World-Wide Volkwagen Corporation v. Woodson – Oral Argument – October 03, 1979

Media for World-Wide Volkwagen Corporation v. Woodson

Audio Transcription for Opinion Announcement – January 21, 1980 in World-Wide Volkwagen Corporation v. Woodson

del

Warren E. Burger:

We’ll hear arguments first this morning in World-Wide Volkswagen Corporation against Woodson.

Mr. Rubin, you may proceed whenever you are ready.

Herbert Rubin:

Mr. Chief Justice and may it please the Court.

This case presents a further variation on the issues which were examined by this Court in International Shoe, McGee, Hanson and Denckla, Shaffer, Heitner and the Kulko cases, Kulko case most recently, just last year.

The order which is appealed from is a final order in — on a writ of prohibition and this Court has jurisdiction.

The issues necessarily raised by this appeal are issues which go to questions of minimum contacts and purposeful activity, and therefore, I think we should refer briefly to the facts and the record in this case.

I think Your Honors will find that the facts and the record are discreet and limited.

We have in this case, first, merely the pleadings.

We have a motion in which it was moved that the preceding be dismissed on jurisdictional grounds.

There was an opportunity for a hearing under the Oklahoma statute.

At the hearing on the Oklahoma law, the plaintiffs had the burden of proving the jurisdictional facts.

No facts were adduced at the hearing.

All that we have in the record then, Your Honors, is the pleading and there are affidavits which were interposed on behalf of the petitioners here which will be found in the appendix at pages 16 and 18 and that’s all there is.

Now, the facts indicate, Your Honors, that the plaintiff, the plaintiffs are New York residents as alleged in the complaint and it was determined again in the federal court when there was a — an application to remove and the plaintiffs protested the removal and claimed that there was no diversity because they were New York residents.

The complaint recites that defendant Seaway is a New York corporation which does business in Massena, New York.

Your Honors will be familiar with the fact that Massena is a community in the northern reaches of New York State.

William H. Rehnquist:

It’s by the St. Laurent.

Herbert Rubin:

That’s right, Your Honor.

It also recites that World-Wide is a New York corporation and World-Wide has its offices in Orangeburg, New York.

World – the Seaway Company is a local dealer which engages in the sale of automobiles in Massena.

World-Wide is a wholesaler which has responsibility for the sale of automobiles to dealers in three States, New York, New Jersey and Connecticut.

Harry A. Blackmun:

Do you think any distinction can be drawn between those two parties so far as the issue of this case is concerned, that is the distributor thinking, “Well, the things I sell are more likely to be used in Oklahoma as contrasted the seatrain who was pretty local” or would you — I take it you classify them together?

Herbert Rubin:

I would classify them together, Your Honor.

I take into account the language of the Court which talks in terms of the differences have to be differences in quality and not merely a matter of more or less.

And in terms of quality, I don’t think that there is any difference, especially, Your Honor, I would like to call your attention again to the record and the affidavit which appears in the appendix at page 16 in which World-Wide expressly states that its business is limited to those three States that it has no intention of doing any business outside of those three States and specifically has no intention of doing business in Oklahoma.

William H. Rehnquist:

But if this accident had happened on the Pennsylvania-New York boarder, it would be a somewhat different case than this one, would it not?

Herbert Rubin:

I think that there may be.

There might be other considerations, Your Honor.

It would go to the question of the minimum contacts which exist and I think you would have to look at the facts under those circumstances.

Harry A. Blackmun:

At least here, your accident was in Oklahoma.

Herbert Rubin:

Here, the accident was in Oklahoma.

Harry A. Blackmun:

So your witnesses to the accident are likely to be there in contrast to Justice Rehnquist’s hypothetical, had the accident happened in Pennsylvania.

Herbert Rubin:

Right.

The — the accident was in Oklahoma and it’s clear from the record, totally undisputed that neither of the parties, which the petitioners here had any connection with Oklahoma and no business, no property, never they went into Oklahoma and indeed, in the Seaway — the Seaway affidavit which is part of the — of the appendix, page 18, I believe it is, it’s recited that they never foresaw that the car would go to Oklahoma.

Harry A. Blackmun:

Does the record show why the other defendant submitted to Oklahoma jurisdiction?

Herbert Rubin:

If Your Honor please, the other defendants that’s Audi NSU and Volkswagen of America have submitted to jurisdiction (Voice Overlap) —

Harry A. Blackmun:

Does the record show why, my question?

Herbert Rubin:

No, Your Honor.

Warren E. Burger:

Does the record disclose any contractual limitations on the petitioners as to the areas in which they may carry on their activities?

Herbert Rubin:

There’s nothing in the record on that subject, Your Honor, except for the express statement by Seaway that its business is a local business and did not contemplate doing business outside of — outside the State and the express statement by World-Wide to the same effect that it did not contemplate doing business outside the three States in which it was a wholesaler.

Harry A. Blackmun:

Mr. Rubin, did you represent the other defendants?

Herbert Rubin:

I — I personally did not —

Harry A. Blackmun:

Did your firm (Voice Overlap) —

Herbert Rubin:

— my — my firm has — has connections with the other defendants.

Harry A. Blackmun:

And — but then your firm chose not to resist Oklahoma or jurisdiction in Oklahoma for that.

Herbert Rubin:

That’s right, Your Honor.

John Paul Stevens:

Mr. Rubin and that said, you said the record doesn’t show why the other companies did not resist, but the record does contain the complaint which alleges that they advertised nationally and specifically in Oklahoma and that allegation is un-denied so wasn’t it fair to assume that that’s the reason that they — jurisdiction could be asserted over them (Voice Overlap) —

Herbert Rubin:

Mr. Justice Stevens, I don’t know that that was the reason and frankly I —

John Paul Stevens:

But you said the allegation is in the record and it’s un-denied.

