Jurisdiction Over Foreign Entities

Jurisdiction Over Foreign Entities in us Courts in 2011

United States views on international law (based on the document “Digest of U.S. Practice in International Law”): As discussed in in this legal Encyclopedia, the U.S. Supreme Court heard two cases in tandem in 2010 concerning state courts' jurisdiction over foreign manufacturers in products liability cases. The Supreme Court issued its opinions in both cases on June 27, 2011. Goodyear Dunlop Tires Ops. v. Brown, No. 10-76, 131 S.Ct. 2846 (2011); J. McIntyre Machinery v. Nicastro, No. 09-1343, 131 S.Ct. 2780 (2011).

In McIntyre, the Supreme Court held by a 6-3 majority that the New Jersey court improperly exercised jurisdiction over a foreign manufacturer in a case arising out of an accident that occurred in New Jersey involving that manufacturer's product. The majority, in two separate opinions, found that exercising jurisdiction would violate the Due Process Clause of the Fourteenth Amendment of the Constitution because the foreign manufacturer never engaged in activity purposely directed at New Jersey. The dissenting opinion asserted that the nature of modern commerce, with products marketed nationwide and even worldwide, mitigated any unfairness of exercising jurisdiction over a foreign manufacturer in the state where its product caused an injury. The excerpt below from the plurality opinion explains the court's weighing of the foreign manufacturer's contacts with and activities in the state of New Jersey (with footnotes and references to the record in the case omitted).

Developments

In this case, petitioner directed marketing and sales efforts at the United States. It may be that, assuming it were otherwise empowered to legislate on the subject, the Congress could authorize the exercise of jurisdiction in appropriate courts. That circumstance is not presented in this case, however, and it is neither necessary nor appropriate to address here any constitutional concerns that might be attendant to that exercise of power. See Asahi, 480 U. S., at 113, n. Nor is it necessary to determine what substantive law might apply were Congress to authorize jurisdiction in a federal court in New Jersey. See Hanson, 357 U. S., at 254 (“The issue is personal jurisdiction, not choice of law”). A sovereign's legislative authority to regulate conduct may present considerations different from those presented by its authority to subject a defendant to judgment in its courts. Here the question concerns the authority of a New Jersey state court to exercise jurisdiction, so it is petitioner's purposeful contacts with New Jersey, not with the United States, that alone are relevant.

Respondent has not established that J. McIntyre engaged in conduct purposefully directed at New Jersey. Recall that respondent's claim of jurisdiction centers on three facts: The distributor agreed to sell J. McIntyre's machines in the United States; J. McIntyre officials attended trade shows in several States but not in New Jersey; and up to four machines ended up in New Jersey. The British manufacturer had no office in New Jersey; it neither paid taxes nor owned property there; and it neither advertised in, nor sent any employees to, the State. Indeed, after discovery the trial court found that the “defendant does not have a single contact with New Jersey short of the machine in question ending up in this state.” These facts may reveal an intent to serve the U. S. market, but they do not show that J. McIntyre purposefully availed itself of the New Jersey market.

It is notable that the New Jersey Supreme Court appears to agree, for it could “not find that J. McIntyre had a presence or minimum contacts in this State—in any jurisprudential sense—that would justify a New Jersey court to exercise jurisdiction in this case.” 201 N. J., at 61, 987 A. 2d, at 582. The court nonetheless held that petitioner could be sued in New Jersey based on a “stream-of-commerce theory of jurisdiction.” Ibid. As discussed, however, the stream-of-commerce metaphor cannot supersede either the mandate of the Due Process Clause or the limits on judicial authority that Clause ensures. The New Jersey Supreme Court also cited “significant policy reasons” to justify its holding, including the State's “strong interest in protecting its citizens from defective products.” Id., at 75, 987 A. 2d, at 590. That interest is doubtless strong, but the Constitution commands restraint before discarding liberty in the name of expediency.

Details

Due process protects petitioner's right to be subject only to lawful authority. At no time did petitioner engage in any activities in New Jersey that reveal an intent to invoke or benefit from the protection of its laws. New Jersey is without power to adjudge the rights and liabilities of J. McIntyre, and its exercise of jurisdiction would violate due process. The contrary judgment of the New Jersey Supreme Court is Reversed In Goodyear, the Court unanimously reversed the North Carolina court's assertion of jurisdiction over Goodyear's foreign subsidiaries in a case arising out of an accident that occurred in Paris involving Goodyear tires manufactured abroad. The facts of the case and the U.S. amicus brief supporting reversal are discussed in Digest 2010 at 611-19. Excerpts below from the Supreme Court's opinion explain the error of the North Carolina courts in asserting general jurisdiction based on the notion of a product's placement into the “stream of commerce.” Footnotes and citations to the state court's decision in the case have been omitted.

