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Supreme Court hears arguments on personal jurisdiction over foreign companies

By Andrea Bottorff

[JURIST] The US Supreme Court [official website; JURIST news archive] heard oral arguments [day call, PDF; merit briefs] Tuesday in J. McIntyre Machinery v. Nicastro [oral arguments transcript, PDF; JURIST report] on the ability of a state, under the Fourteenth Amendment's Due Process Clause [Cornell LII backgrounder], to exercise specific personal jurisdiction over a foreign company that targets the US market and sells its product in the US. The case involves an accident where machinery manufactured by British company and sold in the US by an unaffiliated distributor injured a man in New Jersey. The Supreme Court of New Jersey [official website] held [opinion, text] last year that a foreign manufacturer that targets the US market for sales of its product may be subject to specific personal jurisdiction in state court if the injury in a products-liability case occurs in that state. Counsel for the petitioner argued that New Jersey lacked personal jurisdiction over the company because the company "did not direct any activity at residents of New Jersey either itself or by directing its distributor MMA to do so and had no awareness or knowledge that the distributor took the action that it did toward New Jersey." Counsel for the respondents argued that since the British company purposely availed itself of the entire US market, which included New Jersey, then the company is subject to specific personal jurisdiction in New Jersey.

In Goodyear v. Brown [oral arguments transcript, PDF; JURIST report], the Court heard arguments [day call, PDF; merit briefs] on whether a company is subject to a state's general personal jurisdiction in a products-liability case if it does not have any connections to the state, but where foreign subsidiaries introduced the product to the forum. The case involves the death of two North Carolina youths in France when a tire made in Turkey failed and the bus in which they were riding crashed. The North Carolina Court of Appeals [official website] ruled [opinion, PDF] that the defendants were subject to personal jurisdiction. Counsel for the petitioner argued that finding the foreign company subject to a lawsuit in North Carolina would have widespread consequences for other companies:

Under this Court's cases, the mere sale of a defendant's products in a State does not permit the State to reach out to assert judicial power over all that defendant's worldwide conduct. If that were permissible, every significant seller of products would be subject to suit everywhere on any claim arising anywhere.

Counsel for the respondent argued that the "interdependent relationship" between Goodyear and the foreign companies created a connection to North Carolina based on "continuous and systematic contacts."

Full post as published by JURIST - The Paper Chase on January 12, 2011 (boomark / email).