Fed. Corp. v. Truhlar
| Decision Date | 10 August 2021 |
| Docket Number | No. 08-16-00095-CV,08-16-00095-CV |
| Parties | FEDERAL CORPORATION, INC., Appellant, v. Desiree TRUHLAR, Carlos Alvarez, Rosendo Aguilar, Jennifer Butler, Maria T. Ruiz, Auden Tercero, Lucia Cereceres, Roberto Rodriguez, Priscilla Rodriguez and Liberty Mutual Fire Insurance Corporation, Appellees. |
| Court | Texas Court of Appeals |
ATTORNEY FOR APPELLANT: J. Michael Myers, Naman, Howell, Smith & Lee, PLLC, 10001 Reunion Place, Ste. 600, San Antonio, TX 78216.
ATTORNEYS FOR APPELLEES: J. Hunter Craft, Craft Law Firm, P.C., 2727 Allen Parkway, Suite 1150, Houston, TX 77019, David Bright, Sico, White, Hoelscher, Harris & Braugh, LLP, 802 N Carancahua St., Ste. 900, Corpus Christi, TX 78401, Joseph Isaac, Scherr & Legate, PLLC, 109 N. Oregon, 12th Floor, El Paso, TX 79901.
Before Rodriguez, C.J., McClure, C.J. (Senior Judge), and Hughes, J., McClure, C.J. (Senior Judge)(Sitting by Assignment)
Federal Corporation, Appellant, a Taiwanese manufacturer, sold tires to two wholesale distributors in the United States, one in California (Tire Dealer's Warehouse), the other in Mississippi (Dunlap & Kyle). Desiree Truhlar, Carlos Alvarez, Rosendo Aguilar, Jenifer Butler, Maria T. Ruiz, Auden Tercero, Lucia Cereceres, Roberto Rodriguez, Priscilla Rodriguez and Liberty Insurance, Appellees, claim a Federal tire failed and caused an accident in Texas in which three people were killed and two others injured, all Texas residents. The tire at issue was shipped from Taiwan to a Tire Dealer's Warehouse, in Phoenix, Arizona, but allegedly purchased in Texas.
After it was sued, Federal filed a special appearance. Appellant contends the subject tire was sold in Taiwan. Appellant asserts it is a Taiwanese company with no contacts in Texas, and therefore, specific jurisdiction cannot stand because mere placement in the stream of commerce and foreseeability is not enough to uphold the trial court's finding of specific jurisdiction. Appellees refute Appellant's argument, claiming Appellant purposefully availed itself of Texas' jurisdiction by placing their tires in the stream of commerce in Texas. Appellees point to Appellant's purposeful activities in Texas: (1) shipping tires directly to Texas; (2) sending promotional materials to Texas distributors; (3) meeting with distributors in Texas once or twice a year; (4) assisting Texas residents in purchasing tires with their Texas distributors; (5) administering an interactive website for inquiries from Texas residents or tire distributors; (6) advertising on their website where their Texas distributors can be located; and (7) communicating regularly with their Texas distributors.
The trial court denied Appellant's special appearance, found Appellant's contacts with Texas satisfy the requisites of specific jurisdiction and this interlocutory appeal followed. The question is whether the State of Texas can assert personal jurisdiction over a non-resident defendant, Federal Corporation, a Taiwanese company, in this products liability suit. We affirm.
Appellant is a Taiwanese corporation; all their officers are Taiwan citizens, the board of directors has never held a meeting in Texas, nor have any of Appellant's business activities been controlled by any Texas person or entity. Appellant has never been a resident of Texas or authorized to do business in Texas, does not have a registered agent for service of process, or a license to do business in Texas. Appellant has never owned real or personal property in Texas; does not maintain bank accounts in Texas; does not operate any facilities in Texas; does not pay income or employment tax in Texas; and does not have any employees, agents, sales representatives, or subsidiaries in Texas. Appellant also avers they have never transacted business in Texas, marketed their tires in Texas, advertised in Texas, designed or manufactured tires for sale in Texas, or manufactured other equipment for sale in Texas. Last, Appellant claims it has not established any channels for providing regular advice to customers in Texas nor marketed any tires through a distributor who has agreed to serve as a sales agent in Texas.
The unchallenged evidence demonstrates this wrongful death case arose from an automobile accident in Ector County on July 22, 2013. Appellees here, plaintiffs and intervenors in the trial court, allege the cause of the accident was the failure of a Federal tire due to a tread separation. The alleged defective tire at issue, a Federal Couragia M/T 35 X 12.50 R18 LT, was designed and manufactured in Taiwan near the end of 2011. The subject tire, according to Appellees, was purchased at Tire Club USA of El Paso, Texas.
