Wading Through the Stream of Commerce: When Can Foreign Manufacturers Expect to be Subject to Specific Jurisdiction in United States Courts?

Abstract

THE QUESTION of whether a court may exercise personal jurisdiction over foreign product manufacturers on the basis of introducing goods into the of has produced much litigation and confusion since that phrase was introduced in World-Wide Volkswagen Corp. v. Woodson. (1) Recently, after two decades of relative silence, the United States Supreme Court attempted to clarify the stream-of-commerce doctrine in J. McIntyre Machinery, Ltd. v. Nicastro (2) and Goodyear Dunlop Tires Operations, S.A. v. Brown. (3) Unfortunately, although Goodyear articulated some helpful limits on general jurisdiction, neither decision clarified the stream-of-commerce theory of specific jurisdiction. As a result, foreign manufacturers continue to face uncertainty about when they can expect to be haled into a particular United States court under that theory. This article discusses the origins of the stream-of-commerce doctrine and its development through the years, including the Supreme Court's most recent decisions on the issue--McIntyre and Goodyear. Despite the confusion left intact after McIntyre and Goodyear, as a practical matter, courts have tended to focus on three broad factors in deciding whether to assert specific jurisdiction over foreign manufacturers. Those factors are: a manufacturer's awareness of or control over downstream distribution, the volume of product that enters the market, and the manufacturer's with the United States overall as compared to the forum where suit is brought. This article discusses a number of representative post-McIntyre cases that consider these factors in their analyses of stream-of-commerce jurisdiction and provides a list of specific facts that may inform a court's analysis of these three factors in a given case. I. The Origins and Development of the Stream-of-Commerce Doctrine A. Origins of, and Confusion Over, the Doctrine In addition to any restrictions that a state's particular long-arm statute may provide, federal constitutional due process requires that the defendant have certain minimum with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' (4) Minimum contacts requires the defendant to have purposefully avail[ed] itself of the privilege of conducting activities within the forum State. (5) Purposeful availment may arise when a manufacturer introduces goods into the of commerce, a phrase introduced by the Supreme Court in World-Wide Volkswagen. In that case, the Court said, in dicta, that [t]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a [foreign] corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. (6) Seizing upon this language, some lower courts asserted that a manufacturer can be subject to jurisdiction simply by introducing goods into the stream of commerce. (7) The Supreme Court again addressed the stream-of-commerce theory in Asahi Metal Industry Co., Ltd. v. Superior Court of California. (8) Asahi was a product liability action arising out of a motorcycle accident. The rider of the motorcycle asserted that he was injured and that his passenger was killed because the motorcycle's rear tire exploded. The rider brought suit in California state court against both the Taiwanese manufacturer of the tire tube and the Japanese manufacturer of the tube's valve assembly. The Taiwanese manufacturer filed a crossclaim seeking indemnification from the Japanese manufacturer. The injured rider eventually settled his own claims, leaving only the crossclaim by the Taiwanese manufacturer against the Japanese manufacturer, and the Japanese manufacturer moved to dismiss on the basis of a lack of personal jurisdiction. Ultimately, the Supreme Court held, in a part of an opinion authored by Justice O'Connor and joined by seven other Justices, that jurisdiction over the Japanese manufacturer would be unreasonable and unfair. …