Vol. 75, No. 11, November
Wisconsin's 'Stream of Commerce' Theory of Personal
Kopke v. A. Hartrodt S.r.l. expands the jurisdictional reach
of Wisconsin courts by subjecting foreign companies to jurisdiction if
they could have known that the goods they handle could injure Wisconsin
citizens. Kopke thereby signals the demise of "minimum contacts" as a
check on the state's power to exercise jurisdiction over foreign
defendants in the personal injury setting.
by Daniel J. La Fave
arlier this year, the U.S. Supreme Court put
an end to an Italian jurisdictional odyssey by declining to review the
Wisconsin Supreme Court's decision in Kopke v. A. Hartrodt
S.r.l.1 In Kopke the court
held that an Italian labor cooperative that allegedly negligently loaded
an ocean-going multimodal container (that is, one that can go by truck,
rail, train, or ship) was subject to jurisdiction in a personal injury
action brought in Brown County by a Wisconsin truck driver who was
injured while attempting to unload the container.
By declining to intervene, the nation's highest court permitted
Wisconsin to adopt an aggressive version of the "stream of commerce"
theory of personal jurisdiction in the atypical context of a negligent
services action - even though the theory's application in product
liability cases, from whence it arose, has provoked controversy. The
theory permits a court to exercise jurisdiction over someone who places
an alleged injury-producing product into the "stream of commerce" with
the expectation that it will be purchased by consumers in the forum
state.2 This jurisdictional test is
considered to be easier to satisfy than the customary "minimum contacts"
approach, which requires proof that a defendant has purposefully
directed its activities to the forum state, and thereby invoked the
benefits and protections of its laws, as the quid pro quo for subjecting
the foreigner to jurisdiction.3
Kopke, with its aggressive formulation of what is already
deemed to be a more permissive test, signals an expansion in the
jurisdictional reach of Wisconsin courts. Indeed, the Kopke
ruling pushes the stream of commerce theory to its outermost limits by
subjecting foreign companies to jurisdiction if they "could have known"
that goods that they handle in the ordinary course of business could
prove to be injurious to Wisconsin citizens - regardless of whether the
companies actually knew or expected them to arrive here. In the
dissent's view, the ruling in Kopke effectively spells the
demise of "minimum contacts" as a check on Wisconsin's power to exercise
jurisdiction over foreign defendants in the personal injury setting and
ushers in a new, unduly expansive jurisdictional regime for the
state.4 Given the marked shift in Wisconsin
law that Kopke represents, practitioners need to master
Kopke's lessons in order to effectively navigate Wisconsin's
The "Stream of Commerce" Debate: Plus or Minus
Daniel J. La Fave, Northwestern 1992,
is a partner in the product liability and litigation groups in the
Milwaukee office of Quarles & Brady LLP. He served as lead counsel
for the defendant and third-party defendant Riunione Adriatica di
Sicurtà S.p.A. in Kopke v. A. Hartrodt S.r.l.
Following the landmark case of International Shoe Co. v.
Washington,5 the U.S. Supreme Court's
personal jurisdiction jurisprudence has required a two-tiered due
process inquiry. First, a court must determine whether a particular
defendant has "purposefully established 'minimum contacts' in the forum
state."6 On this point the plaintiff bears
the burden of proof.7 Second, if minimum
contacts exist, then the court must determine whether asserting
jurisdiction "would comport with 'fair play and substantial
justice.'"8 As to this point, the defendant
bears the burden of presenting a compelling case that exercising
jurisdiction over it would be unfair.9
Relevant to this inquiry are various fairness factors such as the burden
on the defendant, the plaintiff's interest in obtaining convenient and
effective relief, and the forum state's interests in adjudicating the
Jurisdictions that follow the "stream of commerce" theory employ it
as a specialized, abbreviated form of the minimum contacts portion of
the analysis, customarily in the context of a product liability action.
