J. Mcintyre Machinery, Goodyear, and the Incoherence of the Minimum Contacts Test

• Jurisdiction: United States,Federal
• Citation: Vol. 44
• Publication year: 2022

44 Creighton L. Rev. 1245. J. MCINTYRE MACHINERY, GOODYEAR, AND THE INCOHERENCE OF THE MINIMUM CONTACTS TEST

J. MCINTYRE MACHINERY, GOODYEAR, AND THE INCOHERENCE OF THE MINIMUM CONTACTS TEST

Patrick J. Borchers(fn*)

INTRODUCTION

On June 27, 2011, when J. Mclntyre Machinery, Ltd. v. Nicastro(fn1) and Goodyear Dunlop Tires Operations, S.A. v. Brown(fn2) were handed down, it marked for the first time in almost a quarter of a century that the United states supreme Court engaged in an extended discussion of the minimum contacts test. That test-first announced by the Court in International Shoe Co. v. Washington(fn3) -has for nearly seven decades set the basic parameters of measuring the constitutionality of exercises of state-court personal jurisdiction. Before its two latest decisions, the Court's last significant discussion of minimum contacts came in Asahi Metal Industry Co. v. Superior Court of California.(fn4) Law professors who teach Civil Procedure and related subjects waited eagerly for the new cases, having had for over two decades no fresh supreme Court opinions to teach in what is a staple of nearly every first-year law student's educational experience.

Of more practical significance, the bench and bar were hoping for guidance on at least two difficult issues that have bedeviled the subject. The first difficult issue is the reach of state courts in products liability cases where the injury occurs in the forum state. The second is the quantum of contacts necessary to create so-called general jurisdiction.

The supreme Court performed miserably. Its opinion in J. McIn-tyre-the case assumed to deal with the first issue-is a disaster. As in its 1987 Asahi decision, the Court produced no majority opinion, but the plurality opinion attempted to roll back the clock by a century or more and re-ground personal jurisdiction in a dubious sovereignty theory that the Court had apparently rejected several times before. Its test took no account of the modern realities of international business, a point fortunately noted by Justice Breyer's concurrence in the judgment, which prevented the plurality from becoming a majority.

The Court's unanimous opinion in Goodyear-the case assumed to deal with the second issue-is not nearly as bad as the Court's opinion in J. McIntyre, but is far from good. The Court attempted to set forth a test for general jurisdiction by saying that the quantum of contacts must be enough so that the defendant is "essentially at home" in the forum.(fn5) It remains to be seen whether this is a workable test, particularly when applied to issues such as defendants who have a ubiquitous Internet presence, but at least it is a test, of sorts, supported by a majority of the Court.

The practical issues presented by the two opinions are considerable. The combination is likely to deprive U.S. plaintiffs asserting state law claims of any U.S. forum in cases against foreign defendants, even though those defendants are intentionally and substantially benefiting from the U.S. market. Absent judicial or legislative reform, the opinions could frustrate the efforts of victims of human rights violations or terrorism at the hands of foreign defendants to seek redress in the United States under any state law theory.

The fundamental difficulty-as I argued over twenty years ago(fn6)- is that the Court lacks any clear constitutional rationale for limiting state-court assertions of jurisdiction. The Court continues to say that the limitations on jurisdiction emanate from the Due Process Clause of the Fourteenth Amendment, a proposition usually thought to have been established by the Court's delphic opinion in Pennoyer v. Neff.(fn7) It is debatable, however, whether Pennoyer actually invoked the Due Process Clause to set substantive limitations on state-court jurisdiction. It is at least as likely that the Pennoyer Court simply meant that due process principles give the defendant the right to attack an assertion of jurisdiction under whatever rules the forum state sets, but set no geographical boundaries on the state's assertions of jurisdiction over non-residents.(fn8) In fact, it was not until almost forty years after Pennoyer that the Supreme Court began to directly invalidate state court assertions of jurisdiction that it deemed to be beyond a state's reach.(fn9)

