Illinois Supreme Court asserts personal jurisdiction over non-US manufacturer despite absence of direct Illinois product sales

The Illinois Supreme Court recently affirmed the assertion of personal jurisdiction over a non-US component part manufacturer that never sold a single product directly to a consumer in the state of Illinois.  See Russell v. SNFA, 987 N.E.2d 778 (Illinois 2013).  The Court held that sales in Illinois, by an unaffiliated US distributor, of helicopter component parts made by a French manufacturer, was sufficient to give the Illinois courts personal jurisdiction over that manufacturer, even though the manufacturer itself never sold products in Illinois and also was unaware that its component parts had been sold in the state. The Russell decision presents concerns to any non-US manufacturer that sells products to the US.

Background

The Russell case arose out of a 2003 helicopter accident in Illinois that claimed the life of the Illinois-based pilot.  Much of the Russell decision involves the Illinois court’s analysis of the US Supreme Court’s opinion in J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011), which substantively revisited the “stream-of-commerce” theory as a means to establish personal jurisdiction.  Briefly, in McIntyre, the plaintiff, a New Jersey resident, was injured while using a metal-shearing machine made by a UK corporation.  Id. at 2786.  This machine was sold to the plaintiff’s New Jersey employer through the UK company’s exclusive US distributor, based in Ohio.  Id. at 2796.  A four-justice plurality found no personal jurisdiction over the UK company.  Id. at 2791.  Simply placing the product into the “stream-of-commerce” to the US, held the plurality, did not establish the requisite purposeful availment of the forum state (New Jersey) and its laws, and “as a general rule, it is not enough that the defendant might have predicted that its goods will reach the forum State.”  Id. at 2788.  Rather, the defendant must have targeted the forum state specifically to be amenable to jurisdiction there.  Id.  While the UK manufacturer intended to serve the US market generally, the plurality found that the manufacturer did not engage in conduct directed at New Jersey specifically, thus precluding personal jurisdiction in the New Jersey courts.  See id. at 2790-91.  A narrower concurring opinion (by two justices), while agreeing that New Jersey could not lawfully assert personal jurisdiction, nevertheless rejected the plurality’s “strict” no-jurisdiction rule.  Id. at 2792-93.  Per the concurrence, there was no need to create new jurisprudence, since existing precedent already established that a single isolated sale in the forum state was too slender a reed upon which to base a finding of personal jurisdiction.  See id.  Rather, the concurring justices held, personal jurisdiction required a “regular course” of sales to support personal jurisdiction.  Id. at 2972. The Russell decision presents concerns to any non-US manufacturer that sells products to the US.

Decision

In Russell, the Illinois Supreme Court refused to apply the McIntyre plurality holding, and instead viewed the jurisdictional issues through a lens similar to its view of McIntyre’s concurrence, i.e., personal jurisdiction should not be exercised based on a single sale in the forum but may be appropriate where there is a regular flow of a defendant’s products into the forum.  The record in Russell reflected that the helicopter in question was manufactured by an Italian company and had several owners before being purchased by the pilot’s Illinois employer.  The helicopter’s original and replacement tail-rotor bearings were manufactured by the defendant, a French manufacturer.  (It was uncontested that at the time of the accident, the helicopter contained tail-rotor bearings made by the defendant.)  See Russell, 987 N.E.2d at 780.  The defendant, which had no office or employees in Illinois, regularly used a Pennsylvania-based distributor to distribute and market its products in the US, although defendant was unaware that its products were sold in Illinois.  In fact, the distributor made multiple sales in Illinois.

The Illinois Supreme Court asserted personal jurisdiction over the French manufacturer.  Id. at 798-99.  The defendant’s use of a distributor to market its products throughout the US, with that distributor having made numerous sales in Illinois, was enough for the Court to find that “the defendant engaged in Illinois-specific activity to establish minimum [jurisdictional] contacts with Illinois.”  Id. at 796.  Though the defendant argued that it had not engaged in any Illinois-specific activity and had no knowledge that its products were marketed or sold in Illinois, the Court rejected what it viewed as the defendant’s attempt to apply the stricter plurality holding in McIntyreId. at 795-96.  The Court also found that the defendant had a business relationship with another company in Illinois that had purchased various products from the defendant, albeit products unrelated to those at issue in Russell, which in the Court’s view further demonstrated that the defendant had purposefully availed itself of the privilege of doing business in Illinois.  Id. at 796-97.  In a pointed dissent, the lone dissenting justice argued that the majority’s decision unfairly subjected a non-US manufacturer to personal jurisdiction and cautioned that “[u]nder the majority holding, a foreign defendant can now be haled into court in Illinois for even the most fleeting and inconsequential business contact with this state.”  Id. at 808 (Garman, J., dissenting).

Comment

The Russell decision presents concerns to any non-US manufacturer that sells products to the US.  Under Russell, a manufacturer−by selling products (including components) to a US distributor−could be subject to personal jurisdiction in Illinois given that distributor’s subsequent sales of those products in Illinois, even if the manufacturer had no intent to sell its products in Illinois or knowledge that its products were being sold there.  Time will tell how this decision will affect non-US manufacturers and whether other states will adopt, or reject, Russell‘s approach to personal jurisdiction.

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