Lonza Ag v. Blum

• Decision Date: 21 November 2001
• Docket Number: No. 04-01-00483-CV.,04-01-00483-CV.
• Citation: 70 S.W.3d 184
• Parties: LONZA AG, Appellant, v. Stephen BLUM, Appellee.
• Court: Texas Court of Appeals

70 S.W.3d 184

LONZA AG, Appellant, v. Stephen BLUM, Appellee.

No. 04-01-00483-CV.

Court of Appeals of Texas, San Antonio.

November 21, 2001.

Barry F. McNeil, Debra J. McComas, Ronald W. Breaux, Sarah R. Teachout, Haynes and Boone, L.L.P., Dallas, Dennis P. Orr, Thomas M. Mueller, Mayer, Brown & Platt, New Yourk, NY, Charles W. Shipman, Stephen P. Allison, Haynes and Boone, L.L.P., San Antonio, for Appellant.

Leonard W. Yelsky, Yelsky & Lonardo, Cleveland, OH, for Appellee.

Sitting: ALMA L. LÓPEZ, PAUL W. GREEN, and SARAH B. DUNCAN, Justices.

OPINION

ALMA L. LÓPEZ, Justice.

Lonza AG appeals an interlocutory order denying its special appearance to contest personal jurisdiction. We find insufficient contacts with the State of Texas to assert general jurisdiction over the Swiss corporation, and the extension of long arm jurisdiction under the circumstances presented here would not comport with our traditional notions of fair play and substantial justice. Therefore, the order denying Lonza AG's motion to dismiss for lack of jurisdiction is reversed and Lonza AG is dismissed from the suit.

BACKGROUND

Blum asserts claims of wrongful termination, fraud, conversion, and intentional infliction of emotional distress arising from an employment relationship in the underlying suit. Blum originally sued his employer, Lonza, Inc., a New York corporation with its principle place of business in New Jersey. He was employed as a salesman with this company from 1983 to 1998 when he was terminated through a voluntary reduction in force. Additional original defendants were a Swiss entity and several Swiss individuals who have either been non-suited or dismissed for lack of personal jurisdiction.

In his sixth amended petition, Blum sued Lonza AG, a Swiss corporation. Lonza AG filed a special appearance and objection to personal jurisdiction. Following an evidentiary hearing,¹ Judge Frank Montalvo denied the special appearance and found that the court had general jurisdiction over the Swiss company.

Lonza AG is a company based in Basel, Switzerland and organized in accordance with the laws of Switzerland. The company manufactures niacin and other products in Switzerland. Lonza AG is a wholly-owned subsidiary of Lonza Group Limited, a Swiss company. Lonza Group also wholly owns a holding company in the United States called Alusuisse-Lonza American, Inc., which in turn wholly owns Lonza, Inc. Thus, Lonza AG and Lonza, Inc. are affiliated. Lonza, Inc., a defendant in the underlying suit, does not contest personal jurisdiction.

Lonza AG denies that it manufactured any of its products in the United States, denies that it does business in Texas, or has directly targeted Texas for purposes of marketing its products. All contact with Texas is done through Lonza, Inc. Lonza AG concedes two contacts with Texas: it provided free product samples of niacin to a Texas A & M professor for research purposes and it voluntarily waived personal jurisdiction in a federal anti-trust suit in the Northern District of Texas. By sworn affidavits, Lonza AG denied in detail any other contacts with Texas relevant to this proceeding.

STANDARD OF REVIEW

A nonresident defendant must negate all bases of personal jurisdiction to prevail in a special appearance. CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex.1996). There is a conflict among the courts of appeal on which standard of review to employ in considering an appeal of a ruling on a special appearance.² In Case v. Grammar, we stated:

When a defendant challenges a Texas court's exercise of personal jurisdiction through a special appearance, he carries the burden of negating all bases of personal jurisdiction. See CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex.1996). In spite of the holdings of several of our sister courts of appeals, this court has held that the proper standard of review of a plea to the jurisdiction in an interlocutory appeal is abuse of discretion. See Magnolia Gas Co. v. Knight Equip. & Mfg., 994 S.W.2d 684, 689 (Tex.App.— San Antonio 1998, no pet.). Under the abuse of discretion standard, we may not substitute our judgment for that of the trial court regarding its resolution of factual issues and we cannot disturb its decision absent a showing of arbitrariness or unreasonableness. See id. (citing Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.1992)).

