Spir Star AG v. Kimich
| Decision Date | 12 March 2010 |
| Docket Number | No. 07-0340.,07-0340. |
| Citation | 310 SW 3d 868 |
| Parties | SPIR STAR AG, Petitioner, v. Louis KIMICH, Respondent. |
| Court | Texas Supreme Court |
Sarah B. Duncan, Elissa Gail Underwood, Mike A. Hatchell, Locke Lord Bissell & Liddell, LLP, Austin, TX, Rick Lee Oldenettel, Oldenettel & Associates, P.C., Houston, TX, for Petitioner.
Scott Rothenberg, Law Offices of Scott Rothenberg, Keith M. Fletcher, Simmons & Fletcher, Houston, TX, for Respondent.
A foreign manufacturer sold its products in Texas through a Texas distributor. We must decide whether the use of that distributorship insulates the manufacturer from the reach of a Texas court when one of the products injures a Texas citizen. We hold that a manufacturer is subject to specific personal jurisdiction in Texas when it intentionally targets Texas as the marketplace for its products, and that using a distributor-intermediary for that purpose provides no haven from the jurisdiction of a Texas court. Because, in this case, personal jurisdiction comports with traditional notions of fair play and substantial justice, we affirm the court of appeals' judgment.
Spir Star AG ("AG"), a German corporation headquartered in Rimbach, Germany, manufactures high-pressure hoses and fittings for sale throughout the world. AG is owned by three German citizens: Werner Büchner, Gerhard Strobach, and Walter de Graaf. In 1995, AG decided that Houston would be the optimal location for a distributorship because the Texas coastal region's numerous refineries were well suited for AG's energy-related products. AG's executives traveled to Houston, leased office space, and established a Texas distributorship, Spir Star Inc., now Spir Star Limited ("Limited"). AG's directors gave Limited permission to use the trademarked "Spir Star" name free of charge. Although it sells products other than AG's, Limited is AG's exclusive distributor in Texas and North America.
AG manufactures hoses that are used primarily in the energy industry. Each month, Limited purchases a maritime container full of AG's products, which are then shipped to the port of Houston. Limited assembles the hoses using AG-provided training and tools and sells them to customers in Texas and elsewhere. Title to the hoses passes to Limited in Europe. The Texas distributorship accounts for thirty-five percent of AG's annual sales, although Limited and AG do not share profits or finances with each other.
De Graaf, AG's president, is also the president of Limited. He splits his time between Houston and Germany, and regularly conducts AG's business in Texas. De Graaf and AG's other two officers own seventy-five percent of Limited; twenty-five percent is owned by Limited employees.
In 2003, an AG high-pressure hose ruptured and seriously injured Louis Kimich. AG had sold the hose to Limited, which in turn sold it to Kimich's employer. Kimich sued his employer and the premises owner, and later added claims against AG and Limited.1
AG filed a special appearance, which the trial court and the court of appeals denied. 311 S.W.3d 1. We granted AG's petition for review, 51 Tex. Sup.Ct. J. 1403, 1416 (Sept. 26, 2008), and now affirm.
To render a binding judgment, a court must have both subject matter jurisdiction over the controversy and personal jurisdiction over the parties. CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex.1996). Whether a court has personal jurisdiction over a defendant is determined as a matter of law, which appellate courts review de novo. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002). When, as here, a trial court does not issue findings of fact or conclusions of law to support its special-appearance determination, we presume that all factual disputes were resolved in favor of the trial court's ruling. Id.
Texas courts have personal jurisdiction over a nonresident defendant when (1) the Texas long-arm statute provides for it, and (2) the exercise of jurisdiction is consistent with federal and state due process guarantees. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex.2002). Our long-arm statute reaches "`as far as the federal constitutional requirements for due process will allow.'" Id. (quoting Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.1991)). Consequently, the statute's requirements are satisfied if exercising jurisdiction comports with federal due process limitations. Id.