Herbert Rubin:

There is such an allegation and there is no —

John Paul Stevens:

Whereas there is a denial as to the clients before the Court now?

Herbert Rubin:

No.

As — as to these petitioners, there is certainly a disavowal of denial that there is — any advertising, local advertising in Oklahoma or even participation in any national advertising or national television.

They expressly disclaim that.

So that all that we have in this case is a recital that the plaintiff was driving in Oklahoma in a car which was purchased from Seaway and was involved then in an accident in Oklahoma.

Plaintiff —

Thurgood Marshall:

(Inaudible)

Herbert Rubin:

Well, the record doesn’t even talk about Arizona, Your Honor.

That has been interposed in the briefs but the record merely talks of the plaintiff, so far as I understand it, as a New York resident.

Thurgood Marshall:

Driving through Oklahoma?

Herbert Rubin:

Driving through Oklahoma, that’s right Your Honor.

Now, the Oklahoma statute provides for actions against nonresidents.

It — interestingly enough makes two — refers to two categories of cases where it will take jurisdiction, one, with respect to tortuous injuries in Oklahoma, one, where it’s caused by acts or omissions in Oklahoma and the second, where it’s caused by acts or omissions outside Oklahoma.

If the defendant regularly does or solicits business or engages in any other persistent course of — course of conduct as you have it tracking pretty much of language which we have in the International Shoe case goes on to say or derives substantial revenue from goods, used or consumed or services rendered in the State.

Now, the Oklahoma Court, the Supreme Court in its decision, first determined that the first section did not apply.

There was no act by the defendants within the State.

It also determined that there was no act or omission outside the State which related to regular solicitation of business or to assist course of conduct but then by some kind of a magnum leap and logic, it says, on the other hand, we can say that because this car was in Oklahoma, that these defendants derive substantial revenue from goods used or consumed or services rendered in the State because this car must have cost a lot of money.

It’s an item great cost and therefore, it must be deemed that these defendants derived substantial revenue from goods used or consumed.

I respectfully submit that that reasoning is totally untenable.

The conclusion rests upon a decision of the District Court of New Jersey in Phil Tolkan case, which I think is patently wrong.

The Tolkan case was a case of an automobile supply dealer, if you will, in Wisconsin that sold the jack to somebody who put in to his car and drove to New Jersey.

And in New Jersey, he was using this jack and the jack failed and an accident occurred.

And it was then sought to sue the automobile supply dealer in Wisconsin in New Jersey by reason of this conduct.

New Jersey said they had jurisdiction.

I believe, Your Honors, that the connection, the so-called “context” was so attenuated that it could not possibly sustain jurisdiction.

I think the same must be found to be true in this case because what this Court has done when it removed the abstractions, the fictions in Pennoyer and Neff and the Harris and Balk, this Court was seeking to find something more objective, more real on which decisions could be made, so in International Shoe those formulate of a concept of minimum context and we have the concept of purposeful activity.

We’re talking about action, movements, some — something real, but it seems to me that the position which the respondents here take is a kind of a movement back to the abstraction, to the fictions which this Court is trying to sweep away.

They talk in terms of what is fair.

They talk about what is reasonable and what they are doing is ignoring the specific fact patents which gave rise to the annunciation of the doctrines which we find now as the doctrine set forth in this — by this Court in the cases which we have mentioned.

We don’t have to review, of course, the facts which are — which underlie the decisions in the International Shoe case, but of course, there was persistent and regular solicitation and there was a showing, hotel showing in which the defendant came into the State, McGee, of course, who had the insurance policy which was being serviced.

And in Hanson, you had — where the Court found there were insufficient contacts despite the communications which went between the Trust Company in Delaware and the (Inaudible) in — in Florida and in Shaffer you had a discreet contact.

Presumably, you have the stock certificates which were owned by the defendants.

Of course, that was not sufficient and in Kulko, the Court went even further it seems to me.

Kulko is a kind of a fortiori case.

I note that the — some members of the Court felt that there were sufficient contexts in that case and they were contexts.

There was the father who sent the child to California, the father who had the benefit.

It was argued of the law of California, support from California, things of that sort and yet, in Kulko, that was insufficient.

In this case, we don’t have any of those contexts.

Here, we have merely the fact that a car that was sold in New York by a local dealer went to Oklahoma and had an accident and so far as World-Wide is concerned, it seems to me the most that the — the respondents can say about World-Wide.

They don’t even say they knew it existed at the time the transaction was entered into and there it becomes a major argument of this as the name of this company is World-Wide and so it must have anticipated somehow that it would be subject to jurisdiction.

Herbert Rubin:

I respectfully submit that that can’t be a basis on which this Court can find minimal contacts or purposeful activity.

William H. Rehnquist:

Mr. Rubin, do you quarrel with the statement of the Supreme Court of Oklahoma on page 6A of the petition for writ for certiorari where it says in the first full paragraph on that page, the evidence presented below demonstrated that goods sold and distributed by the petitioners were used in the City of Oklahoma and under the facts, we believe it reasonable to infer — infer given the retail value of the automobile that the petitioners derive substantial — substantial income from automobiles which from time to time are use in the City of Oklahoma?

Herbert Rubin:

I certainly quarrel with that, Your Honor.

I — it seems to me that’s totally illogical.

All the — the Court says is that because this car was in Oklahoma, it was involved in the accident that that shows that there was a use of automobiles in Oklahoma which have — it says, “Giving the retail value the automobile that petitioners therefore derive substantial income from automobiles which from time to time are used in the State of Oklahoma.

It seems to me there’s no logic to that whatsoever, Your Honor.

William H. Rehnquist:

What — what if the wholesaler had been located in Southern Kansas and although its territory was not Oklahoma, it was — it included Kansas so that it would be foreseeable that cars sold in Kansas would on occasion be driven into Oklahoma.

Would that be a different case?

Herbert Rubin:

I — I think it would be quite a different case.