The first time the U.S. Supreme Court articulated the theory was in
World-Wide Volkswagen Corp. v. Woodson, a product liability
action brought in Oklahoma state court in connection with a car accident
in Oklahoma.11 The Court found insufficient
grounds to exercise jurisdiction over an automobile wholesaler and
retailer that were involved in selling the car in New York. However, in
oft-quoted dicta, the Court said that a state did not offend due process
by exercising jurisdiction over one who "delivers its products into the
stream of commerce with the expectation that they will be
purchased by consumers in the forum state."12
Since World-Wide Volkswagen, courts have disagreed about
what constitutes a sufficient expectation to satisfy this test. Some
courts find the mere act of placing a good into the stream of commerce
to be sufficient. Others require more. When the issue next came before
it, in Asahi Metal Industry Co. v. Superior Court,13 the U.S. Supreme Court found itself unable to
resolve this debate. Instead, the court split evenly on the point. One
group of justices, led by Justice O'Connor, advocated what is referred
to as the stream of commerce "plus" theory. It requires proof that the
defendant had "an intent or purpose to serve the market in the forum
state," by conduct such as advertising in the forum.14 For these justices "a defendant's awareness that
the stream of commerce may or will sweep the product into the forum
state does not convert the mere act of placing the product into the
stream into an act purposefully directed toward the forum state."15 The competing plurality, led by Justice Brennan,
concluded that such "awareness" was enough.16
An Errant Pallet of Italian Paper: Prelude to Adopting the Stream of
Commerce Theory in Wisconsin
Timothy Kopke opened one of the doors of a multimodal container in
Neenah, a pallet of paper unexpectedly fell out and struck him,
rendering him a quadriplegic. Claiming that negligent loading of the
container was to blame, Kopke sued several Italian entities involved in
shipping it. These included: 1) Cartiere Binda in Liquidazione S.p.A.
(Binda), whose successor produced the paper and arranged for its
delivery to Wisconsin; 2) Società Cooperativa L'Arciere
(L'Arciere), an Italian labor cooperative whose laborers packed the
container according to Binda's loading plan; and 3) Riunone Adriatica di
Sicurtà S.p.A. (RAS), Binda's insurer.
L'Arciere launched this jurisdictional odyssey by moving to dismiss
for lack of personal jurisdiction. L'Arciere argued that loading the
container did not constitute an act of "processing" or "servicing" as
contemplated by the local injury/foreign act provision of Wisconsin's
long-arm statute, and that the cooperative had insufficient contacts
with Wisconsin to satisfy due process requirements.
After the circuit court denied L'Arciere's motion, the court of
appeals granted L'Arciere leave to pursue an interlocutory appeal, which
the intermediate court eventually certified to the supreme court.
Wisconsin's Long-arm Easily Reaches L'Arciere
The Wisconsin Supreme Court unanimously concluded that L'Arciere's
actions constituted "processing" within the purview of the long-arm
statute but split 4-3 on what definition of "to process" should apply.
The majority, in an opinion written by Justice Bablitch, adopted the
Seventh Circuit Court of Appeals' interpretation of the term in
Nelson v. Park Industries Inc.17
There, in upholding jurisdiction over a foreign distributor, the Seventh
Circuit held that "to process" goods included "subjecting something to a
particular system of handling to effect a particular result and
preparing something for market or other commercial use by subjecting it
to a process."18 The Kopke
majority concluded that this "broad definition" best advanced the
objective of the long-arm statute to expand personal
The Majority: Tapping Into a Permissive Stream of Commerce
Before embarking on its due process analysis, the court unanimously
jettisoned its dated five-factor test from Zerbel v. H.L Federmen
& Co.20 in favor of the U.S.
Supreme Court's two-tiered approach from International Shoe and
its progeny.21 In doing so, the Wisconsin
Supreme Court brought the state's due process approach into the
mainstream, thereby enhancing uniformity with other jurisdictions.
However, the court split 4-3 on the issues of which mainstream U.S.
Supreme Court precedent controlled and whether the requirements of due
process had been met.
