The case involves determining whether a foreign defendant's knowledge that their products would reach the forum State in the stream of commerce constitutes "minimum contacts" between the defendant and the forum State, allowing for the exercise of jurisdiction without offending traditional notions of fair play and substantial justice. The plaintiff filed a product liability lawsuit against a Taiwanese manufacturer, Cheng Shin Rubber Industrial Co., Ltd., alleging that the tire, tube, and sealant were defective. Cheng Shin filed a cross-complaint seeking indemnification from Asahi Metal Industry Co., Ltd., the manufacturer of the tube's valve assembly. Asahi argued that California could not exert jurisdiction over it consistent with the Due Process Clause of the Fourteenth Amendment. The case involves the interpretation of California's long-arm statute, which allows for the exercise of jurisdiction "on any basis not inconsistent with the Constitution of this state or of the United States." Asahi, a Japanese corporation, manufactures tire valve assemblies in Japan and sells them to Cheng Shin, a Taiwanese manufacturer, and other tire manufacturers for use as components in finished tire tubes. Cheng Shin alleged that approximately 20 percent of its sales in the United States are in California. The Court of Appeal of the State of California issued a writ of mandate commanding the Superior Court to quash service of summons against Asahi, concluding that it would be unreasonable to require Asahi to respond in California solely based on the foreseeability that the product into which its component was embodied would be sold all over the world, including California.

The Supreme Court held that personal jurisdiction over a defendant must be fair and just, and that foreseeability alone is not enough to establish jurisdiction. The regular and anticipated flow of products from manufacture to distribution to retail sale falls under the stream-of-commerce theory, and a participant in this process who is aware that the final product is being marketed in the forum State cannot claim that litigation there is unjust or unfair. The Court distinguished between sufficient and insufficient contacts with a forum State, and held that a manufacturer or distributor can be subject to suit in a State where its allegedly defective merchandise has caused injury to its owner or others, if its sale of the product is not an isolated occurrence but arises from its efforts to serve the market for its product in other States. Justice Brennan disagreed with Part II-A of the Court's opinion, which requires a plaintiff to show additional conduct directed towards the forum State before finding the exercise of jurisdiction over the defendant to be consistent with the Due Process Clause.

Justice Stevens agrees with the judgment to reverse the Supreme Court of California's decision in part. He concurs with Part II-B of the Court's opinion, which establishes that California's exercise of jurisdiction over Asahi in this case would be "unreasonable and unfair." However, he disagrees with Part II-A, as he believes it is not necessary to the Court's decision. He argues that an examination of minimum contacts is not always necessary to determine whether a state court's assertion of personal jurisdiction is constitutional. He also disagrees with the plurality's articulation of "purposeful direction" as the nexus between an act of a defendant and the forum State that is necessary to establish minimum contacts. Justice Stevens suggests that the determination of whether Asahi's conduct rises to the level of purposeful availment depends on constitutional factors such as the volume, value, and hazardous nature of the components.