The channel through which a manufacturer or distributor moves products from production to ultimate consumers across state or national lines.
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Cases
Restatements
How its tested
Common Examples
6
Foreign Parts Supplier and Forum Sales
Summit Bank loaned funds to a Taiwanese valve maker that sold components to a Japanese tire company. The tire company assembled vehicles sold nationwide including in the forum state. After an accident the bank sued the Taiwanese firm for indemnity. The court declined jurisdiction because the firm had done no more than place valves into the stream of commerce with awareness they might reach the forum.
British Manufacturer and National Market
Sierra Solutions manufactured machines in Britain and sold them to a U.S. distributor that resold them across the country. A forum-state buyer was injured and sued in that state. Jurisdiction failed because Sierra had targeted the United States market generally rather than the forum state specifically when it placed the machines into the stream of commerce.
A foreign component maker placed parts into the stream of commerce knowing they could reach multiple states. A buyer in the forum state was injured by the assembled product and sued. The court held that mere awareness of possible forum reach was insufficient for jurisdiction.
Cruzan by Cruzan v. Director, Missouri Dept, of Health497 U.S. 261, 277 (1990)
On the night of January 11, 1983, Nancy Beth Cruzan lost control of her car as she traveled down Elm Road in Jasper County, Missouri. The vehicle overturned, and Cruzan was discovered lying face down in a ditch without detectable respiratory or cardiac function. Paramedics were able to restore her breathing and heartbeat at the accident site, and she was transported to a hospital in an unconscious state. An attending neurosurgeon diagnosed her as having sustained probable cerebral contusions compounded by significant anoxia. The Missouri trial court found that permanent brain damage generally results after six minutes in an anoxic state, and it was estimated that Cruzan was deprived of oxygen from twelve to fourteen minutes.
She remained in a coma for approximately three weeks and then progressed to an unconscious state in which she was able to orally ingest some nutrition. Surgeons implanted a gastrostomy feeding and hydration tube in Cruzan with the consent of her then husband. Subsequent rehabilitative efforts proved unavailing. She now lies in a Missouri state hospital in what is commonly referred to as a persistent vegetative state in which a person exhibits motor reflexes but evinces no indications of significant cognitive function. The State of Missouri is bearing the cost of her care.
After it had become apparent that Nancy Cruzan had virtually no chance of regaining her mental faculties, her parents Lester and Joyce Cruzan, who serve as coguardians, asked hospital employees to terminate the artificial nutrition and hydration procedures. All agree that such a removal would cause her death. The employees refused to honor the request without court approval. The parents then sought and received authorization from the state trial court for termination. The trial court found that a person in Nancy's condition had a fundamental right under the State and Federal Constitutions to refuse or direct the withdrawal of death prolonging procedures. The court also found that Nancy's expressed thoughts at age twenty-five in conversation with a housemate friend suggested that given her present condition she would not wish to continue on with her nutrition and hydration.
The Supreme Court of Missouri reversed by a divided vote. The court recognized a right to refuse treatment embodied in the common-law doctrine of informed consent but expressed skepticism about the application of that doctrine in the circumstances of this case. The court found that Cruzan's statements to her roommate regarding her desire to live or die under those conditions were unreliable for determining her intent and thus insufficient to support the coguardians' claim to exercise substituted judgment on Nancy's behalf. It rejected the argument that Cruzan's parents were entitled to order the termination of her medical treatment, concluding that no person can assume that choice for an incompetent in the absence of the formalities required under Missouri's Living Will statutes or the clear and convincing inherently reliable evidence absent here.
The Supreme Court granted certiorari to consider the question whether Cruzan has a right under the United States Constitution which would require the hospital to withdraw life-sustaining treatment from her under these circumstances.
A foreign manufacturer sold goods to a national distributor that resold them nationwide. An injured forum buyer sued. Jurisdiction failed because the manufacturer had not targeted the forum state specifically when placing items into the stream of commerce.
Burger King Corp. v. Rudzewicz471 U.S. 462, 474 (1985)
In 1978 John Rudzewicz, a Michigan resident and senior partner in a Detroit accounting firm, was approached by Brian MacShara about jointly applying for a Burger King franchise in the Detroit area. They submitted their application to Burger King’s Birmingham, Michigan district office, which forwarded it to the company’s Miami headquarters.
During the ensuing four months Rudzewicz and MacShara negotiated with both the Birmingham district office and Miami headquarters over site-development fees, building design, computation of monthly rent, and assignment of liabilities. With some misgivings they obtained limited concessions from the Miami headquarters, signed the final agreements, and commenced operations in June 1979 for the Drayton Plains facility. The agreements stated that the franchise relationship was established in Miami and governed by Florida law, required all royalty, advertising, and rent payments to be sent to Miami, and obligated Rudzewicz to attend training in Miami. MacShara completed the training course there and the franchisees purchased $165,000 in equipment from Burger King’s Miami division.
The Drayton Plains restaurant enjoyed steady business during the summer of 1979 but patronage declined after a recession began later that year. Rudzewicz and MacShara fell far behind on their monthly payments to Miami. Burger King headquarters sent notices of default and conducted prolonged negotiations by mail and telephone with the franchisees, but the negotiations failed and headquarters terminated the franchise. Rudzewicz and MacShara refused to vacate and continued to operate the facility as a Burger King restaurant.
