### TEXA S COU RT O F AP PEAL S, THIR D DISTRIC T, AT AU STIN
NO. 03-00-00004-CV
Char ly P ubli shing

Lim ited an d Char

ly A cquis itions

Lim ited, A

ppel lan ts
v. Evel yn Kynard E rick

son, in her

Capacities

as Attor ney-in-Fact for

Roky E rick

son and Trustee of

the Roky Er

ickson Tr

ust, Appellee

FROM THE DISTRICT CO URT OF TRAVIS COUNTY, 250T H JUDICIAL DIST RICT NO. 93-07292, H ONORABLE CHARLES F. CAMPBELL JR. , JUDGE PRESIDING
Appell ants, Charl

y Pub li shi ng Li mi ted and Charl

y A cqui si tions Li mi ted, app ea l a di scovery sanction o rder and the d enial of appellants’ speci al

app ea ra n ce s. W e wi l l

af f i rm b oth ord ers. BACKGROUND

In the 196 0s , A us ti n m us i ci an Rok y Eri ck son an d h i s b an d, th e 1 3th Fl oorElevators, entered into a r eco rd ing co nt ra ct in Texa s wit h Te xas- base d I nt er nat ional Ar t ists Pr od ucing Corp orati on (“I nt er nat ional Ar t ists ”) and a so ngwr iter ’s co nt ract wi t h T ex as - ba se d T ap ier Mu sic Corpor ation (“Tapi

er”). The contracts granted Inter nationa l A rtists the excl

usi ve ri ght to produce and dist ribut e r eco rd s and tapes of m usi c perform

ed by Erick so n and t he o t her band member s and granted Tapier the ex

cl usi ve ri ght to li cense, ex pl oi t, an d c ol l ec t roy

al ti esi n c onn ec ti on with s ongs com posed by Eri cks on. The contracts obli gated both compani

es to account t o and pay

royal tiesto2

Eri ck son and the other b and m

em bers. In 1978, Lelan

Rogers (“R ogers” ), a f

orm er em pl oyeeof International

Ar t ist s, bo ug ht all t he o ut st an din g s ha res of st oc k o f bot h Int er nat ional Ar t ists and Tapi er, acqui rin g both the publ

is hi ng i nterests and m

asterrec ordi

ng s of certa in 13th Floor E lev

ato rs’ songs. In

199 3, Ev el y n K y na rd Erick son

(“Eric kson”), in her capaci

ty as A tt orney-i n-Fact f orRoky Eri ckson and as

Trustee of the Roky Eri cks on Trus t, f il ed suit in Austin, Texas, again

st Rogers and others

se ek i ng both da mag esf oralleged unpa id ro yalties a nd r esc ission o f the re co rd ing
and son gwri ter’s contracts prev

i ousl y en tered i nto wi th In terna tion al Arti sts an

d Tapi er. On April 1, 1995, with Erickson’s s uit proceedin

g, Rogers entered int o a c o nt r ac t in Ca lifo r nia wit h C ha r ly Pu blish ing Limit ed ( “Ch ar ly Pu blish ing ”) , an E ng lish c o mpa ny, wh er eb y Cha r ly Pu blish in g pu r ch as ed t he so ng wr it er ’s co nt r ac t s fr o m Ro ge r s. I n t he pu r ch as e a gr ee men t , Ch ar ly Pu bl ishing ex

pre ssly ackno wledg ed t hat it w as a war e o f Er ickso n’s su it ag ainst Ro ger s in Aust in, Texas. On t he sa me day

