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We All Must Rethink Personal Jurisdiction in Products Cases

The U.S. Supreme Court in Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014), (PDF) has forced all of us to reconsider everything we thought we knew about personal jurisdiction. Daimler has had a major impact in products liability and toxic tort cases.

Briefly, Mercedes-Benz parent, Daimler AG, was sued in California for actions and injuries that occurred in Argentina. Notwithstanding undeniable significant contacts in California (2.4% of Daimler's global sales occurred in California), the Supreme Court held there was no personal jurisdiction in California over non-resident Daimler for actions and injuries sustained in Argentina.

Every first year law student studies the "minimum contacts" test established by the Supreme Court's landmark decision in International Shoe v. Washington, 326 U.S. 310 (1945). For decades the jurisdictional analysis began and ended with minimum contacts. In the view of trial court judges, any non- resident corporation engaged in interstate commerce within the forum state is going to meet the minimum contact test.

Daimler, however, reminded us that personal jurisdiction is more complicated and takes two forms: "specific jurisdiction" and "general jurisdiction".

International Shoe's minimum contacts analysis is only applicable where the non-resident corporation is being sued in the forum state as a result of its activity in the forum state. Was the Illinois plaintiff exposed or injured in Illinois by non-resident corporation's product? Assuming minimum contacts, the forum state court will have specific personal jurisdiction.

What if the non-resident corporation is being sued for injuries or exposures outside the forum state? Plaintiff brings a personal injury action in the City of Saint Louis or Madison County against a Delaware corporation whose principal place of business is in Connecticut for injuries suffered in Texas? Minimum contact is irrelevant. In this instance, the forum state must have "general jurisdiction" over the non-resident corporation.

Daimler held that for activities that arise outside the forum state, the non-resident corporation can only be sued where its "continuous corporate operations within a state are so substantial and of such a nature as to...render them essentially at home in the forum state [emphasis added]". Of course creative lawyers will find a lot of devil in the details of where a corporation is "at home". Daimler does us the favor of narrowly defining "at home" as the state of incorporation or the state of the principal place of business.

The logic that underpins Daimler is straight forward. A plaintiff may bring a law suit in a state where they were injured or the product they claim injury from was manufactured. But if Plaintiff wants to bring suit against non-resident corporations for injuries or activities that occurred outside the forum state, they need to come to the defendant's home.

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