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In doing so I have come up with a Stream of Commerce Test which allows a court to determine, in a more globalized economy, which businesses are amenable to suit in the forum and which are not.
In order to understand the test fully.. Take a close look at a clear hypothetical to understand how it operates.
Say we have 5 independant companies. Three manufacturers, a distributor, and a particular retail store within the forum.
Manufacturer 1 is a component manufacturer.
Manufacturer 2 is a component manufacturer.
Manufactureer 3 takes the components and assembles them into a product.
Distributor gets the final product to various retail stores in a particular area.
Retail Store sells the final product to a customer in the forum, who is injured by it.
A classic problem in Stream of Commerce occurs when a person is injured by a product such as this, and the possible defect that led to his injury is the responsibility of a component manufacturer.
In order to determine if a particular manufacturer is subject to personal jurisdiction in the forum, under my Stream of Commerce Test, one must take a look at the timing and order in which these businesses contracted with each other to determine if they 'Purposely Availed' themselves of the forum.
The 'Stream' in this hypothetical looks like this at the time of the trial.
Manufacturer 1 ---> Manufacturer 3 ----> Distributor -----> Retail Store -----> Consumer.
Manufacturer 2
The key to this analysis is simple: Look at the order of contracting to enter into business together in order to determine who is actually 'availing' themselves of the forum when entering into these contracts to do business.
Let's take a look at this hypothetical Stream by looking at the various times these businesses entered into contract to do business with each 'link' in the stream.
Time 1:
Distributor ---> Retail Store
Time 2:
Manufacturer 3 ---> Distributor
Time 3:
Manufacturer 2 ---> Manufacturer 3
Time 4:
Manufacturer 1 ---> Manufacturer 3
Plotting out the Stream and indicating the order the businesses entered the Stream, we get as follows:
Manu. 2 --[T3]-->
In this scenario, Distributor first contracts with the Retail Store in a forum to have its products sold there.
Manufacturer 3 Contracts with Distributor for its product to be distributed.Later, Manufacturer 2 Begins making component parts for Manufacturer 3.
Lastly, Manufacturer 1 Begins making component parts for Manufacturer 3.
In this scenario, ALL of the businesses in this Stream of Commerce are 'Purposefully Availing' themselves of the forum.
The Distributor avails himself by directly contracting with the Retail Store to have his products sold at that location in the forum.
Manufacturer 3 contracts to have the Distributor place his product in every place the Distributor has Contracted with Retail Stores to sell it's products. BECAUSE THE CONTACT WITH THE FORUM WAS ESTABLISHED BEFORE THIS CONTRACTING, MANUFACTURER 3 HAS IMPLIEDLY 'AVAILED' HIMSELF OF ALL FORUMS WHICH THE DISTRIBUTOR HAS 'AVAILED' ITSELF OF AT THE TIME OF CONTRACTING.
Manufacturer 1 and 2, the component makers, similarly avail themselves of the forums in which Manufacturer 3 has purposefully availed himself of prior to their contracting.
Because of the order of contracting, the forum court can properly exercise personal jurisdiction over ALL businesses within this hypothetical Stream of Commerce.
Now let's twist the facts a bit, to make a critical point.
Let's look back at the original Stream:
Manufacturer 1 ---> Manufacturer 3 ----> Distributor -----> R. Store -----> Consumer.
Manufacturer 2
Now lets change the timing of the contracts to as follows:
Time 1:
Distributor ---> Retail Store
Time 2:
Manufacturer 2 ---> Manufacturer 3
Time 3:
Manufacturer 3 ---> Distributor
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Time 4:
Manufacturer 1 ---> Manufacturer 3
Plotting out the Stream and indicating the order the businesses entered the Stream, we get as follows:
Manu. 2 --[T2]--> Manu. 3 --[T3]--> Distributor --[T1]--> R. StoreManu. 1 --[T4]-->
In this scenario, Distributor first contracts with the Retail Store in a forum to have its products sold there.
Manufacturer 2 then begins making component parts for Manufacturer 3.
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Manufacturer 3 Contracts with Distributor for its product to be distributed.Lastly, Manufacturer 1 begins making component parts for Manufacturer 3.
In this scenario, Manufacturer 1 and Manufacturer 3, as well as the Distributor in this Stream of Commerce are 'Purposefully Availing' themselves of the forum.
Manufacturer 2, however, is not.
The analysis is simple. Manufacturer 2 contracted with Manufacturer 3 BEFORE Manufacturer 3 had contracted with the Distributor. Under this timing, Manufacturer DID NOT 'purposefully avail' itself of the forums the Distributor had contacted.
Manufacturer 1, on the other hand, contracted with Manufacturer 3 AFTER Manufacturer 3 had contracted with the Distributor. Because the Distributor had established contacts with the forum at the time Manufacturer 1 contracted to supply component parts, Manufacturer 1 has purposefully availed itself of the same forum the Distributor has.
This simple timing approach makes the Stream of Commerce problem much easier to handle in these scenarios. Courts could apply this test easily and plaintiffs injured by defective products 'thrust' into the Stream of Commerce will have more avenues to reach further back into the Stream of Commerce to hold those who are responsible for the injuries accountable.
Plus, this theory does not offend a sense of fairness, because when these Businesses entered into their contracts, the value of the consideration in those contracts inherently involves the Stream as it is setup at the time of the contracting.
Thus, it is not 'unfair' for a court to find that these defendant businesses could not have 'expected to be hailed into court' within the forum.