, Charl y Hol di ngs , Inc . (“C

ha rl y Hol di ngs ”), a Panam

ani an com pany , entered i n to a su bst ant ially

simi lar p ur chas e co nt ra ct wit h Ro ger s in which Char ly Holdings p ur chas ed t he
recor din g cont racts fro m Rogers. Ch arl y Hol di n gssu b se qu en tl y sol d i ts i n terest i n th e 1 3th Fl oorElev ator s’ m us i c to E t ab liss eme nt Anfr a ( “Anfr a” ) o f Lie ch t en st ein o n Ju ne 1, 19 95
. On Ja nu ar y 11 , 19 96 , Anfr a s o ld it s i ntere st i n the m usi c to Cha rl y Ac qui si tions Li m i ted (“ Charl

y Ac qui si tions”), an

I r ish co mp an y. Eri ck son accord in gly join ed bot h Charl

y Publ ish in g and Charly

Acquis itions (“t heCharl

y c ompan ie s”) i n th e or i gi n al su i t.3 Eri ck son serv ed proc es s a nd req ue sts f or disc l osu

res on Ch arl y Pub l i sh i ng on Jan uary 27, 199 9 and on Charl

y A cqui si tions on Fe

bruary 4, 1999. The Charl

y c ompan ie s f il ed special appearances

on March 1, 1999
. Eri

ck son serv ed both com pa ni eswi th req ue sts f or produc ti on on March 31, 1999 and wi

th in terro gator ie s on

April 2, 1999. On A

pril 29, 1999, t he Ch

arly compan ie s requestedad di t io na l t ime t o r es po nd t o di sc o ve ry. Cou ns el f orboth parties en

tered into a written agr eement whereb

y the Charl y c ompan

ie s would h

ave un til May 6, 199 9 to f

i l e ob j ec ti on s to di sc o ve ry an d u nt il Ma y 13 , 19 99 t o pr o du ce r es po ns es t o di sc o ve ry.

On Ma y 6, 19 99 , t he Ch ar ly c o mpa nie s f i l ed obj ec ti ons

to Eri ck son ’s req ue sts f or pr od uct ion and i

nterroga torie s. The trial

court overruled thes e obj ections at a he arin g on May 17, 1999. Purs uant to Rule 193.4 of the Texas Rul es of Ci

vi l Procedure, the Charl

y c ompan ie s we r e required to produce

re sp on si v e docu men ts and answer all i

nterrogat ories wit hin thirt y days aft er t he
cou rt ’s rul

i ng. See Tex. R. Ci

v. P. 193.4. Erickson wrote t o t he Ch arly compan i es af ter t he May 17th hearing requesting that t hey respond t o t he di scovery requests. Af ter r eceiv in g no respo nses, Eri ck son fi le d, on July

15, 1999 , a motion to compel an d a motion for sanctions. A hearin g was set f orAu gust 3, 1 999. O n A

ugust 2, 19 99 , th e C ha

rl y com pa ni esres pon de d to the re que sts

f or dis cl osure. On A

ugust 3, t he day

of t he hea ring, t he Ch

arl y com pa ni esres pon de d to the re que sts

f or pro duction for t he f

irst time. The compani

es did not respo nd to any

of the interrog ato ries. At t he Aug ust 3r d hea ring, t he t rial co ur t or der ed t he Ch arl y com pa n i es to fully and
co mple t ely

respond to E ricks on’s di scovery requests, san ctioned

t he co mpanies by ass igning att or ney’s fees a gainst t hem, a nd

wa rne d t he co mpa nie s t ha t if t he y faile d t o de liver full an d c om pl ete
an swe rs withi n ten day s, the fol lowi ng f act wo ul d b e e sta

blish ed as t rue : “ De fen da nt Ch ar ly4

Pu blishi ng Limi t ed a nd Defe ndan t Charly Acqui si tions Li mi ted ha ve en ga ge d in bu sine ss co nt ac t s in Texassuf fi ci ent to co nf

er this Court with i

n personam

jurisdi ction over

b o t h D efe nd an t s in t his action.” The Ch ar ly co mpan ies tendered responses t o Er ickson’s discovery requests o n August 13, 199 9. Dissat isfied with t he r esp ons es, Er ickso n fil ed a sec ond mot ion t o c omp el and a m oti on f orsanctions on August 27, 1999. The second m ot ion to compel

