No port for $26 million arbitration award in shipping dispute

Denied enforcement of a $26 million arbitration award in China’s Fujian Province (that court finding the award invalid because an arbitrator was imprisoned during the proceedings), the plaintiff sought recognition in the Eastern District of Louisiana.  First Investment Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding,  No. 12-30377 (Dec. 21, 2012, revised Jan. 17, 2013). The Fifth Circuit affirmed dismissal for lack of personal jurisdiction with three holdings: (1) the recent case of Goodyear Dunlop Tires v. Brown, 131 S. Ct. 2846 (2011), removed doubt as to whether foreign corporations could invoke due process protection about jurisdiction; (2) the New York Convention did not abrogate those rights; and (3) no “alter ego” relationship among the relevant companies was shown that could give rise to jurisdiction.  In a companion case, the Court affirmed a ruling that denied jurisdictional discovery based on “sparse allegations” of alter ego.    Covington Marine v. Xiamen Shipbuilding, No. 12-30383 (Dec. 21, 2012); cf.Blake Box v. Dallas Mexican Consulate, No. 11-10126 (Aug. 21, 2012) (reversing jurisdictional discovery ruling).

Jurisdiction over jurisdictional issue; choice of law affirmance

In National Union v. American Eurocopter, a contribution suit arising from settlement of claims about a helicopter crash, a Hawaii district court found no personal jurisdiction and transferred venue to Texas.  No. 11-10798 (Aug. 27, 2012).  The appellant challenged that ruling, and the Fifth Circuit held that it lacked jurisdiction over that issue.  Id at 4 (quoting 28 U.S.C. § 1294, defining appellate jurisdiction as reaching “appeals . . . [f]rom a district court of the United States to the court of appeals for the circuit embracing the district”).  On the merits, the Court affirmed a dispositive choice-of-law ruling for Texas law, noting a Texas choice-of-law provision in a relevant contract, a rough balance between the place of the accident (Hawaii) and the defendants’ headquarters (Texas), and the relatively weak interest of an out-of-state insurer.  Id. at 5-7 (noting Beech Aircraft v. Jinkins,  739 S.W.2d 19 (Tex. 1987)).

Defenses rejected in fraudulent lien case

Vanderbilt Mortgage v. Flores, arising from a collection suit about the financing for a mobile home, involved a substantial recovery on counterclaims for wrongful debt collection and filing of a fraudulent lien.  692 F.3d 357 (5th Cir. 2012).  The Fifth Circuit affirmed in part and reversed in part, finding: (1) the release of the debtors unambiguously reached only the lien and not the underlying debt (thereby mooting some counterclaims); (2) property owners in the position of these debtors did not have an ongoing duty, for limitations purposes, to check deed records; (3) Tex. Civ. Prac. & Rem Code chapter 12, about fraudulent liens, does not require actual damages before penalties may be awarded; (4) Chapter 12 does not violate the Excessive Fines Clause; and (5) personal jurisdiction over one defendant was appropriate, particularly given the confusion in its own records about its activities.

No personal jurisdiction over German software company

An Austin-based software developer sued a German software company for breach of contract and related torts.  Pervasive Software v. Lexware GMBH & Co., No. 11-50097 (July 20, 2012).  The Fifth Circuit affirmed the dismissal of the case for lack of personal jurisdiction, revisiting several key jurisdiction points for business relationships.  The Court held that the parties’ contracts alone would not create jurisdiction when the parties had no prior negotiations and did not envision “continuing and wide-reaching contacts” in Texas.  Id. at 15, 19 (citing Burger King v. Rudzewicz, 471 U.S. 462 (1985).  (A lengthy footnote analyzes Texas law about the role of choice-of-law clauses in a jurisdictional analysis.  Id.  at 14-15 n.4.)  The German company’s Internet sales into Texas — 15 programs, costing roughly $66 each, over four years — did not establish “purposeful availment” for specific jurisdiction, or “continuous and systematic contacts” for general jurisdiction.  Id. at 19-24, 28-29.    The alleged acts of conversion occurred in Germany and thus did not create specific jurisdiction either.  Id. at 25-26.

Personal jurisdiction revisited

The Court briefly revisited personal jurisdiction in an unpublished opinion, ITL International v. Cafe Soluble, S.A., No. 11-60360 (rev’d June 7, 2012).  The case arose from a dispute between Mars, Inc. and a Latin American distributor, closely related to the dispute at issue in the recent case of ITL International v. Costenla, S.A.  The Court followed the same analytical framework, finding that the defendant’s contacts with Mississippi were not sufficiently related to the dispute to create jurisdiction.  It concluded by reminding that a dismissal for lack of personal jurisdiction should be without prejudice because it is not on the merits.

Sufficient contacts for jurisdiction but claim too remote from them

The Supreme Court wrote two major personal jurisdiction opinions in 2011: Goodyear Dunlop Tires v. Brown, 131 S. Ct. 2846, about general personal jurisdiction based on product sales into a state, and J. McIntyre Machinery v. Nicastro, 131 S. Ct. 2780, analyzing specific personal jurisdiction based on a “stream of commerce” theory.  In ITL International v. Constenla, S.A., the Fifth Circuit’s first lengthy personal jurisdiction opinion since then, the Court found that a defendant’s acceptance of 55 shipments of goods in Mississippi was “purposeful contact[],” but went on to find no specific jurisdiction because the parties’ trademark dispute had too weak a link to those contacts.  No. 10-60892 at 11 (Jan. 31, 2012) The Court did not address general jurisdiction and thus did not directly engage the Goodyear case.