Fifth Circuit Decision on Personal Jurisdiction, McIntyre, and the Stream of Commerce

Last week, the U.S. Court of Appeals for the Fifth Circuit issued an important decision on personal jurisdiction: Ainsworth v. Moffett Engineering, Ltd., No. 12-60155 (May 9, 2013). In an opinion by Judge Patrick Higginbotham (joined by Judges Jerry Smith and Jennifer Elrod), the court reaffirms its “stream-of-commerce approach to personal jurisdiction” [Slip Op. 1] in the wake of J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). Below are some excerpts (footnotes omitted). From Slip Op. 3-4:

In cases involving a product sold or manufactured by a foreign defendant, this Circuit has consistently followed a “stream-of-commerce” approach to personal jurisdiction, under which the minimum contacts requirement is met so long as the court “finds that the defendant delivered the product into the stream of commerce with the expectation that it would be purchased by or used by consumers in the forum state.” Under that test, “mere foreseeability or awareness [is] a constitutionally sufficient basis for personal jurisdiction if the defendant’s product made its way into the forum state while still in the stream of commerce,” but “[t]he defendant’s contacts must be more than ‘random, fortuitous, or attenuated, or of the unilateral activity of another party or third person.’”

On interlocutory appeal, Moffett argues that application of the Fifth Circuit’s stream-of-commerce approach is no longer proper after the Supreme Court’s decision in McIntyre…. We disagree and find that application of the stream-of-commerce approach in this case does not run afoul of McIntyre’s narrow holding….

Turning to the McIntyre decision, Judge Higginbotham writes [Slip Op. 5-6]:

The Supreme Court reversed but did not produce a majority opinion. Justice Kennedy authored a plurality opinion, joined by Chief Justice Roberts, Justice Scalia, and Justice Thomas. Under the plurality’s approach to personal jurisdiction, “[t]he defendant’s transmission of goods permits the exercise of jurisdiction only where the defendant can be said to have targeted the forum; as a general rule, it is not enough that the defendant might have predicted that its goods will reach the forum State.” Our stream-of-commerce test, in not requiring that the defendant target the forum, is in tension with the plurality opinion, under which Moffett would likely not be subject to personal jurisdiction in Mississippi. But that does not answer the question before us. The reasoning of a Supreme Court opinion that does not command a majority vote is not binding precedent. Instead, “[w]hen a fragmented Court decides a case and no single rationale explaining the result enjoys the assent of five Justices, ‘the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds.’” In McIntyre, Justice Breyer’s concurring opinion, joined by Justice Alito, furnished the narrowest grounds for the decision and controls here.

Justice Breyer made clear that his view that “resolving [the] case require[d] no more than adhering to [the Supreme Court’s] precedents” and that his decision was “based on the facts,” which involved only a single sale in New Jersey. He explained that under any of the Court’s precedents “a single isolated sale” is not an adequate basis for personal jurisdiction. Here, from 2000 through September 2010, Cargotec sold 203 Moffett forklifts to customers in Mississippi—a far cry from the single sale in McIntyre….

He also notes [Slip Op. 7-8]:

The only other circuit court to squarely address McIntyre’s narrowest holding reached a similar conclusion. In AFTG-TG, LLC v. Nuvoton Tech. Corp., the Federal Circuit explained that “the crux of Justice Breyer’s concurrence was that the Supreme Court’s framework applying the stream-of-commerce theory—including the conflicting articulations of that theory in Asahi—had not changed, and that the defendant’s activities in McIntyre failed to establish personal jurisdiction under any articulation of that theory.” It found that “[t]he narrowest holding is that which can be distilled from Justice Breyer’s concurrence—that the law remains the same after McIntyre.” Because it concluded “that McIntyre did not change the Supreme Court’s jurisdictional framework,” the Federal Circuit went on to “apply [its] precedent that interprets the Supreme Court’s existing stream-of-commerce precedents.”

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Hat Tip: Texas Appellate Watch (@AppellateWatch)