was hea rd on September 21, 1999. I mmed iat ely

befo re t he hea ring, co unse l for bo t h par t ies ent er ed int o a wr itt en ag re ement wh er ein t he C har ly companies agr eed t o a nswe r c er t ain disco ver y req ues t s wit hin a spe cified t ime. At th e heari ng, t he t r ial c o ur t de t er mined t ha t t he r es po nse s p r ev io us ly f i l ed b y the Cha rl y com pan i es w ere not f ull and com pl ete as requi red b y the p revi ous court order
. As warn ed, th e tri al

courtsanctioned t he compan

ie s by fi ndi ng as f act th at b oth

com pa n i es en gage d i n b us i n es s c on tacts in Texa s su ffi

cient to co nfer t he co ur t wit h in personam jur isd ict io n. T he t r ia lcourt signed the order on October 6, 19 99
. T his o r de rfo r med t he ba sis o f t he Ch ar ly co mpa nie s’ init ial a pp ea l.

On Dece m ber 13, 19 99, a

not he r hearing was h

eld i n whi ch the Charly

companies’ special appearances

were overruled. From

the evi dence prese

nted at t he h ea

ri n g, s ep arate

f rom i ts earli er sa nc t io n, t he t r ial c o ur t mad e t he sa me fa ct ua l de t er minat io n: t ha t Ch ar ly Acqu isitions and Ch ar ly Pu blishi ng have business co nt act s in Texa s su ffi cient t o c onfe r t he co ur t wit h in person am j urisd i cti on ove r bo t h co mpanies. The Char ly companies now app eal t he tr ial cou rt ’s i m pos i ti on of t he discovery

sanction, the cou rt’s denial of their special

appearances, and the f

actual de term i na ti on re sult ingf

rom b oth ac t ions, ar guing t hat Char ly Publishing and Cha rly Acqu isitions do not have1 W e n ee d n ot de ci dewhether d

ete rm i ni ng a j urisd i cti ona l f ac t ad ve rs e to a l iti ga nt is

an appr opri ate

sa nc t io n in

li ght of the trial

court ’s f in din g based on an

evi den tia ry he ari ng on the m atter. 5 busi ness con tacts i n Te x as suf f i ci en t to co n f er th e c ourt wit h in personam jurisd ictio n ove r t he companies. DISCUSSI ON

Di scovery

san cti ons a re not appealab le

until the trial cou rt re n ders a f i n al j udgm en t. Bodnow Corporation v. City of Hondo , 721 S. W.2 d 83 9, 840 (T ex. 198 6) . H ow ever , w hen t he trial courtoverruled

t he Ch ar ly co mpa nie s’ sp ec ial a pp ea r an ce s, it rendered an appe alab l e i

nterl ocutory order. See T ex . Civ. Pr ac . & R em. Code Ann . § 51.014(a)(7) (West Supp. 2000) . The t rial court ’s factual det er minatio n unde rlying t he de nia l o f t he sp ec ial a pp ea r an ce is ide ntica l to that o f the ea

rli er di scovery sanction: that t he Charl

y com pani es engaged in

busi ness contact s i

n Te x as suf f i ci en t to confer the court wi

t h in personam jurisd ictio n ove r t he co mpanies. Had t he t rial co ur t cho sen a different sanc t ion o r ha d t he sa nct ion enc omp asse d ano t her subjec t matt er , t he sa nc ti on o r de rwo uld not yet be appe alab l e to thi s Court ab sen t spec i f i c auth orizati on. Furthe

r, the record makes cl

ear that t he trial court based

it s sp ec i al

ap pe ara nc e ru l i ng on th e e vi de nc e p res en

ted at the h ea ri ng an d n ot on i ts earl i er sa nc tion
. Bec aus e the

f actual ba ses of the two courtor der s ar e ident ical and be cau se t he courtcan en

tert ai n an i nterl ocutory appe al of the sp eci

al appe aran ce orde r, this Court wil l rev ie w that porti on of the di scovery

