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MN DEFENSE s FALL 2012 13 Personal Jurisdiction for Manufacturers continued on page 14 On June 27, 2011, the United States Supreme Court, for the first time in more than two decades, addressed the issue of personal jurisdiction in not one, but two opinions: Goodyear Dunlop Tires Operations v. Brown, 131 S. Ct. 2846 (2011) and J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). Prior to these decisions, courts were trending towards increasingly broad applications of the personal jurisdiction standards articulated in previous Supreme Court decisions. State and federal district courts were using expansive analyses to exercise personal jurisdiction over foreign defendants (both U.S. based and non-U.S. based companies). Goodyear and J. McIntyre are viewed as positive rulings for manufacturers in products liability cases because both cases serve to limit the circumstances in which a state can exercise personal jurisdiction over a foreign defendant. However, this limitation has also resulted in increased difficulty for manufacturers that wish to pursue third- party claims against their suppliers and component manufacturers in the same underlying action. This article will examine the Supreme Court’s holdings in the two opinions, the lower courts’ responses to the opinions, and an upcoming personal jurisdiction case on petition to the Supreme Court. GOODYEAR V. BROWN Goodyear addressed a court’s ability to exercise “general jurisdiction” (jurisdiction arising from actions in the forum state other than those giving rise to the instant case). 131 S. Ct. 2846, 2849 (2011). Specifically, the Supreme Court addressed whether a state court could assert general personal jurisdiction over a foreign defendant, for an accident that occurred outside the forum state, because the defendant placed goods into the “stream of commerce” which eventually reached the forum state. Id. at 2846. Plaintiffs, North Carolina residents, filed a wrongful death action in North Carolina state court against foreign (non-U.S.) subsidiaries of Goodyear based on a fatal bus accident that occurred in France. Id. at 2851-52. The subsidiaries’ contacts to North Carolina were extremely limited: Petitioners are not registered to do business in North Carolina. They have no place of business, employees, or bank accounts in North Carolina. They do not design, manufacture, or advertise their products in North Carolina. And they do not solicit business in North Carolina or themselves sell or ship tires to North Carolina customers. Even so, a small percentage of petitioners’ tires (tens of thousands out of tens of millions manufactured between 2004 and 2007) were distributed within North Carolina by other Goodyear USA affiliates. Id. at 2852. In spite of the minimal contacts with the forum state, the North Carolina trial court denied Petitioners’ motion to dismiss for lack of personal jurisdiction. Id. The North Carolina Court of Appeals then found that North Carolina state courts could exercise general jurisdiction BY LAURA N. MAUPIN Barnes & Thornburg LLP YOUR PRODUCT ENDING UP THERE IS NOT ENOUGH… SO WHAT IS? Laura N. Maupin is an associate in the Minneapolis office of Barnes & Thornburg LLP, where she is a member of the firm’s Litigation Department. Ms. Maupin concentrates her practice on product liability defense and commercial litigation. Ms. Maupin defends a major consumer appliance manufacturer, a multi-national products manufacturer and a manufacturer of turf and landscape maintenance equipment in products liability cases, including asbestos litigation. She has represented a variety of business clients in virtually all aspects of commercial litigation in state and federal court. Her clients include consumer goods manufacturers, a major power sports manufacturer, and commercial real estate owners and managers. She also recently spent several months serving as an in-house litigation manager for a leading multi-national products manufacturer. ANALYZING PERSONAL JURISDICTION FOR MANUFACTURERS IN THE WAKE OF GOODYEAR AND J. MCINTYRE MACHINERY LTD.
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YOUR PRODUCT ENDING UP THERE IS NOT ENOUGH SO WHAT IS?

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Page 1: YOUR PRODUCT ENDING UP THERE IS NOT ENOUGH SO WHAT IS?

MN DEFENSE s FALL 2012 13

Personal Jurisdiction for Manufacturers continued on page 14

On June 27, 2011, the United States Supreme Court, for the first time in more than two decades, addressed the issue of personal jurisdiction in not one, but two opinions: Goodyear Dunlop Tires Operations v. Brown, 131 S. Ct. 2846 (2011) and J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). Prior to these decisions, courts were trending towards increasingly broad applications of the personal jurisdiction standards articulated in previous Supreme Court decisions. State and federal district courts were using expansive analyses to exercise personal jurisdiction over foreign defendants (both U.S. based and non-U.S. based companies).

