The United States Supreme Court did not disturb the concept of General Jurisdiction in Goodyear Dunlop Tires Operations, S.A. et al. v. Brown, et al. In this case, the North Carolina Court of Appeals upheld a lower court decision finding personal jurisdiction over Goodyear USA subsidiaries in Luxembourg, Turkey, and France based on a “stream of commerce” argument. The only contacts that these subsidiaries had with North Carolina were that some of their products were sold – through intermediaries – in the state.
Ginsburg, writing for a unanimous Court, was having none of it. The Court noted that the North Carolina Court of Appeals misapplied the stream of commerce theory, and confused the ideas of “specific” and “general” jurisdiction. Using its prior decisions in Helicopteros, 466 U.S. 408 and Perkins, 342 U.S. 437 as benchmarks the Court found that the selling of “tens of thousands out of tens of millions” tires in North Carolina was not sufficient to exercise general jurisdiction over claims unrelated to the sale of those tires. The sale of such a relatively limited number of tires when compared to Perkins, wherein, a company managed its day to day operations from within Ohio, “fall far short of the ‘continuous and systematic general business contacts,’” that would make them amenable to jurisdiction.
While the Goodyear decision is not surprising, it is the stone that was left unturned that may lead to issues for the defense bar. In dicta, the Court noted the untimely assertion of the “single enterprise” theory in order to exercise jurisdiction. The single enterprise theory is similar to piercing the corporate veil in that the parent and subsidiary, at least for jurisdictional purposes, would be considered a single entity. Therefore, if the parent is subject to jurisdiction so is the subsidiary. The Court did not address this issue but it does highlight a potential new argument for the plaintiff’s bar. Is the single enterprise theory the end-around for exercising general jurisdiction over foreign subsidiaries? What does this mean for product manufacturers with subsidiaries operating in foreign countries? Let us know your thoughts.
In another jurisdictional case, J. McIntyre Machinery, Ltd. v. Nicastro, the United States Supreme Court returned to the hallmark of personal jurisdiction – purposeful availment to the forum state’s jurisdiction. For a more in-depth review and commentary on this decision, see High Court Eases Liability For Foreign-Made Products by Allison Grande. Nicastro’s shift is pertinent to specific jurisdiction, while Goodyear highlights the general jurisdiction concept. However, Nicastro, does leave open jurisdicitional issues relating to modern day advertising and its effect on specific jurisdiction. Additionally, it does raise issues relating to foreign manufacturers selling their products through national campaigns rather than targeting individual states and whether such a campaign could avoid jurisdiction in any one state. Will McIntyre change the way foreign manufactures sell their products? Does it potentially leave U.S. Distributors out to dry? Let us know your thoughts.