sanction resul

ting i n the f ac tua lde te rminat ion alo ngside t he de nial of t he companies’ special

appearances. 1 Standard of Review6 A de fe ndant who challenge s a c ou rt ’s exe rc ise o f per so nal jurisdict ion t hro ugh a special appe aran ce c arries the burden

of n egati ng a l l ba ses of p erson al j uri sdi cti on. Kaw

asaki Steel Corp. v. Middleton , 699 S.W.2d 199, 203 (T ex. 1 985 ); Sisk ind v. Vill a Found. for Ed

uc., Inc. , 642 S.W.2d 434, 438 (Tex. 1982). When a trial cou rt o ver ru les a sp ecial ap pea ra nce, t he de fendant sho uld re qu est th e c our

t to make f

i n di n gsof f ac t ac cordi

n g to Texas Rul

e of Ci vi l Procedure 296. See Tex. R. Ci

v. P. 296; Runnells v. Firestone , 7 46 S .W. 2d 8 45, 848 (T ex. A pp .—H ouston

[1 4th Di st.] 1988, writ deni

ed). Abse

nt such f in din gs, we vi ew the trial

cour t ’s jud gme nt as implie dly find ing all the n

ece ssa ry f acts to su pport i ts rul i ng. See W

orfor d v. Stamper, 801 S.W.2d 108, 109 (T ex. 199 0) . T he Char ly companies made no re que st for findings o f fact fro m the t rial co ur t , a nd
none were

f i l ed. W e the ref ore pres um e tha t the tri al court m ade a l l ne ces sary

f i ndi ngs to supportit s or der
. See id. If evidence suppor ts t he im plied fin dings of fact, we must upho ld the t rial court ’s j udgm en t on an y l egal theory supp orted by

the evi den ce. See id
. Wh en in personam jurisdi ction i s chal le nged, we revi ew al

l the evi den ce. See Smith
v. Lanier , 998 S.W.2d 324, 33 0 (Tex . App.—A usti n 19 99, p et. deni

ed). We appl

y a factual suf fi ci ency standard i

n revi ewi ng the ev ide nce, not a de novo revi ew. See id. We m ay re ver se t he de ci si on of t he t rial co ur t only if i

t s ru ling is so a gainst t he ove rw helming wei ght and preponderanc e of t he ev ide nc e a s t o be cle ar ly errone ous an

d m an i f estl y unjust. See Cai

n v. Bain , 709 S.W.2d 175, 176 (Tex. 19 86).

In Personam Juris

diction7 A Texascourtma

y e xerci se j urisdi

ction over a nonres ide

nt defen dant when the Texas l ong-a rm st at ut e au t hor izes t he exer cise o f jurisdict ion and t he exercise of j uri sd i cti on com por ts w i th due process . Guardian Royal Exch. Assurance, Ltd. v. English Ch ina Clays, P.L.C. , 815 S.W.2d 223, 226 (T ex. 1 991 ); see also Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (West 1997). Our longar m sta t ut e au t hor izes t he exe rc ise o f jurisdict ion o ver t hos e who do business i n Texa s. Guardian Royal , 815 S.W.2d at 226 . T he suprem e court has determi

ned that the broad la

nguage of the

longarm st at ut e p er mit s a n e xp an sive r ea ch o f jur isd ict io n, li mi ted only by the fede ral cons titutional requirem en ts of d ue proce ss. Id . As a resul t, we co nsi

der whether i

t is consi stent with f

ed era l
con sti tutiona l req ui rem en ts of du e p roc es s f

or Te x as cou rtsto as se rt in personam jurisdi ction over the Cha rl y com pan i es. See id. Under th e f eder al con sti tuti on al test o f due pr ocess, a state may assert personal j urisd i cti on over nonresi de nt de fe ndan ts where (1) the defen

dants hav e purposeful

ly establ is hed “m in im um con tacts” wi th t he fo ru m sta t e and (2 ) t he exerci se of j urisdi ction com port s wi th “f ai r play and sub stantial

jus tice.” Burger King Corp. v. Rudzewicz , 471 U .S. 462, 4 75-76(1985 ). Minimum Co ntacts

