On June 27, 2011, the Supreme Court
of the United States issued opinions in Goodyear Luxembourg Tires v. Brown,
564 U.S. ___, [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] and J. McIntyre
Machinery, Ltd. v. Nicastro, 564 U.S. [enhanced version / unenhanced version ] ___. Both cases explored limits on the
exercise of personal jurisdiction over foreign companies.
In Goodyear, the Court
addressed whether "foreign subsidiaries of a United States parent
corporation [are] amenable to suit in state court on claims unrelated to any
activity of the subsidiaries in the forum state." The Court concluded that
the Goodyear foreign subsidiary petitioners are not amenable to suit in North
In Nicastro, the Court
considered the question of whether J. McIntyre Machinery, Ltd. (J. McIntyre), a
UK company, is subject to the jurisdiction of New Jersey courts when J.
McIntyre did not market goods in New Jersey or ship them there. A divided
Supreme Court ruled that J. McIntyre is not subject to the jurisdiction of New
Goodyear Luxembourg Tires v. Brown
Respondents, the parents of two
teenagers who died in a bus accident in France, claimed that one of the bus'
tires failed. Respondents filed suit in North Carolina state court against
Goodyear USA and petitioners, various subsidiaries of Goodyear USA including
Goodyear Lastikleri T.A.S. (Goodyear Turkey), Goodyear Luxembourg Tires, SA,
and Goodyear Dunlop Tires France, SA. Petitioners did not "solicit
business in North Carolina," and did not have a "place of business,
employees or bank accounts in North Carolina." Nor did petitioners
"design, manufacture, or advertise their products in North Carolina."
While other Goodyear USA affiliates distributed a small percentage of
petitioners' tires in North Carolina, petitioners claimed and respondents did
not deny that the kind of tire involved in the accident was never distributed
in North Carolina.
The trial court denied petitioners'
motion to dismiss for lack of personal jurisdiction. The North Carolina Court
of Appeals affirmed and held that the exercise of general jurisdiction over
petitioners was proper. The Court of Appeals found that tires manufactured by
petitioners were placed into the "stream of interstate commerce without
any limitation on the extent to which those tires could be sold in North
In a unanimous opinion, the Supreme
Court reversed the judgment of the North Carolina Court of Appeals.
The Court distinguished between
general and specific jurisdiction  and recognized that the exercise of
general, not specific, jurisdiction was at issue in the case. The Court found
that general jurisdiction is proper when "'continuous corporate operations
within a state [are] so substantial and of such a nature as to justify suit
against it on causes of action arising from dealings entirely distinct from
those activities.' "
In their analysis of general
jurisdiction, the North Carolina courts relied on the petitioners' placement of
tires in the "stream of commerce." The Supreme Court, however,
explained that the "[f]low of a manufacturer's products into the forum . .
. may bolster an affiliation germane to specific jurisdiction . . . But
ties serving to bolster the exercise of specific jurisdiction do not warrant a
determination that, based on those ties, the forum has general
jurisdiction over a defendant."
Accordingly, the Court held that
petitioners' attenuated connections to North Carolina "fall far short of
'the continuous and systematic general business contacts' necessary to empower
North Carolina to entertain suit against them on claims unrelated to anything
that connects them to the State." (citation omitted). The Court stated
that "[u]nder the sprawling view of general jurisdiction urged by
respondents 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."
The Court's refusal to adopt the
broad view adopted by the North Carolina Court of Appeals and urged by the
respondents provides important guidance for foreign companies and will
undoubtedly assist in the assessment of litigation risk and the development of
company objectives. Companies can better assess their litigation risk by
proactively evaluating their connections with various forum states and the
likelihood that they will be amenable to suit in a particular forum in light of
the Goodyear decision.
J McIntyre Machinery, Ltd. v.
Nicastro, an employee of Curcio
Scrap Metal, was injured while using a metal-shearing machine. Nicastro sued
the manufacturer of the machine, J. McIntyre Machinery, Ltd. (J. McIntyre), a
company incorporated in the United Kingdom. Nicastro also sued McIntyre
Machinery America, Ltd. (McIntyre America), the exclusive American distributor
for J. McIntyre. McIntyre America and J. McIntyre were distinct corporate
J. McIntyre challenged the exercise
of personal jurisdiction over it by New Jersey courts. The Supreme Court of New
Jersey found that J. McIntyre was properly subject to the jurisdiction of New
The United States Supreme Court
reversed. The Court, however, did not issue a majority opinion. Rather, Justice
Kennedy, joined by Chief Justice Roberts, Justice Scalia and Justice Thomas,
announced the judgment of the Court and delivered the plurality opinion.
