Metro Equip. & Rental Co. v. Tsurumi Mfg., Co.
| Decision Date | 10 May 2022 |
| Docket Number | 21-CV-00030-DC-DF |
| Parties | METRO EQUIPMENT & RENTAL CO., INC.,, v. TSURUMI MANUFACTURING CO., LTD., and DAISHIN INDUSTRIES, LTD., Defendants. |
| Court | U.S. District Court — Western District of Texas |
REPORT AND RECOMMENDATION OF THE U.S. MAGISTRATE JUDGE
BEFORE THE COURT is Defendant Daishin Industries, Ltd.'s (“Daishin”) Rule 12(b)(2) Motion to Dismiss Plaintiff's First Amended Complaint for Lack of Personal Jurisdiction (hereafter, “Motion to Dismiss”). (Doc. 13). This matter is before the undersigned United States Magistrate Judge through a standing order of referral pursuant to 28 U.S.C. § 636 and Appendix C of the Local Court Rules for the Assignment of Duties to United States Magistrate Judges. After due consideration, the undersigned RECOMMENDS that Daishin's Motion to Dismiss be DENIED. (Doc. 13).
This case's genesis is an indemnity claim concerning an underlying state lawsuit brought by an injured driver. On May 6, 2019, an individual named Camilo Salcedo (“Salcedo”) was allegedly working at a saltwater disposal site in Pecos County, Texas, when an explosion suddenly broke out and severely injured him, purportedly due to a faulty oil pump at the site. (Doc. 13-2 at 6-7). On October 22, 2021, Salcedo filed a Fourth Amended Petition in state court under Cause No. 202020371, Camilo Salcedo v HAWG SWD, LLC, et al., in the 151st District Court of Harris County, Texas (“State Court Action”) against a multitude of defendants. (Doc. 13-2). Four of these defendants in the State Court Action are Tsurumi (America), Inc. (“Tsurumi America”); Metro Equipment & Rental Co., Inc. (“Metro Equipment”); Tsurumi Manufacturing Co., Ltd. (“Tsurumi Japan”); and Daishin. Id. Salcedo brings his claims for personal injury under the theories of breach of warranties, products liability, and negligence. See id. at 9-13. Salcedo asserts that “the pump involved in the underlying incident was designed, manufactured, sold, and distributed” by Tsurumi America, Tsurumi Japan, Daishin, and Metro Equipment. Id. at 9.
Metro Equipment filed its Original Complaint in on May 5, 2021, invoking this Court's diversity jurisdiction under 28 U.S.C. § 1332(a). (Doc. 1 at 2). Metro Equipment filed its First Amended Complaint (hereafter, “Amended Complaint”) against Tsurumi Japan and Daishin on November 23, 2021. (Doc. 11). Metro Equipment seeks a judgment requiring Tsurumi Japan and Daishin to indemnify it against Salcedo's claims in the State Court Action. Id. at 8. Metro Equipment maintains that it was as an innocent retailer for the pump, entitling it to indemnification for products liability under Texas state law against Daishin and Tsurumi Japan, the pump's purported manufacturer and distributor, respectively. Id. at 1, 4; see TEX. CIV. PRAC. & REM. § 82.002. Thus, Metro Equipment requests that the Court require Tsurumi Japan and Daishin to fully indemnify it for the injuries Salcedo sustained due to the faulty pump.
On December 7, 2021, Daishin filed the instant Motion to Dismiss.[1] (Doc. 13). In its motion, Daishin argues that, noting that it is a Japanese-based company, this Court possesses neither general nor specific personal jurisdiction over it, as “any alleged act complained of by Salcedo and Metro Equipment would have occurred in Japan.” Id. at 3. In essence, Daishin propounds that the business transactions which eventually led to the Metro Equipment's selling the subject trash pump to Salcedo's employer in West Texas constitute insufficient minimum contacts. Id. On December 23, 2021, Metro Equipment filed its Response, arguing that Daishin failed to base its Motion to Dismiss on the proper minimum contacts framework for products liability, and instead claims that, under the proper analysis, it was “foreseeable” that the pump could end up in Texas. (Doc. 16 at 2). Metro Equipment prays, in the alternative, that the Court allow limited jurisdictional discovery to utilize deposition testimony from the State Court Action if the Court determines it is warranted, which Daishin does not oppose. Id. at 18; (Doc. 17 at 10). Daishin filed a Reply on January 14, 2022, and following Court approval, Metro Equipment produced a Surreply on February 18, 2022. (Doc. 29). This matter is now ripe for disposition.
