The determination of the reasonableness of the exercise of jurisdiction in each case will depend on an evaluation of several factors. A court must consider the burden on the defendant, the interests of the forum state, and the plaintiff's interest in obtaining relief. It must also weigh in its determination the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several states in furthering fundamental substantive social policies.
A Japanese company manufactures tire valve assemblies in Japan and sells them to several tire manufacturers, including a Taiwanese company. The sales to the Taiwanese company, which amounted to at least 100,000 units annually from 1978 to 1982, took place in Taiwan. The Taiwanese company incorporates the assemblies into its finished tires, which it sells throughout the world, including the United States, where 20% of its sales takes place in California. In 1978, in Solano County, California, the driver of a motorcycle lost control of his vehicle and collided with a tractor, as a result of which he was severely injured and his passenger, who was his wife, was killed. He filed a product liability action in the Superior Court of California for Solano County against the Taiwanese company, among others, alleging that the accident was caused by a sudden loss of air and an explosion in the rear tire of the motorcycle, and that the motorcycle tire, tube, and sealant were defective. The Taiwanese company filed a cross-complaint seeking indemnification from, among others, the Japanese company. The motorcycle driver settled his claims against the Taiwanese company and the other defendants, leaving only the Taiwanese company's indemnity action against the Japanese company. The Japanese company moved to quash the Taiwanese company's service of summons, claiming that the state could not exert jurisdiction over it consistent with the due process clause of the Fourteenth Amendment of the Federal Constitution. In affidavits submitted in connection with the motion to quash, it appeared that while the Japanese company was fully aware that tire valve assemblies it sold to the Taiwanese company would end up throughout the United States and in California, the Japanese company never contemplated that its limited sales to the Taiwanese company in Taiwan would subject the Japanese company to lawsuits in California. The Superior Court denied the motion to quash summons, but on appeal, the Court of Appeal of California issued commanded the Superior Court to quash service of summons. The Supreme Court of California reversed, finding the exercise of jurisdiction over the Japanese company consistent with the due process clause. The case was elevated on certiorari to the Supreme Court of the United States.
Could the court exercise jurisdiction over the Japanese company consistent with the due process clause?
The Court held that the state's exercise of personal jurisdiction over the Japanese company was unreasonable and unfair, so as to violate the due process clause of the Fourteenth Amendment. The mere fact that petitioner knew that some of its component parts would be used in products that would be sold in the state did not provide the necessary minimum contacts for the state to exercise personal jurisdiction over petitioner, since petitioner did nothing to purposely avail itself of the privilege of conducting activities in the state. Therefore, since there were no minimum contacts, the state was estopped by Fourteenth Amendment due process from exercising personal jurisdiction over petitioner.