I think foreseeability is one element in the question of whether there is purposeful activity. And the — the issue which has to be addressed, I think, is whether there is purposeful activity on the part of these defendants.

I believe the record shows there was no purposeful activity.

Byron R. White:

What do you mean purposeful activity?

Do you take — what kind of purposeful activity would satisfy the minimum contacts test?

Herbert Rubin:

I think that there — there would have to be a showing that there was a direction of the — of the energy of this defendant to getting the benefits of the laws of the state of the forum.

Byron R. White:

What benefit does somebody get?

What — what benefit once — once the car is sold, it’s owned by somebody else, what benefit does the seller get from the laws of another State if that car happens to be driven by its then owner into another State?

Herbert Rubin:

Well, Your Honor, I think the — the concept is one of — if this seller intends to localize its activity, intends to isolate itself from being involved in lawsuits in other jurisdictions and simply restricts its activity, then it says, “I want to have the benefit of the laws of my State to the exclusion of the laws of some other State.”

Byron R. White:

What about Mr. Justice Rehnquist’s example and what — why would — why would it be a different case?

Why would the — why would the seller there perhaps be subject to suit in Oklahoma?

Herbert Rubin:

Well, if — if the seller, for example, considered that to be part of his market, considered that people who are coming from that State were buying its cars and it was appealing to those people, it was — its advertising certainly would be a kind of activity which might subjected to jurisdiction in that other State and then its obtaining the benefit of the laws of that other State.

It’s getting economic — it’s deriving economic benefits —

Byron R. White:

Well, what if it —

Herbert Rubin:

— from those —

Byron R. White:

— what if it doesn’t advertise or anything but something that Oklahoma people just happen to come up there and buy some cars?

Herbert Rubin:

I think, Your Honor, that that would bring us to a situation where the involvement of the forum is the result of purely unilateral action on the part of people outside.

Byron R. White:

And then — and then he wouldn’t be subject to suit?

Herbert Rubin:

I think if it’s purely unilateral.

I think you would have a situation which is very analogous to Kulko where —

Byron R. White:

And to this case you think?

Herbert Rubin:

In this case depending again on the quality of the contacts and the purposefulness of the activity.

Byron R. White:

Well, do you think then it’s just enough to anticipate that the cars you sell will be driven in another State?

Herbert Rubin:

I think, Your Honor, that any product can be anticipated to be found in another State.

There are very few products that are — that are found in our economic life which one would not contemplate, will find their way somewhere into another State whether you’re talking about peanuts or cotton or lettuce or baby’s pajamas.

They’re going to find their way into another State.

I don’t think the contemplation here is that the lines of state jurisdiction simply should be wiped out and I think that’s one of the major issues which is before the Court, it’s the ideas somehow that’s being suggested by the respondents that the state court lines that the system of federal — our federal system is somehow in a historical anachronism.

Byron R. White:

Well, if — if the seller in Kansas sells to a traveling salesman, sells it to his next door neighbor, and he knows he’s a traveling salesman who travels once a week to Oklahoma, and he knows the car is going to — go to Oklahoma.

You — you’re position is that — that certainly doesn’t subject him to suit in Oklahoma because all — all that is, is an anticipation that the car will be used in Oklahoma.

Herbert Rubin:

If it’s merely an anticipation, Your Honor, I don’t think that that would be sufficient.

I think that the — the foreseeability, the mere foreseeability that something will be in another State is not enough to confer jurisdiction.

I think that there all that has to be coupled with some affiliating acts which indicate an intention to get the benefits of being in this of the State.

John Paul Stevens:

Mr. Rubin, if I understand your argument correctly, you really didn’t have to answer Mr. Justice Rehnquist the way you did and although you think the Supreme Court of Oklahoma is illogical, if I understand your position, what you’re saying is even if the Oklahoma Supreme Court is right that use in Oklahoma was foreseeable, nevertheless, there was still no jurisdiction because that wouldn’t —

Herbert Rubin:

That’s —

John Paul Stevens:

It’s really the same case in — in your legal terms as if the customers said, “Well, I’m going to drive the car to Oklahoma and the dealer says I don’t care where you drive it as long as you pay — pay for it,” and then he drove it to Oklahoma, you’d still say there is no jurisdiction?

Herbert Rubin:

I would say, Your Honor, that — that’s correct —

John Paul Stevens:

Yes.

Herbert Rubin:

— that foreseeability alone is not enough.

John Paul Stevens:

So we could assume foreseeability and still accept your argument.

I know you’re asking us not (Voice Overlap) —

Herbert Rubin:

Except in this case, Your Honor.

The record indicates to the contrary that there is no foreseeability.

What is sought to be done here, Your Honor, I think, is to — to blur the idea of the federal system of limitation on jurisdiction of state courts.

We have the very eloquent language which was articulated by Judge Sobeloff in the Erlanger case.

I don’t have to repeat it.

I think it’s — it’s very much — very much in point here.

And there are arguments to the effect that there are advantages somehow that there are efficiencies that may occur if somehow or other you blur the idea of jurisdiction in venue that somehow rather it maybe less complicated.

If you just forget about these concepts of jurisdiction and it maybe cheaper or not so difficult to people to get together if somehow or other you wipe out the concept of jurisdiction.

This Court has already said, Mr. Justice Marshall in the Shaffer case indicated that if the price of ignoring jurisdiction is that, then it’s just too higher price and I think that’s what we have here.

We are in an area where we seek to ignore jurisdictional lines where we seek to ignore the intention on the part of a — someone who opted to do — to be a businessman in Massena or someone who opted to be a businessman in Orangeburg and that, Your Honor —

Byron R. White:

Mr. Rubin, do you suppose it would be different if in the Kansas Oklahoma example, the — the car that was in the accident that came from Kansas was a rental car and the defendant was Hertz.

Herbert Rubin:

I think that there — there would be a difference.

