Personal Jurisdiction, Goodyear v. Brown, and Homely Line Drawing

The Supreme Court's decisions often raise more questions than they resolve, especially when they address subjects that the Court rarely encounters.  These intermittent rulings can place lower courts in an awkward position by providing binding authority without useful assistance.  The basic problem is that the Court's opinions serve at least two distinct functions that do not easily coexist.  On the one hand, the Court is attempting to resolve a specific dispute, often on the narrowest possible grounds, and thus tailors its reasoning to the facts and legal authorities relevant to a particular case.  On the other hand, the Court sits atop a judicial pyramid in which judges seeking to follow precedent or predict the law's path look to the Court for guidance.  That guidance is helpful only if it is adaptable to the myriad cases that lower courts confront involving variations in facts, procedural posture, and substantive rules.  Yet narrowly written case-specific opinions are by definition not likely to offer much explicit instruction on questions beyond the scope of what the parties raised.  Lower courts—and lawyers and commentators who seek to influence them—therefore read between the lines of Supreme Court opinions to discern how precedent should influence analogous contexts that the Court either never imagined, expressly avoided, or coyly skirted.  Subtle dimensions of judicial reasoning—tone, structure, method, emphasis, etc.—can therefore have transcendent effects if they influence how judges adapt decisions to distinct circumstances.  Whether those effects are desirable is arguably in part a function of whether they have a legitimate foundation: one would want to know if readers of an opinion are picking up on subtle clues left for them to find and follow, or drawing viable inferences from the Court's implicit assumptions, or merely chasing their own shadows.

An interesting aspect of the Court's recent decision in Goodyear Dunlop Tires Operations, S.A. v. Brown addressing personal jurisdiction in state courts is that the opinion is missing much of the nuance that would be helpful in extrapolating the holding to future cases.  Courts looking for guidance therefore will find little foundation on which to build, but might be tempted to see more in the opinion than is really there.

In Goodyear the Court unanimously held that states can exercise "general" personal jurisdiction over defendants who have "continuous and systematic" contacts with the forum even if those contacts are "unrelated" to the subject of the litigation.  In contrast, if the defendant's contacts with the forum are "limited" and "sporadic," then only "specific" jurisdiction is available, which requires some nexus between those contacts and the plaintiff's claim.  The plaintiffs in Goodyear could not establish specific jurisdiction in their chosen forum of North Carolina: they were complaining about a bus accident in France caused by a tire manufactured in Turkey by a Turkish defendant.  (There were other co-defendants, but for present purposes we can focus on jurisdiction over the manufacturer.)  The case therefore required the Court to consider whether North Carolina could assert general jurisdiction.

The determinative question in Goodyear was whether the Turkish defendant's contacts with North Carolina were "continuous and systematic" or merely "sporadic" and "limited."  That will also be the pivotal question in future cases involving a state's attempt to assert general jurisdiction.  So one would hope to see language in the opinion explaining how lower courts should draw lines between "continuous" and "sporadic," and between "systematic" and "limited." And yet such guidance is missing.

The key language in the opinion is that contacts are sufficient to establish general jurisdiction only if they "render [the defendant] essentially at home in the forum State" and that the defendant in Goodyear was "in no sense at home in North Carolina."  (Elsewhere in the opinion the Court observed that its references to "home" addressed "paradigm" examples of general jurisdiction.  This apparently leaves open whether general jurisdiction is ever appropriate in non-paradigmatic cases, and what those might be.)