Case v. Grammar, 31 S.W.3d 304, 308(Tex.App.-San Antonio 2000, no pet.). In prior cases, as well, this court has stated that trial court decisions derived from both factual determinations and legal conclusions are generally reviewed for an abuse of discretion. See Magnolia Gas Co. v. Knight Equipment & Mfg. Corp., 994 S.W.2d 684, 689 (Tex.App.-San Antonio 1998, no pet.). Under this standard, we may not disturb a trial court's resolution of factual issues unless the trial court could reasonably have reached only one conclusion. Klenk v. Bustamante, 993 S.W.2d 677 (Tex.App.-San Antonio 1998, no pet). With regard to legal issues, however, we are much less deferential. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). A trial court has no "discretion" in determining what the law is or applying the law to the facts of the case. Id. A clear failure by the trial court to analyze or apply the law to the facts correctly will constitute an abuse of discretion. Id.; see Transportes Aereos de Coahuila, S.A. v. Falcon, 5 S.W.3d 712, 717 (Tex.App.-San Antonio 1999, pet. denied). In each of our cases cited above, however, the trial court failed to file requested findings of fact and conclusions of law, and we relied on the reporters' record for such evidence as would support the trial court's ruling.

Where, as in the case before us, the trial court does enter findings of fact and conclusions of law, the findings of fact are reviewed under the sufficiency of the evidence standard, and the trial court's conclusions of law are reviewed de novo. See Linton v. Airbus Industrie, 934 S.W.2d 754, 757 (Tex.App.-Houston [14th Dist.] 1996, writ denied); see also W. Wendell Hall, Standards of Review in Texas, 29 St. Mary's L.J. 351, 375-76 (1998). In reviewing factual sufficiency of the evidence, we examine all the evidence and set aside the verdict only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

PERSONAL JURISDICTION

A court may assert personal jurisdiction over a nonresident defendant only if the requirements of both the Due Process Clause of the Fourteenth Amendment to the United States Constitution and the Texas long-arm statute are satisfied. See TEX. CIV. PRAC. & REM.CODE ANN. § 17.042 (Vernon 1997). The Texas Supreme Court has repeatedly interpreted the Texas long-arm statute to reach as far as the federal constitutional requirements of due process will allow. See, e.g., CSR Ltd., 925 S.W.2d at 594. Consequently, the requirements of the Texas long-arm statute are satisfied if the exercise of personal jurisdiction comports with federal due process limitations. Id.

The federal constitutional test of due process consists of two parts: (1) whether the nonresident defendant has purposely established "minimum contacts" with the forum state; and (2) if so, whether the exercise of jurisdiction comports with "fair play and substantial justice." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The minimum contacts requirement is satisfied if either general or specific jurisdiction exists. CSR Ltd., 925 S.W.2d at 595. In this case, the plaintiffs concede that specific jurisdiction is not applicable. Therefore, we only consider whether general jurisdiction exists.

General jurisdiction is present when a defendant's contacts are continuous and systematic, permitting the forum to exercise personal jurisdiction over the defendant even if the cause of action did not arise from or relate to activities conducted within the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); CSR Ltd., 925 S.W.2d at 595. General jurisdiction requires a showing that the defendant conducted substantial activities within the forum, a more demanding minimum contacts analysis than for specific jurisdiction. CSR Ltd., 925 S.W.2d at 595.

Appellees assertion of jurisdiction is apparently based upon World-Wide Volkswagen's finding that "[t]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivered its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). In Asahi Metal Industry Co., Ltd. v. Superior Court of California, the United States Supreme Court, in a plurality opinion, moderated that position, stating:

The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum state. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.

Asahi Metal Indus. v. Superior Ct. of Cal., 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). Asahi was a specific jurisdiction case. The Fifth Circuit noted later that same year,

In specific jurisdiction cases,...