Justice Breyer, joined by Justice Alito, issued a concurring opinion. Justice
Ginsburg, joined by Justice Sotomayor and Justice Kagan, dissented.
Justice Kennedy noted that
"[a]s a general rule, the exercise of judicial power is not lawful unless the
defendant 'purposefully avails itself of the privilege of conducting activities
within the forum State, thus invoking the benefits and protections of its
laws.' " (citation omitted). He added, "The defendant's transmission
of goods permits the exercise of jurisdiction only where the defendant can be
said to have targeted the forum; as a general rule, it is not enough that the
defendant might have predicted that its goods will reach the forum state."
Consequently, Justice Kennedy
rejected Justice Brennan's opinion in Asahi which suggested a rule based
on notions of "fairness and foreseeability." Justice Brennan's
opinion contended that " 'jurisdiction premised on the placement of a
product into the stream of commerce [without more] is consistent with the Due
Process Clause,' for '[a]s long as a participant in this process is aware that
the final product is being marketed in the forum State, the possibility of a
lawsuit there cannot come as a surprise.' "
Instead, Justice Kennedy found that
the authority to exercise personal jurisdiction over a defendant depends on
"purposeful availment, consistent with Justice O'Connor's opinion in Asahi."
In Asahi, Justice O'Connor stated, in relevant part, "[t]he
placement of a product into the stream of commerce, without more, is not an act
of the defendant purposefully directed toward the forum State."
Respondent contended that
jurisdiction was proper because, (1) a distributor sold J. McIntyre's machines
in the United States; (2) J. McIntyre officials attended trade shows in various
states (but not New Jersey); and (3) up to four machines ended up in New
Jersey. J. McIntyre, however, had no office in New Jersey and did not pay taxes
or own property in New Jersey. Justice Kennedy concluded that J. McIntyre did
not engage in activities in New Jersey that revealed "an intent to invoke
or benefit from the protection of its laws." Respondent did not establish
that J. McIntyre purposefully directed its conduct at New Jersey.
Justice Breyer's concurring opinion
noted that the "Supreme Court of New Jersey adopted a broad understanding
of the scope of personal jurisdiction . . . " However, Justice Breyer
thought it "unwise to announce a rule of broad applicability without full
consideration of the modern-day consequences." Instead, he indicated that
the outcome of the case is decided by Supreme Court precedents. Accordingly,
Justice Breyer found insufficient contacts to support the exercise of jurisdiction
over J. McIntyre by New Jersey Courts: "None of our precedents finds that
a single isolated sale, even if accompanied by the kind of sales effort
indicated here, is sufficient."
The dissent, authored by Justice
Ginsburg, claimed that this case is an example of common marketing arrangements
for sales in the United States. Justice Ginsburg further explained that
"by engaging McIntyre America to promote and sell its machines in the
United States, [J. McIntyre] 'purposefully availed itself' of the United States
market nationwide, not a market in a single State or a discrete collection of
While the plurality and concurring
opinions in Nicastro may help foreign companies better assess their
litigation risk in the United States, it is important to note that no majority
opinion was rendered in this case. As a result, it is unclear what impact this
decision will have on lower courts' analysis of personal jurisdiction. It will
not be long, however, before courts begin considering Nicastro. On June 28,
2011 the Supreme Court of the United States vacated a judgment in Dow
Chemical Canada ULC v. Fandino, Carlos O., et al., U.S., No. 10-250 [enhanced version / unenhanced version ] , and
remanded the case to the Court of Appeal of California, Second Appellate
District for further evaluation in light of Nicastro. Since six justices voted to
reverse the judgment of the Supreme Court of New Jersey, lower courts may be
more reluctant to expand the exercise of jurisdiction over foreign companies in
situations akin to the facts in Nicastro, but the full impact of Nicastro
remains to be seen.
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 See Client Alert:
Supreme Court to Address Exercise of Personal Jurisdiction Over Foreign
 The Court indicated that specific jurisdiction is proper
when a "corporation's in-state activity is 'continuous and systematic' and
that activity gave rise to the episode-in-suit." Moreover,
"the commission of certain 'single or occasional acts' in a State"
may be enough to exercise specific jurisdiction over a corporation with respect
to those acts, but "not with respect to matters unrelated to the forum connections."
Quoting International Shoe Co. v. Washington, 326 U.S. 310, 317-318
(1945) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] .
 Quoting International Shoe, 326 U.S. at 318. [enhanced
version / unenhanced version ]
 See Client Alert:
Supreme Court to Address Exercise of Personal Jurisdiction Over Foreign
 Quoting Asahi Metal Industry Co. v. Superior Court of
Cal., Solano Cty., 480 U.S. 102, 117 (1987)