Source: https://wlflegalpulse.com/2018/07/27/oklahoma-high-court-rejects-stream-of-commerce-doctrine-as-basis-for-specific-jurisdiction/
Timestamp: 2019-04-21 14:43:07+00:00

Document:
In the past several years, the U.S. Supreme Court has issued several decisions significantly limiting the assertion of personal jurisdiction over nonresident defendants.1 However, it has been left to the lower state and federal courts to apply the principles delineated by the Supreme Court. One recent personal jurisdiction decision of note is Montgomery v. Airbus Helicopters, Inc., 414 P.3d 824 (Okl. 2018), which concluded that in the wake of Walden and Bristol-Myers Squibb (“BMS”), the “stream of commerce” doctrine is no longer a viable basis for specific jurisdiction.
The “stream of commerce” doctrine rests on the idea that a corporation may be subject to specific jurisdiction if it “delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State” and the plaintiff’s claims arise out of use of the product in the forum. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980). The Supreme Court took up the doctrine in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), and J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873 (2011), but neither case resulted in a majority decision articulating a clear test for its application. Rather, two competing formulations of the doctrine emerged from Asahi.
Under Justice O’Connor’s “stream of commerce plus” test, “[t]he placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State,” and “[a]dditional conduct of the defendant” is required to “indicate an intent or purpose to serve the market in the forum State, for example, 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.” 480 U.S. at 112.
By contrast, under Justice Brennan’s test, the mere act of placing a product in the stream of commerce may be sufficient, at least so long as there is a “regular and anticipated flow of products” from the defendant to the forum state and the defendant “is aware that the final product is being marketed in the forum State.” Id. at 117. In McIntyre, Justice Kennedy’s plurality opinion (564 U.S. at 883-85) followed Justice O’Connor’s stream-of-commerce-plus approach, but as in Asahi, no opinion garnered a majority of the Court.
The Supreme Court’s decisions in Walden and BMS have been the subject of previous Washington Legal Foundation Legal Backgrounders,2 and it is beyond the scope of this commentary to discuss those decisions again in depth. Suffice it to say that in Walden, the Court articulated several basic principles that govern where specific jurisdiction is at issue: that due process permits the exercise of specific jurisdiction only where the defendant’s “suit-related conduct” creates a “substantial connection” with the forum state and the claims “arise out of contacts that the ‘defendant himself creates with the forum’” (571 U.S. at 284; emphasis in original); that “a defendant’s relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction” (id. at 286); and that “mere injury to a forum resident is not a sufficient connection to the forum” (id. at 290).
Moreover, in BMS, the Court made clear that without a connection between a defendant’s in-state conduct and the claims at issue, “specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State.” 137 S. Ct. at 1781. The Court in BMS likewise made clear that “‘the mere fact’” that a defendant’s conduct outside the forum “‘affected plaintiffs with connections to the forum State’” does “‘not suffice to authorize jurisdiction.’” Id. at 1781–82 (quoting Walden, 571 U.S. at 291).
The issue in Montgomery was whether certain nonresident defendants were subject to specific jurisdiction in Oklahoma for claims arising out of a helicopter crash there.
Defendant Airbus Helicopters, Inc. (“Airbus”) sold the helicopter in an unassembled condition F.O.B. its place of business in Texas to EagleMed, which operated a helicopter ambulance service based in Wichita, Kansas. 414 P.3d at 826. EagleMed arranged for the helicopter to be shipped to Wichita for assembly. Id. “The purchase agreement between EagleMed and Airbus contained a forum selection and choice of law clause regarding any litigation to take place in Texas” (id.), but “Airbus did know that this helicopter would be going to EagleMed’s headquarters in Wichita and purportedly knew it would be used in Oklahoma.” Id.
Four years later, defendant Soloy sold and shipped an “engine conversion kit” to EagleMed in Wichita, and the kit “was installed shortly thereafter.” Id. The court noted that “[a]ccording to Soloy, it did not specifically design its conversion kit for the Oklahoma market, nor did it direct advertising or marketing materials specifically to Oklahoma.” Id. Moreover, “Soloy has no offices, agents, employees, or property in Oklahoma nor does it distribute to Oklahoma.” Id.
EagleMed’s service territory included five states: Kansas, Oklahoma, Missouri, Arkansas, and Nebraska. Id. at 827. Airbus apparently “offered continuous technical support to EagleMed regarding their helicopters,” but all of Airbus’s communications with EagleMed were “made with the main base in Wichita, even though it is likely that some of the communication regarded helicopters which were located in Oklahoma.” Id.
In 2013, the helicopter crashed shortly after takeoff in Oklahoma City, killing two Oklahoma residents. The pilot’s widow then brought suit in Oklahoma.
In analyzing the defendants’ amenability to specific jurisdiction, the Oklahoma Supreme Court noted that its prior decisions had “focused either on the ‘totality of contacts’ between the non-resident defendant[s] and the State of Oklahoma and the resident plaintiff[s], or the nature of the contacts and whether the contact occurred in the ‘stream of commerce.’” Id. at 831 (footnote and internal quotation marks omitted). The court noted that its prior decisions had not “formally adopt[ed] either the O’Connor or Brennan test” (id. at 833), but that it had recognized “that Justice O’Connor’s stricter ‘stream of commerce plus’ test can be met when a defendant’s conduct outside the forum results in their product being placed in the forum and they know and benefit from that placement.” Id.
Relying on Walden and BMS, however, the court held that Airbus and Soloy could not be subject to specific jurisdiction under the “stream of commerce” doctrine (id.), and that by “omit[ting]” any reference to “previous ‘stream of commerce analysis,” Walden and BMS had “presumptively, at least implicitly, reject[ed] such analysis.” Id. at 831. The court explained that it had reached this conclusion for several reasons.
Second, the court noted that “[t]he only direct contacts appear to be between the non-resident EagleMed and the non-residents Airbus and Soloy … in Texas and in Kansas” (id. at 832), and that “[p]ursuant to Walden … a defendant’s relationship with a third party, such as EagleMed, is an insufficient basis for jurisdiction.” Id. at 833.
And, finally, the court found, “EagleMed’s unilateral choice to fly the helicopter into Oklahoma cannot serve as a basis for subjecting Airbus and Soloy to suit in Oklahoma.” Id. at 834.
See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011); Daimler AG v. Bauman, 571 U.S. 117 (2014); Walden v. Fiore, 571 U.S. 277 (2014); BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017); and Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017).
See Andrew Tauber and Gary Isaac, US Supreme Court Curtails Forum Shopping, Aug. 11, 2017; Dan Himmelfarb, Gary Isaac, and Andrew Tauber, Personal Jurisdiction Over Corporate Defendants: Debunking Plaintiffs’ Post-Daimler Dodges, Apr. 7, 2017; and Gary Isaac, Does Daimler v. Bauman Portend an End to Madison County’s Reign as a Top ‘Magnet Jurisdiction’?, June 19, 2015.
In BMS, the Court expressly rejected California’s “sliding scale approach,” under which “the strength of the requisite connection between the forum and the specific claims at issue is relaxed if the defendant has extensive forum contacts that are unrelated to those claims.” 137 S. Ct. at 1781. “Our cases,” the Court noted, “provide no support for this approach, which resembles a loose and spurious form of general jurisdiction.” Id. And Montgomery found “persuasive” that in “two recent cases”—including another Oklahoma case—where the state courts had used a totality of the circumstances approach, the U.S. Supreme Court had granted certiorari, vacated the judgment, and remanded for further consideration in light of BMS. See 414 P.3d at 834 & nn. 31 & 32 (citing cases).

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