Federal Rule of Civil Procedure 12(b)(2) permits a court to dismiss claims against a defendant who is not subject to the court's personal jurisdiction. A federal court sitting in diversity under 28 U.S.C. § 1332(a) may exercise jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state confers personal jurisdiction over the defendant, and (2) the exercise of personal jurisdiction conforms with the due process guarantees of the United States Constitution. See Stripling v. Jordan Prod. Co., LLC, 234 F.3d 863, 869 (5th Cir. 2000). The Texas long-arm statute extends jurisdiction “as far as the federal constitutional requirements of due process will permit.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002) (quoting U-Anchor Advert., Inc. v. Burt, 553 S.W.2d 760, 762 (Tex. 1977)). Consequently, federal courts sitting in Texas need only consider the second step of the analysis. See Pervasive Software Inc. v. Lexware GmbH & Co. KG, 688 F.3d 214, 220 (5th Cir. 2012).
“The Due Process Clause of the Fourteenth Amendment guarantees that no federal court may assume jurisdiction in personam of a non-resident defendant unless the defendant has meaningful ‘contacts, ties, or relations' with the forum state.” Luv n' Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)). Due process requires a federal court to refrain from exercising jurisdiction over a nonresident defendant unless the following two-prong test is satisfied: “(1) the nonresident must have minimum contacts with the forum state, and (2) subjecting the nonresident to jurisdiction must be consistent with traditional notions of fair play and substantial justice.” Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 343 (5th Cir. 2004) (internal quotation marks omitted).
If a plaintiff makes out a prima facie case that the nonresident defendant has minimum contacts with the forum, the burden shifts to the nonresident defendant to demonstrate that exercising personal jurisdiction would offend traditional notions of fair play and substantial justice. See Luv n' Care Ltd., 438 F.3d at 473. To determine whether the exercise of personal jurisdiction would be unfair or unreasonable, courts balance the following factors: “(1) the burden on the nonresident defendant, (2) the forum state's interests, (3) the plaintiff's interest in securing relief, (4) the interest of the interstate judicial system in the efficient administration of justice, and (5) the shared interest of the several states in furthering fundamental social policies.” E. Concrete Materials, Inc. v. ACE Am. Ins. Co., 948 F.3d 289, 298 (5th Cir. 2020) ().
The undisputed[2] factual assertions are as follows. Daishin manufactured the relevant pump (“Subject Trash Pump”) in Japan. (Docs. 13 at 2; 16 at 5). Daishin sold the Subject Trash Pump to Tsurumi Japan, which it then distributed via its wholly owned subsidiary Tsurumi America to the United States. (Docs. 13 at 3; 16 at 5). Tsurumi America sold the Subject Trash Pump to Metro Equipment in Texas, which then sold it to Salcedo's employer. (Docs. 13 at 3; 16 at 4). Salcedo claims in the State Court Action that a fire near the Subject Trash Pump caused him severe burns. (Docs. 13 at 7; 16 at 4).
In its Motion to Dismiss, Daishin asserts that this Court lacks both general personal jurisdiction as well as specific personal jurisdiction over Daishin, since any alleged act would have occurred in Japan and not the United States, let alone Texas. (Doc. 13 at 3). Regarding general personal jurisdiction, Daishin claims that it is incorporated in Japan, has its headquarters in the country, and does not own property or have employees or a registered agent in Texas, and therefore is not “at home” in Texas, or even the United States. Id. at 10-11. Daishin argues against specific personal jurisdiction on the bases that the conduct alleged occurred only in Japan, and that Metro Equipment's causes of action are based only on the “fortuitous chance” that the Subject Trash Pump would “end up” in Texas. Id. at 12-13. Daishin claims that Metro Equipment's Amended Complaint lacks sufficient factual allegations to show that Daishin otherwise expected or should have foreseen that the Subject Trash Pump would be purchased and used in Texas. Id. at 13.
Metro Equipment responds to Daishin's disclaimer of specific personal jurisdiction by referring to a website allegedly operated by Daishin, in which Daishin admits that “certain products meet the United States' Underwriters Laboratory (“UL”) safety certification.” (Doc. 16 at 6). Metro Equipment also asserts that Daishin's distribution network provides a sufficient contact through Tsurumi Japan's own United States-based subsidiary as to make it foreseeable that the Subject Trash Pump could end up in Texas. Id. at 7-8. Metro Equipment lastly points to Daishin's decades-long history of selling the Subject Trash Pumps in such a manner as to be sold in Texas, not only by Metro Equipment, but by other Texas retailers. Id. at 8-9.
The questions before the Court are therefore: (1) what is the appropriate minimum contacts standard for products liability actions in the Fifth Circuit? (2) under this standard, does the undisputed relation between Tsurumi Japan and Tsurumi America subject Daishin to ...
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