Byron R. White:

So you — you mean that Hertz would be subject to suit because it’s car, and anticipate its car would be protected by Oklahoma laws.

Herbert Rubin:

That’s right, Your Honor.

Byron R. White:

Well, what about — well, then what about — what about the — the automobile dealer who sells cars in Kansas to his next door neighbor, who’s a traveling salesman and he takes a mortgage?

He’s got a chattel mortgage on the car.

He’s got it in the — his neighbor is paying it off over time and so he’s got an interest in the car.

Herbert Rubin:

He — he may have an interest in the car, but I don’t think that — I — I would think it’s — that you have a question of whether you don’t have an attenuated situation merely to indicate that there is a minimum contact by reason of the fact that he has a mortgage on —

Byron R. White:

Well, what about the lessor of the car?

What — what if you lease the car (Voice Overlap) —

Herbert Rubin:

The lessor of the car has liability.

He — as the owner, he knows he can be sued wherever that car goes.

And —

Byron R. White:

Well, how do — you just answered the — you just answered the whole case then on the — on the lessor case.

You think the lessor wouldn’t be subject to suit in Oklahoma?

Herbert Rubin:

I think the lessor — the lessor would — where he anticipates that the car is going to be going out of the State if it’s rented, if — if we’re talking now about Hertz, I would say that the lessor would be liable — would be subject to jurisdiction —

Potter Stewart:

Because that’s the activity of the defendant lessor.

Herbert Rubin:

That’s his business.

That’s what —

Potter Stewart:

(Voice Overlap) —

Herbert Rubin:

He’s looking to lease his car and have it travel —

Potter Stewart:

To Oklahoma.

Herbert Rubin:

— throughout the entire country.

That’s not the business of the person who sells his car.

I like to reserve the remaining time, if I may.

Harry A. Blackmun:

For some of these rental releases have a geographical limitation and do you think that presence of such a contractual provision would change the result?

Herbert Rubin:

I think it would, Your Honor.

Warren E. Burger:

Mr. Greer.

Jefferson G. Greer:

Mr. Chief Justice, may it please the Court.

This appears to be the first case to reach this Court involving the interpretation of a “long-arm” statute where a product and a physical injury was involved.

Changes in the modern society have required the expansion of state court jurisdiction and with the advent of automobiles which are certainly unique in American life, it is required the expansion of state court jurisdiction.

This has given rise, first of all, to the nonresident motorist statute which perhaps started the evolution of the expansion of state court jurisdiction.

Jefferson G. Greer:

As far back as — in 1927, the Court recognized the uniqueness of the automobile in American life when they carved out the automobile exception to the search and seizure requirements of the Fourth Amendment.

And it’s long been recognized in criminal law that you can commit an assault with a dangerous or deadly weapon by use of the automobiles, so it is unique.

Today we have a National Highway Transportation Safety Administration within the Department of Transportation who does nothing but promulgate standards and enforce them because of the dangerous nature of the automobile.

As the progress has progressed in interstate or in — in technological areas and in interstate commerce, travel by airplane and automobile has made it easier to move from one State to another.

This has enabled the litigants to defend the informed jurisdictions with far less travel than they would before.

But it would’ve —

Warren E. Burger:

Mr. Greer, it’s a two-way street, isn’t it?

Jefferson G. Greer:

I beg your pardon.

Warren E. Burger:

That’s a two-way street, isn’t it?

Jefferson G. Greer:

Yes, sir.

In some instances, it is.

Warren E. Burger:

In every instance, is it not, with modern travel if it makes it easier for the defendant to come to Oklahoma, makes it easier for the Oklahoma resident to go to some other jurisdiction?

Jefferson G. Greer:

Except that — as this Court has pointed out in the recent denial of a certiorari, it’s very difficult to defend personal injury action several hundred miles away from the scene of the accident where all of the witnesses and the scene of the accidents, records, doctors and so forth are located.

William H. Rehnquist:

Mr. Greer, what if it had been a toaster that was sold in Massena in upstate New York rather than a VW?

Jefferson G. Greer:

Yes, sir, I think that we must consider the nature of the product and I think the important thing here is that, this is a mobile product and it’s been recognized.

In the nonresident motorist statute, that’s the very — very reason for them is because (Voice Overlap) —

Potter Stewart:

A moving chattel is mobile, isn’t it, and long before the automobile, travelling salesman back in the days since the 19th Century had been riding trains and —

Jefferson G. Greer:

Yes, sir.

Potter Stewart:

— whether it be their — the shoes they wear, the toothbrush and their suitcase or whatever.

Their — their — every chattel is mobile.

Jefferson G. Greer:

Yes, sir, but in the case of an automobile, we can anticipate its use.

As a matter of fact, it’s for the purpose —

Potter Stewart:

Well, you can anticipate that a toothbrush is a — is a very mobile product and it’s going to be carried by its owner from State to State.

Jefferson G. Greer:

That’s true and I think that’s a factor that should be considered if a corner grocer, for example, is selling a toothbrush, he cannot anticipate, he should not foresee that he’d be called upon, perhaps, to defend —

Potter Stewart:

But why — why any less so than the — than the defendants in this case?

Jefferson G. Greer:

Well, because the —

Potter Stewart:

People have always traveled long before the automobile.

Maybe there is more of it now quantitatively but —

Jefferson G. Greer:

Yes.

Potter Stewart:

— since — since the 19th century, certainly, there has been a great deal of interstate travel ever since we’ve had railroad trains —

Jefferson G. Greer:

Yes, sir.

Potter Stewart:

— of traveling salesmen and others businessmen of other kinds.

Jefferson G. Greer:

Yes, sir.

The automobile, of course, is considered a — a dangerous instrumentality.

