The Trial Lawyer Winter 2018 - Page 31

1. The Big Picture Jurisdictional Issues in Products Liability Cases Manufacturers often target both the national and international marketplaces. They spend exorbitant sums on widespread advertising blitzes. They establish extensive distribution networks so that their products will reach consumers throughout the country. But when one of their defective products maims or kills someone, the story sometimes changes. Despite having sought out and reaped the benefits of a profitable market within that state, they nonetheless may argue that they have no connection to the state — that it would be “unfair” to force them to appear in court in the state to answer claims that their defective product hurt or killed a consumer. Instead, they would prefer to funnel all litigation back to the states or countries where they chose to set up their business entities. The stakes are high: if the defendant is a foreign corporation, the plaintiff may be denied any meaningful recovery at all if she is unable to obtain jurisdiction in the United States. Similarly, even if the defendant is a domestic corporation, the plaintiff may be forced to re-file a separate lawsuit in a faraway state with no connection to the actual incident at issue. The bedrock principles governing jurisdictional disputes in products liability cases were articulated in International Shoe and World-Wide Volkswagen. International Shoe explained that jurisdiction is proper over an out-of- state corporation where that corporation has “sufficient contacts” with the state such that continuing with the lawsuit in that forum would not “offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). There are two routes to establishing jurisdiction under the “sufficient contacts” due process analysis from International Shoe. First, the court may have “general jurisdiction” or “all purposes jurisdiction” if the defendant’s contacts are “continuous and systematic.” Id. at 317. General jurisdiction would confer jurisdiction for any case, no matter the claims or issues. Id. General jurisdiction is clearly proper in the defendant’s state of incorporation or where it maintains a principal place of business. Id. The second possible basis for jurisdiction is “specific jurisdiction,” which allows the court to exercise jurisdiction over the defendant for claims “arising out of ” or “connected with” the defendant’s affiliations to the state. Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1780 (2017). The seminal opinion on specific jurisdiction in products liability cases is the 1980 decision in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980). The World-Wide Volkswagen majority famously articulated the “stream of commerce” metaphor, explaining that: “The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.” Id. at 297-98. The “stream of commerce” test was subsequently analyzed by Justice O’Connor and Justice Brennan in their separate plurality opinions in Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102 (1987). Justice O’Connor’s approach is referred to as the “stream of commerce plus” test, and requires a showing of both foreseeability that the product would reach the state, as well as “additional conduct of the defendant” which indicates “an intent or purpose to serve the market” in that state. Id. at 112. Justice Brennan, however, espoused a “pure” stream of commerce test which does not include the “additional conduct” requirement. Id. at 116-17. Justice Brennan explained that: “The stream of commerce refers not to unpredictable currents or eddies, but to the regular and anticipated flow of products from manufacture to distribution to retail sale. As long as a participant in this process is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise.” Id. Because each opinion represented just a plurality of the Court, courts around the country are free to adopt either test. Finally, there is another pertinent basis for establishing jurisdiction: consent jurisdiction. Many courts have recognized that a manufacturer consents to jurisdiction in a state by qualifying to do business and designating a registered agent for service for process. There is presently a split of authority as to whether this remains good law today, as will be addressed below. 2. The Recent SCOTUS Cases International Shoe, World-Wide Volkswagen, and Asahi remain good law today. However, in the last few years SCOTUS has issued several decisions which apply the principles of law from International Shoe, World-Wide Volkswagen, and Asahi to unique and jurisdictionally-attenuated facts. The defense bar has seized upon these recent decisions as an opportunity to file a new wave of motions to dismiss for lack of personal jurisdiction. This section will break down the recent SCOTUS opinions, explain the key facts animating those decisions, and explain why each of those cases is readily distinguishable from the vast majority of products liability lawsuits. Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915 (2011) is the first of the recent SCOTUS decisions cited in many defense’s motions. Goodyear was a products liability action brought by North Carolina residents whose children died in a bus accident while visiting France. Id. at 919. The North Carolina plaintiffs named both Goodyear USA and Goodyear’s “foreign affiliates” located in Germany, France, and Luxembourg. Id. Goodyear USA did not challenge the North Carolina court’s exercise of jurisdiction; only the three European entities did so. Id. Justice Ginsburg, writing for the majority, unsurprisingly held that North