Personal Jurisdiction and the Stream of Commerce Theory: A Reappraisal and a Revised Approach
Ave Maria School of Law
July 20, 1988
Kentucky Law Journal, Vol. 77, No. 2, 1989
Since Gray v. American Radiator & Standard Sanitary Corp., American courts have readily asserted jurisdiction over nonresident manufacturers and distributors whose injury-causing products have reached the forum as a result of their introduction into the "stream of commerce." Although the product's presence in the forum may be a result of the independent actions and objectives of others, neither the presence of intermediaries nor even the defendant's ignorance of its product's presence in the forum has been deemed sufficient to render a court's assertion of jurisdiction over the manufacturer or distributor unconstitutional. Rahter, courts have justified their assertion of power over these persons on the basis of legal and economic benefits they attained from the indirect sale of their products in the forum.
The widespread use of the term "stream of commerce" suggests a common understanding of the doctrine's proper scope and application. In fact, however, the lower courts' decisions indicate uncertainty rather than uniformity. The Supreme Court, in Asahi Metal Industry Co. v. Superior Court, had an opportunity to reassess the constitutional basis of the stream of commerce theory and to define in what circumstances the doctrine offers an appropriate basis for the courts' assertion of power. In this regard, however, the Asahi decision was a disappointment. Not only did the decision fail to resolve the differences among the lower courts, but it revealed sharply divergent views among the justices with respect to the proper constitutional scope of a stream of commerce theory.
This Article argues that Asahi should prompt a much-needed reexamination of the stream of commerce theory and its constitutional basis. The Article traces the Supreme Court's personal jurisdiction jurisprudence and the development of the stream of commerce theory, and concludes that the lower court confusion is due, in part, to uncertainty regarding the constitutional values underlying the theory. A stream of commerce analysis consistent with those values must acknowledge the existence of sovereignty limitations on the state's authority to assert jurisdiction and require, as a consequence of those limitations, a purposeful connection between the defendant and the forum. Neither the approach advocated by Justice Brennan nor that advocated by Justice O'Connor properly accommodates these objectives. Instead, this Article argues, the stream of commerce theory should be restructured to incorporate a sliding scale approach, one which looks to the defendant's ability to control the location of its products, as determinant of the power of the forum to assert jurisdiction. Such an approach not only reflects the relevant constitutional values by recognizing limitations on state sovereignty, but affords a more workable standard than that currently applied by the courts.
Number of Pages in PDF File: 75
Keywords: stream of commerce, personal jurisdiction
Date posted: September 27, 2012