To justify the exercise of general jurisdiction over petitioners, the North Carolina courts relied on the petitioners' placement of their tires in the “stream of commerce.” The stream-of-commerce metaphor has been invoked frequently in lower court decisions permitting “jurisdiction in products liability cases in which the product has traveled through an extensive chain of distribution before reaching the ultimate consumer.” 18 W. Fletcher, Cyclopedia of the Law of Corporations §8640.40, p. 133 (rev. ed. 2007). Typically, in such cases, a nonresident defendant, acting outside the forum, places in the stream of commerce a product that ultimately causes harm inside the forum.…

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. For example, the “Local Injury; Foreign Act” subsection of North Carolina's long-arm statute authorizes North Carolina courts to exercise personal jurisdiction in “any action claiming injury to person or property within this State arising out of [the defendant's] act or omission outside this State,” if, “in addition[,] at or about the time of the injury,” “[p]roducts . . .manufactured by the defendant were used or consumed, within this State in the ordinary course of trade.” N. C. Gen. Stat. Ann. §1–75.4(4)(b) (Lexis 2009).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.

The North Carolina court's stream-of-commerce analysis elided the essential difference between case-specific and all-purpose (general) jurisdiction. Flow of a manufacturer's products into the forum, we have explained, may bolster an affiliation germane to specific jurisdiction. See, e.g., World-Wide Volkswagen, 444 U. S., at 297 (where “the sale of a product . . . is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve . . . the market for its product in [several] States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others” (emphasis added)). 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. See, e.g., Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distributors Pty. Ltd., 647 F. 2d 200, 203, n. 5 (CADC 1981) (defendants' marketing arrangements, although “adequate to permit litigation of claims relating to [their] introduction of . . . wine into the United States stream of commerce, . . . would not be adequate to support general, Ôall purpose' adjudicatory authority”).

More about the Issue

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.” 326 U. S., at 318. the U.S. 1952 decision in Perkins v. Benguet Consol. Mining Co. remains “[t]he textbook case of general jurisdiction appropriately exercised over a foreign corporation that has not consented to suit in the forum.” Donahue v. Far Eastern Air Transport Corp., 652 F. 2d 1032, 1037 (CADC 1981).

Sued in Ohio, the defendant in Perkins was a Philippine mining corporation that had ceased activities in the Philippines during World War II. To the extent that the company was conducting any business during and immediately after the Japanese occupation of the Philippines, it was doing so in Ohio: the corporation's president maintained his office there, kept the company files in that office, and supervised from the Ohio office “the necessarily limited wartime activities of the company.” Perkins, 342 U. S., at 447–448. Although the claim-in-suit did not arise in Ohio, this Court ruled that it would not violate due process for Ohio to adjudicate the controversy. Ibid.; see Keeton v. Hustler Magazine, Inc., 465 U. S. 770, 779–780, n. 11 (1984) (Ohio's exercise of general jurisdiction was permissible in Perkins because “Ohio was the corporation's principal, if temporary, place of business”).

We next addressed the exercise of general jurisdiction over an out-of-state corporation over three decades later, in Helicopteros. In that case, survivors of United States citizens who died in a helicopter crash in Peru instituted wrongful-death actions in a Texas state court against the owner and operator of the helicopter, a Colombian corporation. The Colombian corporation had no place of business in Texas and was not licensed to do business there. “Basically, [the company's] contacts with Texas 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] for substantial sums; and sending personnel to [Texas] for training.” 466 U. S., at 416. These links to Texas, we determined, 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. Id., at 415–416 (internal quotation marks omitted).

Jurisdiction Over Foreign Entities in us Courts in 2011

United States views on international law (based on the document “Digest of U.S. Practice in International Law”): Helicopteros concluded that “mere purchases [made in the forum State], even if occurring at regular intervals, are not enough to warrant a State's assertion of [general] jurisdiction over a nonresident corporation in a cause of action not related to those purchase transactions.” Id., at 418. We see 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. Under the sprawling view of general jurisdiction urged by respondents and embraced by the North Carolina Court of Appeals, any substantial manufacturer or seller of goods would be amenable to suit, on any claim for relief, wherever its products are distributed. But cf. World-Wide Volkswagen, 444 U. S., at 296 (every seller of chattels does not, by virtue of the sale, “appoint the chattel his agent for service of process”).

Measured against Helicopteros and Perkins, 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. Helicopteros, 466 U. S., at 416.

