U.S. Supreme Court issues its first major ruling on personal jurisdiction in 20 years

By Heidee Stoller
July 1, 2011

On Monday, a divided U. S. Supreme Court wrestled with the scope of personal jurisdiction in a products liability case.  A concurring opinion signaled that the Court may in the future be open to re-assessing standards for personal jurisdiction in light of, for example, the use of the Internet in commerce. 

J. McIntyre Machinery Ltd. V. Nicastro involved a plaintiff, Nicastro, who was injured  while using a metal-shearing machine manufactured by the defendant, J. McIntyre Machinery, in England.  Nicastro sued J. McIntyre in New Jersey state court.  The New Jersey Supreme Court held that jurisdiction over defendant was appropriate under the “stream-of-commerce” doctrine, because the manufacturer knew or reasonably should have known “that its products are distributed through a nationwide distribution system that might lead to those products being sold in any of the fifty states.”

Justice Kennedy, writing for a plurality of four, reversed the New Jersey Supreme Court, holding that the “stream-of-commerce” doctrine was insufficient to establish jurisdiction.  Justice Kennedy revisited the competing opinions set out in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987), noting that “[t]he rules and standards for determining when a State does or does not have jurisdiction over an absent party have been unclear because of decades-old questions left open in Asahi Metal.”  Justice Kennedy criticized Justice Brennan’s Asahi Metal concurrence, stating that “a [jurisdictional] rule based on general notions of fairness and foreseeability is inconsistent with the premises of lawful judicial power.”  Instead, “it is the defendant’s actions, not his expectations, that empower a State’s courts to subject him to judgment.”

Justice Kennedy noted that the claim of jurisdiction over J. McIntyre centered on three facts: (1) an independent company agreed to sell machines manufactured by J. McIntyre to buyers in the U.S., (2) J. McIntyre’s employees attended annual conventions in the U.S., but not in New Jersey, to advertise the machines, and (3) no more than four machines ended up in New Jersey.  Justice Kennedy held that these facts were insufficient to establish jurisdiction, because while “[t]hese facts may reveal an intent to serve the U.S. market, . . . they do not show that J. McIntyre purposefully availed itself of the New Jersey market.”

Justice Breyer, joined by Justice Alito, concurred in the judgment.  Justice Breyer found that it was unnecessary to critique the tests of foreseeability and fairness, as Justice Kennedy did, because the case came within existing precedent.  He stated that the Court had never held that “a single isolated sale, even if accompanied by the kind of sales effort indicated here, is sufficient” to establish jurisdiction. Justice Breyer then criticized the “strict rules” set out in the plurality opinion, which “limit[ed] jurisdiction where a defendant does not intend to submit to the power of a sovereign and cannot be said to have targeted the forum.”  Justice Breyer also signaled that he was open to revisiting the issue of personal jurisdiction in the future, noting that “there have been many recent changes in commerce and communication, many of which are not anticipated by our precedents.”  He noted, however, that “this case does not present any of those issues,” and that it was “unwise to announce a rule of broad applicability without full consideration of the modern day consequences.”

As in Asahi Metal, no opinion won the support of a majority of the Justices.  Therefore, the Court’s holding is the narrowest holding that did have the assent of a majority of the Justices, which is likely Justice Breyer’s concurrence.  Justice Ginsberg dissented, joined by Justices Sotomayor and Kagan.

Comments

The comments to this entry are closed.