Can a foreign defendant be subject to personal jurisdiction in a state solely based on its awareness that its products would reach that state through the stream of commerce?

On September 23, 1978, Gary Zurcher was involved in a motorcycle accident in California. In September 1979, Zurcher filed a product liability action in California Superior Court, alleging the accident was caused by a defective tire, tube, and sealant. Cheng Shin Rubber Industrial Co., Ltd., the Taiwanese manufacturer of the tire tube, filed a cross-complaint seeking indemnification from Asahi Metal Industry Co., Ltd., a Japanese corporation that manufactured the valve assembly used in the tire.

Asahi produced tire valve assemblies in Japan and sold them to Cheng Shin in Taiwan, with annual sales ranging from 150,000 to 500,000 units between 1978 and 1982. These sales accounted for 1.24% and 0.44% of Asahi's income in 1981 and 1982, respectively. Asahi was aware that some of its valves would end up in California, where Cheng Shin claimed about 20% of its U.S. sales occurred. An informal examination found Asahi valve stems in 21 out of 115 tire tubes in a California store. Notably, Asahi had no offices, property, or agents in California, did not solicit business or make direct sales there, and had no contract with Cheng Shin specifying distribution.

Zurcher initiated a product liability lawsuit in California Superior Court. Subsequently, Cheng Shin filed a cross-complaint against Asahi, seeking indemnification. Asahi responded by moving to quash Cheng Shin's service of summons, contending that the court lacked personal jurisdiction over Asahi. The Superior Court denied Asahi's motion to quash.

Asahi then sought relief from the California Court of Appeal, which issued a writ of mandate to quash the service of summons. However, the California Supreme Court reversed the Court of Appeal's decision. Following this, Asahi petitioned the U.S. Supreme Court, which granted certiorari to review the case.

(O'Connor, J.)

No. Mere awareness that products may reach a state through the stream of commerce is insufficient to establish personal jurisdiction over a foreign defendant. The exercise of personal jurisdiction requires more than simply placing a product into the stream of commerce. There must be additional conduct by the defendant purposefully directed toward the forum state to satisfy the minimum contacts requirement. This additional conduct could include designing the product for the market in the forum state, advertising in the forum state, establishing channels for providing regular advice to customers in the forum state, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum state. Even if minimum contacts are established, the exercise of jurisdiction must still comport with traditional notions of fair play and substantial justice. This assessment involves weighing factors such as the burden on the defendant, the interests of the forum state, the plaintiff's interest in obtaining relief, the interstate judicial system's interest in efficient resolution of controversies, and the shared interest of the several states in furthering fundamental substantive social policies. In the international context, the unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders. The procedural and substantive policies of other nations whose interests are affected by the assertion of jurisdiction must also be considered.

Concurrence (Brennan, J.) The stream-of-commerce analysis presented by the majority is overly restrictive. Placing a product into the stream of commerce with awareness of its destination is sufficient to establish minimum contacts. This approach better reflects the realities of modern commerce and provides a clearer standard for lower courts. However, exercising jurisdiction in this specific case would be unreasonable due to other factors.

Concurrence (Stevens, J.) Addressing the stream-of-commerce theory is unnecessary in this case. The exercise of jurisdiction is unreasonable regardless of how that theory is applied. In determining purposeful availment, courts should consider the volume, value, and hazardous character of the components. This approach provides a more nuanced analysis that better reflects the realities of international trade and the varying degrees of connection a manufacturer may have with a forum state.