E-Alert Case Updates

Stream of Commerce Contacts Cannot Alone Establish General Jurisdiction

Goodyear Dunlop Tires Operations, S.A. v. Brown
No. 10-76 (U.S. 2011)
by Lindsey M. Brunk, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

In the history of the Supreme Court’s decisions regarding personal jurisdiction, there have only been two (2) cases where general jurisdiction—as opposed to specific jurisdiction—was at issue. Recently, the Court added one more case to that list, when it considered whether several European subsidiaries of Goodyear Tires USA could be sued in North Carolina under a general jurisdiction theory. The Court held that they could not.

In 2004, a bus carrying a young soccer team from North Carolina crashed outside of Paris, France, and two 13-year-old boys died in the accident. Their estates and families sued Goodyear’s foreign subsidiaries, the manufacturers of the tires on the bus, alleging that it was their defective product which caused the accident. These subsidiaries, the Petitioners, disputed being hailed into court in North Carolina. The tires manufactured by these companies differed in size and construction from the tires manufactured in America, and they never advertised or sold their product in North Carolina. However, a small percentage of their tires were distributed in America by other Goodyear USA affiliates. Based on a stream of commerce theory, the North Carolina Court of Appeals had held that the Petitioners were subject to general personal jurisdiction in North Carolina.

The Supreme Court rejected this theory. In order for a Court to assert general jurisdiction over a corporation, that corporation must have connections with the State that are so “continuous and systematic” as to make them at home in the forum state. See Int’l Shoe Co. v. Washington, 326 U.S. 310, 317 (1945). In Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984), a Columbian corporation had sent its chief executive officer to Texas for a meeting, had accepted checks from Texas, had purchased equipment from Texas, and had trained some employees in Texas, but it nevertheless failed to have such “continuous and systematic” contacts as to render general jurisdiction appropriate in Texas. The Petitioners had done markedly less to avail themselves to North Carolina.

In reversing the North Carolina Courts’ exercise of jurisdiction over the Petitioners, the Supreme Court criticized North Carolina’s interpretation of the general personal jurisdiction doctrine as “sprawling” and explained that under their holding, any seller of goods could be amenable to suit anywhere that its products were distributed. Had the Respondents suffered some injury within North Carolina due to one of the Petitioner’s tires, then specific personal jurisdiction may have been appropriate, but under the facts of the case, the Petitioners were not subject to the Courts of North Carolina.

On a final note, the Court explained that one of the Respondents’ arguments would not be considered because it was raised too late. The Respondents argued for the first time in oral argument before the Supreme Court that the Court should consider Goodyear USA and its foreign subsidiaries a “single enterprise.” If Goodyear USA would be subject to North Carolina’s jurisdiction, then so should the Petitioners, they argued. However, because the issue was raised too late, it was not considered.