Some of my light reading over the weekend has been about two cases now before the U.S. Supreme Court, where the Court has yet to hand down an opinion.
The first case, Goodyear Tires Luxembourg S.A. v. Brown, concerns an accident that happened in France in 2004. In the accident, two teenage boys (age 13, unrelated,) died when the tires failed on the van that was carrying them.
The survivors, the parents, through the estates of the dead boys, are suing Goodyear Luxembourg. The case made it all the way up to the Supreme Court of North Carolina, which found in favor of the boys. The thinking of the state court was that because Goodyear sold tires in North Carolina, it should be expected that Goodyear or one of its subsidiaries would be called into court in North Carolina, even though the accident happened in France. This line of legal reasoning is called “stream of commerce” doctrine. As a quick overview, the soft rule is: if you put your product out in the stream of commerce, and someone gets hurt, you may be called into court.
The twists on this one are obvious, of course. The accident didn’t happen in North Carolina, and Goodyear Luxembourg was not shown to have directed the sale of the tires at North Carolina, or at any of the other 49 states, or outlying territories. This is probably why the U.S. Supreme Court agreed to hear the case.
The second matter before the high court is J. McIntyre Machinery v. Nicastro. This one also involves a foreign defendant, one whose agent in America sold a piece of equipment in New Jersey. This equipment sliced off four fingers of a man’s hand.
The New Jersey Supreme Court—long considered one of the best in America, at least since the 1947 state Constitution—ruled that a foreign company that directs its product to New Jersey should be expected to be haled into court in the event of a personal injury. This case is almost a mirror image of the Goodyear one, because the injury happened in New Jersey. But still, the original defendant was foreign, the English manufacturer J. McIntyre.
The oral argument was back in January, and a few days later, the ScotusBlog offered this report. Try and guess how these questions are going to go, though. You know that my personal interest is about what jurisdiction a court would have over the “controlled” foreign subsidiary of a U.S. multinational. Justice Ginsburg was interested in knowing what the lawyers in both cases thought of that.
From the SCOTUSblog:
Justice Ginsburg then asked Peddie [lawyer in Goodyear v. Brown] if she could cite any case law that would support the argument that wherever a parent is subject to general jurisdiction, the subsidiary must be as well.
The reason that there is a dearth of cases, is that, since 1945, this question has been forced into the “minimum contacts” analysis of International Shoe. To me, it seems self-evident, that if a foreign sub is a wholly-owned unit of an American parent, the jurisdiction of the parent should carry over to the subsidiary. But there is no plain English court ruling to that effect out of the high court.
Since Justice Ginsburg authored the Arbaugh v. Y & H Corp. decision a few years back, which was the smackdown punch to “jurisdictional” (Federal Rules of Civil Procedure 12(b)(1)) arguments in employment discrimination (Title VII) cases, I think she is interested in defining, in as best terms possible, when an American court would have in personam jurisdiction over a foreign corporation.
The current cases before the courts both involve personal injury, or “torts”. But it is possible that rulings which assist in determining the reach of American courts will come out of one or both those cases. It will be interesting to see if the so-called Alien Venue Statute of federal court practice is called into play. (“An alien may be sued in any district.”) Each state in America has its own court system, but there is also a federal court system. (I am sure that Canada and Australia work the same way, or something close.) I would not be surprised if the court ruled that there is one standard for suing a foreign party in federal court, and a different, more stringent, one for suing in state court. Some of Justice Kennedy’s questioning seems to go to that.
If you don’t know, our Supreme Court is divided into political blocs that tend to combine on decisions in similar ways. Chief Justice Roberts, Justices Alito, Thomas and Scalia tend to vote together in one way. Justice John Paul Stevens had been the head of the opposing bloc, along with Justices Ginsburg, Breyer, and Sotomayor (Souter before her). Justice Kennedy was considered the “swing” vote, or the one-man court, in effect. Justice Elena Kagan replaced Stevens (my favorite Justice who mentioned my pro se case in a dissent). Justice Kagan is expected to decide along the lines of the Ginsburg group.
So these might be Kennedy decisions as the fifth vote in a majority. But I could also see where the would be Ginsburg decisions that persuaded Kennedy to vote against the Chief Justice’s bloc.
[Update: It’s all about clarity. You’d think that these matters would be cut-and-dry. But they’re not. It might surprise people, but the U.S. actually lends its Fifth Amendment protections of due process to people who aren’t even American when it comes to our court system. I know that one current popular stereotype of America and Americans is as the big bully, overseas. But, in fact, there has been a long, long tradition of rationalism and fairness. Sometimes, the “fairness” has been to the point where we Americans put ourselves at a disadvantage, without even realizing it.
When the Supreme Court takes cases, usually they take about 80 or 100 a year. So it’s very rare. The big decisions usually get handed down in June or the first week of July. So I will be on the lookout for these.]