On June 27, 2011, the United States Supreme Court issued a 6-3 decision reversing the New Jersey Supreme Court's exercise of personal jurisdiction over a foreign product manufacturer under the "stream-of-commerce" theory.1 While the Court's holding is significant, how far-reaching its impact will be remains to be seen, as the reasoning of the concurring and dissenting opinions leaves room for interpretation in future cases, depending on the facts at issue and the "relevant contemporary commercial circumstances" that are implicated.2
Robert Nicastro, a metalworker from New Jersey, injured his hand in 2001 while using a shearing machine. The machine was manufactured in England by British manufacturer J. McIntyre Machinery.3 J. McIntyre engaged a United States distributor based in Ohio to sell its products throughout the United States.4 Nicastro sued in New Jersey because the accident occurred in New Jersey.5 To support the exercise of personal jurisdiction, Nicastro focused on three points: 1) J. McIntyre used an independent distributor to sell its machines in the United States; 2) J. McIntyre officials attended annual trade shows in the United States, (albeit not in New Jersey); and 3) up to four J. McIntyre machines wound up New Jersey, though the appellate record confirmed only the subject machine was used in New Jersey.6
New Jersey Supreme Court's Opinion
The New Jersey Supreme Court held that J. McIntyre was subject to jurisdiction in New Jersey "because the injury occurred in New Jersey; because [J. McIntyre] knew or reasonably should have known that its products are distributed through a nationwide distribution system that might lead to those products being sold in any of the fifty states; and because [J. McIntyre] failed to take some reasonable step to prevent the distribution of its products in [New Jersey]."7 It did not matter that the manufacturer had never advertised in, shipped goods to, or otherwise targeted New Jersey.8
The U.S. Supreme Court's Opinion
In authoring the plurality opinion, Justice Kennedy seized the opportunity to "provide greater clarity" on the stream-of-commerce doctrine of jurisdiction set forth in Asahi.9 In Asahi, Justice O'Connor concluded that personal jurisdiction could only be conferred when a defendant purposefully directs its actions toward the forum state, while Justice Brennan's concurring opinion focused on more general concepts of foreseeability and fairness.10 Justice Kennedy adopted Justice O'Connor's approach, writing that precedents "make clear that it is the defendant's actions, not his expectations, that empower a State's courts to subject him to judgment."11 Specific jurisdiction requires purposeful, targeted actions directed at the forum state, "something more" than merely placing the product into the stream of commerce.12 "In products-liability cases like this one, it is the defendant's purposeful availment that makes jurisdiction consistent with 'traditional notions of fair play and substantial justice.'"13 The stream-of-commerce doctrine did not displace these general principles.14
Using Asahi as a jumping-off point, Justice Kennedy set forth two guiding principles for considering whether purposeful availment has been met in a particular case. The first principle requires a court to consider "whether a defendant has followed a course of conduct directed at the society or economy existing within the jurisdiction of a given sovereign, so that the sovereign has the power to subject the defendant to judgment concerning that conduct."15 The second asks a court to evaluate whether it is possible that a defendant "may in principle be subject to the jurisdiction of the courts of the United States, but not to any particular State."16 Justice Kennedy recognized that such a case would be extremely rare because domestic defendants are generally subject to the jurisdiction of their home states and foreign corporations typically target particular states, subjecting them to jurisdiction in those states.17 Justice Kennedy, perhaps anticipating skepticism related to the scope of his opinion, wrote that "the undesirable consequences of [a fairness and foreseeability-focused] approach are no less significant for domestic [defendants]."18
Justices Breyer and Alito, in concurrence, agreed that under the particular factual scenario of Nicastro, jurisdiction was not proper in New Jersey. However, they believed it was "unwise to announce a rule of broad applicability without full consideration of the modern-day consequences" and did not find such "relevant contemporary commercial circumstances" here.19 In their opinion, this case could have been decided simply by "adhering to . . . precedents" and was not the appropriate vehicle through which to issue "broad pronouncements that refashion basic jurisdictional rules."20 Issues with "serious commercial consequences," such as the sale of products on the Internet, the consignment of goods through an intermediary such as Amazon.com, or the marketing of products through pop-up advertisements on Web sites, were "totally absent in [Nicastro]."21
Justice Ginsburg's dissent, joined by Justices Sotomayor and Kagan, placed much emphasis on the manufacturer's intent in entering into a distribution agreement with a United States distributor to ship its machines anywhere in the United States.22 Justice Ginsburg noted that New Jersey is the nation's leader in the scrap metal industry, suggesting that J. McIntyre must have intended for its products to be sold there.23 That fact, coupled with the company's regular attendance at trade conventions in the United States, led Justice Ginsburg to believe that the shearing machine at issue "arrived in Nicastro's New Jersey workplace not randomly or fortuitously, but as a result of the U.S. connections and distribution system that J. McIntyre deliberately arranged."24
The " Take Away"
If the picture of long-arm jurisdiction was blurry after Asahi, it is not necessarily any clearer following the divergent opinions in Nicastro. What is clear after Nicastro, however, is that a foreign manufacturer's mere expectations or hopes that its products will be marketed and/or distributed throughout the entire United States are not enough, in and of themselves, to establish personal jurisdiction. There must be evidence that the manufacturer purposefully directed its activities at a particular forum state to subject it to jurisdiction in that state.
Although Justice Kennedy noted that these principles should be equally applicable to domestic manufacturers, he also pointed out that Asahi and Nicastro both involve foreign manufacturers. Indeed, how this opinion will actually impact domestic manufacturers that market or distribute goods or products across the country remains to be seen. Moreover, it is unclear how courts will apply the principles set forth in Nicastro and other precedents when faced with more "contemporary commercial circumstances," as suggested by Justice Breyer.25 In an "increasingly fast-paced" global economy,26 the Court may be presented with such modern-day commercial issues sooner rather than later, forcing it to revisit personal jurisdiction principles yet again.