Civil litigators should take note of two personal jurisdiction cases in which the Supreme Court has taken certiorari in the upcoming term. No argument date has been scheduled, but the cases will be argued, and opinons will be issued, by the time the Court completes in term in June 2011. The decisions being reviewed originated from the New Jersey Supreme Court and the North Carolina intermediate appellate court. These courts that may not be considered "local" to SDNY, but the ramifications of these Supreme Court decisons may be felt in New York and throughout the country. The current holdings take a more extensive view of jurisdiction than any Supreme Court case ever has.
The New Jersey case: J. McIntyre Machinery Ltd. v. Nicastro, U.S., No. 09-1343 (certiorari petition granted 9/28/10).
The issue presented here was last addressed by the US Supreme Court in Asahi, but that case did not generate a majority theory on the extent to which stream of commerce theory could support personal jurisdiction consistent with the due process clause of the Fourteenth Amendment. Rather it generated two competing four justice pluralities (the court did reach a majority on the theory that there was no personal jurisdiciton because the only remaining parties were both non-US companies that were adjudicating the issue of indemnity -- the American plaintiff having settled its suit). Brennan, writing for four justices, concluded that placing a product in the stream of commerce with the expectation that it would end up in a given state was sufficient for the exercise of jurisdiction under the due process clause. O'Connor, writing for four justices, concluded that there needed to be both placement with knowledge and additional activity directed toward the forum state (sometimes called stream of commerce "plus"). The New Jersey lower-court opinion finds jurisdiction on a bases that is beyond either what Brennan's or O'Connor's opinions discussed, namely based upon placing a product with a national distributor and having that product cause injury in a given state, even if the defendant did not know that the product was being distributed in that state, and where there was no evidence that any of defendant’s products other than the one machine that allegedly caused plaintiff’s injury were distributed in New Jersey.” The Supreme Court's ruling on this case should be of particular interest to plaintiffs counsel seeking to sue non-US entities in tort or to those who defend foreign companies. The case also has broader implications for jurisdiction in all commercial cases involving large corporate defendants.
The North Carolina case: Goodyear Luxembourg Tires SA v. Brown, U.S., No. 10-76 (certiorari petition granted 9/28/10) [link to case: http://www.aoc.state.nc.us/www/public/coa/opinions/2009/pdf/080944-1.pdf ]
This case involves general jurisdiction -- situations in which the suit does NOT arise from the defendant's contacts with a state. The Supreme Court has indicated that for the exercise of general jurisdiction to be constitutional, that the contacts with a given state must be quite extensive. Interstingly, the Supreme Court has only upheld the exercise of general jurisdiction once, in the Perkins case. The North Carolina court concluded that a defendant's sale of tires in a state was enough to subject that defendant to jurisdiction in the state in a case involving an accident that occurred in France due to allegedly defective tires that apparently had nothing to do with North Carolina. The Supreme Court's ruling in this case will have implications for any commericial defendants who have a large volume of sales of a product or service in a given state or througout the United States. In particular, should the Supreme Court affirm the North Carolina court's decision, commercial defendants would arguably be subject to suit to in any state in which it sold goods or services even if the plaintiff's suit is unrelated to those sales, and even if the plaintiff itself has no connection to that state. That result would therefore be a dream-come-true for plaintiff's who wish to shop for a plaintiff's friendly forum, and a nightmare for defendant's seeking to avoid those forums.
Since most of the justices currently on the U.S. Supreme Court were not there the last time the Supreme Court undertook jurisdiction (Roberts, Alito, Thomas, Breyer, Ginsberg, Sotomayer and Kagan were not there) it is hard to predict how the Court will rule in these cases.
Here is a link that will allow one to open the full-text of these opinions
http://www.masstortdefense.com/2010/10/articles/supreme-court-grants-cert-in-important-personal-jurisdiction-cases/
Prof. Pfeffer is a visiting associate professor at the University of Alabama School of Law teaching Civil Procedure, Contracts, Sales, and Criminal Procedure. Please look for additional blog entries from Mr. McGrath and Prof. Pfeffer on SDNY Local Counsel Blog as these cases are argued and decisions are issued.
