In an opinion issued last week, the Fifth Circuit considered whether its approach to the "stream-of-commerce" theory of personal jurisdiction should be revisited in light of the US Supreme Court's decision in J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). The Court joined United States Court of Appeals for the Federal Circuit in holding that Nicastro did not change the law on the "stream-of-commerce" approach to personal jurisdiction. Ainsworth v. Moffett Engineering, Ltd., No. 60155. The opinion is available here.
The issue in Ainsworth was whether Moffett Engineering could be subject to jurisdiction in Mississippi under a stream-of-commerce theory. This was the first case presenting this issue in the Fifth Circuit since the US Supreme Court's Nicastro decision.
In Nicastro, the Supreme Court held that a manufacturer based in England was not subject to jurisdiction in New Jersey for an injury caused by a machine manufactured in England and sold in New Jersey. The machine at issue was the only one sold in New Jersey and there was no evidence that the manufacturer had specifically targeted the New Jersey market.
The Supreme Court's decision did not produce a majority opinion. A plurality opinion written by Justice Kennedy and joined by Chief Justice Roberts, Justice Scalia, and Justice Thomas reasoned that a defendant could liable under a stream-of-commerce theory only if the defendant "targeted" the fourm. It would not be enough if the defendant might have predicted that its goods would reach the forum.
The Fifth Circuit recognized that the plurality opinion was in tension with Fifth Circuit precedent on the stream-of-commerce theory, but the reasoning of the plurality opinion is not binding precedent. Instead, the Fifth Circuit had to determine the narrowest grounds on which a majority of the Supreme Court agreed. In Nicastro, Justice Breyer authored a concurring opinion joined Justice Alito. The concurrence reasoned that the case could be resolved by simply applying the Supreme Court's existing precedents.
Based on this reasoning, the Fifth Circuit concluded that the controlling rationale for Nicastro was that a single isolated sale in the forum state did not satisfy the existing law on the stream-of-commerce theory of personal jurisdiction. Because the Fifth Circuit concluded that Nicastro did not change the law, it applied prior Fifth Circuit precedents to determine that the exercise of personal juridsiction in Mississippi was proper.
-- Rich Phillips, Thompson & Knight
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