The Supreme Court decided that a state may not exercise personal (in personam) jurisdiction over a foreign manufacturer merely because it targeted the U.S. market for sale of its product and that product is bought by a consumer in the forum state. As a result, a state will not be able to exercise worldwide personal jurisdiction over any company that sells its products in the United States.
The decision was splintered, with 4 Justices deciding one way, two others agreeing with the result for different reasons, and the last three dissenting. Justice Kennedy and 3 others concluded that because the company never engaged in any activities that revealed an intent to invoke or benefit from the protection of New Jersey's laws, the state court is without power over the company. Critical is whether the company's activities manifest an intention to submit to the power of the sovereign.
Justices Breyer and Alito agreed that New Jersey does not have jurisdiction in this case because the company did not engage in a regular course of sales in the state, but they did not want to announce a broad rule about jurisdiction without more fully considering the consequences in light of modern changes in commerce and communication.
The dissenting Justices warned that foreign manufacturers can avoid American product liability laws simply by hiring independent distributors to market their products in the United States. They would find that the foreign company could be sued here for an injury involving its product.
The case involved a complaint against the manufacturer of a shear machine made in England, shipped to its unaffiliated distributor in Ohio, and delivered to the customer in New Jersey. The New Jersey Supreme Court ruled that the English company was subject to personal jurisdiction even though it did not have any of the traditional minimum contacts with New Jersey and was not involved in the sale of the product. Instead, jurisdiction was based on the company's distribution scheme targeting the entire U.S. economy.
The case revisited the Supreme Court's opinion in the 1987 Asahi case, in which a plurality of judges ruled that personal jurisdiction may be based on a test that has come to be known as "stream-of-commerce plus." Under that test, actions of the defendant must be purposefully directed toward the forum state.
Because there was no clear rule of law announced, this issue promises to be revisited by the Supreme Court in the years ahead.