October 24, 2018 Practice Points

The Death of Stream of Commerce in Aviation Litigation

By Steven L. Boldt

It is relatively settled by now (or should be) that general personal jurisdiction exists only where the defendant is “at home”—i.e., the jurisdiction(s) in which the defendant is incorporated and/or headquartered. See Daimler AG v. Bauman, 571 U.S. 117, 129 (2014). As a result, the jurisdictional battle lines are now being drawn around specific jurisdiction, though those lines are becoming narrower each day, particularly in light of last year’s U.S. Supreme Court decision in Bristol-Myers Squibb Co. v. Superior Court (BMS), which held that, “[i]n order for a state court to exercise specific jurisdiction, ‘the suit’ must ‘aris[e] out of or relat[e] to the defendant’s contacts with the forum.’” 137 S. Ct. 1773, 1780 (2017) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).

While the holding from BMS is not necessarily new, it did serve to clarify that the nature, not number, of voluntary connections a defendant directs to a forum is what is relevant for the specific jurisdiction inquiry—and those connections, most importantly, must give rise to the specific claims brought by the plaintiff. Id. at 1782–84. In other words, a product liability defendant’s unrelated contacts with a forum, no matter how substantial, will not be sufficient to establish specific jurisdiction in that state.

Given the transient nature of airplanes and, consequently, the fortuitous locations of most crashes, it comes as no surprise that BMS would quickly find its way into aviation product liability cases, one of the latest of which being Montgomery v. Airbus Helicopters, Inc., 414 P.3d 824 (Okla. 2018). In that case, the Oklahoma Supreme Court analyzed whether specific jurisdiction in Oklahoma could be properly exercised over two non-resident defendants—a helicopter manufacturer (Airbus) and designer of engine installation instructions (Soloy)—for a crash in Oklahoma that killed two Oklahoma residents. Id. ¶ 2–4. Despite finding that “most of the harm” from this accident occurred in Oklahoma, the court nevertheless held that “these facts alone, without Airbus or Soloy having further direct and specific conduct with this State directly related to the incident giving rise to the injuries, is insufficient for asserting specific personal jurisdiction over them.” Id. ¶ 37. Significantly, the Montgomery court went on to find that both the “totality of the contacts” and “stream of commerce” tests are no longer viable as a direct result of the BMS decision. Id. ¶ 36. This is significant, as the Montgomery court affirmed the trial court’s denial of plaintiffs’ request for additional jurisdictional discovery on this basis. Id. ¶ 37.

From a practitioner’s perspective, the stream of commerce theory has historically been met with confusion and inconsistent application, due in large part to the Supreme Court reaching only a plurality decision on the subject decades earlier in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987). In the past few years, however, the Court has trended towards limiting or otherwise abandoning the doctrine to more faithfully meet due process considerations, which was seen in Goodyear Dunlop Tires Operations, S.A. v. Brown, wherein a unanimous Supreme Court held that stream of commerce does not apply to general jurisdiction. 564 U.S. 915, 927 (2011). With general jurisdiction laid to rest on the issue, BMS, and Montgomery by extension, is arguably the next step in correcting the unworkable vagaries stream of commerce has also created on the specific jurisdiction front. If the doctrine is truly dead, not only will jurisdictional issues be more properly focused and targeted in the litigation so, too, will be the scope of permissible discovery. Blanketed requests for a defendant’s sales revenues, customer information, and other forum-related contacts not directly related to the specific claims made in the litigation are simply no longer relevant, which is particularly significant for larger corporations with a national presence and diversified product line.

While the ultimate effect of cases like BMS and Montgomery on jurisdictional discovery issues waits to be seen and will certainly be tested, the potential savings in both time and resources litigants on both sides will realize by avoiding drawn-out jurisdictional battles will ultimately result in getting to the actual merits and resolution of cases faster.
 

Steven L. Boldt is an associate at Adler Murphy & McQuillen, LLP in Chicago, Illinois.


Copyright © 2018, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).