As far back as Hess versus Pawloski, the first nonresident motorist case, this Court recognized that it was dangerous even when used carefully and that is even more so —

William H. Rehnquist:

(Voice Overlap) chainsaw —

Jefferson G. Greer:

I beg your pardon.

William H. Rehnquist:

What if the word “chainsaw” which certainly is no less dangerous than an automobile?

Jefferson G. Greer:

Well, our argument is that when a seller places a dangerous product or a product that can produce danger in interstate commerce with reasonable foreseeability that it will be used in foreign jurisdictions, then he should be called upon to defend.

William H. Rehnquist:

Okay.

So, what if in this case, the dealer in Massena, New York sells a chainsaw to a resident of Massena, a year later, the resident of Massena moved his — with chainsaw and all of his other bodily physical possessions to Oklahoma City and he, thereafter, injures himself with the chainsaw, can the dealer in Massena be called upon to defend?

Jefferson G. Greer:

Well, again, we don’t think that — that — if you’re considering foreseeability as an element here and it has been considered — at least touched upon by the Court in these decisions, they’ll think that he can reasonably foresee that.

In the case of an automobile, it’s different.

There is more movement of automobiles.

They move on interstate highways financed by the Government.

The very purpose of the automobile is transportation.

Byron R. White:

Yes, but let’s change the — the example. Suppose the manufacturer of the chainsaw is a national distributor.

He manufacturers in Massena and he ships them over the country and he — he ships one batch, he ships to dealers in Oklahoma and they are sold there and the user hurts himself with one.

Jefferson G. Greer:

Yes, sir.

Byron R. White:

Well, now, talk about foreseeability, it — it’s not only foreseeability.

He knows his chainsaw is going to be used in Oklahoma because he shipped them there.

Jefferson G. Greer:

Yes, sir.

Byron R. White:

Now, is he subject to suit in Oklahoma?

Jefferson G. Greer:

Yes, I believe so.

Harry A. Blackmun:

Mr. Greer, I’m interested in the practicalities of this lawsuit.

You have other defendants, don’t you?

Jefferson G. Greer:

Yes, sir, we have the manufacturer —

Harry A. Blackmun:

Is this an insurance case?

Is this what it amounts to —

Jefferson G. Greer:

I beg your pardon.

Harry A. Blackmun:

— to — is — is this an insurance defense case?

Is this really what’s in the background?

Jefferson G. Greer:

Well, I don’t — I assume there is an insurance, but of course, we’re in state court, we haven’t discovered that.

This is a German manufacturer, is the — is the manufacturer, Audi Union Aktiengesellschaft.

The importer is Volkswagen of America who distributes all over the United States.

World-Wide Volkswagen distributes in three States.

Harry A. Blackmun:

I understand all the facts but I’m interested in why you have to have these two additional defendants when you have the other ones?

Jefferson G. Greer:

Yes, sir.

If we lose these two defendants, we lose any tactical advantage.

If you don’t join the — the — all in the chain of distribution, you’re faced with a defense well, somebody down the line altered this product or made some change in it or misused it in the chain of distribution.

So, that’s why we joined all those in the chain of distribution.

We would lose that here and, of course, there would be two trials then with possibly inconsistent results, one in Oklahoma and — and one in New York.

Either way, the law of Oklahoma applies here.

The law of the forum is no different from New York.

We gain no advantage by applying the law of New York.

Harry A. Blackmun:

Do your judgment in Oklahoma against some of them and collect it, you’re not understood in New York trial, are you?

Jefferson G. Greer:

No, sir.

Not if we get a judgment in New York or against the manufacturer, I would assume that it is collectible in a large manufacturer.

Lewis F. Powell, Jr.:

Mr. Greer, you mentioned the fact that the accident happened in Oklahoma.

Jefferson G. Greer:

Yes, sir.

Lewis F. Powell, Jr.:

Where do you allege that the tort occurred?

Jefferson G. Greer:

Well, the act of the defendant occurred in New York when he placed it in the stream of interstate commerce, when he put it in the marketplace.

It’s — had its effect in Oklahoma.

That’s true.

It was — he started a chain of events which culminated in this tragic accident in Oklahoma.

Lewis F. Powell, Jr.:

But you allege a defective part of the automobile, where was the automobile manufactured?

Jefferson G. Greer:

It was manufactured in Germany and imported —

Lewis F. Powell, Jr.:

Is that — is that where the tort was committed?

There may have been other torts perhaps if somebody knew about the defect or if you suggest some change was made but what — what do you allege?

Jefferson G. Greer:

Well, under products-liability law of, certainly, of Oklahoma, I think most States now all those in the chain of distribution are liable as the manufacturer for a defect.

Jefferson G. Greer:

In this case, for example, these two defendants could plead over against the manufacturer and the importer.

The fact that they haven’t done so is perhaps explained by the fact that they’re all part of a large marketing apparatus extending all over the United States.

It’s interesting to note when you buy an automobile, they hand you a owner’s manual.

I think all of us have experienced that.

This tells you where all the other dealers throughout the United States are located and where you can obtain service.

They are in fact inviting you to use service facilities all over the United States.

They certainly can foresee, it seems to me, that the product is going to be used other than in their little local marketing area.

Potter Stewart:

Well, I suppose your position also would include anybody who — who in Germany might have manufactured the part that ended up in the car.

Jefferson G. Greer:

I believe that would follow.

Potter Stewart:

Or designed it.

You — you (Voice Overlap) —

Jefferson G. Greer:

This is a design defect in this case, Your Honor, yes.

Potter Stewart:

(Voice Overlap) design.

Jefferson G. Greer:

Yes, sir.

Potter Stewart:

And that I suppose took place in Germany.

Jefferson G. Greer:

Yes, sir.

William H. Rehnquist:

But it would exclude the toaster since presumably the toaster owner’s manual doesn’t give you the list of all the —

Jefferson G. Greer:

[Attempt to Laughter]

William H. Rehnquist:

— different toaster dealers in the United States.