And so we now have the "home" test. But what does this mean in practice?  The Court never elaborates.  The word "home" seems to connote a single place, and the Court at one point defends a precedent upholding general jurisdiction because the forum was the defendant's "sole" place of business.  But we know that this connotation is misleading because the Court acknowledged, citing an article by Lea Brilmayer, that a defendant's home can be its "place of incorporation" and "principal place of business."  Wal-Mart, for example, is incorporated in Delaware and has its headquarters in Arkansas, and so it has at least two jurisdictional homes.  Indeed, Wal-Mart probably has more than two jurisdictional homes.  For example, Wal-Mart has dozens of stores in North Carolina, presumably racking up hundreds of millions of dollars in sales.  I doubt that the Court would hold that a North Carolina resident who slips and falls in a Wal-Mart store while on a once-in-a-lifetime vacation in Alaska could not sue in North Carolina, and must instead travel to Alaska (or Delaware or Arkansas) to file a claim.  Yet such a claim would require asserting general rather than specific jurisdiction, and so Wal-Mart would therefore be at "home" in North Carolina.  (One could instead conclude that jurisdiction in this hypo would hinge on implied or express "consent" rather than "home," but if fictional or coerced consent circumvents the home inquiry, then it is not clear what purpose the home inquiry serves.  One could also try to justify jurisdiction in the hypo based on physical service in the forum, but it is not clear that Burnham extends to corporate defendants in general jurisdiction cases, and if it did, then much of Goodyear's reasoning would be superfluous because defendants would already be easily amenable to general jurisdiction at their physical headquarters without the need to call such places homes, and would likewise be easily amenable to general jurisdiction in many places in which they have a presence but are clearly not at home).  If general jurisdiction would exist in the Wal-Mart hypo, then maybe what the Court means is that a corporate defendant is at "home" anywhere it has a robust physical presence.  But what about Amazon.com, which presumably lacks a physical presence in many states, and yet still does a huge volume of business in those states?  Would Amazon.com really be immune from general jurisdiction even if their brick-and-mortar competitor Wal-Mart would be subject to such jurisdiction?  Maybe, but that is far from clear and not necessarily sensible.  So perhaps what the Court means is that a defendant is at "home" wherever it has a substantial relationship.  But if contacts rather than physical presence create a home, presumably those contacts can be established by more than just distribution through a website.  For example, suppose that Wal-Mart decides to outsource all manufacturing of its store-branded products to a subsidiary in, say, Turkey, which then ships millions of units to every state.  Is the Court saying that Wal-Mart is at "home" if it sells products in North Carolina, but that its subsidiary that manufacturers millions of those products is not at home?  Does general jurisdiction really attach to stores, but never to the stuff that those stores sell?  Perhaps, but this sort of formal distinction seems unlikely to persist without at least a few exceptions.  The Court rejected the "sprawling view of general jurisdiction" under which "any" manufacturer could be sued "wherever" its products are sold.  But that holding leaves room for a less sprawling theory subjecting some manufacturers to jurisdiction in some of the places where they sell many products.  And if it turns out that the hypothetical Wal-Mart subsidiary in Turkey would be subject to general jurisdiction in North Carolina, why not Goodyear's subsidiary in Turkey, which sold "tens of thousands" of tires in North Carolina via its U.S.-based parent?

The critical distinction between the hypothetical Wal-Mart subsidiary in Turkey and the actual Goodyear subsidiary in Turkey is that tens of millions of in-state sales are more "continuous and systematic" then tens of thousands.  But that observation takes us back to the line drawing problem.  How many sales in the forum are enough to establish general jurisdiction?  Is a small defendant who sells a small number of items in the forum that nevertheless constitute a large percentage of its business more amenable to general jurisdiction than a large defendant who sells a large number of items that are a small percentage of its business; and if so, what ratio marks the inflection point?  If it matters whether the defendant controls stores in the forum, how many stores are sufficient?  If stores are not necessary, what other kinds of distribution arrangements create general jurisdiction?  The fact that the Court did not give precise answers to these questions is appropriate given that it was asked to rule only on the case before it.  But the fact that the Court silently lumped these questions together and disposed of them in a few opaque sentences about "home" is frustrating in light of the decision's precedential effect.  Lower courts and lawyers must now develop the architecture for jurisdictional homes without an authoritative blueprint or a solid foundation.

The Court may of course clarify Goodyear through its customary iterative process. But given that the most recent iterations before Goodyear came 27 years ago (Helicopteros) and 59 years ago (Perkins), clarification might not be imminent.