Supreme Court Tightens Requirements for State Courts to Exercise Jurisdiction Over Foreign Corporations

Recently, the Supreme Court addressed the standards for state courts asserting jurisdiction over foreign corporations. In Goodyear Dunlop Tires Operations, S.A. v. Brown, No. 10-76 (June 26, 2011) and J. McIntyre Mach., Ltd. v. Nicastro, No. 09-1343 (June 27, 2011), the Court held that North Carolina and New Jersey state courts had overstepped their authority by exercising jurisdiction over foreign corporations. Although neither opinion announced a new bright-line rule, they help clarify the conditions under which the assertion of jurisdiction is appropriate.

Traditional Jurisdictional Requirements

The broad principles informing jurisdictional analysis are well known and long established. The “outer boundaries” of a state’s jurisdictional authority to “hale a defendant before a court” are defined by the due process clause of the Fourth Amendment. Goodyear Dunlop Tires Operations, S.A. v. Brown, No 10-76, slip op., at 6 (June 26, 2011). Goodyear characterized the Court’s decision in Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) as the “canonical opinion” defining those “outer boundaries”: jurisdiction is constitutional if the defendant has “minimum contacts [with the state] such that the…suit does not offend traditional notions of fair play and substantial justice.” Intl. Shoe at 316.

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