Posted Jun 27, 2011 08:03 pm CDT
The U.S. Supreme Court has ruled in two separate cases that foreign manufacturers and subsidiaries are protected from liability suits in state courts because they had insufficient connections to justify jurisdiction.
Justice Ruth Bader Ginsburg sees some big differences in the issues. In the first case, Ginsburg wrote the unanimous decision protecting foreign subsidiaries of the Goodyear Tire and Rubber Company from suit in North Carolina. In the second, she wrote a dissent claiming the four justices joining the plurality opinion were taking “a giant step away” from notions of fairness in the landmark 1945 case, International Shoe Co. v. Washington.
The suit against the Goodyear subsidiaries had alleged a defective tire made in Turkey caused a bus accident in Paris that claimed the lives of two 13-year-old North Carolina boys. The North Carolina Court of Appeals had ruled state courts had jurisdiction because some of the tires had reached the state through the stream of commerce. The U.S. Supreme Court reversed.
The tires were made primarily for sale in European and Asian markets, Ginsburg noted in her opinion (PDF). The subsidiaries had no place of business, employees or bank accounts in North Carolina, and they did not not make, advertise or ship their products there. The decision is Goodyear Dunlop Tires Operations v. Brown.
Ginsburg read aloud from her dissent in the second case, J. McIntyre Machinery v. Nicastro. The Supreme Court ruled in a 6-3 opinion (PDF) that New Jersey state courts had no jurisdiction to hear a suit by a man who lost four fingers while working on a metal-shearing machine in the state.
The manufacturer, J. McIntyre Machinery Ltd., was located in England. It did not ship its products to New Jersey, but it did sell its products to an independent U.S. distributor. The New Jersey Supreme Court had ruled state courts had jurisdiction because the foreign manufacturer knew or should have known its nationwide product distribution system might lead to sales in any of the 50 states. The U.S. Supreme Court reversed.
In this case, the tort plaintiff did not establish that J. McIntyre engaged in conduct “purposefully directed at New Jersey,” Justice Anthony M. Kennedy wrote in a plurality opinion joined by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia and Clarence Thomas. In products liability cases, Kennedy wrote, a company is not subject to state court jurisdiction unless it purposely avails itself of the privilege of conducting activities there.
A separate concurrence by Justice Stephen G. Breyer, joined by Justice Samuel A. Alito Jr., said the New Jersey Supreme Court decision should be reversed, but the plurality went too far by apparently stating strict rules limiting jurisdiction. Breyer said the plurality’s standards are unclear in situations where a company sells products through its website, through an intermediary such as Amazon.com or through pop-up ads.
Ginsburg’s dissent in Nicastro was joined by Justices Sonia Sotomayor and Elena Kagan. Quoting a law review article, Ginsburg wrote that “the splintered majority today ‘turn[s] the clock back to the days before modern long-arm statutes when a manufacturer, to avoid being haled into court where a user is injured, need only Pilate-like wash its hands of a product by having independent distributors market it.”