Goodyear and J. McIntyre are viewed as positive rulings for manufacturers in products liability cases because both cases serve to limit the circumstances in which a state can exercise personal jurisdiction over a foreign defendant. However, this limitation has also resulted in increased difficulty for manufacturers that wish to pursue third-party claims against their suppliers and component manufacturers in the same underlying action. This article will examine the Supreme Court’s holdings in the two opinions, the lower courts’ responses to the opinions, and an upcoming personal jurisdiction case on petition to the Supreme Court.

GOODYEAR V. BROWN

Goodyear addressed a court’s ability to exercise “general jurisdiction” (jurisdiction arising from actions in the forum state other than those giving rise to the

instant case). 131 S. Ct. 2846, 2849 (2011). Specifically, the Supreme Court addressed whether a state court could assert general personal jurisdiction over a foreign defendant, for an accident that occurred outside the forum state, because the defendant placed goods into the “stream of commerce” which eventually reached the forum state. Id. at 2846.

Plaintiffs, North Carolina residents, filed a wrongful death action in North Carolina state court against foreign (non-U.S.) subsidiaries of Goodyear based on a fatal bus accident that occurred in France. Id. at 2851-52. The subsidiaries’ contacts to North Carolina were extremely limited:

Petitioners are not registered to do business in North Carolina. They have no place of business, employees, or bank accounts in North Carolina. They do not design, manufacture, or advertise their products in North Carolina. And they do not solicit business in North Carolina or themselves sell or ship tires to North Carolina customers. Even so, a small percentage of petitioners’ tires (tens of thousands out of tens of millions manufactured between 2004 and 2007) were distributed within North Carolina by other Goodyear USA affiliates.

Id. at 2852.

In spite of the minimal contacts with the forum state, the North Carolina trial court denied Petitioners’ motion to dismiss for lack of personal jurisdiction. Id. The North Carolina Court of Appeals then found that North Carolina state courts could exercise general jurisdiction

By Laura N. MaupiNBarnes & Thornburg LLP

YOUR PRODUCT ENDING UP THERE IS NOT ENOUGH… SO WHAT IS?

Laura N. Maupin is an associate in the Minneapolis office of Barnes & Thornburg LLP, where she is a member of the firm’s Litigation Department. Ms. Maupin concentrates her practice on product liability defense and commercial litigation. Ms. Maupin defends a major consumer appliance manufacturer, a multi-national products manufacturer and a manufacturer of turf and landscape maintenance equipment in products liability cases, including asbestos litigation. She has represented a variety of business clients in virtually all aspects of commercial litigation in state and federal court. Her clients include consumer goods manufacturers, a major power sports manufacturer, and commercial real estate owners and managers. She also recently spent several months serving as an in-house litigation manager for a leading multi-national products manufacturer.

ANALYZING PERSONAL JURISDICTION FOR MANUFACTURERS IN THE WAKE OF GOODYEAR AND J. MCINTYRE MACHINERY LTD.

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14 MN DEFENSE s FALL 2012

over the foreign subsidiaries because some tires made by the foreign subsidiaries were placed into the stream of commerce and were eventually sold in North Carolina. Id. The appellate court acknowledged that the foreign subsidiaries did not take “any affirmative action to cause tires which they had manufactured to be shipped into North Carolina.” Id. (internal citation omitted). However, the North Carolina appellate court focused on the fact that “tires made by petitioners reached North Carolina as a consequence of a ‘highly-organized distribution process’ involving other Goodyear USA subsidiaries.” Id. The appellate court also noted that the foreign subsidiaries made “no attempt to keep these tires from reaching the North Carolina market.” Id.

The Supreme Court rejected the North Carolina court’s reasoning and stated, “[a] court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Id. at 2851 (emphasis added). The Court did not specifically define which actions establish a corporation is “at home” in a state, but did provide examples such as the place of incorporation, or place where the corporation has a physical presence and principal place of business. Id. at 2854. Finding that the subsidiary had no such affiliations with North Carolina, the Supreme Court held that North Carolina did not have personal jurisdiction over the foreign subsidiaries. Id. at 2857.

