Tuesday, June 28, 2011

SCOTUS "Decides" Nicastro

The Supreme Court has decided J. McIntyre Machinery, Ltd. v. Nicastro, No. 09-1343. Unfortunately, the Court did not resolve the issue left unresolved in Asahi, namely what is required of a defendant who places a product in the stream of commerce to subject it to jurisdiction in a state where the product causes harm. Justice Kennedy authored an opinion in which only three other Justices joined, embracing the O'Connor approach from Asahi. Breyer and Alito agreed that there could be no jurisdiction in the case but declined to join Kennedy's opinion.

Here is an excerpt from the Syllabus of the case:

Justice Kennedy , joined by The Chief Justice, Justice Scalia , and Justice Thomas , concluded that because J. McIntyre never engaged in any activities in New Jersey that revealed an intent to invoke or benefit from the protection of the State’s laws, New Jersey is without power to adjudge the company’s rights and liabilities, and its exercise of jurisdiction would violate due process. Pp. 4–12.

(a) Due process protects the defendant’s right not to be coerced except by lawful judicial power. A court may subject a defendant to judgment only when the defendant has sufficient contacts with the sovereign “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington , 326 U. S. 310 . Freeform fundamental fairness notions divorced from traditional practice cannot transform a judgment rendered without authority into law. As a general rule, the sovereign’s exercise of power requires some act by which the defendant “purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla , 357 U. S. 235 . In cases like this one, it is the defendant’s purposeful availment that makes jurisdiction consistent with “fair play and substantial justice” notions. No “stream-of-commerce” doctrine can displace that general rule for products-liability cases.

The rules and standards for determining state jurisdiction over an absent party have been unclear because of decades-old questions left open in Asahi. The imprecision arising from Asahi , for the most part, results from its statement of the relation between jurisdiction and the “stream of commerce.” That concept, like other metaphors, has its deficiencies as well as its utilities. It refers to the movement of goods from manufacturers through distributors to consumers, yet beyond that descriptive purpose its meaning is far from exact. A defendant’s placement of goods into commerce “with the expectation that they will be purchased by consumers within the forum State” may indicate purposeful availment. World-Wide Volkswagen Corp. v. Woodson , 444 U. S. 286 . But that does not amend the general rule of personal jurisdiction. The principal inquiry in cases of this sort is whether the defendant’s activities manifest an intention to submit to the power of a sovereign. See, e.g., Hanson , supra , at 253. In Asahi , Justice Brennan’s concurrence (joined by three other Justices) discarded the central concept of sovereign authority in favor of fairness and foreseeability considerations on the theory that the defendant’s ability to anticipate suit is the touchstone of jurisdiction. 480 U. S., at 117. However, Justice O’Connor’s lead opinion (also for four Justices) stated that “[t]he ‘substantial connection’ between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State.” Id., at 112. Since Asahi, the courts have sought to reconcile the competing opinions. But Justice Brennan’s rule based on general notions of fairness and foreseeability is inconsistent with the premises of lawful judicial power under this Court’s precedents. Today’s conclusion that the authority to subject a defendant to judgment depends on purposeful availment is consistent with Justice O’Connor’s Asahi opinion. Pp. 4–10.

(b) Nicastro has not established that J. McIntyre engaged in conduct purposefully directed at New Jersey. The company had no office in New Jersey; it neither paid taxes nor owned property there; and it neither advertised in, nor sent any employees to, the State. Indeed, the trial court found that petitioner did not have a single contact with the State apart from the fact that the machine in question ended up there. Neither these facts, nor the three on which Nicastro centered his jurisdictional claim, show that J. McIntyre purposefully availed itself of the New Jersey market. Pp. 10–12.

The opinions in the case may be downloaded by clicking here


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