Goodyear and Its Effects

Goodyear Dunlop Tires Operations, S.A. v. Brown is a recent Supreme Court case in which the Court held that foreign manufacturers’ sales of a limited quantity of goods in a state did not subject the manufacturers to personal jurisdiction in that state for deaths of state residents that occurred outside the state and were caused by products sold outside the state.

Specifically, Goodyear and its foreign subsidiaries were sued in a North Carolina state court after a bus accident in Paris, believed to have been caused by defective tires, killed two North Carolina residents. The Court held that a connection between Goodyear and its subsidiaries with the state of North Carolina was not strong enough to establish general personal jurisdiction over the subsidiaries in North Carolina. While some tires manufactured by the subsidiaries had been sold in North Carolina, these limited sales did not satisfy the “substantial” activity or “continuous and systematic” contacts required for general jurisdiction.

Goodyear generally conformed to the court’s prior decisions that “evidence[d] the Court’s reluctance to permit general jurisdiction over corporations based upon claims unrelated to corporate activity in the forum state.[1]” Its apparent effect was narrower and more limited than similar cases, like J. McIntyre Machinery, Ltd. v. Nicastro, another jurisdictional case that was heard around the same time and which prompted an angry dissent from three members of the bench.

The effect of Goodyear has still been to limit the extent to which a US state court can exercise general jurisdiction over an out-of-state corporation. Lower courts have interpreted the decision to require a “truly ‘exceptional’ case[2]” before a corporation’s contacts with a state will be sufficient to render the corporation “at home” in the state. For example, in Brown v. Lockheed Martin Corp., the Second Circuit determined that a Connecticut court had no general jurisdiction over Lockheed Martin, because, despite the fact that Lockheed had revenues of around $160 million in Connecticut and had a designated agent of service of process within the state, these sales represented a small percentage of Lockheed’s overall revenue, and were “unexceptional” for a corporation in Lockheed’s position. Other lower courts have had similar interpretations.

However, a number of states, like Delaware and New York, still have state registration statutes that require a company to consent to general jurisdiction as a part of the process of registration. Lower courts have been continuing to uphold these statutes as valid and constitutional[3], even in light of the Supreme Court’s decisions in Goodyear and in later interpretations like Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (holding that Daimler could not be subject to California’s general jurisdiction in a suit filed by Argentine plaintiffs over events occurring on Argentine soil because Daimler was not “at home” in California). While these decisions do represent a new approach on the part of the Court (particularly Daimler, which appears to substantially weaken contacts-based general jurisdiction), the Supreme Court has not yet weighed in on the constitutionality of these statutes under Goodyear.

[1] Michael H. Hoffheimer, General Personal Jurisdiction After Goodyear Dunlop Tires Operations, S.A. v. Brown, 60 Kansas L. Rev. 549, 550 (2012), available at https://kuscholarworks.ku.edu/bitstream/handle/1808/20185/02_Hoffheimer_Final.pdf?sequence=1

[2] See Brown v. Lockheed Martin Corp., Civ. No. 14-4083, 2016 WL 641392 (2d Cir. Feb. 18, 2016)

[3] See, e.g., Hudson v. International Paper Company, C.A. No. N14C – 03 – 247 ASB (D. Del. 2015), available at http://courts.delaware.gov/opinions/download.aspx?ID=228660