This post is from the non-Reed Smith side of the blog.

Not a drug or a device case, the recent personal jurisdiction ruling in In re: Hair Relaxer Marketing Sales Practices and Products Liability Litigation, 2025 WL 1331791 (N.D. Ill. May 7, 2025), caught our attention because typically the Seventh Circuit is not a very favorable place to be from a corporate personal jurisdiction standpoint. And coming shortly after the disappointing Ninth Circuit foreign defendant personal jurisdiction ruling, we thought we could use some good news on this topic.  In re Hair Relaxer delivers, making it a nice checklist for avoiding foreign parent jurisdiction even in a difficult forum.

In re: Hair Relaxer involves claims against the manufacturers of various hair relaxer products, including L’Oréal USA.  As is sometimes the case in MDLs, you get a rogue plaintiff. Here, that rogue plaintiff added L’Oréal USA’s French parent company, L’Oréal S.A. as a defendant.  Id. at *1-2.  On the parent defendant’s motion to dismiss, the question before the court was whether plaintiff’s allegations demonstrated that the court had specific jurisdiction over the foreign company.  Specific jurisdiction hinges on the defendant having contacts with the forum state that show it purposefully availed itself or purposefully directed activities at the state and that plaintiff’s alleged injury arose from the forum-related activities.  Id. at *3. 

Plaintiff argued that personal jurisdiction was established under the stream-of-commerce doctrine—which allows the exercise of jurisdiction over a foreign corporation if it “delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state.” Id. (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980)).  However, ever since Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), we have considered the door at least partially closed on stream-of-commerce jurisdiction.  The Third Circuit, for example, does not recognize it at all.  See Shuker v. Smith & Nephew, PLC, 885 F.3d 760 (3d Cir. 2018) (noting that a plurality of the Supreme Court has twice rejected the theory). But it’s still alive and kicking in the Seventh Circuit.

In fact, the Seventh Circuit has adopted a broad, knowledge-based stream-of-commerce doctrine whereby “as long as a participant in the stream of commerce is aware that the final product is being marketed in the forum state, the possibility of a lawsuit there cannot come as a surprise.”  In re Hair Relaxer, at *3.  Moreover, stream-of-commerce jurisdiction applies to non-manufacturing parent companies when parents “significantly contribute” to the placement of the product in the stream-of-commerce. Clearly the Seventh Circuit does not make it easy on foreign defendants. But even with the weight of the law on plaintiff’s side, the court found her allegations severely lacking.

Plaintiff’s allegations that the foreign parent itself placed the products into the stream of commerce were unsupported and conclusory. The foreign parent submitted a declaration to the contrary that plaintiff did not rebut.  Id. at *4. So, plaintiff’s primary argument was that the parent company placed the products into the stream of commerce “through control of the actions of its subsidiaries.” Id. 

First, plaintiff attempted to attribute statements in L’Oréal Groupe’s annual report and investor website to L’Oréal S.A.  But none of the statements specifically were about L’Oréal S.A. itself as opposed to one of its subsidiaries.  Id. at *5.  Rather, L’Oréal Groupe refers to all of the entities and brands under the corporate umbrella.  That is not enough for personal jurisdiction.  Nor does the fact that the parent company owned the products’ formulas or held U.S. patents for the products or licensed the products to its U.S. subsidiary establish that the products at issue in the litigation were actually the parent’s products. Id. The existence of a licensing arrangement is not enough alone to establish jurisdiction; the question is the degree of control exercised by the licensor or parent. 

Try as she might, plaintiff could not demonstrate the type of pervasive control needed to disregard corporate separateness.  Overlapping board members are common, as is a parent maintaining some financial records regarding its subsidiaries or sharing infrastructure like an intranet site.  Id. at *6. That fact that the U.S. subsidiary’s website is a page on the L’Oréal Groupe’s website was not only irrelevant to the level of control exercised by L’Oréal S.A., but “simply running a website that is accessible in all 50 states is not enough to create the ‘minimum contacts’ necessary to establish personal jurisdiction in the forum state.  Id. Take that Ninth Circuit. 

The court also found the parent company’s involvement in the litigation irrelevant to the jurisdictional question.  While the court had previously found the parent and subsidiary had a close relationship such that the parent was required to produce documents, the standard for establishing “control” for purposes of discovery “is much lower than the standard for establishing an alter-ego relationship.”  Id. at *7.  And then plaintiff got desperate.  She argued that the parent’s issuing of a press release about the MDL was evidence of control.  It’s not and moreover, the press release was issued by L’Oréal Groupe, not L’Oréal S.A. 

The court concluded that the two entities operate separately and independently and that the parent does not control the day-to-day operations of the subsidiary.  Therefore, plaintiff failed to demonstrate sufficient minimum contacts to warrant exercising jurisdiction over the foreign parent or even to state a colorable claim to warrant jurisdictional discovery.