Jefferson G. Greer:

Your Honor, I’m a bachelor, I have never bought a toaster and I’m unable to answer that.

[Laughter]

The trend certainly has been toward an expansion of state court jurisdiction and as the Court has pointed out, they — you first adopted consent as a test in doing business and presence of the corporation and finally, minimal contacts.

The emphasis is gone from power of the State in Pennoyer to the contacts among the defendant state in the litigation.

The State’s interest in the litigation has certainly been an important factor which has been considered by this Court, beginning with International Shoe, the Court’s — the State’s taxing power there was prime consideration and in McGee, the Court recognized that the State should gave an effective means of redress for its residents and had a — an interest in regulating the insurance industry.

Thurgood Marshall:

(Inaudible) residents of New York.

Jefferson G. Greer:

I beg your pardon.

Thurgood Marshall:

These are residents of New York, not of Oklahoma.

Jefferson G. Greer:

Yes, sir, but Oklahoma has an interest in this litigation as I will point out.

Thurgood Marshall:

In — in protecting people of going through Oklahoma.

Jefferson G. Greer:

Yes, sir.

Jefferson G. Greer:

These people while residents of New York were enroute to Arizona and so, they were still residents of New York until they reach their — until they reach their new home.

That’s the reason they were still residents of New York.

But in Shaffer, again, talking about the State’s interest, you recognized the strong interest in the marketability of property and — and providing a procedure for peaceful resolution of disputes.

And also, Justice Brennan recognized in the Shaffer case the unusually powerful interest of the State over corporations domesticated there and the importance of ensuring the availability of a convenient forum for litigating claims involving duplicity of corporate officers.

This Court has used different language in describing the relationship of the defendant to the State.

You’ve — you’ve used minimal contacts in International Shoe.

You’ve also spoken of the contacts, ties and relations and you spoke of affiliating circumstances and substantial connections in the McGee case.

This is a somewhat uncertain definition as Justice Marshall has pointed out in the Kulko case.

Beginning with Hanson, we see the purposeful activity language that is that the defendant must have taken some purposeful act by which he avails himself for the privileges of the forum State.

We take the position that when a seller has taken some action in his home State such as placing a dangerous instrumentality in the stream of commerce or in the marketplace, he has taken purposeful activity and he does meet the test.

Warren E. Burger:

Even on proceed (Inaudible) the manufacturer of the chainsaw which is per se a dangerous instrumentality, I guess, is liable to the subject of the jurisdiction in every State and territory of the United States, is that your position?

Jefferson G. Greer:

If the manufacturer could foresee its distribution there.

Of course, this Court has recognized in an opinion that the automobile is a dangerous instrumentality, I don’t’ know that this Court has done that for a chainsaw.

Lewis F. Powell, Jr.:

What about skateboards?

Jefferson G. Greer:

Well, I don’t know about skateboards either.

I’m a little old for that, Judge.

[Laughter]

Byron R. White:

Well, what about — what about medicine drugs?

Jefferson G. Greer:

Yes, sir —

Byron R. White:

You — you’ve probably taken some medicines and drugs.

Jefferson G. Greer:

Yes, yes, I have to do that.

I think certainly a drug can – is liable to produce death and certainly, it would apply in that case, if he can foresee the distribution of the drug.

Here, we have a purchaser.

Of course, it took the automobile into the jurisdiction himself but we think that that’s different from the ordinary goods in that it’s more apt.

It is for the very purpose of transporting people from — from one coast to another.

We have transcontinental highways running coast to coast and Route 66 where this accident occurred is the most heavily traveled road, I believe, in the — in the world and we can anticipate —

John Paul Stevens:

What about —

Jefferson G. Greer:

— more movement of automobiles and we could —

Potter Stewart:

(Voice Overlap) automobile repair shop or a gas station on Route 66.

We got nothing but tourists going by.

Potter Stewart:

I take it that gas station operator probably is subject to jurisdiction in every place that the people who buy gas from him and so forth when they travel.

Jefferson G. Greer:

Well, if — if a New York resident is going —

John Paul Stevens:

(Voice Overlap) by tire or something like that.

He’s just fixing a flat tire, let’s say, on a car that’s on its way across the country, he —

Jefferson G. Greer:

Yes, sir.

Potter Stewart:

— therefore subject himself to jurisdiction at the destination of the (Voice Overlap) —

Jefferson G. Greer:

Yes, sir, if a — let’s say a gas station operator in Oklahoma fixes a tire and he messes up —

John Paul Stevens:

He does —

Jefferson G. Greer:

— the job.

John Paul Stevens:

It — it blows in Alaska, yes.

Jefferson G. Greer:

Excuse me.

John Paul Stevens:

And it blows in Alaska.

The tire finally —

Jefferson G. Greer:

Yes.

John Paul Stevens:

Yes.

Jefferson G. Greer:

Okay.

He looks at the license.

They say this guy has got an Alaska license, he should anticipate (Voice Overlap) —

John Paul Stevens:

He should say, “I’m sorry, sir.

I’m not going to fix your flat tire because I don’t want to do business in Alaska.”

Jefferson G. Greer:

He may very well do that.

John Paul Stevens:

I see.

Jefferson G. Greer:

Well, I think he can certainly figure that if —

Thurgood Marshall:

Well, suppose they have Oklahoma tag.

Jefferson G. Greer:

Excuse me.

Thurgood Marshall:

Suppose they have Oklahoma tag.

Jefferson G. Greer:

Yes, sir.

Thurgood Marshall:

And he is going to Oklahoma service and then went to Alaska, would it still be true, (Inaudible) bring on a tag.

Jefferson G. Greer:

Well, I think in that situation, Your Honor, we could — we — he could not reasonably foresee that.

He would foresee that the man is living in a —

Thurgood Marshall:

You couldn’t foresee that a man in a car in a day is subject only to any State in the union.