Jurisdiction Over Foreign Entities in U.S. Courts in 2013

United States views on international law [1] in relation to Jurisdiction Over Foreign Entities in U.S. Courts: On July 5, 2013, the United States submitted a brief as amicus curiae in support of petitioner, DaimlerChrysler, in a case on appeal from the U.S. Court of Appeals for the Ninth Circuit, DaimlerChrysler AG v. Bauman, No. 11-965. The question presented on appeal was whether the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution permits a court to exercise general personal jurisdiction over an out-ofstate corporation based on its subsidiary's contacts with a U.S. state , in a case not arising out of, or related to, either corporations' contacts with the U.S. state. Plaintiffs in the district court brought suit against German company DaimlerChrysler, alleging that DaimlerChrysler's Argentinian subsidiary had collaborated with state forces during Argentina's “Dirty War” in the 1970s and 1980s. The district court dismissed for lack of personal jurisdiction. The court of appeals initially affirmed, but reversed on rehearing. The appeals court reasoned primarily that another of DaimlerChrysler's subsidiaries, Mercedes-Benz United States, LLC (“MBUSA”), performed services for DaimlerChrysler in California that were sufficiently important to the parent company and that there was an element of control by the parent so as to allow for attribution of activities to the parent for jurisdictional purposes. Excerpts below from the U.S. amicus brief (with most footnotes omitted) argue that the court of appeals erred, noting that it did not take into account the Supreme Court's decision in Goodyear, discussed in this world legal encyclopedia (in relation to issues that took place in the year 2011) at 458-62, which was decided after the DaimlerChrysler appeal was decided.**

Some Aspects of Jurisdiction Over Foreign Entities in U.S. Courts

INTEREST OF THE UNITED STATES

This case concerns a federal court's exercise of personal jurisdiction over a foreign parent corporation based on its subsidiary's contacts with the State in which the federal court sits, in a case not arising out of, or related to, either entity's contacts with the State. This Court has referred to such a claim of adjudicatory authority as “general” personal jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011). In some instances, the interests of the United States are served by permitting suits against foreign entities to go forward in domestic courts. But expansive assertions of general jurisdiction over foreign corporations may operate to the detriment of the United States' diplomatic relations and its foreign trade and economic interests. See U.S. Br. at 1-2, 28-34, Goodyear, in this world legal Encyclopedia (No. 10-76) (U.S. Goodyear Br.). Those concerns would only be magnified under the court of appeals' framework, which fails even to give foreign defendants fair warning of what conduct would subject them to suit in domestic courts, and thus leaves them unable “to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.” WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).

Developments

From an economic perspective, the inability to predict the jurisdictional consequences of commercial or investment activity may be a disincentive to that activity. Likewise, an enterprise may be reluctant to invest or do business in a forum, if the price of admission is consenting to answer in that forum for all of its conduct worldwide. The uncertain threat of litigation in United States courts, especially for conduct with no significant connection to the United States, could therefore discourage foreign commercial enterprises from establishing channels for the distribution of their goods and services in the United States, or otherwise making investments in the United States. Such activities are likely to be undertaken through domestic subsidiaries and thus are likely to implicate the decision below.

Details

From a diplomatic perspective, foreign governments' objections to some domestic courts' expansive views of general jurisdiction have in the past impeded negotiations of international agreements on the reciprocal recognition and enforcement of judgments. See Friedrich K. Juenger, The American Law of General Jurisdiction, 2001 U. Chi. Legal F. 141, 161-162. The conclusion of such international compacts is an important foreign policy objective because such agreements serve the United States' interest in providing its residents a fair, sufficiently predictable, and stable system for the resolution of disputes that cross national boundaries.

More

The United States has a further interest in preserving the federal government's legislative and regulatory flexibility to foster those trade, investment, and diplomatic interests, while assuring a domestic forum to adjudicate appropriate cases. This case does not directly implicate that interest. It does not, for example, involve an Act of Congress addressing the relationship between a parent corporation and its subsidiary, or reflecting Congress's judgment concerning relevant contacts with a forum for jurisdictional purposes. And it presents a question under the Due Process Clause of the Fourteenth Amendment, while exercises of the federal judicial power are, as a constitutional matter, constrained instead by the Due Process Clause of the Fifth Amendment.1 Nonetheless, because the political Branches are well positioned to determine when the exercise of personal jurisdiction will, on balance, further the United States' interests, the United States has an interest in ensuring proper regard for their judgments in this field.

More

ARGUMENT

The court of appeals applied a rule for attributing a subsidiary's forum contacts to its foreign parent that is inconsistent with due process, and indeed is not grounded in any applicable law shaping petitioner's expectations about the jurisdictional consequences of its corporate affiliations. Even apart from its flawed approach to attribution of contacts, the court below embraced the startling conclusion that the relatively small fraction of a German manufacturer's production sold in California by a corporate affiliate permits that State's courts to bind the German corporation to judgment on potentially any claim, arising anytime, anywhere in the world. Goodyear puts that result in doubt by holding that a forum court may properly exercise general jurisdiction only over corporations that are “essentially at home in the forum.” 131 S. Ct. at 2851.

