Goodyear and the At-Home Standard

Goodyear Dunlop Tires Operations, S.A. v. Brown changed the question general jurisdiction asks about a corporation. The Court held that a corporation answers any claim in a state only when its affiliations there are so continuous and systematic that it is essentially at home, and that a steady flow of its products into the state does not meet that test.¹

Before Goodyear, most courts had assumed that general jurisdiction existed whenever a defendant had continuous and systematic contacts with the forum. Goodyear was the first case in which the Court stressed the “at home” formulation, and it seemed to signal that continuous and systematic contacts no longer sufficed.² The new test trades a question of volume for a question of place. It asks where the corporation is at home, not how much business it does in the forum.

Later decisions confirmed that reading. Daimler AG v. Bauman called a corporation’s place of incorporation and principal place of business paradigm all-purpose forums, rejected as “unacceptably grasping” the view that general jurisdiction exists in every state where a corporation engages in a substantial, continuous, and systematic course of business, and reserved only an exceptional case for a home elsewhere.³ BNSF repeated the lesson: a corporation is not subject to general jurisdiction in a state merely because it does substantial business there.⁴ Both decisions receive full treatment later in this chapter.

Goodyear teaches two lessons, taken in turn below. The first is the standard itself, stated through the facts that tested it. The second is why a manufacturer’s products reaching a state through ordinary sales cannot meet that standard.

The At-Home Standard

Goodyear began as a wrongful-death suit over an accident in France. Two boys died in a bus accident outside Paris, and their parents, suing as administrators of the boys’ estates in the Superior Court of Onslow County, North Carolina, blamed a tire that failed when its plies separated.⁵ They alleged negligence in the tire’s design, construction, testing, and inspection, and they traced it to a plant in Turkey operated by a foreign subsidiary of The Goodyear Tire and Rubber Company (Goodyear USA).⁶

The parents named four defendants. Goodyear USA, an Ohio corporation with plants in North Carolina and regular commercial activity there, did not contest the state court’s jurisdiction, so the Supreme Court never decided whether North Carolina could reach it. Three of its foreign subsidiaries, organized and operating in Turkey, France, and Luxembourg, did contest jurisdiction.⁷ Those subsidiaries had no place of business, employees, or bank accounts in North Carolina. They did not design, manufacture, or advertise their products there, and they neither solicited business in the state nor themselves sold or shipped tires to its customers. They built tires mainly for European and Asian markets, in sizes and constructions that differ from the tires ordinarily sold in the United States and for heavier loads. The type of tire involved in the accident, a Goodyear Regional RHS made by Goodyear Turkey, was never distributed in North Carolina.⁸

Some of the subsidiaries’ other tires did reach the state through intermediaries. Tens of thousands were sold in North Carolina, a very small percentage of the subsidiaries’ overall sales, and they seemed to involve specialized heavy machinery.⁹ That sporadic flow was the substance of the subsidiaries’ tie to the state, and the Court had to decide whether it could carry general jurisdiction.

Specific jurisdiction could not help the plaintiffs, because it depends on a tie between the forum and the controversy itself, and every event behind this claim happened abroad.¹⁰ The North Carolina Court of Appeals acknowledged that the claims neither related to nor arose from the subsidiaries’ contacts with North Carolina, so it confined its analysis to general jurisdiction, which it recognized required a higher threshold. It found the threshold crossed because the subsidiaries had placed their tires in the stream of interstate commerce without limiting how many could be sold in North Carolina.¹¹ The Supreme Court said that the North Carolina courts had confused or blended the general and specific jurisdictional inquiries.¹²

The Court reversed unanimously.¹³ A court may assert general jurisdiction over a foreign corporation to hear any and all claims against it when the corporation’s affiliations with the state are so continuous and systematic as to render it essentially at home in the forum state.¹⁴ Measured against Helicopteros and Perkins, the subsidiaries fell far short. Unlike the defendant in Perkins, whose sole wartime business activity was conducted in Ohio, they were in no sense at home in North Carolina, and their attenuated connections to the state were not the continuous and systematic general business contacts needed to answer claims unrelated to anything that connects them to it.¹⁵

The standard borrows its meaning from domicile. For an individual, the paradigm forum for general jurisdiction is the domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home. The corporate counterparts of a domicile are the place of incorporation and the principal place of business.¹⁶ The Court called those places paradigm examples and did not hold that a corporation can be at home nowhere else, although later decisions lend support to the narrower reading.¹⁷

The standard therefore asks where, not how much. A plaintiff who stresses a defendant’s sizable sales in the forum answers a question the test does not ask, as the next subsection shows. Testing the standard on the Goodyear facts means asking where the parents could have sued each defendant on the Paris claim.

The three subsidiaries stand on the other side of the line. Each is at home in the country where it is organized and operates, and none is at home in North Carolina, where it had no place of business, employees, or bank accounts.¹⁹ The Paris claim that an Ohio court could hear against the parent therefore fails in North Carolina against the subsidiaries. The claim is identical in both places, and the defendant’s relationship to the forum changes the result.