Burger King commenced suit in the United States District Court for the Southern District of Florida in May 1981. It invoked diversity and federal trademark jurisdiction. Burger King alleged breach of the franchise agreements by failure to make required payments in Miami together with trademark infringement. The district court denied Rudzewicz’s motion to dismiss for lack of personal jurisdiction, conducted a three-day bench trial, entered judgment against Rudzewicz and MacShara jointly and severally for $228,875 in contract damages, ordered them to close the restaurant or surrender possession, and awarded costs and attorney’s fees. Rudzewicz appealed to the Court of Appeals for the Eleventh Circuit, which reversed on the ground that the circumstances left Rudzewicz without reasonable notice of suit in Florida. The Supreme Court granted certiorari to review the jurisdictional ruling.
A Taiwanese firm placed valves into the stream of commerce with knowledge they might enter the forum. After a product-related accident the firm was sued locally. The court found no jurisdiction absent purposeful targeting of the forum.
Koontz v. St. John’s River Water Management District570 U.S. 595 (2013)
In 1972, Coy A. Koontz, Sr. purchased an undeveloped 14.9-acre tract of land on the south side of Florida State Road 50 east of Orlando that lies entirely within the jurisdiction of the St. Johns River Water Management District.
The property contains wetlands as defined by Florida statute. A drainage ditch runs along the property's western edge, and high-voltage power lines bisect it into northern and southern sections. The northern 3.7-acre section drains well despite its classification. The southern section includes a small creek, forested uplands, and wetlands that sometimes have water as much as a foot deep.
In 1984 the District adopted a rule requiring permit applicants whose projects would adversely impact wetlands to offset that loss by creating, enhancing, or preserving wetlands elsewhere. That requirement could be satisfied by purchasing credits from a mitigation bank. In 1994 Koontz applied to the District for Management and Storage of Surface Water and Wetlands Resource Management permits to develop the northern 3.7 acres. He proposed to raise the elevation of the building site, install a dry-bed pond, and grant a conservation easement over the remaining 11 acres.
The District found the mitigation inadequate. It stated it would approve the permits only if Koontz reduced the development to one acre and deeded the remaining 13.9 acres to the District. In the alternative, Koontz could pay contractors to replace culverts or fill ditches on District-owned land several miles away to enhance approximately 50 acres of wetlands. Koontz found both alternatives unacceptable and filed suit in Florida circuit court under Fla. Stat. § 373.617(2) alleging that the demands constituted an unreasonable exercise of the state's police power.
After a two-day bench trial at which experts testified that the northern section had already been seriously degraded by surrounding construction, the trial court found the demands lacked the required nexus and rough proportionality and awarded damages. The Florida District Court of Appeal affirmed, but the Florida Supreme Court reversed on the grounds that the permit denial was not a taking and that the District had not actually demanded any property from Koontz.
The United States Supreme Court granted certiorari to resolve a conflict among state courts of last resort on whether the Nollan and Dolan standards apply to a land-use agency's demand for money.
A British maker sold machines into the national market via a U.S. distributor. A forum-state user sued after injury. Jurisdiction was denied because the maker had not directed activities specifically at the forum when placing goods into the stream of commerce.
Penn Central Transportation Co. et al. v. New York City438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978)
In 1965 New York City enacted the Landmarks Preservation Law, which created an eleven-member Landmarks Preservation Commission and authorized it to designate buildings at least thirty years old that possess special historical or aesthetic interest.
The law required owners of designated landmarks to obtain Commission approval before altering exterior architectural features and imposed an affirmative duty to keep those features in good repair. In August 1967 the Commission designated Grand Central Terminal a landmark and the city tax block it occupies a landmark site; the Board of Estimate confirmed the designation the following month.
Penn Central Transportation Co. and its affiliates owned the Terminal, an eight-story Beaux-Arts structure completed in 1913 that served as the main station for the New York Central and Harlem lines. On January 22, 1968, Penn Central entered a fifty-year renewable lease with UGP Properties, Inc., under which UGP agreed to construct a multistory office building cantilevered above the Terminal and to pay Penn Central at least three million dollars annually after construction.
Penn Central and UGP submitted two plans prepared by architect Marcel Breuer: Breuer I, a fifty-five-story tower resting on the Terminal roof, and Breuer II Revised, a fifty-three-story building that would have removed part of the 42d Street facade. After four days of hearings at which over 80 witnesses testified, the Commission denied this application as to both proposals.
Penn Central filed suit in New York Supreme Court, Trial Term, seeking a declaratory judgment, injunctive relief, and damages for a temporary taking. The trial court granted the injunctive and declaratory relief. The Appellate Division reversed, holding that Penn Central had failed to prove deprivation of all reasonable beneficial use. The New York Court of Appeals affirmed, concluding that the Terminal could still earn a reasonable return and that transferable development rights provided significant compensation. The Supreme Court noted probable jurisdiction.
Does merely placing a product into the stream of commerce establish personal jurisdiction?
No. The Supreme Court has held that awareness that a product may reach the forum state is not alone a sufficient basis for jurisdiction.
Supporting sources
What additional showing is required in stream-of-commerce cases?
The defendant must have targeted the forum state specifically rather than the national market as a whole.
Supporting sources
How does the stream-of-commerce doctrine interact with the fairness prong of personal jurisdiction?
Even if minimum contacts exist, jurisdiction may still be unreasonable when the burden on a foreign defendant is severe and the forum's interest is slight.
Supporting sources
…property for its own use, the Court held that full compensation had to be awarded. “Suppose, in the improvement of a navigable
stream
, it was deemed essential to construct a canal with locks, in order to pass around rapids or falls. Of the power of Congress to condemn whatever land may be necessary for such canal, there…