By Kimberly Atkins
The Daily Record Newswire
On Tuesday, the justices of the U.S. Supreme Court considered two cases with a common basic question: just when can American plaintiffs file product liability suits against foreign manufacturers in American courts?
In separate oral arguments, the Court took up J. McIntyre Machinery v. Nicastro, which considers when U.S. courts can exercise specific personal jurisdiction over a foreign corporation, and Goodyear Dunlop Tires Operations v. Brown (formerly Goodyear Luxembourg Tires v. Brown), which involves the question of general personal jurisdiction.
In J. McIntyre, scrap metal plant worker Robert Nicastro had four of his fingers severed as he used a shear machine manufactured by British company J. McIntyre. The company sold the machine through a U.S. distributor, McIntyre Machinery of America (MMA), a distinct corporate entity from J. McIntyre. The foreign company marketed its products at trade shows and conventions throughout the United States.
Nicastro filed a product liability action against J. McIntyre in a New Jersey court. The court granted the company's motion to dismiss for lack of personal jurisdiction. The New Jersey Appellate Division reversed, holding that personal jurisdiction was proper since the company put its products into the stream of commerce. The New Jersey Supreme Court affirmed, holding that the company targeted the entire United States for sales of its products directly and through its Ohio-based distributor MMA.
Goodyear involved a bus accident in France that killed two American teenagers. It was determined that faulty Goodyear tires contributed to the crash. European Goodyear tires are manufactured in Luxembourg, France and Turkey for use primarily in Europe, although a small number -- about 45,000 of the 9 million made in Europe - are exported to the United States for specialized vehicles. The tires were never distributed in North Carolina.
The teens' parents filed suit against the tire maker in North Carolina court, and the company moved to dismiss for lack of personal jurisdiction. The court denied the motion and the North Carolina Court of Appeals affirmed, holding that it could exercise general jurisdiction against the company because its systematic and continuous ties with the state were substantial. The North Carolina Supreme Court declined to review the case.
The U.S. Supreme Court granted the companies' requests for certiorari.
Arthur F. Fergenson, of counsel in the Ellicott City, Md., office of Ansa Assuncao, argued on J. McIntyre's behalf that the England-based company never intended to open itself up to suit in a New Jersey court.
"J. McIntyre did not direct any activity at residents of New Jersey either itself or by directing its distributor MMA to do so," Fergenson said.
"You targeted the entire United States," Justice Elena Kagan said. "Why shouldn't there be jurisdiction in each of the states you targeted?"
Justice Antonin Scalia chimed in, answering Kagan's question.
"This is specific jurisdiction," Scalia said. "So the question is, when you target the entire United States [and] an accident occurs within one of those states, are you subject to jurisdiction in that state for that accident? ... Not generally, but just for a claim based on that accident."
Alexander W. Ross of the law firm of Rakoski & Ross in Marlton, N.J., argued for Nicastro that the company is trying to profit from sales in the United States while shielding itself from liability.
"'All we wish to do is sell our products in the States and get paid.' That's what the British manufacturer said," Ross said.
Justice Stephen Breyer wondered if a ruling for the plaintiff in this case would be bad for small businesses.
"We have a lot of small businesses," Breyer said. "I'd worry about a rule of law that subjects every small business in every developing country to have to be aware of the law in 50 states simply because they agreed to sell to an independent company [that] is going to sell to America."
Ross noted that the British company purposely exposed itself to jurisdiction by attending trade shows to sell its products throughout the United States. "I think that the manufacturer has done more than just intend to sell," Ross said.
In the second argument, Meir Feder, a partner in the New York office of Jones Day, argued for Goodyear that "the mere sale of a defendant's products in a state does not permit the state to reach out to assert judicial power."
"If that were permissible, every significant seller of products would be subject to suit everywhere on any claim arising anywhere," Feder said.
When several justices questioned why, if Goodyear's U.S. distributor would be subject to personal jurisdiction, the doctrine of respondeat superior wouldn't create jurisdiction for the foreign company as well, Feder said the plaintiffs waived that issue.
"We haven't resolved a whole lot if we leave that question open, have we?" asked Scalia. "Is that the kind of an opinion that the world is waiting for?"
"If the Court were to write that [opinion], it would be left with the important general jurisdiction question that the court below decided incorrectly," Feder said.
When Benjamin J. Horwich, assistant to the solicitor general, argued as amicus in favor of Goodyear, Justice Anthony Kennedy asked why the Justice Department chose to participate in the second case, but not the first.
"The difference in our interest in the two cases is at bottom just a difference in magnitude, but we think it's a fairly significant difference in magnitude" between general jurisdiction and specific jurisdiction, Horwich said.
Collyn Peddie, a Houston solo appellate attorney, argued on the bus victim's family's behalf that the Court has long recognized "that commercial activities, when they're conducted on behalf of an out-of-state party, can" create personal jurisdiction.
"We don't have anything in the record about this being a unitary business," said Ginsburg. "Unless you're trying to present some sweeping, piercing the corporate veil theory, there is nothing here that says that."
A decision from the Court is expected later this term.
Published: Fri, Jan 14, 2011