If a defendant has never invoked the protections that a forum offers its residents, or has no purposeful contact with it, the forum court's jurisdiction is confined. Personal jurisdiction over nonresident defendants is constitutional only when: (1) the defendant has established minimum contacts with the forum state, and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945); PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 167 (Tex. 2007). The catchphrase "traditional notions of fair play and substantial justice," first used in Milliken v. Meyer, 311 U.S. 457, 463-64, 61 S.Ct. 339, 85 L.Ed. 278 (1940), has its origins in a 1917 decision that referred to both "fair play" and "substantial justice" when the Supreme Court considered whether service by publication comported with the due process clause. See McDonald v. Mabee, 243 U.S. 90, 91-92, 37 S.Ct. 343, 61 L.Ed. 608 (1917) (). Since that time, we have incorporated the phrase into our own jurisprudence, beginning with O'Brien v. Lanpar Co., 399 S.W.2d 340, 342 (Tex.1966) (quoting Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154). The phrase remains a hallmark of personal jurisdiction today. See, e.g., Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex.2009); PHC-Minden, 235 S.W.3d at 166; Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex.2007).
Although this "fair play" and "substantial justice" test is well known to appellate courts, the expression is imprecise. It gains meaning, however, when viewed in light of the "minimum contacts" a defendant has with the forum. Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154. Significant contacts suggest that the defendant has taken advantage of forum-related benefits, while minor ones imply that the forum itself was beside the point. When a nonresident defendant has purposefully availed itself of the privilege of conducting business in a foreign jurisdiction, it is both fair and just to subject that defendant to the authority of that forum's courts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1984).
A defendant's contacts with a forum can give rise to either specific or general jurisdiction. CSR, 925 S.W.2d at 595. General jurisdiction exists when a defendant's contacts are continuous and systematic, even if the cause of action did not arise from activities performed in the forum state. Id. Here, the court of appeals concluded that AG's continuous and systematic contacts with Texas established general jurisdiction. 311 S.W.3d at 5. We do not reach that issue, however, because we conclude instead that the trial court had specific jurisdiction over AG.
A court has specific jurisdiction over a defendant if its alleged liability arises from or is related to an activity conducted within the forum. CSR, 925 S.W.2d at 595. Unlike general jurisdiction, which requires a "more demanding minimum contacts analysis," id. at 595, specific jurisdiction "may be asserted when the defendant's forum contacts are isolated or sporadic, but the plaintiff's cause of action arises out of those contacts with the state." 4 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5 (3d ed. 2002). In such cases, "we focus on the `relationship among the defendant, the forum, and the litigation.'" Moki Mac, 221 S.W.3d at 575-76 (quoting Guardian Royal, 815 S.W.2d at 228). Specific jurisdiction is appropriate when (1) the defendant's contacts with the forum state are purposeful, and (2) the cause of action arises from or relates to the defendant's contacts. See Retamco, 278 S.W.3d at 338.
The "touchstone of jurisdictional due process is `purposeful availment.'" Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). Purposeful availment requires a defendant to seek some "benefit, advantage, or profit by `availing' itself of the jurisdiction." Id. at 785. Thus, sellers who reach beyond one state and create continuing relationships with residents of another state are subject to the specific jurisdiction of the latter in suits arising from those activities. Moki Mac, 221 S.W.3d at 575.
Notably, however, a seller'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.'" CSR, 925 S.W.2d at 595 (quoting Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (plurality opinion)). Instead, our precedent generally follows Justice O'Connor's plurality opinion in Asahi, which requires some "additional conduct"—beyond merely placing the product in the stream of commerce —that indicates "an intent or purpose to serve the market in the forum State." Asahi, 480 U.S. at 112, 107 S.Ct. 1026; Moki Mac, 221 S.W.3d at 577; Michiana, 168 S.W.3d at 786. Examples of this additional conduct include: (1) "designing the product for the market in the forum State," (2) "advertising in the forum State," (3) "establishing channels for providing regular advice to customers in the forum...
To continue reading
Request your trial