June 27, 2011

Supreme Court Decides Goodyear Dunlop Tires Operations, S. A. v. Brown

On June 27, 2011, the U.S. Supreme Court decided Goodyear Dunlop Tires Operations, S.A. v. Brown, No. 10-76, holding the Fourteenth Amendment's Due Process Clause does not permit a state to exercise "general" personal jurisdiction over a foreign subsidiary of a U.S. corporation where the subsidiary lacks continuous and systematic business contacts with the state. 

The parents of two boys who were killed in a bus accident in France brought suit in North Carolina state court against Goodyear Tire and Rubber Company and three Goodyear subsidiaries operating in Turkey, France, and Luxembourg.  Plaintiffs claimed that the accident resulted from a defective tire manufactured at the Turkish subsidiary's plant.  Although Goodyear USA operates in North Carolina, the three foreign subsidiaries have no place of business, employees, or bank accounts in the state and neither solicit nor do business in the state.  However, a small percentage of the subsidiaries' tires were distributed in North Carolina by other Goodyear USA affiliates.  The subsidiaries moved to dismiss the claims against them for lack of personal jurisdiction.  The trial court denied the motion, and the North Carolina Court of Appeals affirmed, holding that the court had general jurisdiction over the subsidiaries because their tires had reached the state through "the stream of commerce."

The Supreme Court reversed.  Relying heavily on International Shoe Co. v. Washington, 326 U. S. 310, 316 (1945) and its progeny, the Court reiterated its distinction between general and specific personal jurisdiction.  General personal jurisdiction arises from a defendant's "continuous and systematic" affiliation with a state and permits a state to exercise personal jurisdiction over the defendant for any claim, regardless of whether the claim itself has any connection to the defendant's activities in the state.  In contrast, specific personal jurisdiction arises from a connection between the state and the underlying claim, and permits a state to exercise jurisdiction only with respect to that claim.  Here, the Court held, the North Carolina courts had improperly conflated the two types of jurisdiction, improperly using the isolated presence of the subsidiaries' products in the state as a result of others' actions to justify jurisdiction over the subsidiaries for claims having nothing to do with those products. 

Justice Ginsburg delivered the opinion for a unanimous Court. 

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