The ulti ma te test of m

in im um c ontacts is whether

t he de fen da nt s p ur po se fully avai le d thems el vesof t he pr ivil

ege of c ond uct ing act ivities in Te xas, t her eby invoking t he bene fit and prote cti on of Texa s laws . S

chl obohm v. S chapiro , 784 S. W.2d 355, 35 7 (Tex. 19 90). T hose activi ties, whether they

consi st of direct acts wi

thin the forum

orconduct out side the f

oru m, m ust jus t ify a conclusion that the defendants should reaso nab l y an tic i pate b ei ng c al l ed i nto Texas. Id.8

Fo re se ea b i l i ty is thus an impor t ant co nsider at ion in dec iding whet her t he no nre sident defend ant s have pu r po se ly estab l i shed m

i ni m um contacts wi

th the f orum state. Guardian Royal , 815 S.W.2d at 227. The mi ni mum contacts anal

ys is has f urther been ref

in ed i nto t wo typesof jur isdict ion, sp ec i f i c a nd ge ne ral . Sp ec i f

i c j urisd i cti on exi sts when

the cause of ac

tion ari ses out of

or re l ate s to t he n on re si den t de f en da n ts’ con tacts w i th t he f orum state. Id . The nonresi

dent defe ndan ts’ activ ities must ha ve be en purpos ef ull y di rected toward the

f orum state. Id . at 228 . U nder spe cific jurisdict ion, t he m i n i m um con tacts an al y sis f ocu se s on t he r elat ionship a mong t he de fendant s, t he fo ru m, and t he litigat ion. Id . General

jurisdi ction ex

is ts wh en the def

en dan ts’ c ontactswi

th the f orum state are con ti nuous and sy

stemati c, even

if the cause of ac

tion does not arise f

rom or relate to act iv

ities conductedwi

thi n Texa s. Id . Generall

y, the eff ort to establi sh

gen eral j uri sdi cti on i s m ore dem andi ng, re quir inga sho wing o f the def endan ts’ s ubs tantial acti vi tie s wi thi n the f orum state. Schlobohm , 784 S. W.2 d at 357 . We analyze t he pr ese nt cas e und er bot h t ypes o f jurisdict ion.

The Ch ar ly

co mpani es argue that they do not have mi ni mum contacts with Texas
su f ficientto su

bj ec t the m to in personam j uri sdi

cti on wi thi n the state, e

m phasi zi ng th at they are foreign co rp or at ions ba sed in Ire land and t he Chan nel Isla nds, an d that t hey

are not registered to do busi ness i n T exas , do n

ot ow n pr op er t y in Texas, have no employee s, a sset s, o r o ffi ces in Texa s, a nd have not so ught t o a vail themse lves o f the protecti ons a f f orded un der th e lawsof Texa s. Howe ver, mi ni mum con tacts w i th a stat e for perso nal

juri sdiction purposes need not alway s arise from actual ph ys ic al ac t ivit y of

the de f en da nt i n th e f orum sta te. A cti vi ti estak i ng pl ac e i n oth er s tate s or countries whi

ch en tail foreseeab le

eff ects in the forum

state may be su ffi cient t o s at isfy the mi

ni mum con tacts requ irem

en t. See Wester

n Desert, Inc. v. Chase Resources Corp. , 460 F. Supp. 63, 659

(N.D. Te x. 1 978 ). The re co rd est ablishes t hat t he Charl y c ompan ie s engaged in

num erou s activi

ties, the f oresee ab l e ef

f ects of whi ch sati sf y the m i ni m um contacts requ

i rem en t. Pu rsu ant t o t he o r igin al r ec o r din g a nd so ng wr it er ’s co nt r ac t s, I nt er na t io na l A rti sts and Tapier were o bl igated to pro vide not ices, twice-y early written acco untings, and roy al ti esto Eri ck son and ot her band m

