Key Takeaway

The connection between Goodyear and its subsidiaries with the state of North Carolina was not strong enough to establish jurisdiction over the companies.

Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011)

Court Syllabus:

Respondents, North Carolina residents whose sons died in a bus accident outside Paris, France, filed a suit for wrongful-death damages in North Carolina state court. Alleging that the accident was caused by tire failure, they named as defendants Goodyear USA, an Ohio corporation, and petitioners, three Goodyear USA subsidiaries, organized and operating, respectively, in Luxembourg, Turkey, and France. Petitioners' tires are manufactured primarily for European and Asian markets and differ in size and construction from tires ordinarily sold in the United States. Petitioners are not registered to do business in North Carolina; have no place of business, employees, or bank accounts in the State; do not design, manufacture, or advertise their products in the State; and do not solicit business in the State or sell or ship tires to North Carolina customers. Even so, a small percentage of their tires were distributed in North Carolina by other Goodyear USA affiliates. The trial court denied petitioners' motion to dismiss the claims against them for want of personal jurisdiction. The North Carolina Court of Appeals affirmed, concluding that the North Carolina courts had general jurisdiction over petitioners, whose tires had reached the State through “the stream of commerce.”

Held: Petitioners were not amenable to suit in North Carolina on claims unrelated to any activity of petitioners in the forum State. 

(a) The Fourteenth Amendment's Due Process Clause sets the outer boundaries of a state tribunal's authority to proceed against a defendant. The pathmarking decision of International Shoe Co. v. Washington provides that state courts may exercise personal jurisdiction over an out-of-state defendant who has “certain minimum contacts with [the State] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Endeavoring to give specific content to the “fair play and substantial justice” concept, the Court in International Shoe classified cases involving out-of-state corporate defendants. First, the Court recognized that jurisdiction could be asserted where the corporation's in-state activity is “continuous and systematic” and gave rise to the episode-in-suit. It also observed that the commission of “single or occasional acts” in a State may be sufficient to render a corporation answerable in that State with respect to those acts, though not with respect to matters unrelated to the forum connections. These two categories compose what is now known as “specific jurisdiction.” International Shoe distinguished from cases that fit within the “specific jurisdiction” categories, “instances in which the continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” Adjudicatory authority so grounded is now called “general jurisdiction.” Since International Shoe, this Court's decisions have elaborated primarily on circumstances that warrant the exercise of specific jurisdiction. In only two decisions postdating International Shoe has this Court considered whether an out-of-state corporate defendant's in-state contacts were sufficiently “continuous and systematic” to justify the exercise of general jurisdiction over claims unrelated to those contacts.

(b) Petitioners lack “the kind of continuous and systematic general business contacts” necessary to allow North Carolina to entertain a suit against them unrelated to anything that connects them to the State. The stream-of-commerce cases on which the North Carolina court relied relate to exercises of specific jurisdiction in products liability actions, in which a nonresident defendant, acting outside the forum, places in the stream of commerce a product that ultimately causes harm inside the forum. Many state long-arm statutes authorize courts to exercise specific jurisdiction over manufacturers when the events in suit, or some of them, occurred within the forum State. The North Carolina court's stream-of-commerce analysis elided the essential difference between case-specific and general jurisdiction. Flow of a manufacturer's products into the forum may bolster an affiliation germane to specific jurisdiction, see, e.g., World-Wide Volkswagen Corp. v. Woodson; but ties serving to bolster the exercise of specific jurisdiction do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant. A corporation's “continuous activity of some sorts within a state,” International Shoe instructed, “is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.” 

Measured against Helicopteros and Perkins, North Carolina is not a forum in which it would be permissible to subject petitioners to general jurisdiction. In the 1952 Perkins case, general jurisdiction was appropriately exercised over a Philippine corporation sued in Ohio, where the company's affairs were overseen during World War II. In Helicopteros, however, the survivors of U. S. citizens killed when a helicopter owned by a Colombian corporation crashed in Peru could not maintain wrongful-death actions against that corporation in Texas, where the company's contacts “consisted of sending its chief executive officer to Houston for a contract-negotiation session; accepting into its New York bank account checks drawn on a Houston bank; purchasing helicopters, equipment, and training services from [a Texas enterprise]; and sending personnel to [Texas] for training.” These links to Texas did not “constitute the kind of continuous and systematic general business contacts . . . found to exist in Perkins,” and were insufficient to support the exercise of jurisdiction over a claim that neither “ 'ar[o]se out of' . . . no[r] related to” the defendant's activities in Texas. This Court sees no reason to differentiate from the ties to Texas held insufficient in Helicopteros, the sales of petitioners' tires sporadically made in North Carolina through intermediaries.

