Brief Fact Summary.
Two American boys living in North Carolina were killed in a bus accident in France. Their parents filed against the tire company in North Carolina.
Synopsis of Rule of Law.
A state court may not exercise general jurisdiction over a foreign subsidiary of a United States-based corporation unless the subsidiary engages in such continuous and systematic activities as to render it essentially at home in the forum state.
Although the claim-in-suit did not arise in Ohio, the Court ruled that it would not violate due process for Ohio to adjudicate the controversy.View Full Point of Law
Plaintiffs filed a wrongful-death suit in North Carolina state court against Defendants. Plaintiffs alleged that a defective tire manufactured in Goodyear’s Turkey plant was the cause of the accident. Although Goodyear USA regularly conducted business in North Carolina and agreed to submit to the court’s jurisdiction, its subsidiaries did not. The subsidiaries argued that the state court lacked jurisdiction over them and filed a motion in the trial court to dismiss the claims. The trial court denied the motion, and the subsidiaries appealed. The North Carolina Court of Appeals affirmed. The United States Supreme Court granted certiorari to review.
May a consumer sue a foreign manufacturer in a U.S. court when the manufacturer’s only connection with the United States is that another company sells its products in this country?
No. The court reversed the lower court order, holding that a connection so limited between the forum and the foreign corporation is an inadequate basis for the exercise of general jurisdiction.
A state court may not exercise general jurisdiction over a foreign subsidiary of a United States-based corporation unless the subsidiary engages in such continuous and systematic activities as to render it essentially at home in the forum state. Under International Shoes, there is general jurisdiction if a defendant’s continuous corporate activity within a state is substantial enough to justify a suit against the defendant even if the cause of action has nothing to do with its in-state corporate activities. For an individual, this place of general jurisdiction is the individual’s domicile. For a corporation, it is the place in which the corporation is regarded at home, such as its place of incorporation or principal place of business.
Here, the North Carolina courts relied on the subsidiaries placing tires into the “stream of commerce” to justify the exercise of general jurisdiction over them in the state. However, merely placing a product into the stream of commerce in a state is insufficient to subject the entity to suits unrelated to that activity. North Carolina is not a forum in which the subsidiaries are at home. The subsidiaries’ sale of some tires in North Carolina through intermediaries is not a continuous, systematic business contact with the state sufficient to warrant the exercise of general jurisdiction over them. Therefore, the appellate court’s judgment was reversed.