emb ers at t hei

r addresses in Texas. By purchasin

g the o utst andi

ng shares o f International

A rti sts an d Ta pi er , Rogers as su

med th es e ob l i ga

ti on s. W h en Rog er s e n tered i n to t he ag re em en ts with C harl y Pub li shi ng an d Charl y H oldi ngs, both compa

nies si gn ed i den ti ca l con tra cts wi thRo ge r s. Ar t icle 6. 2 o f t he co nt r ac t s s t at es t ha t bo t h C ha r ly Pu blish ing an d C ha r ly Ho ld ing s un de rtook“t o fu lfi

l all [Ro ger s’] obligat ions first ar ising afte r t he da t e her eo f pur sua nt t o t he A cq ui si ti on Agr eement s as if [C har ly Publishing and Ch ar ly Holdi ngs] [were] a di

rect part y to such agreem ents.” Under the agreem

ent, the compani

es expressl

y assum ed all res ponsi bi li tiesunde r t he f orm er contra cts , i

n cl udi n g th e ob l i ga ti on to pa y roy al ti es an d m ake acc oun

ti n gs . Th e c on tra cts between Rogers on the on e hand, and Charl y Publ ish in g and Charly

Holdin gs on the o ther, also contain ed ide ntica l provisi ons obliga

ting the c o mpanies “

t o p ay any and a ll royalt ies du e t o t he As si gnors and al l other thi rd parties partici

pating purs

uant to t he A

cqui si tion Agreem

ents i n respect of phonograph records so ld and/or an

y and al l other ex ploitati on of the C omp an [i es] a

nd or [th ei r] l i censes .” Whe n C ha r ly

Acquisi tions sub sequentl

y assum ed the contract Ch ar ly Ho ldin gs o r igin ally entered in to , Charl y A cqui si tions b ecam

e subj ect to the comm

on la w ma xi m that “ an ass ign

ee stands in the shoes of h

is assi gnor.” Jacks on v. Thw

eatt , 883 S.W .2d 171 , 174 (Tex. 19 94). Ch ar ly Acqu isitions t hu s be ca me r es po nsib le for Charly Holdin gs’ contr actual obli

gations. The reco rd also10

r ev ea ls t hat t he Cha rly co mpanies ha ve, in fact , se nt accountin gs to ban d me mb ers l ocated t hroughout Texas. The Char ly companies re ly on U-Ancho r Adver., Inc. v. Burt , 5 53 S .W. 2d 7 60 ( Te x. 1977) , cert. denied, 434 U.S. 106 3 ( 197 8) , t o a rg ue t hat mini mum cont act s may not be sa t isfied by
a pa r t y mer ely ma kin g p ayme nt s o rse nd ing r o yalt ies t o t he fo rum s t at e. In that case, a Texas busi ness, U- Ancho r, insta lled highway signs in Ok lah o ma a nd t he Ok lah o ma c us t o mer se nt mo nt hly pa y men ts to U-An

chor’s of f i ce i n Texas . U-Anchor Adver., Inc. , 553 S.W.2d at 761. T he Texa s Su pr eme Court hel

d that the Okl ahom

a customer’s si

ngle act of ma

il in g pay me nts to T exas

wa s n ot enough to sati sf y the d ue proce ss re qui

rem en t of m i ni m um contacts. Id . at 763. I f the only contact t he Charl y c ompan ie s had wit h Er ickso n was send ing ro yalty payment s t o E rick so n in Texa s, t he pres en t case m i ght b e m ore an al ogous to U-Anchor Advertising . However, the Charl y c ompan ie s ha d other c onta

cts , i n a ddi ti on to t he o blig at io n t o se nd r o yalt ies an d a cc o un t ing s, t ha t co llec t ive ly
sa ti sf y th e m i n i m um con tacts req ui re men t. Wh erenonr eside nt defend ant s have only a single c ont act or act ivity tying t hem to t he forum state, min im um c ontacts may

