Quick Summary
The Supreme Court addressed whether a foreign subsidiary of a U.S. corporation can be sued in a state court when the claims are unrelated to the subsidiary’s activities in that state.
The parents (plaintiffs) of two boys who died in a bus accident in France sued Goodyear Dunlop Tires Operations, and its subsidiaries (the defendants) in North Carolina.
The foreign subsidiaries argued that North Carolina lacked jurisdiction over them. The North Carolina court ruled in favor of the plaintiffs, but the Supreme Court reversed the decision.
Facts of the Case
In April 2004, a bus carrying young soccer players from North Carolina crashed outside Paris, resulting in the deaths of two boys, Julian Brown and Matthew Helms. Their parents (plaintiffs) filed a wrongful death lawsuit in a North Carolina state court.
They alleged that the accident was caused by a defective tire manufactured by a foreign subsidiary of Goodyear USA (defendants).
Goodyear USA and its three foreign subsidiaries, Goodyear Luxembourg Tires, Goodyear Lastikleri, and Goodyear Dunlop Tires France, were filed for a wrongful-death suit. The plaintiffs claim that these subsidiaries are indirectly owned by Goodyear USA and were involved in manufacturing and selling the allegedly defective tire.
Procedural History
The parents filed a lawsuit in the Superior Court of Onslow County, North Carolina, and the defendants moved to dismiss for lack of Personal Jurisdiction.
- The trial court denied the motion, ruling that General Jurisdiction existed based on the Stream of Commerce theory.
- The North Carolina Court of Appeals affirmed this decision.
- The defendants appealed to the Supreme Court.
I.R.A.C. Format
Issue
Whether foreign subsidiaries can be subjected to Personal Jurisdiction in a state court when their activities are unrelated to the Forum State.
Rule of Law
To establish general jurisdiction over a foreign corporation, its affiliations with the state must be “continuous and systematic” such that it is essentially at home in the Forum State.
Reasoning and Analysis
The Court distinguished between specific and general jurisdiction, with specific jurisdiction being tied to the defendant’s contacts with the Forum State related to the underlying claim and general jurisdiction being based on continuous and systematic contacts with the Forum State.
While the stream of commerce theory may bolster specific jurisdiction, it does not establish the necessary continuous and systematic affiliation for general jurisdiction.
Goodyear’s foreign subsidiaries, in this case, did not have enough connections to North Carolina to warrant general jurisdiction.
Conclusion
The Supreme Court reversed the decision of the North Carolina Court of Appeals, ruling that North Carolina lacked general jurisdiction over Goodyear’s foreign subsidiaries.
The case was remanded to determine whether there was specific jurisdiction.
Key Takeaways
- Foreign subsidiaries of a U.S. corporation aren’t subject to general jurisdiction if their activities are unrelated to the Forum State.
- The Stream of Commerce theory may strengthen Specific Jurisdictions but does not establish continuous and systematic contacts for General Jurisdiction.
Relevant FAQs of this case
What distinguishes General Jurisdiction from Specific Jurisdiction?
General jurisdiction encompasses a broad range of affiliations a defendant has with a state, making them essentially “at home” in that state. It allows a court to hear any claims against the defendant.
In contrast, specific jurisdiction is confined to claims related to the defendant’s specific contacts with the state.
What criteria establish general jurisdiction over a corporation?
For general jurisdiction, a corporation must have continuous and systematic affiliations with the state, such as substantial business activities, a principal place of business, or incorporation in that state. This level of connection goes beyond sporadic contacts.
- For example: a national retail chain with numerous stores and a corporate headquarters in a state maintains ongoing and systematic affiliations.
References
Was this case brief helpful?