Brown v. Meter
681 S.E.2d 382, 2009 N.C. App. LEXIS 1365, 199 N.C. App. 50 (2009)
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Rule of Law:
A state may exercise general personal jurisdiction over a foreign corporation that purposefully injects its products into the stream of commerce without limiting the area of distribution, if the resulting sales in the forum state are of such a continuous and systematic volume as to constitute substantial activity.
Facts:
- Matthew Helms and Julian Brown, two 13-year-old residents of North Carolina, were on a soccer trip in Europe.
- On April 18, 2004, they were traveling on a bus outside Paris, France, en route to an airport for their return flight to North Carolina.
- The bus crashed, and both boys died from their injuries.
- The crash was allegedly caused by the failure of a Goodyear Regional RHS tire, which was manufactured by Goodyear Turkey.
- The specific tire model involved in the crash bore U.S. Department of Transportation markings and safety warnings written in English, conforming to U.S. standards.
- Goodyear Turkey, along with Goodyear Luxembourg and Goodyear France, are foreign subsidiaries of the U.S.-based Goodyear Tire and Rubber Company.
- Between 2004 and 2007, tens of thousands of tires manufactured by these three foreign subsidiaries were shipped into North Carolina for sale through the Goodyear corporate distribution system.
- Specifically, over this period, at least 5,906 tires from Goodyear Turkey, 33,923 from Goodyear France, and 6,402 from Goodyear Luxembourg were sold in North Carolina.
Procedural Posture:
- The administrators of the estates of Matthew Helms and Julian Brown (Plaintiffs) filed a lawsuit against Goodyear Luxembourg, Goodyear Turkey, and Goodyear France (Defendants), among others, in the Onslow County Superior Court, a North Carolina trial court.
- Defendants filed motions to dismiss for lack of personal jurisdiction under Rule 12(b)(2).
- After considering affidavits and deposition testimony, the trial court denied the Defendants' motions, concluding that it could exercise general personal jurisdiction.
- Defendants (as appellants) appealed the trial court’s order to the North Carolina Court of Appeals, with Plaintiffs as appellees.
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Issue:
Does the Due Process Clause permit a North Carolina court to exercise general personal jurisdiction over foreign corporate subsidiaries whose products are sold in North Carolina in substantial, continuous, and systematic quantities through an affiliated distribution system, even when the cause of action arises from an incident that occurred outside of North Carolina?
Opinions:
Majority - Ervin, Judge
Yes. The exercise of general jurisdiction over the foreign subsidiaries is consistent with the Due Process Clause because their continuous and systematic contacts with North Carolina make it fair and reasonable to be haled into court there. The court held that by placing a substantial and regular volume of products into the stream of commerce with the knowledge that they would be sold in North Carolina, the defendants purposefully availed themselves of the state's market. The court explicitly followed the broader 'stream of commerce' theory articulated by Justice Brennan in Asahi, rather than the more restrictive 'stream of commerce plus' test. The sheer quantity of tires—tens of thousands—distributed in North Carolina through a highly organized, continuous process established the 'continuous and systematic' contacts required for general jurisdiction. This regular flow of goods into the state, combined with North Carolina's strong interest in providing a forum for its deceased citizens, meant that exercising jurisdiction did not offend traditional notions of fair play and substantial justice.
Analysis:
This decision is significant for applying the 'stream of commerce' theory, more commonly associated with specific jurisdiction, to a general jurisdiction analysis. By doing so, the court established that a high volume of sales through a distribution network can, by itself, create the 'continuous and systematic contacts' necessary for a company to be sued in a state for any reason, not just for claims arising from its in-state activities. The ruling solidifies North Carolina's rejection of the restrictive 'stream of commerce plus' test from Asahi, broadening the scope of potential liability for foreign manufacturers whose products are sold in the state. This precedent makes it easier for plaintiffs to sue international corporations in North Carolina, provided they can demonstrate a substantial and regular flow of the defendant's products into the state market.
