Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 9

FACTS Harry and Kay Robinson purchased a new Audi automobile from Seaway Volkswagen, Inc. (Seaway) in Massena, New York. The Robinsons, who had resided in New York for years, left for a new home in Arizona. As they drove through Oklahoma, another car struck their Audi from behind, causing a fire that severely burned Kay and her two children.
The Robinsons brought a products-liability suit in the District Court in Oklahoma, claiming their injuries resulted from defective design of the Audi gas tank and fuel system. They joined as defendants the manufacturer (Audi), the regional distributor (World-Wide Volkswagen Corp.), and the retail distributor (Seaway).
World-Wide and Seaway entered special appearances, asserting that Oklahoma's exercise of jurisdiction over them offended limitations on state jurisdiction imposed by the Due Process Clause of the Fourteenth Amendment. The Oklahoma Supreme Court upheld the assertion of state jurisdiction, and World-Wide and Seaway appealed.
DECISION Judgment of Oklahoma Supreme Court reversed.
OPINION White, J. The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant. [Citation.] A judgment rendered in violation of due process is void in the rendering State and is not entitled to full faith and credit elsewhere. [Citation.] Due process requires that the defendant be given adequate notice of the suit, [citation], and be subject to the personal jurisdiction of the court, [citation]. In the present case, it is not contended that notice was inadequate; the only question is whether these particular petitioners were subject to the jurisdiction of the Oklahoma courts.
As has long been settled, and as we reaffirm today, a state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist ''minimum contacts'' between the defendant and the forum State. [Citation.] The concept of minimum contacts, in turn, can be seen to perform two related, but distinguishable, functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.
The protection against inconvenient litigation is typically described in terms of ''reasonableness'' or ''fairness.'' We have said that the defendant's contacts with the forum State must be such that maintenance of the suit ''does not offend 'traditional notions of fair play and substantial justice.''' [Citation.] The relationship between the defendant and the forum must be such that it is ''reasonable *** to require the corporation to defend the particular suit which is brought there.'' [Citation.] Implicit in this emphasis on reasonableness is the understanding that the burden on the defendant, while always a primary concern, will in an appropriate case be considered in light of other relevant factors, including the forum State's interest in adjudicating the dispute [citation]; the plaintiff's interest in obtaining convenient and effective relief, [citation], at least when that interest is not adequately protected by the plaintiff's power to choose the forum, [citation]; the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies, [citation].
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Applying these principles to the case at hand, we find in the record before us a total absence of those affiliating circumstances that are a necessary predicate to any exercise of state-court jurisdiction. Petitioners carry on no activity whatsoever in Oklahoma. They close no sales and perform no services there. They avail themselves of none of the privileges and benefits of Oklahoma law. They solicit no business there either through salespersons or through advertising reasonably calculated to reach the State. Nor does the record show that they regularly sell cars at whole-sale or retail to Oklahoma customers or residents or that they indirectly, through others, serve or seek to serve the Oklahoma market. In short, respondents seek to base jurisdiction on one, isolated occurrence and whatever inferences can be drawn therefrom: the fortuitous circumstance that a single Audi automobile, sold in New York to New York residents, happened to suffer an accident while passing through Oklahoma.
INTERPRETATION Sufficient minimal contacts between the defendant and the state must exist for a state to exercise jurisdiction.
CRITICAL THINKING QUESTION Explain the public policy reasons for subjecting nonresidents doing business in a state to the in personam jurisdiction of the courts within that state.