Mr. Dawu Chen, Appellant's director of Global Sales and Marketing, was deposed in January 2016. Chen was questioned regarding computer screen shots showing bar code numbers on tires which give Appellant the ability to track where a particular tire is sold within the United States. Documents referenced in his deposition show potential locations where Appellant shipped the subject tire from Taiwan. The bar code on the subject tire was incomplete and missing some digits; according to Chen, Appellant took the bar code numbers that were visible to find out all the potential bar code numbers which could apply, and where all of those potential tires were shipped. Only two possible tire types fit the bar code of the subject tire, and based on the information for those two types, Appellant determined all of those two types of tires were "meant to be shipped" to Tire Dealers Warehouse in Phoenix, Arizona. However, Appellant cannot determine for sure whether those tires were in fact shipped only to Arizona.
Appellant admits it sells to two companies that distribute tires in Texas. One is Tire Dealer's Warehouse, which has its headquarters in Ohio. In a sworn declaration made by Chen and attached to Appellant's answer subject to its special appearance, Appellant acknowledges it manufactured the subject tire and sold it to Tire Dealer's Warehouse in Compton, California. According to Appellant, Tire Dealer's Warehouse in Compton, California, shipped the tire to its location in Phoenix, Arizona. The subject tire was sold "Free on Board" (F.O.B.) in Taiwan meaning that title to the tire is transferred to Tire Dealer's Warehouse at the time it was loaded on the ship in Taiwan. Appellant maintains Tire Dealer's Warehouse had exclusive control over the distribution and final destination of the subject tire once title transferred in Taiwan. Appellant contends they have no control or any involvement in the decision as to where Tire Dealer's Warehouse ultimately sends or sells the tire. However, Appellant admits that some of the tires sold to Tire Dealer's Warehouse have "eventually" made their way into Texas. Appellant asserts there is no evidence demonstrating Appellant placed the subject in the stream of commerce in Texas. According to Appellant, they did not intend or expect the subject tire would be sold in Texas or to a Texas resident. The second distributor is Dunlap & Kyle of Batesville, Mississippi, which includes Gateway Tires (Gateway) of Carrollton, Texas and Hesselbein Tires Southwest (Hesselbein) of San Antonio, Texas. Appellant ships tires purchased by Dunlap & Kyle directly to Gateway and Hesselbein. Appellant asserts they have no control or any decision making authority regarding the ultimate destination of the tires sold to Dunlap & Kyle. All tire orders delivered to Gateway and Hesselbein are paid by Dunlap & Kyle.
Further, Appellant states they have no distribution agreement with any of the distributors and have never exercised control over the marketing practices of these distributors. Appellant asserts they have never made any direct sale to any end-user in Texas, and according to Chen, the number of tires shipped to Texas amounted to between .4% and 1.4% of Appellant's global sales.
Chen supervises Appellant's employees who communicate with Texas distributors. From 2009 through 2014, Appellant employed nine sales managers and team members who were responsible for Texas, including Charles Hsu and Elic Liu. These employees contacted Texas distributors directly and were responsible for ensuring Texas distributors had what they required and the shipping of their orders was correct. Mr. Chen, when asked if those distributors were selling tires in Texas, responded, "We don't know exactly what they do with our tires." On follow-up, he was asked whether tire facilities in Texas "would primarily be marketing to Texas customers ...?" Chen replied, "[W]e actually—we don't know every detail [of] what they do in Texas." Chen agreed distributors in Texas under parent company Dunlap & Kyle distributed Appellant's tires.
Documents in the record indicate Appellant contacted tire dealers in Texas to inquire about selling Federal tires. For example, Appellant's representative in Taiwan, Alex Lu, emailed Doug Robinson in Carrollton, Texas and "Mr. Mullino," in Mesquite, Texas, inquiring about whether they would be interested in selling Federal tire products. Chen testified the email indicates Appellant has several companies it ships its tires to, and Mr. Mullino could contact those companies to obtain Federal tires. Chen also clarified although Appellant's contract is with Dunlap & Kyle in Mississippi, they ship directly to the state of Texas. Appellant also communicated with employees of Hesselbein and shipped tires directly to Hesselbein in Texas.
According to Chen, Appellant ships its tires to Texas, California, Oregon, South Carolina, and New Jersey, along with a few other states, but not all fifty states.
The record includes some twenty-nine sets of shipping documents of tires sold to Hercules Tire and Rubber of Ohio, but delivered to Tire Dealer's Warehouse's locations in San Antonio,...
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