The majority concluded that Justice Brennan's formulation of the
stream of commerce theory in Asahi was the proper analysis to
apply.22 It found that three facts
satisfied that test: 1) the contractual relationship between Binda and
L'Arciere, pursuant to which they collaborated in the loading of
containers; 2) the identification of the cargo's destination as
Wisconsin in five loading plans; and 3) damaged cargo reports sent to
Binda by its consignee in Wisconsin showing that L'Arciere had loaded at
least 39 containers destined for Wisconsin during the six months just
before Kopke's accident.23 The majority
reasoned that L'Arciere indirectly derived economic benefit from the
distribution of Binda's products, and "literally 'played a hand'" in the
container arriving in Wisconsin.24
Regarding L'Arciere's claim that it did not actually know or expect
that the cargo was destined for Wisconsin, thereby negating the
expectation requirement of the stream of commerce test, the majority
found the difference between "know" and "should have known" to be a
distinction without meaning.25
Having found the first part of the International Shoe test
to have been satisfied via the stream of commerce route, the court
proceeded to consider the fairness prong of the due process calculus. It
found three factors to be relevant: 1) Wisconsin's interest in
adjudicating the dispute, 2) Kopke's interest in obtaining convenient
and effective relief, and 3) the burden on L'Arciere. As to the first,
the majority found that Wisconsin had "an unquestionable interest" in
providing a forum to adjudicate claims arising in the state.26 As to the second, the majority found that Kopke
had an "undeniable interest" in obtaining convenient relief. As to the
third factor, the majority distinguished several cases advanced by
L'Arciere, noting that unlike the situations in those cases, the arrival
of the container in Wisconsin was not "merely fortuitous" but was an
intended event. The majority also emphasized that it was not a one-time
transaction; rather, L'Arciere had been packing containers destined for
Wisconsin on behalf of Binda for years.27
The majority concluded its fairness analysis by finding that L'Arciere
had failed to make the requisite compelling case that it would be
unreasonable to exercise jurisdiction over it.28
The Dissent: A Critical Minimum Contacts Analysis
Justice Crooks, joined by Justices Sykes and Wilcox, remarked that
"If what the majority concludes qualifies as minimum contacts is indeed
sufficient, then there is, in effect, nothing left of the doctrine of
minimum contacts, which would limit the reach of a state court's
jurisdiction."29 He found fault with each
of the three facts that the majority relied on to satisfy Justice
Brennan's stream of commerce test. As to L'Arciere's contract with
Binda, Justice Crooks noted that the fact that L'Arciere's personnel
worked with Binda's employees "did not establish the requisite awareness
that L'Arciere was purposefully making contact with this forum."30 Rather, it was Binda that had chosen to market
and deliver its paper to Wisconsin and that stood to profit directly
from that choice. L'Arciere did not depend on Wisconsin for any economic
benefit, as it would be paid regardless of where any of the containers
it loaded was sent.31
Regarding the five loading plans, Justice Crooks observed that none
of their references to Appleton, Neenah, or CTI Paper U.S.A. Inc.
(Binda's Wisconsin consignee) revealed that the cities and the business
were located in the United States, much less Wisconsin.32
Finally, concerning the damage reports that were directed to Binda by
its Wisconsin consignee, Justice Crooks commented that they did not and
could not establish, after the fact, that L'Arciere was "aware" that
those containers were heading for Wisconsin. He said that, "It is this
thread, L'Arciere's supposed awareness, which, when pulled, unravels the
Justice Crooks argued that the only way the majority could find the
requisite "awareness" and related expectation by L'Arciere that the
container was destined for and would arrive in Wisconsin was by adopting
Kopke's "constructive knowledge" argument.34 However, he found that Kopke had pointed to no
evidence showing that L'Arciere "should have known" that the container
was headed to Wisconsin. Justice Crooks distinguished the authority the
majority relied upon to support a "should have known" standard as
involving classic product distribution networks. He found that the
economic incentives implicated for those participating in such
distribution networks were absent, and that it was therefore
inappropriate to permit constructive knowledge to serve proxy for the
requisite "awareness."35 He believed the
majority had placed undue significance on the foreseeability of the
potential adverse effect of one's allegedly negligent actions in a
distant forum - a brand of foreseeability that the U.S. Supreme Court
had expressly held is an insufficient benchmark for exercising personal
More Personal Injury Defendants Likely to Be Swept Up
Although, as noted earlier, the stream of commerce theory is most
commonly applied in product liability cases,37 the Kopke court is by no means the
first to apply it in the context of alleged negligent loading of cargo.