In a last-ditch effort to maintain personal jurisdiction over the foreign subsidiaries, the plaintiffs belatedly argued for the application of a “single enterprise” theory among all Goodyear entities. Id. at 2857. In response, Justice Ginsberg stated, “[i]n effect, respondents would have us pierce Goodyear corporate veils, at least for jurisdictional purposes.” Id. Because the issue was not raised at the district or appellate level, the Court declined to address this issue as not properly before it. Id. However, this may be only a temporary reprieve because a petition for writ of certiori has been filed on this very issue in a case out of the Ninth Circuit.

J. MCINTYRE MACH., LTD. V. NICASTRO

McIntyre addresses a court’s ability to exercise “specific jurisdiction” (jurisdiction arising when a manufacturer’s product allegedly causes injury in the forum state.) 131 S. Ct. 2780, 2787-88 (2011). Specifically, the Court attempted to clarify the “rules and standards for determining when a State does or does not have jurisdiction over an absent

party” previously discussed in Asahi Metal Industry Co. v. Superior Court of Cal., Solano Cty., 107 S. Ct. 1026 (1987). Id. at 2785. The guidelines for specific jurisdiction articulated in McIntyre are less clear than those in Goodyear, but are still helpful to manufacturers and legal practitioners.

Like Asahi, McIntyre is of limited precedential value because the Court’s opinion was a plurality, meaning that a majority of the Court joined in the Court’s judgment, but less than a majority joined in its reasoning. In McIntyre, four justices joined in the Court’s opinion, and another two justices concurred with the judgment, but not with the reasoning resulting in that judgment. “A plurality opinion is said not to be a binding precedent, or, by a related view, to be nonbinding, but of limited precedential value as to the holding but not as to the rationale.” 20 Am.Jur. 2d Courts § 138 (2012) (internal citations omitted).

McIntyre began as a New Jersey state court products liability suit. Mr. Nicastro was seriously injured at work while using a metal-shearing machine manufactured by an English company, J. McIntyre Machinery, Ltd. (“J. McIntyre”); J. McIntyre is incorporated and operates in England. McIntyre, 131 S.Ct. at 2786. Relying on the “stream of commerce” metaphor introduced in Asahi (discussed below), the Supreme Court of New Jersey held that New Jersey’s courts can exercise specific jurisdiction over a foreign manufacturer of a product if the manufacturer “knows or reasonably should know that its products are distributed through a nationwide distribution system that might lead to those products being sold in any of the fifty states.” McIntre, 131 S.Ct. at 2785 (internal citation omitted). Applying that rationale, the New Jersey Supreme Court concluded that J. McIntyre was subject to jurisdiction in New Jersey, “even though at no time had it advertised in, sent goods to, or in any relevant sense targeted the State.” Id.

In McIntyre, the Supreme Court once again rejected the lower court’s reasoning and held that specific jurisdiction would not result solely from a nationwide distribution of a product or a manufacturer’s reasonable expectations that a product might ultimately be distributed in a given state. Id. at 2791. Instead, the Court found that the proponent of jurisdiction must demonstrate that the manufacturer purposefully availed itself of the particular state’s market. Id. at 2790. The plurality stated, “it is the defendant’s actions, not his expectations, that empower a State’s court to subject him to judgment.” Id. at 2789. The Court held that placing a product in the stream of commerce could result in specific jurisdiction; however,

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...the defendant must ‘purposefully avai[l] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws…Sometimes a defendant does so by sending its goods rather than its agents. The defendant’s transmission of goods permits the exercise of jurisdiction only where the defendant can be said to have targeted the forum; as a general rule, it is not enough that the defendant might have predicted that its goods will reach the forum State.

McIntyre, 131 S. Ct. at 2788 (internal citations omitted). McIntyre arguably acts to reign in the expansive assertion of personal jurisdiction over foreign defendants which has occurred since the Supreme Court last addressed personal jurisdiction in 1987; however, the Court admits that the analysis requires a fact-specific inquiry. Id. at 2789 (stating “personal jurisdiction requires a forum-by-forum, or sovereign-by-sovereign, analysis”).

The concurring opinion agreed in the Court’s judgment but not its reasoning; the concurring justices focused more on the manufacturer’s expectations. Id. at 2791-92 (Breyer, J. concurring) (finding Nicastro had not shown that J. McIntyre purposefully availed itself of the privilege of conducting activities within New Jersey nor that it delivered its goods in the stream of commerce with the expectation that they would be purchased by New Jersey users). In addition, Justice Breyer opined that the facts of this case did not require an additional analysis of personal jurisdiction and could easily be decided based upon current precedent. Id. at 2792.