The fundamental doctrinal confusion is evident in the Supreme Court's most recent efforts, particularly J. McIntyre. In a splintered and muddled opinion, some Justices insisted that the touchstone of jurisdiction is state sovereignty, some insisted that it is a matter of individual fairness to defendants, and all except the J. McIntyre dissenters overlooked the obvious point that fairness to the plaintiff in providing a realistic forum is at least as important as protecting a foreign defendant. These two new opinions are further, and unfortunate, evidence that the Court should abandon the idea that the Constitution limits state-court jurisdiction, except in the most extreme of circumstances in which the defendant's opportunity to mount a defense is realistically compromised. Significantly relaxing, or nearly erasing, the constitutional boundaries on personal jurisdiction would force states, or perhaps Congress, to enact realistic jurisdictional statutes, which would have a much better chance at adapting to modern realities than the Court's occasional and confused pronouncements. In the end, the minimum contacts test is deeply incoherent because the Court has no clear idea what it is trying to accomplish or why it regulates the reach of state courts at all.

In Part I, I review the two issues that J. McIntyre and Goodyear were thought to have been poised to resolve. In Part II, I examine the two opinions and show that J. McIntyre actually further confuses the issue it was set to address and that Goodyear gives a partial-and likely unsatisfactory-resolution to its issue. In Part III, I revisit what I believe to be the root of the Court's doctrinal confusion, raise some additional open questions in the law of personal jurisdiction, and offer what I hope to be path out of the current mess.

I. THE TWO ISSUES

In its 1980 opinion in World-Wide Volkswagen Corp. v. Wood-son,(fn10) the United States Supreme Court refused to allow jurisdiction over an out-of-state seller of a product in which the only contact was that the consumer of the product brought it into the forum state, where it injured the consumer. The Court, however, with a cryptic "cf." citation to a famous state court decision,(fn11) stated that the "forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State."(fn12) The Court seemed to draw a line between mere use of the product in the forum (in which case jurisdiction would be unconstitutional) and a forum-state sale of the product (which would allow for jurisdiction).

But even if one accepts that this is where the line is drawn, the Supreme Court's casually announced stream-of-commerce test raised many questions. In Asahi Metal Industry Co. v. Superior Court of Cal-ifornia,(fn13) the Court endeavored to answer one of the more pressing issues, which was whether the stream of commerce flowed to where the harmful product was resold (as opposed to directly sold) in the forum state as a component of a larger product. On such facts in Asahi, the Supreme Court unanimously held that the forum state of California lacked jurisdiction, but the Court splintered in its interpretation of the stream-of-commerce test. Four Justices, led by Justice O'Connor, concluded that the stream runs dry absent a plus factor showing that the component part manufacturer specifically meant to serve the forum-state market. This could be shown, according to those four Justices, by demonstrating that the manufacturer was "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."(fn14) Four other Justices, led by Justice Brennan, vigorously disagreed, concluding that the predictable sale or resale of a product in the forum state was itself enough to show that the stream still flowed.(fn15) Justice Stevens refused to commit himself to Justice O'Connor's resale plus test, but concluded that the even more stringent O'Connor test was met on the facts of Asahi in which approximately 100,000 of the component products were sold in the forum state.(fn16)

Remarkably, though, all nine of the Asahi Justices concluded that jurisdiction was lacking. This unanimity of result came about because even the Justices who concluded that the stream of commerce flowed into the forum state thought jurisdiction to be unreasonable on independent grounds.(fn17) Asahi arrived at the Supreme Court in an unusual posture. The case began as an ordinary products liability case (involving a motorcycle tube that blew out as the result of an alleged defect), with the injured plaintiffs suing one of the defendants in the distribution chain. By the time it reached the Supreme Court, because of settlements, all that remained was an impleader action between a Japanese manufacturer of the...