Clarifying personal jurisdiction . . . or not

The Supreme Court on Monday handed down its first decisions on personal jurisdiction since 1990. In Goodyear Dunlop Tires Operations v. Brown, the Court unanimously held that there was no general jurisdiction over a non-U.S. subsidiary in North Carolina based only on the subsidiary's products being sold in the state. In J. McIntyre Machinery Ltd. v. Nicastro, a divided Court (with no majority) held that a non-U.S. company is not subject to jurisdiction in New Jersey on any stream-of-commerce theory where it sold its products to a distributor in Ohio and never entered, advertised, or sold its products in New Jersey itself.

Thoughts (probably too many of them) after the jump.

1) Goodyear clarifies, in very stark terms, the differences between general and specific jurisdiciton. General jurisdiction is a place in which a defendant is "fairly regarded as at home." The paradigm of general jurisdiction is an individual's domicile, a business' place of incorporation, and a business' principal place of business. The textbook example is a 1952 case, in which the Court found jurisdiction in Ohio over a Philippines corporation that had ceased all activities there during the Japanese occupation during World War II and was operating entirely out of offices in Ohio during the duration of the War. The foreign subsidiaries were "in no sense at home in North Carolina."

Importantly, the Court seems to have rejected or at least narrowed general "doing business" jurisdiction, in which an entity is subject to general jurisdiction in any state in which it does continuous, systematic, and substantial business. The Court rejected the lower court's "sprawling view" of general jurisdiction under which "any substantial manufacturer or seller of goods would be amenable to suit, on any claim for relief, wherever its products are distributed." More is required than simply doing a lot of business in the state. At the very least, the company must have formally registered to do business in the state, have offices or plants or stores in the state, have agents in the state, etc. But the case could be read as suggesting that even this is not enough. Certainly those examples are not as continuous, systematic, and substantial as the paradigms of domicile, place of incorporation, and principal place of business, nor is it the same as having the home office in the state, as in Perkins.

The opinion signals to lower courts that simply doing even a lot continuous business in a state is not sufficient for general jurisdiction. But it remains to be seen what lower courts, which have over-expanded the concept, do with that signal.

2) The Court granted cert in McIntyre to resolve a question that had been left open 25 years ago in Asahi: whether putting a product into the stream of commerce expecting it to reach a particular state was sufficient purposeful availment or whether the defendant must somehow "target" the forum (through some "plus" activities). As we all remember from 1L, the Asahi Court divided 4-4-1 on that question, with Justice O'Connor arguing that something more is required and Justice Brennan arguing that placing the product into the stream of commerce was enough. Twenty-five years later, still no resolution. Four justices, lead by Justice Kennedy, emphatically rejected the Brennan view. Kennedy insisted that the defendant's actions, not his expectations, empowered the courts of a state to hear a case; only if a defendant took some actions directed towards a state could it be subject to a court's authority.

But we still do not have a majority view on the question. Justice Breyer concurred in the judgment, joined by Justice Alito, to again punt the question. Fearing the rapid changes to commerce and communication, Breyer thought it "unwise to announce a rule of broad applicability without full consideration of the modern-day consequences." There was no jurisdiction here even under a stream-of-commerce theory, therefore no reason to resolve the bigger question. Especially when the question looms for cases involving web sites, pop-up ads, and Amazon. At the very least, Adam Steinman argues, Justice Breyer's opinion suggests the Court is not going to wait another twenty years before wading back into personal jurisdiction and perhaps trying to create a more-modern framework; it just needs the right (read: internet-centered) case.

3) McIntyre in particular marks a shift in the rhetoric of personal jurisdiction. Justice Kennedy repeatedly talks about personal jurisdiction in structural terms of judicial power, sovereign authority, and submission by the defendant (through his acts) to the power of the sovereign, and the invalidity of a "judgment rendered in the absence of authority." In other words, making jurisdiction over the person sound like jurisdiction over the subject matter. This trumps the concerns for fairness and foreseeability that, according to the Court, lie at the heart of Justice Brennan's stream-of-commerce theory in Asahi. As Kennedy says, "[f]reeform notions of fundamental fairness divorced from traditional practice cannot transform a judgment rendered in the absence of authority."

Justice Ginsburg (properly, in my view) calls the plurality on this, insisting that "the constitutional limits on a state court's adjudicatory authority derive from considerations of due process, not state sovereignty." Indeed, one would have thought that was the idea behind International Shoe, which rejected presence and implied consent as legal fictions. Due process is supposed to be about fundamental fairness, a focus on individual liberty rather than root structural authority. A defendant's minimum contacts are not important because it means it consents to suit there, but because the contacts make it foreseeable and fair that, in the main, it could be sued there because of those contacts.

4) The disturbing part of McIntyre is less the academic/esoteric stream-of-commerce debate than the finding of no jurisdiction in this case. McIntyre Machinery is a British company that sought to sell its machines throughout the United States by selling them on consignment to an Ohio distributor with the hope that the distributor would sell throughout the U.S., of which New Jersey is a part (all jokes aside). Six justices viewed this as sufficient to establish minimum contacts with the United States, but not with New Jersey, with the latter being necessary for jurisdiction in state court or in the absence of a federal statute (more on that below). Personal jurisdiction is sovereign-specific, thus the question of personal jurisdiction in the United States was different than personal jurisdiction in any one state).

Justice Ginsburg rejected the idea that a defendant should be permitted to avoid jurisdiction in a state where one of its products caused serious harm simply because it worked through a single national or regional intermediary, as opposed to selling directly in the state or having a distributor in each state. For Ginsburg, intent to serve the entire United States means intent to serve every state in the United States, at least where the intent is to sell everywhere in the country (as opposed to telling the distributor to avoid a certain state or only to focus on certain places other than the forum). She further supports the point by including an appendix summarizing lower-court decisions finding jurisdiction over a manufacturer who worked through national or regional distributors.

5) The plurality and concurrence both ignore the second part of the personal jurisdiction analysis, which causes both to take a crabbed view of minimum contacts. Even if there are minimum contacts, jurisdiction still must comport with "traditional notions of fair play and substantial justice," meaning it must be reasonable to make the defendant litigate in the forum. Justice Kennedy expresses concern for a small local Florida fruit grower who sells to a national distributor and is subject to jurisdiction in Alaska; Justice Breyer (in his opinion and at oral argument) is similarly worried about an Egyptian shirt maker and Kenyan coffee farmer. But this is where the second prong is supposed to do its work to protect a truly small and truly local company from having to litigate far away (particularly in a foreign country). But this part of the framework never seems to come into play.

6) The question for civ pro teachers is whether and how to incorporate these cases into the personal jurisdiction portion of the course. They cannot just be add-ons; both must be treated as "major" cases and, particularly in a four-hour/one-semester class, there is no time to cover two additional cases. My inclination is that Goodyear replaces Helicopteros and McIntyre replaces Asahi, since both new opinions do a good job of discussing the prior cases, although I will miss teaching Asahi, which allowed for a nice review of impleader and applied the whole multi-step analytical framework. Someone on the civ pro listserv suggested teaching Goodyear right after Shoe and covering general jurisdiction first, given how Jutsice Ginsburg discusses the division between the two and how well she shows those differences. The opinion may allow students to understand general jurisdiction without having to first understand specific jurisdiction.