In Goodyear Dunlop Tires Operations, S.A. v. Brown, the Supreme Court addressed whether a state court could exercise general personal jurisdiction over a foreign subsidiary of a U.S. corporation when the subsidiary had no continuous or systematic business contacts with that state.
The case arose from a tragic bus accident that took place outside Paris, France, resulting in the deaths of two 13-year-old boys from North Carolina. The parents of the boys alleged that a defective tire manufactured by one of Goodyear’s foreign subsidiaries caused the accident.
The families filed suit in a North Carolina state court against Goodyear USA and three of its foreign subsidiaries located in Turkey, Luxembourg, and France. The foreign subsidiaries argued that they did not have sufficient ties with North Carolina to justify personal jurisdiction.
The North Carolina courts, however, allowed the case to proceed, reasoning that some of the subsidiaries’ products had reached North Carolina through the stream of commerce.
The issue eventually reached the Supreme Court, which was tasked with determining whether the state court’s exercise of general personal jurisdiction was valid under due process principles.
Facts of Goodyear Dunlop Tires Operations, S.A. v. Brown
Two American boys, aged thirteen, and residents of North Carolina, died in a bus accident near Paris, France. Their parents believed that the accident occurred due to a defective tire that had been manufactured by a foreign subsidiary of the Goodyear Tire and Rubber Company. Based on this belief, the parents filed a wrongful death action in a North Carolina state court.
The defendants included Goodyear USA, based in Ohio, and three of its foreign subsidiaries operating in Turkey, Luxembourg, and France. The foreign subsidiaries (the petitioners in this case) manufactured tires primarily for sale in European and Asian markets.
None of these subsidiaries had offices, employees, bank accounts, or property in North Carolina. They also did not advertise, solicit business, or design products specifically for the North Carolina market.
Although some of the subsidiaries’ tires were distributed in North Carolina through the broader Goodyear distribution network, the particular type of tire involved in the French accident was never sold or distributed in North Carolina. Nevertheless, the plaintiffs argued that the presence of some Goodyear products in North Carolina’s market was enough to establish jurisdiction.
Procedural History in Goodyear Dunlop Tires Operations, S.A. v. Brown
At the trial level, the foreign subsidiaries moved to dismiss the action for lack of personal jurisdiction. The North Carolina trial court denied their motion, finding that the subsidiaries’ products had reached the state through the stream of commerce, and that this was enough to justify general jurisdiction.
The foreign subsidiaries appealed the ruling, but the North Carolina Court of Appeals affirmed the lower court’s decision. The appellate court reasoned that general jurisdiction was proper because Goodyear’s foreign subsidiaries’ tires were distributed within North Carolina, which constituted sufficient contacts to subject them to the jurisdiction of the state courts.
The foreign subsidiaries then petitioned the Supreme Court of the United States for review, arguing that their limited and indirect connections to North Carolina did not meet the due process requirements for general personal jurisdiction.
Issue
The central issue in Goodyear Dunlop Tires Operations, S.A. v. Brown was:
Can a state court exercise general personal jurisdiction over a foreign subsidiary of a U.S. corporation when that subsidiary has no systematic, continuous, or organized business relationship with the state?
Goodyear Dunlop Tires Operations, S.A. v. Brown Judgment
Justice Ruth Bader Ginsburg delivered the opinion of the Court.
The Supreme Court began by emphasizing the distinction between specific jurisdiction and general jurisdiction. Specific jurisdiction applies when a claim arises from or relates to the defendant’s contacts within the forum state.
In contrast, general jurisdiction allows a state court to hear any and all claims against a defendant, even those unrelated to the defendant’s activities in the forum, but only if the defendant’s affiliations with the state are so substantial as to make it essentially at home there.
The Court found that the North Carolina courts had blurred this distinction. In Goodyear Dunlop Tires Operations, S.A. v. Brown, the claims arose from a bus accident in France, involving a tire manufactured abroad, and not from any conduct or activity occurring within North Carolina. Therefore, specific jurisdiction was not applicable.
Next, the Court examined whether the subsidiaries could be subject to general jurisdiction. The record showed that the foreign subsidiaries had no place of business, employees, or bank accounts in North Carolina. They neither advertised nor sold products directly in the state.
The mere fact that a small number of their tires reached North Carolina through the stream of commerce—via other Goodyear affiliates—did not constitute “continuous and systematic” business contacts that would make the subsidiaries “at home” in North Carolina.
The Supreme Court clarified that the stream-of-commerce theory used by the North Carolina courts could not serve as a basis for exercising general jurisdiction. The theory might sometimes support specific jurisdiction if the cause of action arose from the flow of products into the state, but in this case, the accident and alleged defect occurred entirely outside North Carolina.
The Court relied on International Shoe Co. v. Washington and subsequent decisions such as Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984), which explained that general jurisdiction requires continuous corporate operations within a state, so substantial and of such a nature as to justify suit on causes of action arising from dealings entirely distinct from those activities.
Applying this precedent, Justice Ginsburg concluded that the connection between the foreign subsidiaries and North Carolina was too limited to justify general jurisdiction. The subsidiaries were not “at home” in North Carolina, and due process would be violated if the state courts exercised authority over them.
Holding in Goodyear Dunlop Tires Operations, S.A. v. Brown
The Supreme Court unanimously held that North Carolina’s courts did not have general personal jurisdiction over the foreign subsidiaries of Goodyear.
The Court reversed the judgment of the North Carolina Court of Appeals, holding that the subsidiaries’ limited contacts with the state—specifically, the fact that some of their tires ended up there through the stream of commerce—did not constitute the kind of continuous and systematic general business contacts required to render them essentially at home in the forum state.
Therefore, in Goodyear Dunlop Tires Operations, S.A. v. Brown, the Supreme Court concluded that the North Carolina courts lacked jurisdiction to hear the case against the foreign subsidiaries.
Judgment
Reversed.
The Supreme Court reversed the decision of the North Carolina Court of Appeals and remanded the case, holding that the exercise of general personal jurisdiction over the foreign subsidiaries violated the Due Process Clause of the Fourteenth Amendment.
Key Takeaways
- Distinction Between General and Specific Jurisdiction: The case reaffirmed the importance of distinguishing between general and specific personal jurisdiction. General jurisdiction requires continuous and systematic contacts that render a corporation “at home” in the forum state.
- Stream-of-Commerce Theory Limitation: The decision clarified that the stream-of-commerce theory cannot serve as a basis for general jurisdiction when the cause of action is unrelated to the forum state.
- Foreign Subsidiaries and Jurisdiction: Goodyear Dunlop Tires Operations, S.A. v. Brown made clear that foreign subsidiaries of U.S. corporations are not automatically subject to personal jurisdiction in every state where some of their products may be sold.
- Due Process Protection: The ruling reinforced that extending state court jurisdiction over foreign corporations with only minimal and indirect ties would violate due process principles under the Fourteenth Amendment.
Conclusion
In Goodyear Dunlop Tires Operations, S.A. v. Brown, the Supreme Court set a clear boundary for the exercise of general personal jurisdiction over foreign corporations. The Court held that the subsidiaries of Goodyear did not have sufficient contacts with North Carolina to be deemed “at home” there, as they did not engage in continuous or systematic business operations within the state.
This decision underscored that general jurisdiction cannot rest solely on the movement of products through a global distribution network when the products’ presence in a forum state is random or fortuitous.
By reversing the North Carolina courts’ decision, the Supreme Court reinforced the constitutional limits on personal jurisdiction, ensuring that foreign corporations are subject to U.S. state courts only where their affiliations are truly substantial and predictable.