Personal Jurisdiction

The Supreme Court’s 2014 opinion about general jurisdiction was first applied by the Fifth Circuit in Monkton Ins. Servs. v. Ritter, No. 13-50941 (Sept. 26, 2014).

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. Personal jurisdiction has developed in the Fifth Circuit’s commercial law opinions since then:

While the fractured McIntyre Court did not produce a majority opinion, the plurality and a 2-Justice concurrence expressed concern about a view of the “stream of commerce” doctrine that would allow jurisdiction in a particular state based on a manufacturer’s general intent to do business across the country.

The Fifth Circuit directly addressed that language in Ainsworth v. Moffett Engineering, 716 F.3d 714 (2013), finding that the plurality was not controlling, and that the 2-Justice concurrence was decided on the limited ground that no formulation of the doctrine would allow jurisdiction based on that manufacturer’s small number of shipments into the forum. Because the defendant in Ainsworth had over 100 shipments during the relevant time, jurisdiction was appropriate. Language from past Circuit cases that may be inconsistent with McIntyre was noted but kept in place for now.

In the same vein, the Chinese defendant in Baldwin v. Taishan Gypsum Co., Ltd. (part of the “Chinese Drywall” MDL case), sought to set aside a default judgment for lack of personal jurisdiction. Nos. 10-30568 & 12-31017 (Jan. 28, 2014). Applying Fourth Circuit law, which the Court characterized as a “more conservative” approach to recent Supreme Court decisions than the Fifth’s, the Court found jurisdiction under that Circuit’s “stream-of-commerce plus” test.

It noted that the defendant sold directly into Virginia, made markings on its product specific to the Virginia customer, modified the design specifically for that customer, and had a plan to expand sales by leveraging the relationship with the customer.

In ITL International v. Constenla, S.A., 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. 669 F.3d 493 (5th Cir. 2012). The Court did not address general jurisdiction and thus did not directly engage the Goodyear case, although it did find twelve similar shipments to be inadequate for general jurisdiction in an unpublished companion case.

See also Bowles v. Ranger Land Systems, No. 12-51255 (June 16, 2013, unpublished) (declining to find general jurisdiction over a defense contractor with a handful of employees at three Army bases in Texas, when it had no bank account, registered agent, or office in Texas).

In Pervasive Software v. Lexware GMBH & Co., an Austin-based software developer sued a German software company for breach of contract and related torts. The Court affirmed the dismissal of the case for lack of personal jurisdiction. It reminded 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. 688 F.3d 214 (5th Cir. 2012) (citing Burger King v. Rudzewicz, 471 U.S. 462 (1985). (Footnote 4 analyzes Texas law about the role of choice-of-law clauses in a jurisdictional analysis.)

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. The alleged acts of conversion occurred in Germany and thus did not create specific jurisdiction either. The discussion of Internet-based jurisdiction engages the recent Goodyear opinion.

Building on Constenla, the Fifth Circuit addressed a claim about an ice-shaving machine, bought in Louisiana from a Louisiana company, that injured the owner after she moved it to Mississippi and tried to clean it.

Even assuming that Southern Snow, the manufacturer, had minimum contacts by making a substantial percentage of its sales into neighboring Mississippi, her claim did not arise out of those contacts because “Southern Snow sold the machine to a Louisiana customer and had no knowledge that, years later, Irvin unilaterally transported it into Mississippi.” General jurisdiction was not at issue. Irvin v. Southern Snow Manufacturing, No. 11-60767 (March 13, 2013, unpublished).