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United States Supreme Court Admonishes State Courts for Exercising General Jurisdiction over Foreign Corporations which are not “Present” in the State

18 Jul 2011
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By Lewis Tesser, partner, and Timothy Nolen, Associate, of Tesser, Ryan & Rochman, LLP

For only the third time since 1945, the United States Supreme Court addressed the issue of “general jurisdiction” over a foreign corporation. General jurisdiction requires that a party be “present” in a state and allows a state or federal court to hear any case against the party even if the injury occurred outside of the state. The case includes issues of business law, corporate structuring, constitutional law and product liability.

The case, Goodyear Dunlop Tires Operations, S.A. v. Brown, No. 10-76, 2011 U.S. LEXIS 4801 (June 27, 2011), involved a bus crash outside of the city of Paris, France, which killed two young children. The children’s parents sued both Goodyear Tire and Rubber, an American corporation, and Goodyear’s foreign subsidiaries in North Carolina state court. Although the North Carolina state courts had found that they had jurisdiction over Goodyear’s foreign subsidiaries since the subsidiaries knew that some tires would reach North Carolina, the United States Supreme Court rejected that position. In her opinion for the unanimous Court, Justice Ginsberg noted that the foreign subsidiaries had no place of business, no employees and no bank accounts in North Carolina. The subsidiaries also did not advertise, solicit business or ship tires into North Carolina. Accordingly, Justice Ginsberg found that the subsidiaries did not have sufficient contacts with North Carolina to support the finding that the subsidiaries were “present” in the state. Thus, the North Carolina state courts could not hear the dispute.

Goodyear Dunlop, one of the United State Supreme Court’s few general jurisdiction cases, provides interesting insight into the complexities of bringing a suit against a foreign corporation. It remains to be seen whether fewer state courts exercise general jurisdiction over foreign corporations going forward.

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About Post Author

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Lewis Tesser is a senior partner in the New York law firm of Tesser, Ryan & Rochman, LLP, concentrating his practice in litigation and mediation, representing licensed professionals and professional practices, administrative law and commercial law. Lew Tesser is Vice-President of the New York County Lawyers’ Association and Director of its Ethics Institute. Prior to private practice, Mr. Tesser was an Assistant United States Attorney in the Eastern District of New York. In that capacity, he represented various agencies of the United States government in litigation in the United States District Court and United States Court of Appeals. Mr. Tesser also served as a Judge Advocate in the United States Army where he prosecuted and defended criminal cases and was the chief legal advisor to the Commanding General of the U.S. Army War College, Carlisle, Pennsylvania. He also has served as an Arbitrator for the American Arbitration Association, New York City Civil Court, a Judge for the Environmental Control Board of the City of New York and a lecturer for various Bar Associations and New York area law schools. Mr. Tesser, who was admitted to practice in 1971, is a 1970 Honors graduate from the National Law Center, George Washington University, a Masters graduate from the Wharton Business School, University of Pennsylvania (l974) and a graduate of the Harvard Law School Program of Instruction for Lawyers. He is a past President of Congregation Sons of Israel, Nyack, NY. Publications and Speaking Engagements Editor-In-Chief, “The New York Rules of Professional Conduct Annotated”, Oxford University Press, New York, 2010. A complete list of Mr. Tesser’s speaking engagements and publications is available if you would like to learn more about Mr. Tesser’s work. Representative Cases In Re Zhang, 376 Fed. Appx. 104 (2d Cir. 2010) Continental Casualty Co. v. JBS Construct. Mgmt., 2010 U.S. Dist. LEXIS 85467 (S.D.N.Y. 2010)

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