Also known as:stream of commerce · streams of commerce approach · stream-of-commerce approach · stream of commerce doctrine · stream-of-commerce theory
Written by attorneys — see sources below.
2 senses
1
in civil procedure
A theory for establishing specific personal jurisdiction over a foreign defendant. The theory treats the defendant's placement of a product into the stream of commerce with awareness that the product may reach the forum state as a contact supporting jurisdiction.
2
Sense 1
1
in civil procedure
A theory for establishing specific personal jurisdiction over a foreign defendant. The theory treats the defendant's placement of a product into the stream of commerce with awareness that the product may reach the forum state as a contact supporting jurisdiction.
See Our Sources· 2 primary sources
Cases
Sense 2
2
in products liability
A theory extending strict liability for defective products to every participant in the overall producing and marketing enterprise. The theory reaches manufacturers, wholesalers, retailers, and other links in the commercial chain so that the cost of injuries is borne by those who place the product into the stream of commerce rather than by injured persons.
A theory extending strict liability for defective products to every participant in the overall producing and marketing enterprise. The theory reaches manufacturers, wholesalers, retailers, and other links in the commercial chain so that the cost of injuries is borne by those who place the product into the stream of commerce rather than by injured persons.
Each sense below has its own examples, sources, and questions.
Examples3
Indemnity Suit Between Foreign Corporations
A Japanese valve manufacturer sold valves to a Taiwanese tire-tube maker that incorporated them into tubes sold nationwide. One tube exploded in California, injuring a user who sued the tube maker. The tube maker then sought indemnity from the valve maker in California court. The valve maker had no offices, agents, or direct sales in California and had not designed the product for that market. The court held that mere placement into the stream of commerce with awareness of possible resale in California did not create minimum contacts sufficient for jurisdiction.
Foreign Manufacturer Targeting National Market
A British manufacturer of heavy machinery sold equipment exclusively through a U.S. distributor that resold the machines across the country. A machine reached New Jersey and injured a worker there. The manufacturer had no New Jersey advertising, employees, or direct sales and had not specifically targeted that state. The court held that awareness that the distributor might sell the machine anywhere in the United States did not satisfy the requirement of purposeful targeting of New Jersey.
Antitrust Challenge to Minimum Fee Schedule
A county bar association enforced a minimum fee schedule for title examinations that affected interstate real-estate transactions. The schedule increased costs for out-of-state lenders and buyers. Plaintiffs challenged the schedule under the Sherman Act. The court examined whether the local legal services had a sufficient effect on interstate commerce to support federal jurisdiction.
Goldfarb v. Virginia State Bar421 U.S. 773, 788
In 1971 petitioners, husband and wife, contracted to buy a home in Fairfax County, Virginia. The financing agency required them to secure title insurance, which in turn required a title examination that only a member of the Virginia State Bar could legally perform.
Petitioners contacted a lawyer who quoted them the precise fee suggested in a minimum-fee schedule published by respondent Fairfax County Bar Association, amounting to one percent of the value of the property. They then sent letters to thirty-six other Fairfax County lawyers requesting their fees for the title examination. Nineteen replied, and none indicated that he would charge less than the rate fixed by the schedule.
The fee schedule is a list of recommended minimum prices for common legal services. The County Bar is a purely voluntary association of attorneys with no formal power to enforce the schedule. Respondent Virginia State Bar is the administrative agency through which the Virginia Supreme Court regulates the practice of law, and membership is required to practice in the state. The State Bar published reports condoning fee schedules. It issued ethical opinions indicating that evidence an attorney habitually charges less than the suggested minimum fee schedule adopted by his local bar association raises a presumption that such lawyer is guilty of misconduct.
Because petitioners could not find a lawyer willing to charge a fee lower than the schedule dictated, they had their title examined by the lawyer they had first contacted. They then brought this class action against the State Bar and the County Bar alleging that the operation of the minimum-fee schedule as applied to fees for legal services relating to residential real estate transactions constitutes price fixing in violation of section 1 of the Sherman Act. After a trial solely on the issue of liability the district court held that the minimum-fee schedule violated the Sherman Act as to the County Bar but exempted the State Bar. The court of appeals reversed as to liability. The Supreme Court granted certiorari.
2 common questions
Students Frequently Ask...
Does merely placing a product into the stream of commerce with awareness that it might reach the forum state establish personal jurisdiction?
No. The Supreme Court has held that awareness that a product may reach the forum state through the stream of commerce is not alone a clearly sufficient basis for personal jurisdiction.
