Citation. 131 S. Ct. 2846 (2011)
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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 has no general personal jurisdiction over a foreign subsidiary of a U.S. corporation if the subsidiary has no ongoing or organized business relationship with the state.
Two American boys were killed in a bus accident in France as the result, so the parents (P) claimed, of a defective tire manufactured at the Turkish subsidiary of Goodyear Tire and Rubber Company (D). The parents (P) sued Goodyear USA (D) and three of its subsidiaries (D) in Turkey, Luxembourg and France. Goodyear USA (D) is based in North Carolina but the subsidiaries (D) have no direct connection with the state as they have no place of business in North Carolina, no accounts in any bank in the state, nor do they employ any one in North Carolina. They also do not run or manage any advertising there nor do direct business there. Some of their products reach the distribution network through other Goodyear subsidiaries and are sold here. Thus the subsidiaries (D) claimed that the state of North Carolina had no personal jurisdiction in the case, and moved for dismissal of the case on this ground. This was denied by the trial court, and the decision was affirmed by the state Court of Appeals on the basis that the general jurisdiction of the court over the subsidiaries (D) existed because their products were distributed in the state through the stream of commerce.
The issue here is whether a foreign subsidiary of a U.S. corporation can be held to be under the general personal jurisdiction of a state when it lacks any organized or continuous business relationship with the state
(Ginsberg, J.) No.
A state does not have general personal jurisdiction over a foreign subsidiary of a U.S. corporation if there are no systematic and persistent business contacts between the state and the subsidiary. The precedent cited was International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) and cases based on it. Here a line was drawn between general and specific personal jurisdiction,such that general personal jurisdiction was explained as being due to a defendant being under the state’s laws as a result of continuous and systematic business relations with the state. The state therefore can exercise personal jurisdiction over the defendant for any legal claim, even if the claim should not be related to the subsidiary’s activities in the state. Specific personal jurisdiction is due to an existing connection between the state and the claim, and the state has jurisdiction only in that area. In the present case, the North Carolina courts failed to make this distinction. The single fact of the subsidiaries’ products being present in the state, without their being related in any way to the subject of the claim, and even though such presence was not owing to their actions, was used as justification for the exerciseof jurisdiction over them. The decision was therefore reversed.
The issue in this case was the difference to be made between the two kinds of personal jurisdiction, that is, general and specific. General jurisdiction means the state has authority to allow any claim against a defendant provided the defendant has organized and continuous relationship with the state. Specific jurisdiction means the state has authority to hear a claim against a defendant only in a specific instance where the state is connected to the subject of the claim. In the present case, as the accident and the manufacturer of the tire were both out of North Carolina, the state has no connection with the subject of the claim and hence has no specific jurisdiction. General jurisdiction also could not be allowed because of the stream-of-commerce exception.