At the end of its recent term, the United States Supreme Court
decided J. McIntyre Machinery, Ltd. v. Nicastro (Case No. 09-1343,
June 27, 2011). In McIntyre Machinery, the Court reversed a
decision by the Supreme Court of New Jersey, finding that the New
Jersey courts improperly asserted jurisdiction over an English
machinery manufacturer in a product liability suit brought by an
individual who was injured while using the manufacturer's
product in New Jersey.
The facts of the case are as follows: The defendant, McIntyre
Machinery, is an English company that manufactures metal shearing
devices used in the scrap metal industry. The plaintiff, Robert
Nicastro, was severely injured while using a McIntrye shear in New
Jersey. McIntyre sold its machines through an independent U.S.
distributor, not controlled by McIntyre and not located in New
Jersey. The distributor, however, followed McIntyre's direction
and guidance whenever possible. McIntyre officials also attended
trade shows in the U.S., but not in New Jersey. McIntyre held U.S.
and European patents on the machine. McIntyre generally desired to
sell machines in the U.S., but there was no showing that New Jersey
was targeted for sales, by advertising or otherwise. There was some
evidence suggesting that as many as four McIntyre machines were
located in New Jersey.
On these facts, six Justices of the Court agreed that the assertion
of personal jurisdiction over McIntyre Machinery in New Jersey was
improper. The six Justices did not agree on their reasoning.
Justice Kennedy wrote the plurality opinion, joined by Chief
Justice Roberts, Justice Scalia and Justice Thomas. Justice Breyer,
joined by Justice Alito, concurred in the judgment. Justice
Ginsburg dissented, joined by Justice Sotomayor and Justice
Kagan.
The plurality stressed that the exercise of personal jurisdiction
under the Due Process Clause of the Constitution generally depends
on the defendant having purposefully availed itself of the
privilege of doing business in the forum state, thus invoking the
benefits and protections of its laws. Product liability cases, the
plurality wrote, fall within this general rule. The plurality
specifically rejected the notion that placing products in the
stream of commerce in a manner such that it is foreseeable they
will end up in a particular state is not enough: "The
defendant's transmission of goods permits the exercise of
jurisdiction only where the defendant can be said to have targeted
the forum; as a general rule, it is not enough that the defendant
might have predicted that its goods will reach the forum
State." (Slip Op. at 7). Further, although the facts showed a
general intent by McIntyre to serve the U.S. market, "they do
not show that J. McIntyre purposefully availed itself of the New
Jersey market."
In the concurring opinion, Justice Breyer stated that he did not
believe it was appropriate to use the facts of this case to set
strict rules. He noted that the case does not "implicate
modern concerns" (such as targeting the world for sales by
selling on the Internet). Justice Breyer supported the view that a
single isolated sale in a state is not enough, and that
"something more" is required than simply putting a
product in the stream of commerce with knowledge that it may be
swept into the forum state. Justice Breyer also stressed his view
that due process requirements, including "purposeful
availment," rest upon a notion of "defendant-focused
fairness." Such considerations may vary when comparing a large
national manufacturer to a small manufacturer selling a small
number of products through a distributor. "Further, the fact
that the defendant is a foreign, rather than a domestic,
manufacturer makes the basic fairness of an absolute rule yet more
uncertain." (Breyer J., concurring, Slip. Op. at 6).
McIntyre Machinery is important because it limits the grounds for
U.S. courts asserting personal jurisdiction against foreign
manufacturers. In this context, "foreign" means
out-of-state manufacturers as well as international companies. Six
of the nine Justices clearly indicated that the simple fact that a
product has found its way into a jurisdiction is not enough to
establish jurisdiction over a non-resident manufacturer even though
the manufacturer realizes that the product might end up in the
state. The case will likely lead lower courts to dismiss certain
cases which would otherwise have remained in court. Because of the
fractured nature of the decision, however, its overall significance
remains to be seen. Issues of personal jurisdiction will remain
highly dependent on the facts of a particular case.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.