This article previously appeared in Last Month at the Federal Circuit, July, 2011.

Justice Kennedy delivered the opinion of the Court, in which Chief Justice Roberts and Justices Scalia and Thomas joined.  Justice Breyer filed an opinion concurring in the judgment, in which Justice Alito joined.  Justice Ginsburg filed a dissenting opinion, in which Justices Sotomayor and Kagan joined.

[Appealed from N.J. Sup. Ct.]

In J. McIntyre Machinery, Ltd. v. Nicastro, No. 09-1343 (U.S. June 27, 2011), the Supreme Court reversed the judgment of the New Jersey Supreme Court that New Jersey state courts can exercise jurisdiction over a foreign manufacturer without contravening the Fourteenth Amendment's Due Process Clause.  In so doing, the Court addressed the decades-old question of "[w]hether a person or entity is subject to the jurisdiction of a state court despite not having been present in the State either at the time of suit or at the time of the alleged injury, and despite not having consented to the exercise of jurisdiction."  Slip op. at 1.

Robert Nicastro injured his hand in New Jersey while using a metal-shearing machine manufactured by petitioner J. McIntyre Machinery, Ltd. ("J. McIntyre").  The machine was made in England, where J. McIntyre is incorporated and operates.  J. McIntyre at no time marketed goods in New Jersey or shipped them there; instead, J. McIntyre sold its goods to a U.S. distributor, who in turn sold the machines in the United States.  Although J. McIntyre's officials attended trade shows in the United States, none were in New Jersey.  No more than four J. McIntyre machines (the record suggested only one), including the one that allegedly caused Nicastro's injuries, ended up in New Jersey.

Nicastro sued J. McIntyre in New Jersey state court, and J. McIntyre sought to dismiss the suit for lack of personal jurisdiction.  The New Jersey Supreme Court held that the state court can exercise jurisdiction over a foreign manufacturer so long as it knew or reasonably should have known that its products are distributed through a nationwide distribution system that might lead to sales in any of the fifty states, and failed to take any reasonable steps to prevent the distribution of its products in the forum State.  The Supreme Court granted certiorari.

Justice Kennedy's plurality opinion, joined by three other Justices, focused on jurisdiction over disputes that "arise out of or are connected with the activities within the state."  Id. at 6 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)).  In such cases, the principal inquiry is "whether the defendant's activities manifest an intention to submit to the power of a sovereign," i.e., purposeful availment of the benefits and protections of the forum State's laws.  Id. at 7.  Justice Kennedy advocated the explanation provided in Justice O'Connor's concurrence (for four Justices) in Asahi Metal Industry Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102 (1987), that "[t]he placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State."  Slip op. at 8.  Thus, contrary to the standard stated in Justice Brennan's concurrence (for four Justices) in Asahi, which "made foreseeability the touchstone of jurisdiction," id. at 7, the Court's precedent supports a standard in which "it is the defendant's actions, not his expectations, that empower a State's courts to subject him to judgment," id. at 7-8.

In this case, Justice Kennedy focused on J. McIntyre's "purposeful contacts with New Jersey, not with the United States" as the relevant question.  Id. at 11.  Nicastro's claim of jurisdiction centered on three facts in support of jurisdiction:  (1) a distributor selling J. McIntyre's machines in the United States, (2) J. McIntyre officials attending trade shows in several States but not in New Jersey, and (3) up to four machines ending up in New Jersey.  While all are targeted "to serve the U.S. market, . . . they do not show that J. McIntyre purposefully availed itself of the New Jersey market."  Id.  Because "the stream-of-commerce metaphor cannot supersede either the mandate of the Due Process Clause or the limits on judicial authority that Clause ensures," Justice Kennedy reversed the judgment of the New Jersey Supreme Court.  Id. at 11-12.

Justice Breyer filed a separate opinion concurring in the judgment but not the plurality's reasoning.  Justice Breyer acknowledged that to exercise jurisdiction, Justice O'Connor's concurrence in Asahi required "'something more' than simply placing 'a product into the stream of commerce,' even if defendant is 'awar[e]' that the stream 'may or will sweep the product into the forum State.'"  Breyer Concurrence at 3 (alteration in original) (quoting Asahi, 480 U.S. at 111, 112).  Indeed, he noted that
"[n]one of our precedents finds that a single isolated sale, even if accompanied by the kind of sales effort indicated here, is sufficient."  Id. at 2.

According to Justice Breyer, this case should be decided narrowly to reverse the judgment of the New Jersey Supreme Court because Nicastro failed to carry his burden of proving jurisdiction and has not shown any specific effort by J. McIntyre to sell in New Jersey.  Id. at 1-2.  However, Justice Breyer declined to "refashion basic jurisdictional rules" because this case was not a suitable vehicle.  Id. at 4.  Instead, he would wait for a future case in which the Solicitor General participates to consider any change to the law in view of "many recent changes in commerce and communication" with "full consideration of the modern-day consequences."  Id. at 1, 7.

In a dissenting opinion, Justice Ginsburg strongly disagreed with the splintered majority.  While agreeing that J. McIntyre is not subject to general jurisdiction, Justice Ginsburg disagreed on whether specific jurisdiction exists based on "affiliatio[n] between the forum and the underlying controversy."  Ginsburg Dissent at 7 (alteration in original) (citation omitted).  In her view, J. McIntyre's goal "is simply to sell as much as it can, wherever it can," id. at 1, and J. McIntyre likely targeted New Jersey, "the hotbed of scrap-metal businesses," for its three-ton metal-shearing machines, id. at 3.  In fact, "[t]his case is illustrative of marketing arrangements for sales in the United States common in today's commercial world," where a "foreign-country manufacturer engages a U.S. company to promote and distribute the manufacturer's products."  Id. at 10.

Justice Ginsburg urged that "[w]hen industrial accidents happen, a long-arm statute in the State where the injury occurs generally permits assertion of jurisdiction."  Id. at 11.  Here, J. McIntyre purposefully availed itself of the "United States market nationwide, not a market in a single State or a discrete collection of States."  Id. at 13.  And a fair place of suit within the United States should be a question of venue, not jurisdiction.  Id.  Accordingly, Justice Ginsburg would hold J. McIntyre subject to the jurisdiction of New Jersey courts where the injury occurred.  To hold otherwise "would take a giant step away from the 'notions of fair play and substantial justice' underlying International Shoe."  Id. at 19 (citation omitted).

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