ASAHI METAL INDUSTRY CO. V. SUPERIOR COURT OF CALIFORNIA

The McIntyre decision represents an attempt to clarify the Court’s position on personal jurisdiction previously articulated in Asahi Metal Indus. Co. v. Superior Court of Cal., 107 S. Ct. 1026 (1987). Asahi, like McIntyre, was a plurality opinion, which advocated the “purposeful availment” standard. 107 S. Ct. at 1032. Asahi was a personal injury suit in California alleging injury was caused by a defective tire tube assembly on a motorcycle. Id. at 1029. By the time the case reached the Supreme Court, the only claim which had not settled was a claim for contribution and indemnification between a Taiwanese manufacturer of the tire tube and the Japanese manufacturer of the tire tube’s valve assembly. Id. The plurality held that, “a defendant’s awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.” Id. at 1032. The concurring opinion advocated a foreseeability approach, stating that a “defendant who has placed goods in the

stream of commerce benefits economically from the retail sale of the final product in the forum State, and indirectly benefits from the State’s laws that regulate and facilitate commercial activity.” Id. at 1035. The concurring opinion also argued that the benefits of selling a product in the forum state “accrue regardless of whether that participant directly conducts business in the forum State, or engages in additional conduct directed toward that State.” Id.

Following Asahi, courts did not uniformly apply one set of rules regarding the exercise of jurisdiction over a foreign defendant. “In the wake of Asahi, lower courts have divided over the proper constitutional standard for the stream-of-commerce theory. Some have followed Brennan [concurrence], some have followed O’Connor [plurality], and some have declined to decide between the two.” Richard B. Koch, Jr., Comment, A Non-Resident Defendant is Only Subject to the Jurisdiction of a State Where that Defendant Displays Intentional, Forum-Directed Conduct and Purposefully Avails Him or Herself of the Benefits and Protections of that State’s Laws: J. McIntyre Machinery, Ltd. v. Nicastro, 50 Duq. L. Rev. 199, note 159 (2012) (citing Matthew R. Huppert, Comment, Commercial Purpose as Constitutional Purpose: Reevaluating Asahi Through the Lens of International Patent Litigation, 111 Colum. L. Rev. 624, 625 (2011)).

Although it arguably provides additional guidance, McIntyre leaves courts in much the same predicament as Asahi because the plurality opinion advocates the more stringent purposeful availment standard, but the concurrence would follow the more lenient foreseeability approach. Because there is no majority opinion in McIntyre, lower courts may once again choose to follow the plurality, the concurrence, or neither and manufacturers are left without clear guidance as to the locations where they may have to defend a suit. Nationwide, courts have reached inconsistent results but the Eighth Circuit and the District of Minnesota have followed the more stringent “purposeful availment” standard articulated by the plurality for determining whether specific jurisdiction applies to a given defendant.

EIGHTH CIRCUIT REACTION Lower courts responded swiftly to these personal

jurisdiction cases. In July 2011, just weeks after these cases were decided, the Eighth Circuit Court of Appeals issued its ruling in Viasystems, Inc. v. EBM-Papst St. Georgen GmBH & Co., 646 F.3d 589 (8th Cir. 2011). The court affirmed a district court’s dismissal on jurisdictional grounds and wrote the following

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concerning general jurisdiction:

…However, when our circuit’s decision in Barone established the variant of “stream-of-commerce” jurisdiction on which Viasystems now seeks to rely, we were careful to note that “stream of commerce” jurisdiction is “a type of specific jurisdiction (as opposed to general jurisdiction).” Barone, 25 F.3d at 612. Indeed, the Supreme Court recently clarified that placing products in “the stream of commerce” is “[a] connection so limited between the forum and the foreign corporation [that it] is an inadequate basis for the exercise of general jurisdiction.” Goodyear, 180 L.Ed.2d at 803. The Court rejected “the sprawling view of general jurisdiction” that would make “any substantial manufacturer or seller of goods . . . amenable to suit, on any claim for relief, wherever its products are distributed.” Id. at 809.

Viasystems, 646 F.3d at 597 (citing Barone v. Rich Bros., 25 F.3d 610 (8th Cir. 1994)). The Eighth Circuit declined to find general jurisdiction existed where contacts were limited to scattered emails, phone calls and a transfer of money to Viasystems and stated, “[i]ndeed, these isolated connections are just the sort of random, fortuitous, and attenuated contacts that cannot justify the exercise of personal jurisdiction.” Id. at 594.