In Logwood v. Apollo Marine Specialties Inc.,38 a federal court in Louisiana discussed several
earlier decisions in which the theory had been applied to such a fact
pattern. The crucial (and disputed) question for the Logwood
court was whether the defendant-Brazilian company that had loaded the
cargo in Rio de Janiero "knew or should have known, that the cargo would
be unloaded in Louisiana...."39 Because
that issue was contested, the court denied the loader's summary judgment
motion. Notably, in discussing the Fifth Circuit's pre-Asahi
cases (one of which the Kopke majority followed), the court
observed that they "evidence a very liberal 'minimum contacts'
standard."40 As to fairness, the
Logwood court observed that the burden on the defendant of
defending the case would be severe. However, as did the Kopke
majority, the court found the balance weighed in favor of litigating the
case where the "allegedly negligently performed service  has its
The Kopke majority similarly justified its extension of the
theory to a negligent service setting, explaining that "Kopke's injuries
arose out of commercial activities and the distribution of goods in the
stream of commerce."42 The conceptual
problem that arises from taking the stream of commerce theory out of its
traditional product liability setting is that doing so vitiates an
essential element of control that is embedded in the doctrine (not to
mention the altogether different economic dynamics that Justice Crooks
highlighted).43 A manufacturer or
distributor can choose where to market its products and exercise control
over how they are sold and upon what terms through contractual means,
whereas someone who is preparing another's items for delivery
customarily does not. These functions are in the exclusive control of
the shipper. Because the majority's test strips away this fundamental
control element, it could aptly be termed a stream of commerce "minus"
Taken to its logical conclusion, the Kopke rule would, in
effect, result in organizations such as the United States Postal Service
appointing each and every parcel it posts as its agent for service of
process at the listed destination should an injurious consequence attend
the item's delivery (recent hazards such as anthrax laden letters come
to mind).44 Although the U.S.P.S. lacks any
exclusive contract like L'Arciere had with Binda, it occupies a unique
position in controlling the mails in our country, one that has persisted
for years. (Other mail carriers, both foreign and domestic, could find
themselves similarly implicated.)
One might argue that L'Arciere, as with the U.S.P.S., could actively
take steps to screen cargo that is going through its hands, and refuse
to handle items destined for aggressive jurisdictional havens such as
Wisconsin (assuming, of course, its prospective clients would pay for
such incomplete service). What the Kopke majority essentially
says is: "Handle at your own risk." If there was a way for one to
determine the item's destination, then one should have known
and realized that injurious effects could result there. The dissent
recognized that the imposition of such an obligation has ominous
implications for foreign trade.45 Can we
reasonably expect that foreign enterprises such as L'Arciere, an Italian
labor cooperative based entirely in Italy, will be sophisticated and
enterprising enough to research the law of every country to which its
clientele ships its products, and effectively assess what jurisdictional
risks are present - particularly in a country such as ours with its
patchwork quilt of jurisdictional precedent?46
Yet, the "should have known" standard effectively waters down the
notion of purposeful conduct directed at the forum to a quasi-negligence
standard, with all of its attendant vagaries. At just what volume of
shipments does jurisdiction attach? How long must the period of
shipments extend? The uncertainty that surrounds such questions makes
the Kopke rule hard to reconcile with the fundamental purpose
of due process law, which is to provide foreign parties with adequate
notice of what it will take before they will be subjected to
While there may be uncertainty surrounding the stream of commerce
rule that emerges from Kopke, where it has been met, foreign
parties can expect a chilly reception to any complaints of the
difficulties of defending litigation in Wisconsin. Given the outcome for
L'Arciere, a relatively small Italian cooperative defending itself on
its own dime, other foreign companies should not expect more lenient
treatment. If the supreme court was willing to subject L'Arciere to
jurisdiction - even though Kopke chose not to oppose
L'Arciere's contemporaneous summary judgment motion on the merits of his
claim against it, since he believed that Binda alone was culpable yet
likely to point to L'Arciere's empty chair at trial to deflect blame
from itself if L'Arciere was dismissed solely on procedural grounds - it
is evident that there does not need to be much of a resident party
interest to carry the day.
Indeed, at every turn, the Kopke majority showed itself
eager to extend the jurisdictional reach of Wisconsin's courts, whether
in adopting the more expansive definition of processing for purposes of
the long-arm statute or in picking Justice Brennan's more permissive
formulation of the stream of commerce theory. Kopke represents
a new high-water mark in Wisconsin's personal jurisdiction law, although
one that appears to be firmly grounded in and limited to personal injury
cases - at least for the time being.
