Attorneys & Counselors At Law

Recent U.S. Supreme Court Decisions Favor the “No Personal Jurisdiction” Defense

Two cases decided by the U.S. Supreme Court on June 27, 2011 suggest renewed vitality in the time-honored defense of lack of personal (or in personam) jurisdiction.  The state of the law in this area has been in flux for decades since the Court’s split decision in Asahi Metal Industry, Ltd. v. Superior Court of  California, 480 U.S. 102 (1987), which did not have even a plurality opinion. In J. McIntyre Machinery, Ltd. v. Nicastro, __U.S. __, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011), a 6-3 decision, the Court re-focused the personal jurisdiction analysis onto the manifested intent of the defendant to subject itself to the jurisdiction of the state court.  Justice Breyer concurred in the judgment, and was joined by Justice Alito in arguing that the rule should be limited to the question of “purposeful availment,” and should not rely so heavily on manifested intent.  The effect of this decision was to overturn the New Jersey Supreme Court’s finding of personal jurisdiction over a British manufacturer whose goods were sold through an independent distributor in the United States. 

In Goodyear Dunlop Tires Operations, S.A. v. Brown, ___U.S.___, 131 S. Ct. 2846, 180 L.Ed.2d 796 (2011), a 9-0 Supreme Court determined that a “stream of commerce” test is not applicable to the general personal jurisdictional analysis.  The Court found that foreign subsidiaries of an American parent corporation are not amenable to suit in a state court on claims unrelated to the activity of the subsidiary in the forum.  The case was sued out in North Carolina seeking damages for a bus crash that occurred in France.  The Court overruled the North Carolina Court of Appeals’ decision which found that, because some of the tires that were manufactured abroad by a foreign subsidiary of the defendant found their way to North Carolina through the “stream of commerce,” the state had general personal jurisdiction over the foreign subsidiary.  In doing so, the Court refused to accept the stream-of-commerce theory of general jurisdiction, and limited that analysis to the specific jurisdiction inquiry. 

W & E is often retained to represent out-of-state corporations and business interests who are sued in Iowa.  Our lawyers have argued and won the personal jurisdiction defense in many cases over the years. After Asahi Metal Industry, some courts held that placing a product into the “stream of commerce” was all that need be shown in order to establish sufficient minimum contacts to support a constitutional exercise of in personam jurisdiction.  However, after J. McIntyre Machinery and Goodyear Dunlop, it is now clear that something in addition to “stream of commerce” must be shown—so-called “stream of commerce plus”—and that a further showing is a manifested intent on the part of the defendant to subject itself to the jurisdiction of the forum state, similar or comparable to the “purposeful availment” test of prior cases.  The net effect of both McIntyre and Goodyear Dunlop should be to add considerable strength to the personal jurisdiction defense in an appropriate case.  In some situations, especially where the applicable statute of limitations has run, winning this argument may result in a complete dismissal of the case.  Contact W & E Products Liability Practice Group Chair Kevin Reynolds at Reynolds@whitfieldlaw.com for more information.