In a well-attended CLE, SDNY Local Counsel author, yours truly, and Prof. Pfeffer, SDNY Local Counsel contributor, presented on the Supreme Court's recent decisions in:
J. McIntyre Machinery Ltd. v. Nicastro, U.S., No. 09-1343 (certiorari petition granted 9/28/10),
and
Goodyear Luxembourg Tires SA v. Brown, U.S., No. 10-76 (certiorari petition granted 9/28/10).
Special thanks to the New York County Lawyers Association and the SDNY Chapter of the Federal Bar Association for co-sponsoring the event.
In J. McIntyre Machinery Ltd. v. Nicastro, the New Jersey Supreme Court found jurisdiction valid in that state over an out-of-state manufacturer. That manufacturer had sold its machine to an Ohio distributor, who then sold it at a Nevada trade show to the company that employed plaintiff, who, in turn, was injured by the machine in New Jersey.
In Goodyear Luxembourg Tires SA v. Brown, the North Carolina Court of Appeals found that jurisdiction was valid over an out-of-state manufacturer of tires based on its sale in North Carolina, even though the plaintiff was injured overseas and the events of the law suit had no connection to North Carolina, other than the fact that plaintiffs lived there.
The U.S. Supreme Court's unanimous decision in Goodyear comes as no surprise. The Court reigned in a lower court practice of finding "general jurisdiction" based upon contacts with the state -- usually in sympathetic cases where the lower courts could not deem the lawsuit as "arising out of" certain contacts with the state. In short, after Goodyear, there should not be a finding of "general jurisdiction" unless the defendant is "at home" in the state. Being at home means that the forum is the home state of the person or company or that person or company has such pervasive contacts that the state is like a second home (which should be rare).
The Court's plurality decision in Nicastro, however, is not so simple. The decision is a must read for any Supreme Court-watcher because of the interplay between the competing plurality, concurrence and dissent is fascinating.
Still, despite the plurality's attempt to go back to basics and phrase the analysis as a state's sovereignty meets due process issue, there remains numerous open questions and no true clarity. In fact, the concurrence and dissent indicate that the due process limitations of long-arm statutes in the new age of global markets and e-commerce is still an open question.
The take-aways from Nicastro that we at SDNY Local Counsel find interesting are:
(i) the phrase "stream of commerce" is no more than a metaphor and not a doctrine that can answer jurisdictional questions in the absolute. In short, the Supreme Court has emphasized the need for a minimum contacts analysis and that putting a product in the "stream of commerce" may be just one factor in such an analysis. Indeed, without more, the stream of commerce metaphor may be insufficient to sustain an assertion of jurisdiction.
(ii) the plurality's criticism of foreseeability as a touchstone for the due process limits of long-arm jurisdiction (which appears to require more than simply putting a product in the stream of commerce that causes injury in the state) may run up against New York's long-arm statute which contemplates jurisdiction when a defendant:
[§302 (a): ]
3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or …
In sum, clarity is not forthcoming from the Court on the due process limitations on long-arm jurisdiction and may not be taken up again any time soon.
