International Shoe Co. v. Washington
Does the Due Process Clause of the Fourteenth Amendment permit a state to exercise judicial jurisdiction over a corporation that has no physical presence in the state but whose agents conduct systematic business activities there?
The Decision
Unanimous (Jackson not participating) decision · Opinion by Harlan Fiske Stone · 1945
Majority Opinion— Harlan Fiske Stoneconcurring ↓
The Supreme Court unanimously affirmed the Washington Supreme Court's decision, holding that International Shoe's activities within Washington were sufficient to subject the company to the state's jurisdiction without violating the Due Process Clause. The opinion was authored by Chief Justice Harlan Fiske Stone. Justice Robert H. Jackson took no part in the consideration or decision of the case.
The Court's groundbreaking reasoning swept away the old fiction that a corporation had to be physically 'present' in a state for that state's courts to exercise jurisdiction over it. Chief Justice Stone wrote that due process requires only that a defendant who is not physically present within a state must have 'certain minimum contacts' with that state 'such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.' This new standard, known as the 'minimum contacts' test, replaced the rigid territorial approach with a flexible, fact-specific inquiry into the nature and quality of a defendant's connections to the forum state.
The Court explained that the minimum contacts analysis depends on a sliding scale. At one end, if a corporation's activities in a state are 'systematic and continuous,' those contacts may be sufficient for the state to exercise jurisdiction even over claims unrelated to the in-state activities. At the other end, a single, isolated act within a state may not be enough. In between, the Court said, the question turns on whether the corporation has enjoyed the benefits and protections of the state's laws to such a degree that it should reasonably expect to be called to account there. The obligations a corporation incurs from its activities in a state are not to be regarded as arising from its mere 'presence' but rather from the quality and nature of those activities.
Applying this framework to the facts, the Court found that International Shoe's contacts with Washington were plainly sufficient. The company employed a team of salesmen who continuously and systematically solicited orders within the state over a period of years, generating a large volume of business. These activities were not isolated or sporadic; they were a regular and integral part of the company's commercial enterprise. The company received the benefits of Washington's economy and legal system, making it entirely fair to require it to respond to the state's assessment of unemployment fund contributions. The exercise of jurisdiction, the Court concluded, did not offend due process.
Concurring Opinions
Justice Hugo Black wrote a separate opinion concurring in the result. While agreeing that Washington could assert jurisdiction over International Shoe, Black expressed concern about resting the decision on the vague due process standard of 'fair play and substantial justice,' which he feared gave courts too much unguided discretion. He would have preferred to ground the decision more firmly in the specific constitutional text and in the practical realities of interstate commerce rather than in an open-ended balancing test.
Background & Facts
International Shoe Co. was a Delaware corporation headquartered in St. Louis, Missouri, that manufactured and sold shoes and other footwear across the United States. The company did not maintain an office, warehouse, or stock of merchandise in the State of Washington. However, between 1937 and 1940, International Shoe employed between 11 and 13 salesmen who lived in Washington and worked there on a regular basis. These salesmen rented hotel rooms to display samples, solicited orders from customers within the state, and earned commissions on the sales they generated. The orders they took were sent back to St. Louis, where the company would accept or reject them and ship the goods from outside Washington.
The State of Washington assessed International Shoe for contributions to the state's unemployment compensation fund, based on the commissions paid to its Washington-based salesmen. The state served notice of this assessment on one of the company's salesmen in Washington and also mailed a copy by registered mail to the company's headquarters in St. Louis. International Shoe challenged the assessment, arguing that it was not 'present' in Washington and therefore the state had no jurisdiction over it. The company contended that forcing it to defend itself in Washington courts would violate the Due Process Clause of the Fourteenth Amendment.
The state's unemployment office ruled against the company, and the Washington Superior Court affirmed that ruling. International Shoe then appealed to the Washington Supreme Court, which also upheld the assessment, finding that the company's activities within the state were sufficient to make it subject to Washington's jurisdiction. The company then petitioned the United States Supreme Court, which agreed to hear the case because it raised a fundamental constitutional question about when a state can haul an out-of-state corporation into its courts.
At the time, the prevailing legal doctrine on jurisdiction was rooted in the concept of physical 'presence'—the idea that a court could only exercise power over a person or corporation physically found within its borders. This rigid rule had become increasingly difficult to apply in a modern economy where corporations routinely conducted business across state lines through employees and agents without ever setting up a formal office. The Supreme Court took this case to clarify the constitutional limits of state court jurisdiction in this new commercial reality.
The Arguments
International Shoe argued that it was not 'present' in Washington because it had no office, warehouse, or inventory there. It contended that subjecting it to the jurisdiction of Washington's courts based solely on the activities of a handful of salesmen violated its right to due process under the Fourteenth Amendment.
- The company was incorporated in Delaware and headquartered in Missouri, with no formal business presence in Washington.
- Its salesmen in Washington merely solicited orders, which were sent to St. Louis for acceptance; the company itself made no direct sales within the state.
- Under the existing legal standard, a corporation had to be physically 'present' in a state—through offices or other fixed operations—to be subject to that state's jurisdiction, and International Shoe had no such presence.
Washington argued that International Shoe derived substantial economic benefit from its systematic sales activities within the state and that its salesmen's continuous operations there were more than enough to justify the state's exercise of jurisdiction over the company for purposes of collecting unemployment fund contributions.
- International Shoe employed numerous salesmen who lived and worked continuously in Washington, soliciting business and generating significant revenue for the company from within the state.
- The company's salesmen used the state's infrastructure, economy, and labor market to conduct business, making it fair and reasonable for the state to require contributions to its unemployment compensation fund.
- Allowing corporations to profit from substantial, ongoing activities within a state while claiming immunity from that state's legal authority would be unjust and impractical in a modern national economy.