Sales volume does not change that answer. When a fact pattern describes large forum sales, first ask whether the claim grows out of them. If it does, the question is specific jurisdiction; if it does not, the only question is whether the defendant is at home.

The sales may matter to a claim that arises from them. They do not bring the manufacturer home to North Carolina for every other claim.

Product Flow Is Not Enough

Goodyear’s second lesson answers the argument that persuaded the North Carolina courts. The Court of Appeals reasoned that tires the subsidiaries made abroad had reached North Carolina through the stream of commerce, and it believed that connection gave the state’s courts general jurisdiction.²² The Supreme Court held that this stream-of-commerce analysis “elided the essential difference between case-specific and all-purpose (general) jurisdiction.”²³

Product flow still matters, but it matters to specific jurisdiction. A manufacturer’s products flowing into the forum may bolster an affiliation germane to specific jurisdiction. World-Wide Volkswagen Corp. v. Woodson states the idea: when a sale is not an isolated occurrence but results from the manufacturer’s or distributor’s efforts to serve the market for its product in several states, it is not unreasonable to subject the seller to suit in one of those states if its allegedly defective merchandise has there been the source of injury.²⁴ The flow counts in that setting because the claim connects to it, since the marketing effort that put goods in the forum also put the injuring product there.

North Carolina’s long-arm statute shows the same structure. It has a provision addressed to injury in the state caused by an act outside it, and the Court of Appeals recognized that the provision “does not apply to this case,” because both the act alleged to have caused injury (making the tire) and its impact (the accident) occurred outside the forum.²⁵ The courts turned instead to a provision reaching defendants engaged in substantial activity in the state whether or not the claim arises there, which the North Carolina Supreme Court reads to extend as far as federal due process allows. The case therefore came down to the constitutional limit.²⁶

The same flow does far less when the claim arose somewhere else. Placing a product in the stream of commerce “may bolster an affiliation germane to specific jurisdiction,” the Court explained, but such contacts “do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant.”²⁷ A claim that grows out of the sales supplies its own link to the forum, so the sales can help support jurisdiction. A claim unrelated to the sales supplies no link, and the question becomes whether the defendant is at home in the forum. The Court saw no reason to treat the subsidiaries’ sporadic tire sales through intermediaries differently from the ties held insufficient in Helicopteros. It rejected the “sprawling view” of general jurisdiction, under which any substantial manufacturer or seller of goods would be amenable to suit, on any claim, wherever its products are distributed.²⁸ That view would make every substantial manufacturer at home in every state where its goods are sold. The subsidiaries’ North Carolina sales were also a very small percentage of their overall sales, and the tire that failed was manufactured and sold abroad, with the accident occurring abroad.²⁹

A fact pattern that describes steady distribution of a manufacturer’s goods into the forum should prompt the question of which claim is being sued on, because one distribution can support one plaintiff’s suit and defeat another’s.

The distribution is identical in the two suits, and the answer differs because the first claim grows out of the flow while the second does not. The Brazilian plaintiff’s only route is general jurisdiction, and the flow of goods into a state does not show that a manufacturer is at home there.

The Court of Appeals also leaned on the state’s “well-recognized interest in providing a forum in which its citizens are able to seek redress for injuries that they have sustained.”³¹ The appeal had intuitive force, but the Supreme Court answered in a footnote that general jurisdiction in United States practice has “never been based on the plaintiff’s relationship to the forum.”³² The reasoning is structural. General jurisdiction justifies power over a claim that has no tie to the forum, so the only justification left is the defendant’s own relationship with the state, and the plaintiff’s residence is a fact about the plaintiff. If it counted, every defendant would face suit wherever a plaintiff happened to live. The plaintiff’s residence is not irrelevant everywhere, because when a defendant’s act outside the forum causes injury in the forum, the plaintiff’s forum residence may strengthen the case for specific jurisdiction.³³ That is a different inquiry, and an accident in France could not trigger it.

The last argument came from the respondents themselves. Late in the case they urged the Court to treat all Goodyear entities as a unitary business, so that jurisdiction over the parent would draw in the subsidiaries as well. The Court observed that the respondents had urged disregard of the subsidiaries’ separate status neither below nor in their brief opposing certiorari, held the contention forfeited, and did not address it.³⁴ A footnote adds that the respondents’ earlier reference to “integrated world-wide efforts” was a narrower point about the subsidiaries’ own distribution of tires in North Carolina, and that even regularly occurring sales of a product in a state do not justify jurisdiction over a claim unrelated to those sales.³⁵ The forfeiture limits what Goodyear decides. A student who writes that Goodyear forbids attributing a parent’s contacts to a subsidiary credits the decision with an answer it declined to give, and the interaction between corporate relationships and general jurisdiction returns later in this chapter.