U.S. Supreme Court Lays Down Hard Line on States’ Ability to Assert Jurisdiction Over Out-of-State Defendants

July 20, 2011 in Events, News

The U.S. Supreme Court has just made it harder for plaintiffs to convince state courts to assert personal jurisdiction over foreign manufacturers on products cases.

In J. McIntyre Machinery, Ltd. v. Nicastro, decided June 27, 2011, the question was whether the New Jersey Supreme Court properly exercised jurisdiction over a British manufacturer of scrap metal machines.  The record showed that (1) an independent company had agreed to sell McIntyre’s machines in the United States, (2) McIntyre officials had attended annual conventions of the scrap metal industry in the United States, but never New Jersey, (3) between 1 and 4 of McIntyre’s machines—including the machine that caused the injury—had ended up in New Jersey, (4) McIntyre had U.S. patents on its scrap recycling technology and (5) the injury occurred in New Jersey.

In a plurality opinion and a concurrence, six justices ruled that these facts were not sufficient to support an exercise of personal jurisdiction.  Squarely rejecting “fundamental fairness” and “foreseeability” analyses, and reaffirming that a manufacturer’s amenability to suit does not “travel with the chattel,” the Court applied an analysis heavy on considerations of federalism.  The Court noted that the federal government and the governments of the several states are separate.  Just because a manufacturer is subject to the jurisdiction of the federal government in one kind of matter does not mean that it is subject to the jurisdiction of each of the fifty sovereign states in other matters.  And the mere fact that a manufacturer is subject to jurisdiction in one state does not mean it is subject to jurisdiction in others.  Recognizing that “jurisdiction is power to declare the law,” the Court held that the only way in which a company can be held to have subjected itself to a state’s laws is by purposefully availing itself of the privilege of conducting activities there.  The Court cited express consent, physical presence, citizenship and domicile as examples of the kinds of activities that can constitute “purposeful availment.”

In a striking aside, the Court noted that the same rules would apply to American companies or individuals who are haled into the court of another state.

The plurality opinion said it was “clarifying” confusion that had arisen because of different language used in Justice O’Connor’s plurality opinion in Asahi Metal Industry Co. v. Superior Ct. of Cal., Solano Cty., 480 U.S. 102 (1987) and Justice Brennan’s concurring opinion in the same case.  Justices Breyer and Alito, concurring with the McIntyre plurality, asserted that the result was clearly compelled by clear precedents.

In summary, the mere fact that an American or foreign manufacturer or seller targets the U.S. market or can foresee that its products will end up in a state does not mean that manufacturer or seller is amenable to jurisdiction in that state.  The plaintiff bears the burden of showing that the manufacturer or seller “purposely availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.”