Jefferson G. Greer:

Yes, sir.

Thurgood Marshall:

Could he foresee that?

Jefferson G. Greer:

I think he could.

Byron R. White:

Especially if he says — especially if he says, “Fix that tire real good, I’m going to Alaska.”

Jefferson G. Greer:

[Attempt to Laughter]

Yes.

Byron R. White:

So that refilling station man has to defend in Alaska in Nome.

Jefferson G. Greer:

I think when we consider foreseeability, we must consider not only that something will happen there, that he will be forced to defend there and on the case of the Oklahoma license or the Oklahoma owner, he would not anticipate that he would have to defend in Alaska.

He would more — he’d be more apt to think he would be defending in Oklahoma.

John Paul Stevens:

Mr. Greer, may I ask you a question about the state of the record.

In your complaint you — you alleged that all four of the defendants advertised the Audi automobile in national magazine circulated in Oklahoma and that national television that appeared in — in Oklahoma, but in the affidavits of these two defendants, they take issue with that statement as applied to them.

May we assume for purpose of decision that they do know advertising in Oklahoma?

Jefferson G. Greer:

This, we were not able to prove that these two defendants advertised in Oklahoma.

That is true, Your Honor.

John Paul Stevens:

So we can assume that for our purpose.

Jefferson G. Greer:

Yes, sir.

The manufacturer and the importer do.

Right.

Yes.

So —

Lewis F. Powell, Jr.:

Mr. Greer —

Jefferson G. Greer:

— it’s not in question.

Lewis F. Powell, Jr.:

— I’d like to attend for a moment to the question of Mr. Justice Rehnquist put to your adversary.

It relates to what was said by the Oklahoma Supreme Court on page 6A to the effect that under the facts presented, the trial court was justified in concluding that the petitioners derived substantial revenue from goods used or consumed in Oklahoma, what are the facts of — to which that opinion refers?

Jefferson G. Greer:

The facts were not fully developed at the hearing.

There was no evidence as to how many Audis are used in Oklahoma or how many come from New York or anything of that nature.

Lewis F. Powell, Jr.:

Are there any facts that support that statement in the record?

Jefferson G. Greer:

I cannot recall any, Your Honor, other than the fact that this automobile was used there, yes and we think that the — the test that has been applied, the purposeful activity test simply does not fit the situation where a product is concerned.

Goods travel routinely across state lines by different routes.

Jefferson G. Greer:

They may go to a jobber in one State, to a wholesaler and another, to a distributor in another State and on down to a retailer.

It’s difficult to say that the seller has any specific intent that they will be used in any — any particular State and yet, he knows when he puts some in the stream of interstate commerce that they are going to be used in different States.

He can anticipate that.

William H. Rehnquist:

When you say the seller, you — you mean not the manufacturer but the retail seller?

Jefferson G. Greer:

I mean any seller, anybody in the chain of distribution, Your Honor.

Warren E. Burger:

That goes right back to the manufacturer.

Jefferson G. Greer:

Yes.

The — the sellers, all of these in the chain of distribution have actions over.

It all gets back to the manufacturer eventually.

They can —

William H. Rehnquist:

Well, but that doesn’t really affect the question of in personam jurisdiction whether someone has an action over and can protect himself under local procedure.

Jefferson G. Greer:

Yes, sir.

William H. Rehnquist:

What I was curious about is whether your statement affected the foreseeability of the local distributor in Massena, New York foreseeing that a Volkswagen he sold there, would ultimately be used in Oklahoma.

Jefferson G. Greer:

Well, Massena, New York, I think is well-known as a — as a tourist area.

It’s 10 miles from the bridge crossing the St. Lawrence Freeway or — yes, and it — seaway and close to two Canadian provinces.

He can certainly say that it’s going to be used in some area other than his own little marketing area and — and I think that he can certainly foresee that it’s going to be used or may very well be used.

I don’t think he has to absolutely know that this product is going to be used or have some affirmative statement that it’s going to be used some place else.

He knows an automobile is used to travel.

Why do we have transcontinental highways?

Why does the Government spend millions of dollars building transcontinental highways if it’s not for driving automobiles and people over them from coast to coast?

William H. Rehnquist:

Well then, automobiles are just per — per se — automobile retail dealers are just per se suable in any one of the 50 States.

Jefferson G. Greer:

I think the Court might well make a distinction between automobile because of its uniqueness and the place that it plays in American life, an automobile or an airplane.

It’s designed for use all over.

Thurgood Marshall:

What about a truck?

Jefferson G. Greer:

Same thing.

Thurgood Marshall:

Yes, what I mean you didn’t mention that.

Jefferson G. Greer:

Yes, sir.

Trucks — well, certainly trucks, most of our goods nowadays with the demise of the railroads is being transported by trucks.

Thurgood Marshall:

But you’d put them in my brother Rehnquist’s category to it.

Jefferson G. Greer:

Yes, sir.

Jefferson G. Greer:

Sure I would.

Harry A. Blackmun:

Mr. Greer, your emphasis on the foreseeability takes me to the facts of the next case and not yours.

Jefferson G. Greer:

Yes, sir.

Harry A. Blackmun:

But in your case, the accident took place in your State of Oklahoma.

Jefferson G. Greer:

Yes, sir.

Harry A. Blackmun:

Would the same accident would be suable in the State of Minnesota?

Jefferson G. Greer:

Well, not under the formula we’d like to propose to the Court.

Harry A. Blackmun:

If you’re relying entirely on foreseeability, there are Audis in Minnesota also.

Jefferson G. Greer:

Yes, sir.

I haven’t considered that, Your Honor.

Harry A. Blackmun:

Well, I’m asking whether you are restricting your approach and your focus in this case to the place of the accident as well as to the — to the form of the instrumentality.

Jefferson G. Greer:

Well, I think it should be restricted to where the accident occurs.