(c) Neither below nor in their brief in opposition to the petition for certiorari did respondents urge disregard of petitioners' discrete status as subsidiaries and treatment of all Goodyear entities as a “unitary business,” so that jurisdiction over the parent would draw in the subsidiaries as well. Respondents have therefore forfeited this contention.


How the Justices Voted

Majority: Ginsburg, joined by unanimous

Goodyear Dunlop Tires Operations, S.A. v. Brown

131 S. Ct. 2846 (2011)

(General Personal Jurisdiction Over a Foreign Subsidiary of a U.S. Corporation)


Facts:

A bus accident outside Paris that took the lives of two 13-year-old boys from North Carolina gave rise to the litigation we here consider. Attributing the accident to a defective tire manufactured in Turkey at the plant of a foreign subsidiary of The Goodyear Tire and Rubber Company (Goodyear USA), the boys' parents commenced an action for damages in a North Carolina state court; they named as defendants Goodyear USA, an Ohio corporation, and three of its subsidiaries, organized and operating, respectively, in Turkey, France, and Luxembourg. Goodyear USA, which had plants in North Carolina and regularly engaged in commercial activity there, did not contest the North Carolina court's jurisdiction over it; Goodyear USA's foreign subsidiaries, however, maintained that North Carolina lacked adjudicatory authority over them.

Because the episode-in-suit, the bus accident, occurred in France, and the tire alleged to have caused the accident was manufactured and sold abroad, North Carolina courts lacked specific jurisdiction to adjudicate the controversy. The North Carolina Court of Appeals so acknowledged. Were the foreign subsidiaries nonetheless amenable to general jurisdiction in North Carolina courts? Confusing or blending general and specific jurisdictional inquiries, the North Carolina courts answered yes. Some of the tires made abroad by Goodyear's foreign subsidiaries, the North Carolina Court of Appeals stressed, had reached North Carolina through “the stream of commerce;” that connection, the Court of Appeals believed, gave North Carolina courts the handle needed for the exercise of general jurisdiction over the foreign corporations.

I

On April 18, 2004, a bus destined for Charles de Gaulle Airport overturned on a road outside Paris, France. Passengers on the bus were young soccer players from North Carolina beginning their journey home. Two 13-year-olds, Julian Brown and Matthew Helms, sustained fatal injuries. The boys' parents, respondents in this Court, filed a suit for wrongful-death damages in the Superior Court of Onslow County, North Carolina, in their capacity as administrators of the boys' estates. Attributing the accident to a tire that failed when its plies separated, the parents alleged negligence in the “design, construction, testing, and inspection” of the tire. 

Goodyear Luxembourg Tires, SA (Goodyear Luxembourg), Goodyear Lastikleri T. A. S. (Goodyear Turkey), and Goodyear Dunlop Tires France, SA (Goodyear France), petitioners here, were named as defendants. Incorporated in Luxembourg, Turkey, and France, respectively, petitioners are indirect subsidiaries of Goodyear USA, an Ohio corporation also named as a defendant in the suit. Petitioners manufacture tires primarily for sale in European and Asian markets. Their tires differ in size and construction from tires ordinarily sold in the United States. They are designed to carry significantly heavier loads, and to serve under road conditions and speed limits in the manufacturers' primary markets. 

In contrast to the parent company, Goodyear USA, which does not contest the North Carolina courts' personal jurisdiction over it, petitioners are not registered to do business in North Carolina. They have no place of business, employees, or bank accounts in North Carolina. They do not design, manufacture, or advertise their products in North Carolina. And they do not solicit business in North Carolina or themselves sell or ship tires to North Carolina customers. Even so, a small percentage of petitioners' tires (tens of thousands out of tens of millions manufactured between 2004 and 2007) were distributed within North Carolina by other Goodyear USA affiliates. These tires were typically custom ordered to equip specialized vehicles such as cement mixers, waste haulers, and boat and horse trailers. Petitioners state, and respondents do not here deny, that the type of tire involved in the accident, a Goodyear Regional RHS tire manufactured by Goodyear Turkey, was never distributed in North Carolina.

Petitioners moved to dismiss the claims against them for want of personal jurisdiction. The trial court denied the motion, and the North Carolina Court of Appeals affirmed. Acknowledging that the claims neither “related to, nor . . . ar[o]se from, [petitioners'] contacts with North Carolina,” the Court of Appeals confined its analysis to “general rather than specific jurisdiction,” which the court recognized required a “higher threshold” showing: A defendant must have “continuous and systematic contacts” with the forum. That threshold was crossed, the court determined, when petitioners placed their tires “in the stream of interstate commerce without any limitation on the extent to which those tires could be sold in North Carolina.”  