Supporting sources
Must a foreign manufacturer specifically target the forum state rather than the national market to be subject to jurisdiction under the stream of commerce approach?
Yes. In stream-of-commerce cases a foreign manufacturer must target the forum state specifically, not just the United States market generally, for personal jurisdiction to be proper.
Supporting sources
2
Landlord Liability for Defective Appliance
A landlord purchased a water heater from a wholesaler and installed it in a rental unit. The heater contained a latent defect that caused an explosion injuring the tenant. The tenant sued the landlord under strict products liability. The court applied the stream of commerce approach and held the landlord subject to liability as a participant in the marketing chain even though the landlord had not manufactured the heater.
Becker v. IRM Corp.698 P.2d 116 (Cal. 1985)
In 1974, IRM Corporation acquired a 36-unit apartment complex that had been built in 1962 and 1963. George Becker later leased one of the apartments in the complex. On November 21, 1978, Becker slipped and fell against the frosted glass shower door in his apartment; the door was made of untempered glass, broke on impact, and severely lacerated his arm.
Prior to the acquisition, two IRM officers walked through most of the apartments and observed that all shower doors were of frosted glass and appeared identical. From acquisition until the 1978 accident, IRM received no reports of accidents involving the shower doors and was not advised that any were made of untempered glass. After the accident, IRM learned that 31 of the 36 shower doors were untempered; its maintenance man replaced them and stated that the only way to differentiate the glass types was by a very small mark in the corner of each piece, which was not visible upon ordinary inspection.
Becker sued IRM for personal injury, asserting causes of action for strict liability and negligence. IRM moved for summary judgment. Becker filed no opposing affidavits. The trial court granted summary judgment and denied reconsideration. While the case was pending, Becker settled with the builder and a door assembler and installer for $150,000 plus an additional $50,000 contingent on the outcome against remaining defendants.
A publisher sold textbooks abroad at lower prices. A student purchased copies overseas and imported them for resale in the United States. The publisher sued for copyright infringement. The court held that the first sale of the books abroad exhausted the copyright owner's distribution right, allowing the student to resell the copies without further permission.
Kirtsaeng d/b/a Bluechristine99 v. John Wiley & Sons Inc.568 U.S. 519 (2013)
John Wiley & Sons, Inc., an academic textbook publisher, often assigns to its wholly owned foreign subsidiary Wiley Asia rights to publish, print, and sell foreign editions of Wiley's English language textbooks abroad. Each copy states that it is authorized for sale only in particular regions outside the United States and may not be exported without permission.
Supap Kirtsaeng, a citizen of Thailand, moved to the United States in 1997 to study mathematics at Cornell University on a Thai government scholarship. While studying, Kirtsaeng asked friends and family in Thailand to purchase copies of these foreign edition textbooks at low prices in Thai book shops and to mail them to him.
Kirtsaeng sold the imported books in the United States, reimbursed his family and friends for their purchases, and retained the profit after successfully completing his undergraduate and doctoral programs. In 2008 Wiley filed a federal lawsuit against Kirtsaeng alleging that his unauthorized importation and resale of the books infringed Wiley's exclusive right to distribute copies under 17 U.S.C. §106(3) and the import prohibition in §602(a)(1).
The District Court rejected Kirtsaeng's assertion of the first sale defense. The jury found that Kirtsaeng had willfully infringed eight of Wiley's copyrighted titles and assessed statutory damages of $600,000. A split panel of the Second Circuit affirmed the District Court's judgment that the first sale doctrine does not apply to copies of American copyrighted works manufactured abroad. The Supreme Court granted Kirtsaeng's petition for certiorari to consider the question in light of differing views among the Circuits.
1 common questions
Students Frequently Ask...
Does the stream of commerce approach in products liability extend strict liability beyond the manufacturer?
Yes. The approach extends strict liability to all participants in the overall producing and marketing enterprise, including wholesalers and retailers, so that the cost of injuries is borne by those who place the product into the stream of commerce.
Supporting sources
421 U.S. 773, 788
…stations to change trains in the midst of an interstate journey. In Yellow Cab we held that such a trip was a part of the stream of commerce. Id. , at 228-229. : 355 F. Supp., at 497. : The County Bar cites phrases in several cases that implied the practice of a learned profession is not “trade or commerce”…
TortsProducts liability based on the design, manufacture, and distribution of products and defenses to such claims · Products liability based on the design, manufacture, and distribution of products and defenses to such claimsNEXTGENFoundational