to cause their tires to be shipped into North Carolina.  But the U.S. Supreme Court rejected this "stream of commerce" theory, finding it too slender a reed on which to base an assertion of general jurisdiction.  Indeed, "[u]nder the sprawling view of general jurisdiction urged by [the plaintiffs] and embraced by the North Carolina Court of Appeals, any substantial manufacturer or seller of goods would be amenable to suit, on any claim for relief, wherever its products are distributed."  Id. at 2856.  Thus, "the sales of [the defendants'] tires sporadically made in North Carolina through intermediaries" were insufficient to support the exercise of general jurisdiction over the foreign tire manufacturers.  Id.  By contrast, the "[f]low of a manufacturer's products into the forum . . . may bolster an affiliation germane to specific jurisdiction," where the allegedly defective products were the source of the plaintiff's injury.  Id. at 2855.  Because that was not the case in Goodyear, the North Carolina courts could not entertain suit against the manufacturers on "claims unrelated to anything that connects them to the State."  Id. at 2857.

    Topics: legal research, Paul Ferrer, Due Process Clause, Fourteenth Amendment, general jurisdiction, specific jurisdiction, stream of commerce theory, out-of-state categories, Goodyear Dunlop Tires Operations v. Brown, claims unrelated to domicile, place of incorporation, principal place of business, U.S. Supreme court, civil procedure, The Lawletter Vol 36No 2

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