Jurisdiction Over Foreign Entities in U.S. Courts in 2013 (Continuation)

United States views on international law [1] in relation to Jurisdiction Over Foreign Entities in U.S. Courts: A. The Ninth Circuit's Decision Did Not Take Account Of Goodyear

The court of appeals' approach would hold a foreign parent corporation subject to general jurisdiction in a forum whenever the parent has an element of control over its subsidiary that makes substantial sales in the forum State of products manufactured and sold abroad by the foreign parent. The lower court endorsed that approach without the benefit of this Court's decision in Goodyear, which was announced a month after the panel's decision. The result below is difficult to square with Goodyear's reaffirmation of the principle that a State may bind a corporation to judgment on any claim arising anywhere in the world only when the corporation's “affiliations with the State are so 'continuous and systematic' as to render [it] essentially at home in the forum State,” 131 S.Ct. at 2851.

More about Jurisdiction Over Foreign Entities in U.S. Courts

1. Because the foreign corporate defendants in Goodyear had only “attenuated connections to the [forum] State” that “f[e]ll far short” of the standard for exercising general jurisdiction, 131 S. Ct. at 2857, this Court did not have occasion there to explain what kinds of contacts would establish that a defendant is “essentially at home” in a particular forum.

Development

…Whatever precise rule emerges from Goodyear, we understand the Court's test to be appropriately demanding, given that an exercise of general jurisdiction subjects a defendant to suit for any claim arising anytime, anywhere in the world.

Details

The Ninth Circuit's approach is very different. As the court of appeals acknowledged, its “agency” test “has its origins in case law from the Second Circuit,” Pet. App. 32a. In particular, Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 423 (9th Cir. 1977), adopted the test in Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116, 121 (2d Cir. 1967), cert. denied, 390 U.S. 966 (1968). Gelfand in turn drew its standard from New York cases, most prominently Frummer v. Hilton Hotels International, Inc., 227 N.E.2d 851, 852-854 (N.Y.), cert. denied, 389 U.S. 923 (1967). Frummer applied a principle of “[t]raditional” New York personal jurisdiction law, viz., that New York courts have general jurisdiction over a foreign corporation “engaged in such a continuous and systematic course of 'doing business' [in New York] as to warrant a finding of its 'presence' in this jurisdiction.” Id. at 853 (citation omitted). That principle traces back decades before International Shoe, to cases such as Tauza v. Susquehanna Coal Co., 115 N.E. 915 (N.Y. 1917) (Cardozo, J.), which held that a Pennsylvania coal company's maintenance of a “branch office in New York” for salesmen, “contain[ing] eleven desks, and other suitable equipment,” subjected it to general jurisdiction in New York. Id. at 916-917. At bottom, therefore, the Ninth Circuit's test articulates what it meant a century ago for an out-of-state corporation to be “doing business” in New York, and then extends that test through a nontraditional concept of “agency” to attribute a subsidiary's “doing business” to its foreign parent.

More

Substantial reason exists to doubt the continuing vitality of the Ninth Circuit's concept of general jurisdiction. The analysis below is unmoored from this Court's “continuous and systematic” test for general jurisdiction, obligingly quoting it once (Pet. App. 20a) but never mentioning it again. More broadly speaking, a foreign corporation that merely does business in the forum State would not necessarily be “essentially at home” there. The “doing business” approach to general jurisdiction has been a source of contention in diplomatic contexts, see U.S. Goodyear Br. at 33 n.14, and has been subject to extensive scholarly criticism, see, e.g., Essen tially at Home, 63 S.C. L. Rev. at 545-548; General Jurisdiction, 66 Tex. L. Rev. at 758759, 781.

Jurisdiction Over Foreign Entities in U.S. Courts

In relation to the international law practice and Jurisdiction Over Foreign Entities in U.S. Courts in this world legal Encyclopedia, please see the following section:

Educational Issues, Cultural Issues

About this subject:

Cultural Property: Import Restrictions

. Note: there is detailed information and resources, in relation with these topics during the year 2011, covered by the entry, in this law Encyclopedia, about Italy

Resources

See Also

• Private International Law
• International Civil Litigation
• Jurisdiction
• Courts

Resources

See Also

• Private International Law
• International Civil Litigation
• Jurisdiction
• Courts

Resources

Notes

1. Jurisdiction Over Foreign Entities in U.S. Courts in the Digest of United States Practice in International Law

Resources

Notes

1. Jurisdiction Over Foreign Entities in U.S. Courts in the Digest of United States Practice in International Law