Asahi Metal Industry Co. v. Superior Court

480 U.S. 102 (1987)

What's Going On?

Petitioner, a Japanese manufacturing company, seeks review of a decision holding that it was subject to personal jurisdiction in California based on its manufacturing of tire parts in Japan, which were incorporated into other tire parts in Taiwan, and sold to customers in California.

Who's Who?

Petitioner    :

Asahi Metal Industry Co. – a Japanese corporation engaged in the manufacture of tire valve assemblies (original defendant).

Respondent :

Superior Court [of California, Solano County] – court in California where the action at issue was brought;
Cheng Shin Rubber Industrial Co., Ltd. – a Taiwanese corporation engaged in the manufacture of tire tubes (original defendant).

Facts:

Following a motorcycle accident in Solano County, California, Gary Zurcher (original plaintiff) brought a products liability action against Respondent Cheng Shin Rubber Industrial Co., Ltd. (Cheng Shin) in Respondent, the Superior Court [of California, Solano County]. In the accident Zurcher was injured in and his wife was killed. Zurcher alleged that the accident resulted from defective tire components manufactured by Respondent Cheng Shin, a Taiwanese corporation. Seeking indemnification, Respondent Cheng Shin filed a third-party complaint against Petitioner Asahi Metal Industry Co. All other claims between Zurcher, Cheng Shin, and other parties were settled and dismissed. The only remaining claim is between Petitioner and Respondent Cheng Shin. Petitioner is a Japanese corporation that manufactures tire valve assemblies, which it sells to Cheng Shin and other manufacturers, to be used in tire tubes. From 1978 to 1982, Respondent Cheng Shin bought between 100,000 and 500,000 valve assemblies, annually, which were incorporated into its tubes. Respondent Cheng Shin also purchased valve assemblies from other manufacturers. Approximately 20% of Respondent Cheng Shin's American sales were in California. A manager of Cheng Shin stated that Petitioner had been made aware, through discussions with Respondent Cheng Shin, that the valve assemblies would end up in the U.S. Petitioner declared that it had never contemplated becoming subject to suit in California as a result of its limited sales to Respondent Cheng Shin. Respondent Superior Court found that the international scale of Petitioner's business made it reasonable that Petitioner defend product liability claims internationally. [The appellate court then commanded Respondent Superior Court to quash service of summons, finding the exercise of jurisdiction improper. The Supreme Court of California reversed.]

Issue:

Does a foreign defendant's mere awareness that the components it manufactures, sells, and delivers from outside of the United States will reach the forum state in the stream of commerce constitute “minimum contacts” such that the forum state's exercise of personal jurisdiction is justifiable?

Decision:

No. Minimum contacts must be based on the act of the defendant. In this case, The Supreme Court of California upheld Respondent Superior Court's exercise of jurisdiction, finding it sufficient that Petitioner placed its product into the stream of commerce, which eventually swept Petitioner's product into California; however, Petitioner did nothing else to purposefully avail itself of the California market. Due process requires that the substantial connection between the defendant and the forum state, required for a finding of minimum contacts, must arise from an action of the defendant that of the defendant purposefully directed toward the forum state. The mere placement of the product into the stream of commerce is not an act purposefully directed toward the forum state, even if the defendant is aware that the product may reach the forum state. Petitioner did not advertise in the forum state, or market its product through a distributor who has agreed to serve as the sales agent in the forum state. The burden on Petitioner of defending this case is severe. Petitioner would have to travel from Japan to the United States, and submit its dispute with Respondent Cheng Shin to a foreign judicial system. Neither Asahi, nor Cheng Shin is an American party, yet, Cheng Shin has not shown why it is more appropriate to litigate in California rather than Taiwan or Japan. The interests of California in the dispute are not strong enough to justify its exercise of jurisdiction in light of the limited connection that it has with Petitioner. Exercise of personal jurisdiction by a California court in this instance would be unfair. Reversed.

Basic Rule:

The mere placement of a product by a nonresident defendant into the stream of commerce, even with knowledge that the product may reach the forum state, is not an act purposefully directed toward the forum state that would justify the forum state's exercise of personal jurisdiction over the defendant.

Concurrence (Brennan):

Petitioner did purposefully avail itself of the California market. This is a rare case, however, in which California's exercise of personal jurisdiction would not comport with fair play and substantial justice because the minimum requirements inherent in the concept of fair play and substantial justice defeat the reasonableness of jurisdiction, notwithstanding the fact that Petitioner purposefully engaged in forum activities.

Concurrence (Stevens):

Minimum contacts do not always have to be examined to determine the constitutionality of a state court's assertion of jurisdiction. The finding that California's exercise of jurisdiction over Petitioner would be unfair and unreasonable alone requires jurisdiction to be denied. In light of the unfairness of jurisdiction in this case, it is unnecessary for the Court to consider purposeful direction, or any other test, in an attempt to establish a connection between Petitioner and the forum state.

Terms:

Long-arm statute :

A statute that provides for a state's exercise of jurisdiction over nonresident defendants.

Third-party complaint :

A complaint filed against a third party by the defendant.

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