International Shoe Co. v. Washington

The Court rejected the older, formal inquiry into whether a corporation was physically "present" in the forum. Corporate presence is only a shorthand for the real constitutional question: whether the corporation's contacts with the State make it reasonable to require it to defend the particular suit there.

Due process permits a state to enter an in personam judgment against an out-of-state defendant when it has certain minimum contacts with the forum such that maintaining the suit does not offend traditional notions of fair play and substantial justice. The inquiry is qualitative, not merely mechanical or quantitative; courts must assess the nature of the defendant's activities and their relation to the litigation.

International Shoe's Washington activities were regular, systematic, and continuous rather than isolated or casual. Its resident salesmen worked there for years, displayed its samples, solicited orders under its direction, and produced a substantial volume of interstate sales into the State.

The liability Washington sought to enforce arose directly from those activities: the assessment was based on the wages and commissions International Shoe paid its Washington salesmen. Because the company enjoyed the benefits and protections of Washington law while conducting that business, it was reasonable and just to require it to answer for obligations connected to that business in Washington.

Service on an agent may satisfy due process when the agent's activities are sufficiently connected to the corporation's forum contacts and to the claim being asserted. Here, the salesman was an appropriate person through whom to communicate notice because the assessment arose from the employment activities of International Shoe's Washington sales force.

Registered mailing to International Shoe's home office gave further assurance that the company would receive actual notice. Taken together, in-state service and registered mail were reasonably calculated to apprise the company of the assessment and allow it an opportunity to contest it.

The Washington Supreme Court construed the statute as taxing the privilege of employing workers in Washington, with the tax measured by the wages or commissions paid to them. The Supreme Court accepted that state-law construction in evaluating the federal constitutional claim.

A state may impose an unemployment-compensation tax on employers for labor performed within the State. International Shoe's employment of Washington-based salesmen was both the taxable event and a central component of the contacts that made the company amenable to suit there.

Because International Shoe's Washington business activities supported both the tax and the State's jurisdiction to collect it, due process did not bar Washington from imposing or enforcing the assessment.

Federal law provided that a person required to contribute to a state unemployment fund could not avoid that obligation on the ground that it engaged in interstate or foreign commerce. Congress may, in exercising its commerce power, authorize specified state regulation of or burdens on interstate commerce.

That congressional authorization foreclosed International Shoe's Commerce Clause challenge. The Court therefore affirmed the state judgment without treating the assessment as a prohibited burden on interstate commerce.