Nothing in the record, the court observed, indicated that petitioners “took any affirmative action to cause tires which they had manufactured to be shipped into North Carolina.” The court found, however, that tires made by petitioners reached North Carolina as a consequence of a “highly-organized distribution process” involving other Goodyear USA subsidiaries. Petitioners, the court noted, made “no attempt to keep these tires from reaching the North Carolina market.” Indeed, the very tire involved in the accident, the court observed, conformed to tire standards established by the U. S. Department of Transportation and bore markings required for sale in the United States. As further support, the court invoked North Carolina's “interest in providing a forum in which its citizens are able to seek redress for [their] injuries,” and noted the hardship North Carolina plaintiffs would experience “[were they] required to litigate their claims in France,” a country to which they have no ties. The North Carolina Supreme Court denied discretionary review.

Issue:

Are foreign subsidiaries of a United States parent corporation amenable to suit in state court on claims unrelated to any activity of the subsidiaries in the forum State?

Reasoning:

A state court's assertion of jurisdiction exposes defendants to the State's coercive power, and is therefore subject to review for compatibility with the Fourteenth Amendment's Due Process Clause. Opinions in the wake of the pathmarking International Shoe decision have differentiated between general or all-purpose jurisdiction, and specific or case-linked jurisdiction. 

A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so “continuous and systematic” as to render them essentially at home in the forum State. Specific jurisdiction, on the other hand, depends on an “affiliatio[n] between the forum and the underlying controversy,” principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation. In contrast to general, all-purpose jurisdiction, specific jurisdiction is confined to adjudication of “issues deriving from, or connected with, the very controversy that establishes jurisdiction.”

II A

The Due Process Clause of the Fourteenth Amendment sets the outer boundaries of a state tribunal's authority to proceed against a defendant. The canonical opinion in this area remains International Shoe, in which we held that a State may authorize its courts to exercise personal jurisdiction over an out-of-state defendant if the defendant has “certain minimum contacts with [the State] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'"

Endeavoring to give specific content to the “fair play and substantial justice” concept, the Court in International Shoe classified cases involving out-of-state corporate defendants. First, as in International Shoe itself, jurisdiction unquestionably could be asserted where the corporation's in-state activity is “continuous and systematic” and that activity gave rise to the episode-in-suit. Further, the Court observed, the commission of certain “single or occasional acts” in a State may be sufficient to render a corporation answerable in that State with respect to those acts, though not with respect to matters unrelated to the forum connections. The heading courts today use to encompass these two International Shoe categories is “specific jurisdiction.” Adjudicatory authority is “specific” when the suit “aris[es] out of or relate[s] to the defendant's contacts with the forum.”

International Shoe distinguished from cases that fit within the “specific jurisdiction” categories, “instances in which the continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” Adjudicatory authority so grounded is today called “general jurisdiction.” For an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.

Since International Shoe, this Court's decisions have elaborated primarily on circumstances that warrant the exercise of specific jurisdiction, particularly in cases involving “single or occasional acts” occurring or having their impact within the forum State. As a rule in these cases, this Court has inquired whether there was “some act by which the defendant purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” 

B

Many States have enacted long-arm statutes authorizing courts to exercise specific jurisdiction over manufacturers when the events in suit, or some of them, occurred within the forum state. As the North Carolina Court of Appeals recognized, this provision of the State's long-arm statute “does not apply to this case,” for both the act alleged to have caused injury (the fabrication of the allegedly defective tire) and its impact (the accident) occurred outside the forum.

Flow of a manufacturer's products into the forum, we have explained, may bolster an affiliation germane to specific jurisdiction. But ties serving to bolster the exercise of specific jurisdiction do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant.

A corporation's “continuous activity of some sorts within a state,” International Shoe instructed, “is not enough to support the demand that the corporation be amenable to suits unrelated to that activity.”

North Carolina is not a forum in which it would be permissible to subject petitioners to general jurisdiction. Unlike the defendant in Perkins, whose sole wartime business activity was conducted in Ohio, petitioners are in no sense at home in North Carolina. Their attenuated connections to the State fall far short of the “the continuous and systematic general business contacts” necessary to empower North Carolina to entertain suit against them on claims unrelated to anything that connects them to the State.

Holding:

A connection so limited between the forum and the foreign corporation, we hold, is an inadequate basis for the exercise of general jurisdiction. Such a connection does not establish the “continuous and systematic” affiliation necessary to empower North Carolina courts to entertain claims unrelated to the foreign corporation's contacts with the State.


Name
Name
Is there anything we left out? Anything we should remove? Let us know your thoughts!