However, the Eighth Circuit’s reference to Barone v Rich Bros. is interesting because the Barone defendant who contested personal jurisdiction in Nebraska had, “no office in Nebraska, no agent for service of process, no distributor. It does not advertise in Nebraska, nor does it directly send any of its products into Nebraska.” Barone, 25 F.3d at 611. Despite these minimal contacts, the Eighth Circuit determined that the “defendant poured its products into regional distributors throughout the country, and now would have this court believe that it had no idea its products were being distributed into neighboring states.” Id. at 615. The court found the defendant’s argument unpersuasive and determined that the defendant had “reaped the benefits of its network of distributors, and it is only reasonable and just that it should now be held accountable in the forum of the plaintiff’s choice (as long as that choice of forum comports with due process, which we believe it does).” Id. The McIntyre plurality rejected just such an assertion of personal jurisdiction based solely on a nationwide distribution network without something more demonstrating the defendant had purposefully availed itself of the forum.

MINNESOTA REACTION TO MCINTYRE

The District of Minnesota has also addressed challenges to personal jurisdiction in light of McIntyre in the past year. In November, 2011, Judge Susan Richard Nelson found that the defendant’s contacts with Minnesota were sufficient to establish both general and

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specific jurisdiction in Ritrama, Inc. v. Burlington Graphic Systems, Inc., a products liability case. Civil No. 11–CV–977, 2011 U.S. Dist. LEXIS 128487 (D. Minn. Nov. 7, 2011). Between 2005 and 2010 Burlington Graphic Systems, Inc. (“Burlington”) sent more than 590 individual purchase orders to Plaintiff’s Minnesota headquarters; some of those orders involved the allegedly defective product that is the subject of Plaintiff’s claims. Id. at *13. The court stated, “although the Court need not reach the issue, specific jurisdiction is satisfied, as Burlington had contacts with Minnesota that form the basis of Ritrama’s declaratory judgment claim. In any event, Burlington had sufficient systematic contacts with Minnesota to satisfy general jurisdiction.” Id. at *13-1.

In March, 2012, Judge Nelson again ruled on a challenge to personal jurisdiction and found specific personal jurisdiction over a resident of Washington State where he directly invoiced and shipped artifacts to a resident of Minnesota over a period of several months and traveled to Minnesota to facilitate the parties’ commercial relationship. Afremov v. Jarayan, Civil No. 11–313, U.S.Dist. LEXIS 42549 (D. Minn. March 28, 2012.) The court noted, “this is not a products liability case where the non-resident manufacturer has simply placed goods into the ‘stream of commerce’ that then ended up in Minnesota through the actions and decisions of intermediary distributors.” Id. at *34.

In May, 2012, Judge Joan N. Erickson addressed personal jurisdiction in a fraud case involving counterfeit espresso makers sold to a Minnesota company by a Chinese company. Jacobs Trading, LLC v. Ningbo Hicon Intern. Indus. Co., Ltd., --- F.Supp.2d ----, 2012 U.S. Dist. LEXIS 74330 (D. Minn. 2012). The court declined to find that the Chinese company was subject to either general or specific personal jurisdiction in Minnesota. Id. Although Jacobs Trading is not a products liability suit, the court’s jurisdictional analysis is instructive. The contacts which Jacobs argued supported a finding of personal jurisdiction were:

(1) Hicon knew it was transacting business with a Minnesota company because Marcotte told Hu he represented a Minnesota company and Marcotte’s business card indicated that Jacobs’ place of business was in Minnesota; (2) Hicon’s invoice to Jacobs was addressed to Jacobs’ office in Minnesota; (3) Hicon arranged for the product to ultimately be shipped to Minnesota, albeit “F.O.B. Ningbo”; and (4) Hicon contracted with a Minnesota-based shipping/freight forwarding company to ship the goods.

Id. at *9. The court found these contacts inadequate and declined to extend specific jurisdiction stating that Defendant Hicon:

has no offices, manufacturing plants, facilities, bank accounts, property, employees, phone numbers, mailing addresses, or registered agents in Minnesota. It is not registered to conduct business in Minnesota. It does not advertise in Minnesota—or any other part of the United States for that matter—and its website does not target residents of any particular country or state. Jacobs initiated and pursued the business relationship with Hicon. All of the events related to the sale of the coffeemakers at issue occurred in China. Based on the parties’ negotiations, lack of contemplated future consequences, terms of the contract, and the parties’ actual course of dealing, there is no indication that Hicon purposefully established minimum contacts within Minnesota.

