Monday, June 27, 2011

SCOTUS Decision in Goodyear v. Brown

Today the Supreme Court issued its decision in Goodyear Dunlop Tires Operations, S.A. v. Brown (No. 10-76), one of two decisions on personal jurisdiction that the Court released during its final public session of the October 2010 Term. Goodyear is a unanimous decision (in contrast to the 4-to-2-to-3 split in J. McIntyre Machinery v. Nicastro). Justice Ginsburg writes the Opinion of the Court.

Goodyear considers whether North Carolina courts could exercise jurisdiction based on a theory of general jurisdiction, which is proper where “the continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” [Slip Op. 7 (quoting International Shoe)]. From the opinion:

To justify the exercise of general jurisdiction over petitioners, the North Carolina courts relied on the petitioners’ placement of their tires in the “stream of commerce.” The stream-of-commerce metaphor has been invoked frequently in lower court decisions permitting “jurisdiction in products liability cases in which the product has traveled through an extensive chain of distribution before reaching the ultimate consumer.” Typically, in such cases, a nonresident defendant, acting outside the forum, places in the stream of commerce a product that ultimately causes harm inside the forum. [Slip Op. 9 (citations omitted)]

In this case, however, “both the act alleged to have caused injury (the fabrication of the allegedly defective tire) and its impact (the accident) occurred outside the forum.” Accordingly, “[t]he North Carolina court’s stream-of-commerce analysis elided the essential difference between case-specific and all-purpose (general) jurisdiction.” [Slip Op. 10].

Flow of a manufacturer’s products into the forum, we have explained, may bolster an affiliation germane to specific jurisdiction. But ties serving to bolster the exercise of specific jurisdiction do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant. A corporation’s “continuous activity of some sorts within a state,” International Shoe instructed, “is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.” [Slip Op. 10-11]

The opinion then examines the facts of Goodyear through the prism of the Supreme Court’s key precedents on general jurisdiction. It concludes:

Measured against Helicopteros and Perkins, North Carolina is not a forum in which it would be permissible to subject petitioners to general jurisdiction. Unlike the defendant in Perkins, whose sole wartime business activity was conducted in Ohio, petitioners are in no sense at home in North Carolina. Their attenuated connections to the State fall far short of the “the continuous and systematic general business contacts” necessary to empower North Carolina to entertain suit against them on claims unrelated to anything that connects them to the State. Helicopteros, 466 U. S., at 416. [Slip Op. 13]

The Court refused to consider another potential theory of jurisdiction, on the ground that the plaintiffs failed to properly raise it:

Respondents belatedly assert a “single enterprise” theory, asking us to consolidate petitioners’ ties to North Carolina with those of Goodyear USA and other Goodyear entities. In effect, respondents would have us pierce Goodyear corporate veils, at least for jurisdictional purposes. Neither below nor in their brief in opposition to the petition for certiorari did respondents urge disregard of petitioners’ discrete status as subsidiaries and treatment of all Goodyear entities as a “unitary business,” so that jurisdiction over the parent would draw in the subsidiaries as well. Respondents have therefore forfeited this contention, and we do not address it. [Slip Op. 13-14 (citations omitted)]

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