That’s my —

Harry A. Blackmun:

But certainty, you don’t argue to that effect.

Jefferson G. Greer:

I don’t argue with it, yes.

The element of foreseeability has — has, as I said, been recognized by this Court.

It’s been recognized in the Kulko decision certainly where Justice Marshall pointed out that the defendant could hardly expect to be hailed before in California court under the circumstances there presented.

We think it’s entirely different situation here for the man, who is selling — these defendants are selling automobiles for use wherever the purchaser chooses to use them, of course.

The — we recognize the difference between the choice of law on the jurisdictional inquiries but we were impressed with Justice Brennan’s treatment of this subject where he urges the Court to bridge the gap.

Certainly, many of the choice of law factors have been touched on and mentioned.

Evidently, it was important to the Court, although not overtly recognized them on the question of jurisdiction.

We, too, as Justice Brennan pointed out, maintain that when a suit or six largest suit in a State with a substantial interest and seen its own law applied to the transaction in question, the Court could very well act to minimize conflicts, confusion and uncertainty which is inherent in this definition of minimal contacts by adopting a liberal view of jurisdiction unless, as he pointed out, considerations of fairness or efficiency strongly point in the opposite direction.

We should guess that the fairness factors certainly point to Oklahoma in this case.

Justice Marshall has mentioned the fairness considerations where he speaks of basic considerations of fairness as bearing on the proper forum for adjudicating the case in the Kulko decision and Justice Douglas remarked in the Hanson case that the question in cases of this kind should be whether the procedure is fair and just, all things considered considering the interest of the parties.

It seems just that that’s not a bad rule.

In each of decision of this —

Potter Stewart:

(Inaudible) wouldn’t it?

Jefferson G. Greer:

Excuse me?

Potter Stewart:

It’s rather a — it’s — that’s really not a rule, is it?

It depends entirely on the subject of reaction of the judge.

Jefferson G. Greer:

Yes, sir, it — it requires a measurement of the fairness factors.

Potter Stewart:

Yes.

Jefferson G. Greer:

Yes, sir.

Potter Stewart:

There’s no rule at all.

Jefferson G. Greer:

Neither, Your Honor, I should admit is a minimal contacts.

As this Court has pointed out that there is no mechanical application of that.

And as Justice Marshall pointed out, its — we seldom find the answers written in black and white and even in the gray area in numerable shades, so we don’t have a fixed standard that you can reach in and apply with no uncertainty at the present time.

Potter Stewart:

It makes one long for the days of Pennoyer against Neff with all its artificialities, doesn’t it?

Jefferson G. Greer:

I beg your pardon.

Potter Stewart:

It makes one reminisce longingly about the days of Pennoyer against Neff with all its artificialities.

At least it was —

Jefferson G. Greer:

No, I don’t —

Potter Stewart:

— the rules.

Jefferson G. Greer:

— reminisce longingly about it at all.

Potter Stewart:

No, I know you don’t.[Laughter]

Warren E. Burger:

You also reject the Roman law rule, I take it?

Jefferson G. Greer:

Yes, sir.

The — in each of the Court’s decisions, you’ve spoken a fair notice and the opportunity to defend.

Certainly in this case, there is no contention they haven’t had fair notice and they have been defending.

They certainly had an opportunity.

Convenience of the parties has been mentioned by this Court in several decisions.

In the McGee case, the Court noted that while there might be some inconvenience to the defendant corporation in that case, it was not sufficient to amount to denial of due process.

We suggest that the manufacturer and importer here apparently saw no difficulty in defending in Oklahoma since they are not contesting the jurisdiction.

William H. Rehnquist:

That, of course, might be quite a different question.

A worldwide manufacturer may have to be prepared to defend anywhere.

Jefferson G. Greer:

Yes, sir.

I say that I have reached the end.

I would like to urge the Court to consider Winton Woods’ article “Pennoyer’s Demise” in the Arizona Law Review which I believe gives this subject the best treatment of any law review article that we have read and suggest a new formula for establishing state court jurisdiction.

Warren E. Burger:

Do you have anything further, Mr. Rubin?

Herbert Rubin:

Mr. Chief Justice, may it please the Court.

Herbert Rubin:

I’ve listened long but I haven’t heard a thing about state lines for the federal system — of federal court system for the rights of state courts to exist and function.

And I believe that the comments by Mr. Justice Sobeloff become particularly poignant here because what is being suggested here is precisely what he was indicating could happen.

He said individual States could undertake at the expense of other States enlarge the sphere of their authority to nationwide dimensions requires no flight of fancy to foresee the resulting maze of lawsuits, adjudicating interests of persons having only the faintest, most remote links of the state exercising authority.

The Due Process Clause is not effective to restrain such extensions of local power and the federal system is likely to be transformed into something very different from anything we have known.

I think that’s precisely what we have here.

We have someone who is suggesting we go — go have some kind of an idea of fairness as a misunderstanding to say the least of what Mr. Justice Stevens referred to when he talked about fair notice.

He certainly didn’t talk about fair notice in the terms which my friend was arguing.

I respectfully submit that this is just a case in which a State is reaching too far and the consequences in terms of adverse results including forum shopping is simply rife and therefore, the — the action should be dismissed, the petition should be granted.

Thank you.

Harry A. Blackmun:

Is it really forum (Inaudible) on the suit where the accident took place is not a natural place to sue?

Herbert Rubin:

In — in this case, Your Honor, I think that’s so, but the theory on which the claim is being asserted, the rational is one in which you could, as Your Honor suggest, to go to Minnesota —

Harry A. Blackmun:

Yes, I have trouble with the rational.

Herbert Rubin:

That — that I think is — is the problem here.

We are departing from any kind of an idea of firm guidelines to a complete limitless uncharted maze.

Warren E. Burger:

Thank you, gentlemen.

The case is submitted.

We’ll hear arguments next in —