Id. at *17 (emphasis added). The court further declined to extend general jurisdiction, although Jacobs presented evidence that Hicon had repeatedly shipped goods to Minnesota over time, finding that, “a total of twenty individual shipments to only four Minnesota companies over a period of more than four years does not constitute such ‘continuous and systematic’ contacts with the forum such that this Court could exercise general personal jurisdiction over Hicon.” Id. at * 28 (citing Goodyear, 131 S. Ct. at 2856).

These Minnesota District Court decisions focus their jurisdictional inquiry on defendants’ purposeful direction of activities towards Minnesota, indicating adherence to the plurality opinion in McIntyre, rather than the more lenient foreseeability standard advocated by the concurrence.

REACTIONS BY OTHER COURTS

Although Minnesota and the Eighth Circuit follow the plurality, decisions following McIntyre demonstrate a lack of national consensus regarding the standards for personal jurisdiction; because there is no majority opinion, courts have been free to choose either the plurality or the concurrence to analyze specific jurisdiction. Like the Eighth Circuit, the Ninth Circuit has followed the plurality. Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218 (9th Cir. 2011) (finding specific personal jurisdiction based on defendant’s purposeful activities targeting California customers through its website). But the Supreme Court of Oregon relied on the reasoning in the concurrence to find specific jurisdiction over a Taiwanese manufacturer in a products action. Willemsen v. Invacare Corp., --- P.3d ----, 352 Or. 191, 200-202 (Or. 2012). It remains to be seen whether the Supreme Court will provide further clarity regarding specific jurisdiction; however, in jurisdictions adopting the plurality’s reasoning, plaintiffs will have greater difficulty establishing personal jurisdiction over manufacturers. For manufacturers, this is advantageous for avoiding products claims in a host of jurisdictions

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nationally, but it simultaneously complicates manufacturers’ ability to obtain contribution from their suppliers.

BAUMAN V. DAIMLERCHRYSLER CORP.

As briefly addressed above, plaintiffs in Goodyear asked the Court to pierce the corporate veil between Goodyear USA and its foreign subsidiaries for personal jurisdiction analysis and the Court declined to address this issue because it was raised for the first time on appeal. But on February 6, 2012, a Ninth Circuit petitioner filed a petition for certiorari and asked the Court to address this very issue.

In Bauman v. DaimlerChrysler Corp., 644 F.3rd 909 (9th Cir. 2011), the Ninth Circuit considered whether the Northern District of California could exercise jurisdiction over DaimlerChrysler Aktienge-sellschaft (DCAG), a German company, for acts committed exclusively in Argentina by its Argentinean subsidiary, Mercedes-Benz Argentina (MBA). The plaintiffs, citizens of Argentina, brought suit against DCAG under the Alien Tort Statute and the Torture Victims Protection Act, and alleged that MBA collaborated with the government of Argentina to kidnap, torture, and kill MBA employees. 644 F.3d at 912. Plaintiffs asserted that the California federal court had general jurisdiction over DCAG because its American subsidiary, Mercedes Benz USA LLC (MBUSA)—a distributor of DCAG-manufactured vehicles to dealerships in California—was DCAG’s agent. Id.

The district court dismissed the claim for lack of personal jurisdiction over DCAG, the German entity. Id. at 917. The Ninth Circuit initially affirmed, but then vacated its original opinion nine months later, and issued a new opinion that reversed the district court. Concluding that the exercise of general jurisdiction over DCAG was appropriate, the court found first that the services provided by MBUSA to DCAG were sufficiently important so that if MBUSA went out of business, DCAG would perform the same services on its own or through another representative. Id. at 922. The court went on to conclude that under its General Distributor Agreement, DCAG had the right to control MBUSA, although evidence of actual control was not necessary to warrant the exercise of general jurisdiction. Id. at 924. In his dissent to the denial of rehearing, Judge O’Scannlain characterized the majority opinion as “an affront to due process” and extending “the reach of general jurisdiction far beyond its breaking point.” Bauman v. Daimler Chrysler Corp. 676 F.3d 774, 775 (9th Cir. 2011)(O’Scannlain dissenting).