Kopke's stream of commerce rule expands jurisdictional
exposure for foreign enterprises involved in handling and distributing
goods destined for Wisconsin. In addition to manufacturers of products
and those in their distribution chain, companies that help to convey
goods to Wisconsin - especially those with exclusive long-term contracts
with producers that actively market their wares here - face a heightened
risk of being hauled into Wisconsin court to answer for their conduct
when injury attends those goods after their arrival here. Kopke
imposes a duty on these foreign entities to investigate the destinations
of the goods passing through their hands and take active steps to avoid
Wisconsin unless they are prepared to defend their actions here. Those
who continue to operate under the banner of "ignorance is bliss" (at
least as far as being subject to jurisdiction) do so at their peril.
While the doctrine of minimum contacts may not be entirely dead in
Wisconsin, it has been substantially diluted, at least in personal
injury cases, by a virulent stream of commerce theory of
12001 WI 99, 245
Wis. 2d 396, 629 N.W.2d 662, cert. denied sub nom. Società
Cooperativa L'Arciere v. Kopke, 122 S. Ct. 808 (2002).
Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (1980).
Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985).
Kopke, 2001 WI 99 at ¶ 49 (Crooks, J., dissenting).
5326 U.S. 310
King, 471 U.S. at 474.
2001 WI 99 at ¶ 23 (citing Burger King, 471 U.S. at
King, 471 U.S. at 476 (quoting International Shoe, 326
U.S. at 320).
Farm Bureau Mut. Ins. Co., 179 Wis. 2d 42, 57, 505 N.W.2d 162 (Ct.
11444 U.S. 286
at 297-98 (emphasis added).
13480 U.S. 102
17717 F.2d 1120
(7th Cir. 1983).
at 1124 n.5.
19Kopke, 2001 WI 99 at ¶ 17.
20 48 Wis. 2d 54, 64-65, 179 N.W.2d 872 (1970).
21Kopke, 2001 WI 99 at ¶ 23 n.9; see also
id. at ¶ 49 n.1 (Crooks, J., dissenting) ("I agree with the
majority's conclusion that the five-factor test set forth in
Zerbel has been subsumed into the due process standards adopted
by the United States Supreme Court.").
at ¶ 30.
at ¶ 32.
at ¶ 36.
at ¶ 38 (quoting Barone v. Rich Bros. Interstate Display
Fireworks Co., 25 F.3d 610, 613 n.4 (8th Cir. 1994) (quoting
Oswalt v. Scripto Inc., 616 F.2d 191, 200 (5th Cir.
at ¶ 40.
at ¶ 46.
at ¶ 48.
at ¶ 49.
at ¶ 55.
at ¶ 61.
at ¶ 56.
at ¶ 57.
at ¶ 60.
at ¶¶ 63-64; see also Burger King, 471 U.S. at 474
("Although it had been argued that foreseeability of causing injury in
another State should be sufficient to establish such contacts there when
policy considerations so require, the Court has consistently held that
this kind of foreseeability is not a 'sufficient benchmark' for
exercising personal jurisdiction.") (footnote omitted).
Apollo Marine Specialties, Inc., Civ. A. No. 89-4785, 1992 WL
124812, at *2 n.1 (E.D. La. June 4, 1992).
42Kopke, 2001 WI 99 at ¶ 31.
criticized the majority for glossing over this distinction.
Kopke, 2001 WI 99 at ¶ 53 & n.3.
World-Wide Volkswagen, 444 U.S. at 296 ("If foreseeability were the
criterion ... [e]very seller of chattels would in effect appoint the
chattel his agent for service of process. His amenability to suit would
travel with the chattel.").
45Kopke, 2001 WI 99 at ¶ 49.
46Compare, e.g., Kopke, 2001 WI 99,
and Logwood, 1992 WL 124812, with Haley v. Champion Int'l
Corp., No. 99-2256-JWL, 2000 WL 1472880 (D. Kan. April 21, 2000)
and Union Pacific R. Co. v. Foxexport, Inc., No. Civ.
99-917-KI, 1999 WL 1206758 (D. Or. Dec. 14, 1999), reconsideration
denied, 2000 WL 1780346 (D. Or. Dec. 5, 2000).
World-Wide Volkswagen, 444 U.S. at 297.