Asahi Metal Industry Co. v. Superior Court of California
In Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987), a Californian was injured in a motorcycle accident when its rear tire tube exploded. He filed suit against the Taiwanese manufacturer of the tube, which, in turn, impleaded Asahi, a Japanese company that manufactured and supplied the tube's valve assembly. Asahi conceded that it was aware that its valve assemblies would eventually be sold on motorcycles throughout the United States, but it contended that it never expected to be sued in the United States, since all of its sales flowed from Japan to Taiwan.
In Asahi, the Supreme Court produced two dissonant plurality opinions, with each opinion shared by four Justices. The schism was over whether the first prong under the International Shoe analysis, specifically, the minimum contacts standard, had been achieved. Although there was no majority opinion as to whether minimum contacts existed, the Court did unanimously hold that personal jurisdiction was not present. Taking into account the burden on Asahi to defend an American suit, the Court relied on the second prong of International Shoe and decided that California's assertion of jurisdiction over Asahi would be unconstitutional, because it would "offend traditional notions of fair play and substantial justice." Asahi, 480 U.S. at 113.
In discussing the first prong of the International Shoe analysis - whether minimum contacts were present - four Justices, including Justice O'Connor, Chief Justice Rehnquist, and Justices Powell and Scalia, opined that the minimum contacts standard had not been met. Justice O'Connor, writing for that plurality, articulated:
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, 480 U.S. at 112.
In sum, according to the plurality opinion written by Justice O'Connor, even though Asahi may have been aware that its products would eventually be sold in California, its lack of conduct directed specifically at California made jurisdiction in California improper under a "minimum contacts" analysis.
In contrast, Justice Brennan, joined by Justices White, Marshall, and Blackmun, concluded that World-Wide Volkswagen should not be read to require "additional conduct" beyond simply placing a product in the stream of commerce with the expectation that it will be purchased in the forum state. As Justice Brennan continued, "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, 480 U.S. at 117.
Justice Stevens remained above the discord by declining to address the issue and stating that it did not need to be resolved because of the unanimous decision to rely on the second prong of International Shoe. He did state, however, that, "even assuming that the minimum contacts test ought to be formulated here," Justice O'Connor's opinion "misapplies the test to the facts of Asahi." Id. at 122. Justice Stevens concluded that Asahi's conduct did rise to the level of "purposeful availment" in the state of California because of the large number of Asahi's units that ended up there. Id.
Conceding that there has been dissension among courts in the interpretation of the minimum contacts standard, the O'Connor plurality opinion in Asahi articulated:
In World-Wide Volkswagen itself, the state court sought to base jurisdiction not on any act of the defendant, but on the foreseeable unilateral actions of the consumer. Since World-Wide Volkswagen, lower courts have been confronted with cases in which the defendant acted by placing a product in the stream of commerce, and the stream eventually swept defendant's product into the forum State, but the defendant did nothing else to purposefully avail itself of the market in the forum State. Some courts have understood the Due Process Clause, as interpreted in World-Wide Volkswagen, to allow an exercise of personal jurisdiction to be based on no more than the defendant's act of placing the product in the stream of commerce. Other courts have understood the Due Process Clause and the above-quoted language in World-Wide Volkswagen to require the action of the defendant to be more purposefully directed at the forum State than the mere act of placing a product in the stream of commerce. Id. at 110.
Concluding the discussion on the two divergent interpretations of the minimum contacts standard, the O'Connor plurality opinion stated that the more stringent "purposefully directed" test, rather than the "stream of commerce test," was the position that was "consonant with the requirements of due process." Asahi, 480 U.S. at 112.
In sum, a California resident sued in California state court to recover for injuries he sustained when a tire on his motorcycle exploded. Id. at 106.
The plaintiff sued the tire tube manufacturer, a Taiwanese company, who then impleaded the manufacturer of the tube's valve, a Japanese company. Id.
After the underlying case settled, the Japanese valve manufacturer sought to quash the third-party summons for lack of personal jurisdiction, arguing that it manufactured the tubes only in Japan. Id.
It was the Taiwanese corporation that incorporated the valves into the tubes in Taiwan and sold the finished tubes throughout the world. Id.
With split reasoning, the Supreme Court agreed with the Japanese company and found that due process prevented the company from being haled into court in California. Id. at 108.
The plurality opinion, written by Justice O'Connor, promulgated what has become known as the "stream of commerce plus" standard, which provides that:
"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." Id. at 112.
In concurrence, Justice Brennan determined that due process required no such additional conduct. Id. at 117.
Brennan reasoned 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 . . . regardless of whether the participant directly conducts business in the forum State, or engages in additional conduct directed toward that State." Id. No matter what reasoning they employed, all the justices agreed that personal jurisdiction over the Japanese corporation violated due process. Id. at 116, 121-22.