Asahi Metal Industry Co., Ltd. v. Superior Court
In Asahi Metal Industry Co., Ltd. v. Superior Court, 480 U.S. 102 (1987), the plaintiff was seriously injured in an accident in California when he lost control of his motorcycle. He filed a product liability action in California, alleging the accident was caused by a defective motorcycle tire and tube. He sued Cheng Shin Rubber Industrial Co., Ltd., the Taiwanese manufacturer of the tube, and Cheng Shin filed a cross-complaint against Asahi Metal Industry Co., Ltd., the manufacturer of the tube's valve assembly. The plaintiff settled and thereafter dismissed his claims against Cheng Shin. Only Cheng Shin's cross-complaint remained. The court held "the exercise of personal jurisdiction by a California court over Asahi in this instance would be unreasonable and unfair." (Id. at p. 116 107 S.Ct. at p. 1034.)
Asahi, a Japanese corporation, manufactured tire valve assemblies and sold them to a Taiwanese company for use as components in finished tire tubes. Asahi, 480 U.S. at 106.
The Taiwanese company sold the finished tire tubes in the United States, including California. Id. After a California driver injured by an allegedly defective tire tube sued the Taiwanese company, it filed a cross-complaint seeking indemnification from Asahi. Id.
Asahi argued California "could not exert jurisdiction over it consistent with the Due Process Clause of the Fourteenth Amendment." Id.
In considering whether the California court could exercise jurisdiction over Asahi consistent with the Due Process Clause, the Supreme Court noted the burden Asahi would face in defending itself in a foreign legal system. Id. at 114.
The Court also stated that because the third-party plaintiff the Taiwanese company was not a California resident, California's legitimate interests in the dispute diminished considerably. Id.
It held that the exercise of jurisdiction would be unreasonable and unfair in light of the "serious burdens on the alien defendant which were outweighed by minimal interests on the part of the plaintiff or the forum State." Id. at 115-16.
A majority of the court stated: "The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders." ( Asahi, supra, 480 U.S. at p. 114 107 S. Ct. at p. 1033.) It further advised that "a court should consider the procedural and substantive policies of other nations whose interests are affected by the assertion of jurisdiction by the California court. The procedural and substantive interests of other nations in a state court's assertion of jurisdiction over an alien defendant will differ from case to case. In every case, however, those interests, as well as the Federal interest in Government's foreign relations policies, will be best served by a careful inquiry into the reasonableness of the assertion of jurisdiction in the particular case, and an unwillingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum State." (Id. at p. 115 107 S.Ct. at p. 1034.)
While the majority of the court concluded reasonableness and consideration of the policies of other nations dictated the result in the case, the justices disagreed on the application and interpretation of the stream of commerce theory. A plurality of four justices, led by Justice O'Connor, interpreted the stream of commerce theory to bar the assertion of jurisdiction in the case.
They concluded "the 'substantial connection,' , between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State. The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But 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." (Asahi, supra, 480 U.S. at p. 112 107 S. Ct. at p. 1032 (plur. opn. of O'Connor, J.).)
Were this the opinion of the majority, this "stream-of-commerce-plus" theory would provide a simple answer to the case before us. Italpast did not purposefully avail itself of the benefits of doing business in California simply by placing its machines into the stream of commerce in Italy, without any further indicia of intent to serve the market in California. It did not design the allegedly defective machine for the California market, advertise in California, provide regular advice to customers in California or market the product through a distributor who agreed to serve as its sales agent in California. Italpast was aware the stream of commerce might sweep its product into California, but according to the cited plurality opinion, this would not be enough.
On the other hand, four justices in a concurring opinion authored by Justice Brennan disagreed with the "stream-of-commerce-plus" interpretation. As they put it, "the stream of commerce refers not to unpredictable currents or eddies, but to the regular and anticipated flow of products from manufacture to distribution to retail sale. As long as a participant in this process is aware that the final product is being marketed in the forum State, the possibility of a lawsuit there cannot come as a surprise." (Asahi, supra, 480 U.S. at p. 117 107 S.Ct. at pp. 1034-1035 (conc. opn. of Brennan, J.).)
They continued: "Most courts and commentators have found that jurisdiction premised on the placement of a product into the stream of commerce is consistent with the Due Process Clause, and have not required a showing of additional conduct." (Ibid.)