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Recent Cases Further Narrow Jurisdiction in Product Liability Cases

The U.S. Supreme Court and a lower federal district court recently handed down rulings further limiting the ability to hold foreign companies accountable in product liability cases. The rulings have made recovery from foreign manufacturers of defective and unsafe products difficult, even when the companies have connections with the U.S.

A Company Must “Purposefully Avail Itself”

In J. McIntyre Machinery, Ltd. v. Nicastro, the plaintiff was seriously injured by a McIntyre Machinery’s metal-shearing device in the United States. McIntyre, a British manufacturer, sold the device through an independent U.S. distributor (based outside of New Jersey) and did not target advertising or sales promotions in the Garden State. Though maybe four of its products landed in New Jersey, there was no indication the company had any direct connections there.

The U.S. Supreme Court overturned the New Jersey Supreme Court, holding that McIntyre had insufficient connections to New Jersey to establish jurisdiction over the company. McIntyre had not “purposefully availed itself” of the benefits of doing business in New Jersey and merely placing its product in the stream of U.S. commerce was not enough. Even if it was foreseeable the product could end up in New Jersey.

No Piercing of the Corporate Veil

In Michnovetz v. Blair, LLC, a New Hampshire resident was killed when a bathrobe caught fire. The plaintiff’s wrongful death claim named Bureau Veritas Consumer Products Ltd. in Singapore, which tested and manufactured the robe, as the defendant – as well as its French parent company and another subsidiary of the French parent, Bureau Veritas Consumer Products Services, Inc., which was a Massachusetts company.

Though the U.S. subsidiary had nothing to do with the robe’s testing or production, the plaintiff tried to tie it to BV Singapore simply because it is another subsidiary of the French parent company. The U.S. District Court of New Hampshire rejected the plaintiff’s attempt to “pierce the corporate veil” and hold the subsidiary liable for another subsidiary’s actions.

Difficulties Holding Foreign Manufacturers Liable

As these cases show, companies set up several subsidiaries to protect themselves from liability and courts may not be willing to “pierce the corporate veil” and hold one subsidiary liable for the actions of another or the parent company. These cases also show that federal courts are narrowing the focus of personal jurisdiction to individual states, making the stream of commerce and purposeful availment arguments more difficult – although courts are still willing to assert jurisdiction over foreign corporations in product liability cases in the appropriate circumstances.

Questions of jurisdiction can be complicated. If you or a loved one has been injured by a defective product, contact an experienced products liability attorney to discuss your situation and your options.