Asahi Metal Industries v. Superior Court of California (Part I)

SCOTUS - 1987 (480 U.S. 102)

Facts:

• Zurcher (CA) lost control of motorcycle and collided with a tractor. He was badly hurt and his wife was killed.
• Zurcher sued Cheng Shin Rubber. Cheng Shin filed a cross-complaint seeking indemnification from its codefendants and from petitioner, Asahi, the manufacturer of the valve assembly.
• Zurcher's claims against everyone were settled and dismissed except for the claim against Asahi.
• Asahi is a Japanese corporation who sold valve assemblies to Cheng Shin in Taiwan. Cheng Shin sold finished products to US, 20% to CA.

Procedural History:

•  Superior Court of CA ruled against Asahi.
• Court of Appeal of CA reversed, ruled for Asahi.
• Supreme Court of CA reversed, ruled against Asahi.
• SCOTUS reversed, ruled for Asahi, no jurisdiction.

Issues:

• Does the mere awareness on the part of a foreign D that the components it manufactured, sold, and delivered outside the US would reach the forum state in the stream of commerce constitute "minimum contacts" in that state?

Holding/Rule:

• The mere awareness on the part of a foreign D that the components it manufactured, sold, and delivered outside the US would reach the forum state in the stream of commerce does not constitute "minimum contacts" in that state.
• The D's awareness that the stream of commerce may or will sweep the product into the forum state does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum state.

Reasoning:

• "Stream of commerce plus"
•  Asahi never purposefully availed itself of the CA market.
• Jurisdiction is proper when the contacts result form actions of the D that create a "substantial connection" with the forum state.
• The "substantial connection" between the D and the forum state necessary for finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum state.
• Asahi does not do business directly in CA, has no office, agents, employees, or property in CA. It did not create, control, or employ the distribution system that brought its valves to CA.

Dissent:

•  Brennan…
• Pure stream of commerce
• If a party is aware that the final product is being marketed in the forum state, the possibility of a lawsuit there cannot come as a surprise.
• The D indirectly benefits from the state's laws that regulate and facilitate commercial activity.

• Stevens...
• Decision about stream of commerce/minimum contacts isn't necessary because of other holdings.
• A regular course of dealing that delivers over 100k units annually over a period of several years would constitute "purposeful availment" even though the item delivered to the forum state was a standard product marketed throughout the world.

Notes:

•  Two views… (both of which are accurate to some extent)
• Asahi was fully aware that their products were used in CA based upon the level of activity. How much activity was this? Stevens thinks a lot.
• Asahi never contemplated being subject to suit in CA.

• There isn't a majority in the opinion, only a plurality.
• Court split 4-4-1 on whether "stream of commerce" was enough.
• O'Connor said that stream of commerce by itself is not sufficiently purposeful. Need stream of commerce plus.
• Advertising, designing for market (It's not terribly hard to find these plus factors, given capable attorneys, for American companies; harder for foreign companies)
• Vandelune v. 4B Elevator - Court found that a British manufacturer "designed" a component part for the American grain elevator market

• The opposing view was that this plus will simply require more work by Ps to discover the plus points. If advertising is enough, virtually any American company will be found to have done enough.