A recent Pennsylvania Supreme Court opinion provides out-of-state corporations more protection from litigation tourists, bringing the state’s general personal jurisdiction rules in line with U.S. Supreme Court precedent. In Mallory v. Norfolk Southern Railway Co., a unanimous court invalidated part of Pennsylvania’s corporate registration statute, holding that corporations that are not incorporated and do not have a principal place of business in Pennsylvania cannot be subject to general personal jurisdiction simply because they have registered to conduct business in the Commonwealth.
The New Jersey Appellate Division has held that Korean company LG Chem Ltd. (“LG Chem”)will have another opportunity to dispute New Jersey’s jurisdiction over it in a product liability lawsuit concerning a vaping device battery. The decision is based, in part, on the trial court’s failure to order jurisdictional discovery and convene an evidentiary hearing to resolve the disputed jurisdictional allegations before deciding LG Chem’s pre-answer motion to dismiss. This case underscores that in New Jersey, the standard governing motions to dismiss for lack of jurisdiction, unlike other bases, requires the court to look outside the disputed pleadings alone.
The New Jersey plaintiff alleged he was injured when a lithium-ion battery manufactured by LG Chem exploded in his pocket. Plaintiff attempted to serve process on LG Chem through two of its U.S.-based subsidiaries, LG Chem America, Inc. (LGCAI) and LG Chem Michigan, Inc. (LGCMI). The agents of both refused to accept service.
Patterson v. Chiappa Firearms, USA, LTD, No. 1:20-cv-01430-JPH-MG, 2021 WL 4287431 (S.D. Ind. Sept. 21, 2021).
- First Indiana case to apply the “relate to” standard articulated in Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017 (2021).
- Rejects a broad, unlimited stream of commerce theory for establishing personal jurisdiction.
- Denied plaintiff jurisdictional discovery, noting that foreign nationals should not be subjected to extensive discovery in order to determine whether personal jurisdiction over them exists.
On March 25, the U.S. Supreme Court decided Ford Motor Co. v. Montana Eighth Judicial District Court, revisiting the issue of due process limitations on the exercise of personal jurisdiction, most recently addressed by the Court in 2017 in Bristol-Myers Squibb v. Superior Court, 137 S. Ct. 1783 (2017) (“BMS”). A unanimous Court (8-0, with Justice Barrett not participating) held in Ford Motor that courts in Montana and Minnesota could hear claims by residents of those states alleging injuries sustained in accidents that occurred there involving Ford vehicles. Relying on Ford’s extensive contacts with those states, which consisted of efforts to create and serve local sales and service and repair markets for the same kinds of vehicles, the Court concluded these plaintiffs’ claims were sufficiently “related to” Ford’s local contacts, even though the actual vehicles in the accidents were designed, manufactured and initially sold in other states. (We commented here on the state court decisions in these cases before Ford sought certiorari.)
In an important decision in accord with the U.S. Supreme Court’s 2017 landmark ruling on personal jurisdiction in Bristol-Myers Squibb Co. v. Superior Court of Calif., 137 S. Ct. 1773 (2017) (BMS), the Illinois Supreme Court held that Illinois courts may not exercise personal jurisdiction over claims of out-of-state plaintiffs for personal injuries suffered outside of Illinois from a device manufactured outside of Illinois. Rios v. Bayer, 2020 IL 125020 (June 4, 2020).
Courts have struggled for decades to define the constitutional limitations on personal jurisdiction over major product manufacturers who sell their products nationwide. The central tension has been determining the validity and potential scope of the “stream of commerce” theory in a world of advancing technology and associated evolution of business operations and practices. That tension is increasing as state courts decide what kind of nexus is required, between a defendant’s “forum-directed” commercial activities and the plaintiff’s claim, to justify the exercise of specific jurisdiction. Specifically, how purposefully forum-directed and how closely tied to the specific claim must the activities be?
Stream of commerce theory posits that a defendant that has placed a product into the nationwide channels of commerce should anticipate that its products will thereby be “swept” into any state and if it causes injury there, it will be subject to suit. In its purest form, the theory collides to some degree with the fundamental limiting requirement that a defendant may be haled into a forum to litigate only where it has “purposely availed” itself of the privilege of doing business by, for example, directing its products into the forum.