Jurisdiction

In April 2004, a bus accident fatally injured two 13-year-old passengers, Julian Brown and Matthew Helms, on a road outside Paris, France.

As administrators of the boys’ estates, the parents filed a wrongful death suit in Superior Court in North Carolina. Attributing the accident to a tire that failed when its plies separated, the parents alleged negligence in the “design, construction, testing, and inspection” of the tire.

Among the defendants was Goodyear Dunlop Tires France, SA (Goodyear France), an indirect subsidiary of the Ohio corporation Goodyear, USA.

Goodyear France manufactured tires primarily for sale in European and Asian markets. It was not registered to do business in North Carolina; had no place of business, employees, or bank accounts in North Carolina; did not design, manufacture, or advertise their products in North Carolina; and did not solicit business in North Carolina or themselves sell or ship tires to North Carolina customers.

Yet, a small percentage of the subsidiary’s tires were distributed within North Carolina by other Goodyear USA affiliates. The type of tire involved in the accident was never distributed in the state.

Although Goodyear France maintained North Carolina lacked jurisdiction over it, the trial court denied its motion to dismiss the claims against it.

The subsidiary appealed the ruling, but the North Carolina Court of Appeals affirmed.

Addressing the threshold issue—are foreign subsidiaries of a U.S. parent corporation amenable to suit in state court on claims unrelated to any activity of the subsidiaries in the forum state?—the U.S. Supreme Court reverses because insufficient contacts existed to warrant North Carolina’s exercise of jurisdiction over Goodyear France.

The Supreme Court discusses the appeals court’s process at length. Acknowledging contacts with North Carolina insufficient to invoke “special jurisdiction” over the subsidiary, the appeals court confined its analysis to “general jurisdiction,” which can be inferred when the defendant’s contacts with the forum state are so “continuous and systematic” as to render them essentially at home there. “To justify the exercise of general jurisdiction over petitioners,” the Supreme Court states, “the North Carolina courts relied on the petitioners’ placement of their tires in the ‘stream of commerce.’” [Slip op.12] However, “the North Carolina court’s stream-of-commerce analysis elided the essential difference between case-specific and...