On February 6, 2012, DCAG filed a petition for a writ of certiorari with the U.S. Supreme Court. In its petition, DCAG quoted the Baumann rehearing dissent which stated that the Ninth Circuit’s decision “represents a breathtaking expansion of general personal jurisdiction, which is unwarranted in light of Supreme Court precedent, the precedent of our sister circuits, and our own [Ninth Circuit] precedents.” Id. at 779. DCAG argued that in the Fourth, Fifth, Sixth, Seventh, and Eighth Circuits, if given similar facts, the plaintiffs’ complaint would have been dismissed “out of hand” because there were no allegations that DCAG and MBUSA were alter egos of one another, and that both parent and subsidiary failed to adhere to the requirements of their corporate separateness. Pamela D. Tarr, General Jurisdiction: Round Two, American Bar Association, Section of Litigation Products Liability, News & Developments, http://apps.americanbar.org/litigation/committees/products/news.html#02, August 22, 2012.

Because the Ninth Circuit did not limit its decision to the human rights arena (the basis for plaintiffs’ suit), the Bauman decision could have far-reaching impact on products liability cases in which a foreign parent has U.S.-based subsidiaries, or vice versa. Id. Attorneys, manufacturers, and lower courts can all hope the Supreme Court will seize this opportunity to provide clear guidelines concerning the exercise of general personal jurisdiction over parent companies and their subsidiaries. Id.

PRACTICAL CONSIDERATIONS FOR MANUFACTURERS

In light of the Goodyear decision, which yielded reasonably predictable results, and the uncertainty remaining as a result of the McIntyre decision, how should entities analyze the risk of being hauled into court in a particular forum (or the risk that they may not be able to obtain jurisdiction over their suppliers)? Individuals should consider the following factors when analyzing whether general jurisdiction will apply to a specific company:

• Incorporation in the forum• Physical presence in the forum• Principal place of business in the forum

Goodyear made it clear by specific example that these three factors weigh heavily in the general jurisdiction analysis. Other factors which may also be taken into account include:

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• License or authorization to conduct business in the forum

• Contracts with any party located in the forum• Registered agent for service of process in the forum• Consent to suit in the forum• Bank account(s) in the forum state• Sales force or employees in the forum state

Factors that companies should take into account in analyzing specific jurisdiction include whether the defendant:

• Sells its products directly in the forum state• Designs, manufactures, or tests its products in the

forum state• Distributes or controls distribution of products into

the forum state• Conducts marketing efforts specifically directed to

the forum state market (including web marketing)• Enters into contracts with residents of the forum

state that are implicated by the litigation

These factors are not comprehensive; however, in jurisdictions that follow the McIntyre plurality, which appears to include the District of Minnesota and the Eighth Circuit, an absence of any of the above will weigh heavily against the establishment of specific jurisdiction.

These two decisions have provided some clarity for manufacturers regarding personal jurisdiction. The Goodyear decision provides clear guidance as to the circumstances which will likely lead to the assertion of general jurisdiction. McIntyre did less to clarify the Court’s position with respect to specific jurisdiction, and a jurisdiction by jurisdiction analysis will likely continue to be required until the Court again addresses the issue.

MDLA COMMITTEE NEWS

Victor Lund of Mahoney, Dougherty & Mahoney P.A. is stepping down as chair of the MDLA editorial committee after serving for 10 years. Victor has done a fantastic job serving as the leader of Minnesota Defense and MDLA sincerely thanks him for his help and expertise.

The new editors are Andrea E. Reisbord of Cousineau McGuire Chtd. and Sean J. Mickelson of Terhaar Archibald Pfefferle & Griebel LLP. Please welcome them into their new roles as co-chairs of the editorial committee.

Their contact information and more are located at mdla.org.

MDLA CLE CREDIT APPROVALS

CLE credits approved since June 2011 will now show up on your online profile on mdla.org. Previous credit approvals will be listed online at mdla.org. For additional reporting assistance, contact [email protected] or 651-290-6293.

RECENT CLE CREDIT APPROVALS:• 7/26/2012 MDLA Women Lawyers’ Breakfast: A View from the Bench has been approved for 1 Standard Credit

(MN, Event Code 170572)• 6/22/2012 CLE Seminar and Golf Tournament: Implicit Bias - Diversity, Law and the Concealed Mind has been

approved for 1 Standard Credit (MN, Event Code 169391)

Personal Jurisdiction for Manufacturers continued from page 18