Supreme Court to readdress stream of commerce theory of personal jurisdiction.

JurisdictionUnited States
AuthorBerkelhammer, Jonathan A.
Date01 July 2011

This article originally appeared in the April 2011 Products Liability Committee Newsletter.

In International Shoe Co. v. Washington, (1) the Supreme Court held that for a state to exercise personal jurisdiction over a non-resident defendant, the Constitution requires that there be sufficient minimum contacts between the defendant and the forum state such that the assertion of personal jurisdiction "does not offend 'traditional notions of fair play and substantial justice.'" (2) Over forty years after International Shoe, the Court addressed the question of whether the mere awareness on the part of a foreign defendant that the components it manufactured, sold, and delivered outside the United States would reach the forum State in the stream of commerce constitutes "minimum contacts" between the defendant and the forum state such that the exercise of jurisdiction "'does not offend 'traditional notions of fair play and substantial justice." (3)

The plaintiff in Asahi was injured and his wife was killed when the rear tire of his motorcycle suffered a blowout. The plaintiff thereafter brought a product liability action against Cheng Shin Rubber Industrial Co., Ltd., the Taiwanese manufacturer of the tire, as well as Asahi Metal Industry Co., Ltd., the Japanese manufacturer of the valve assembly. Although Asahi did not sell its valve assemblies directly into California, the California Supreme Court nevertheless found personal jurisdiction over Asahi proper, concluding "that Asahi knew that some of the valve assemblies sold to Cheng Shin would be incorporated into tire tubes sold in California, and that Asahi benefitted indirectly from the sale in California of products incorporating its components." (4)

The Supreme Court reversed. In a plurality opinion, Justice O'Connor, joined by Chief Justice Rehnquist, and Justices Powell and Scalia, concluded that placing a product into the stream of commerce, without more, was insufficient to establish personal jurisdiction. (5) Rather, the plurality held that "the 'substantial connection'... between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State." (6) Thus, the plurality reasoned as follows:

The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream [of commerce] into an act purposefully directed toward the forum State. (7) Justices Brennan, White, Marshall, and Blackmun...

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