Can an Ohio corporation be held accountable in North Carolina when a foreign subsidiary manufactures a product blamed for a fatal accident in France?

The U.S. Supreme Court recently addressed that question stemming from a ruling of the North Carolina Court of Appeals. In a unanimous opinion, the federal justices delivered a resounding “no,” reversing the state court’s decision and limiting jurisdictional claims.

In doing so, the court may have discouraged overseas litigants hoping to find sympathetic juries from filing lawsuits in North Carolina rather than in their home countries. Had the justices sided with the state Court of Appeals, the ruling could have invited a flurry of liability lawsuits involving parties with minimal connection to the Tar Heel State.

The case, Goodyear Dunlop Tires Operations, S.A. v. Brown, arose after a bus crashed outside Paris, causing the deaths of two 13-year-old boys who lived in North Carolina. (PDF download of decision here.) The parents filed suit against Goodyear, claiming flawed tires manufactured by a Turkish Goodyear subsidiary caused the accident.

The Court of Appeals ruled for the parents, even though the three subsidiaries — located in Luxembourg, France, and Turkey — do not solicit business from North Carolina. Goodyear did sell a small percentage of tires from the subsidiaries in North Carolina to fulfill custom orders for specialized vehicles. But the tires on the bus were not the same type as those involved in the crash.

“The decision they were reviewing was kind of an outlier,” said Walter Olson, senior fellow at the Cato Institute’s Center for Constitutional Studies.

The high court did not address the bus crash, but whether North Carolina courts had the authority to consider the case.

Jurisdiction cases generally raise issues of fairness, policy, and occasionally sovereignty issues, Olson said. “The United States has become absolutely notorious as a target worldwide for forum shopping.”

Forum shopping allows plaintiffs to choose among different jurisdictions for a case, usually hoping to find a favorable court. Plaintiffs may gain more sympathetic juries and have a greater chance for large monetary compensation if they file suit in the United States rather than in Europe.

Three U.S. Supreme Court decisions — International Shoe Co. v. Washington (1945), Perkins v. Benguet (1952), and Helicopteros v. Hall (1984), established the concepts of general and specific jurisdiction to determine where legal disputes should be settled.

General jurisdiction applies when a corporation affiliates with a state in such a “continuous and systematic” way as to “render [the company] essentially at home in the forum state,” wrote Justice Ruth Bader Ginsburg for the court.

Specific jurisdiction, in contrast, applies when an event occurs within a court’s jurisdiction, and depends on the “affiliation between the forum and the underlying controversy.”

The “attenuated connections,” she wrote, between North Carolina and Goodyear’s foreign subsidiaries, “fall far short” of the threshold allowing North Carolina authority in the case.

“Under the sprawling view of general jurisdiction urged by respondents and embraced by the North Carolina Court of Appeals, any substantial manufacturer or seller of goods would be amenable to suit, on any claim for relief, wherever its products are distributed,“ Ginsburg wrote.

Because the accident occurred outside North Carolina, and the subsidiaries had scant economic ties to the state, North Carolina holds an inadequate claim to jurisdiction, specific or general.

The Supreme Court’s reversal of the Court of Appeals does not create a new standard but merely reaffirms the precedent. “This one flew under the radar mostly because the court confirmed what most lawyers had assumed was the law,” Olson said.

Had the court upheld North Carolina’s decision, it implicitly could have encouraged forum shopping and weakened the threshold for valid lawsuits filed in the state and across the nation.

Anthony Hennen is an editorial intern for Carolina Journal.