In Goodyear Dunlop v. Brown, 2011 WL 2518815 (U.S.N.C.), the United States Supreme Court analyzed whether placing goods in the stream of commerce of the forum state that later cause injury outside the forum state permit the forum state’s courts to assert jurisdiction over the defendant manufacturer. The Court ruled such contacts do warrant the exercise of state court jurisdiction.
On April 18, 2004, two young North Carolina boys traveling in a bus in Paris, France were killed when the bus crashed. The parents filed suit in North Carolina alleging the bus tires were defective. 2011 WL 2518815 (U.S.N.C.) at p. 4. Three of the defendants were Goodyear Luxembourg Tires, SA (Goodyear Luxembourg), Goodyear Lastikleri T.A.S. (Goodyear Turkey), and Goodyear Dunlop Tires France, SA (Goodyear France). The parent company was Goodyear USA. Id. The foreign Goodyear subsidiaries contested the North Carolina Court’s jurisdiction, asserting that they did not solicit business, manufacture, sell or advertise their products in North Carolina. Id. at 6. The foreign Goodyear subsidiaries admitted that some of the products they manufactured were ultimately sold in North Carolina by Goodyear USA affiliates. Id.
The foreign Goodyear subsidiaries moved to dismiss the claims against them for want of personal jurisdiction. The state trial and court of appeals denied the motion, and the state supreme court denied the motion for discretionary review. Brown v. Meter, 199 N.C.App. 50, 57–58, 681 S.E.2d 382, 388 (2009). The Supreme Court of the United States granted certiorari “to decide whether the general jurisdiction the North Carolina courts asserted over petitioners is consistent with the Due Process Clause of the Fourteenth Amendment.” Id.
The Court’s analysis addressed the distinction between general jurisdiction over foreign corporations as compared to specific jurisdiction. Citing International Shoe Co. v. Washington, 326 U.S. 310, 317, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the Court said a state may assert general jurisdiction over foreign (sister-state or foreign-country) corporations when their affiliations with the state are so “continuous and systematic” that they are at home in the forum state. By contrast, specific jurisdiction requires “affiliatio[n] between the forum and the underlying controversy,” before the forum state can assert jurisdiction. Id at 3, citing von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L.Rev. 1121, 1136 (1966).
Here, Goodyear USA admitted it was subject to North Carolina’s general jurisdiction, but the foreign Goodyear subsidiaries contended that their contact with North Carolina was not so continuous and systematic that they were at home in North Carolina, and neither was there an affiliation between North Carolina and the Paris bus crash. 2011 WL 2518815 (U.S.N.C.) at p. 5.
The North Carolina courts explained their decision to exercise general jurisdiction over the foreign Goodyear subsidiaries, by finding that they placed their goods in “stream of commerce.” Id. at 8. This rationale, however, did not survive scrutiny as the Supreme Court found that the stream of commerce analysis is only applicable when the goods placed in the stream of commerce cause injury in the forum state. Essentially, the North Carolina courts were mixing rationales between general (continuous and systematic contact) and specific (affiliation between the forum and the controversy) jurisdiction to drag the foreign subsidiaries into its state courts. Id.
Had the Supreme Court permitted the North Carolina courts’ reasoning to prevail, defendants from around the world could be called into any state’s court if their goods were sold or used in the forum state, whether the injury arose in that state or not. Such a holding would invite widespread forum-shopping.
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