be absent. But w ith each addi tional contact, the analy

sis ch anges. T his Courthas su st ained a finding of su ffi cient mini mum cont act s wit h Te xas w her e t he no nre sident defend ant had two purpos ef ul contacts. SeeRowland & Rowland, P.C. v. Texas Employers Indem. Co. , 973 S. W.2 d 43 2, 436 (T ex. App. —Aus t in 199 8, no pet .) . I n Rowland & Rowland , i n a ddi ti on to sendi ng a paym ent from a wrongful death j udgment to Texas residents, the n onres i den t la w f i rm sent a let t er t o t he T exas Emplo yers I ndemnit y Compa ny confirming t hat t he firm wo uld p ro t ect t he company’sin

terest in cont inuing litigat ion, el i m i n ati n g th e n ec es si ty of th e c om pa n y b ei n g add ed to11

t he sui t. Id. at 435-3 6. This Co ur t fou nd t hat t he no nre sident defend ant ’s pr omise t o p ro t ect t he company’sin

terest in Texa s and the distribution of proceeds i n Texas we re su ffi ci ent purposeful mi ni mum contact s with thi s stat e to satisfy due pro cess. Id . a t 436 . As in Rowland & Rowland , t he
recor d here cont ains evidence of contact s of substantial quali ty to establi sh m

in im um contacts. Ina ddi ti on to ob l i ga ti n g th em se l v es to m ake roy al ty pa y men ts a n d acc oun

ti ngs t o T ex as r es ide nt s, t he Ch ar ly companies acquired t he reco rding and songw riter ’s co nt ra ct s kno wing they wer e t he su bject matt er of litiga t ion i n Te xa s. As s uc ce ss o r s t o Ro ge r s’ int er es t , t he Ch ar ly compan ie s acquired that interest knowing i t was subject to dispute d li ti gati on. Sec t ion 3 .6 of t he
as si gn men t con tra cts dr af ted b y th e Ch arl y com pa n i es f or R oge rs sta tes , i n pa rt: Co mpany [Charly companies] is aware that pro ceedings h ave been i ssued agains

t yo u [Roger s] by Ro ky E r ick so n a nd o t he r s inAust in, Te xas ( “the Pr oc eed ings”) claiming that you do n

ot own an d/or contro l a ny righ ts . . . . You hereby

undertake t o d efend t he Proceed

i ngs to the be st of y

our a bili t y and no t t o s et t le or co mpro mise the P r o ce ed ing s w it ho ut t he pr io rwr it t en co ns en t o f Co mp an y. The Ch ar ly co mpa nie s a r gu e t ha t t his se ct io n abso lved t he co mpanies o f any involvement in

the la wsui t. Yet , as the parties recogni ze, the provis ion does n

ot prohib it or prot ect t he Charl y c ompan ie s f rom i nv olv em en t in the l awsui t. Rathe r, it m erely requires R

ogers to continue defense of t he action. I n fa ct , t he pr o visio n c lea r ly st at es t ha t wh ile R o ge r s w o uld r ema in p r imar ily
r es po nsib le for the def

ense, the Ch

arly compan ie s would n

everthel ess take at le ast an

in direct interest in th e l aw su i t b y re qui ri n g R ogers to s eek th

e Ch arl y com pa n i es ’ a pp roval b ef oresettlin

g or co mpro misi

ng the proc ee di ng s. Eve n i f the Ch arl y com pa ni esch ose not t o be co me d ire ct ly

in volv ed in the pro ceedings, wh

i ch the con tracts d i d n ot prohib it them

from doing, they

nevertheles s requi

red12

Rogers, a party in

volv ed i n a l awsui t in Tex as court s, to gai

n the approval

of the Charly

compan ie s be f ore res ol ving t he T exas pr oc eed ings, t her eby impli cat ing t he Cha rly co mpanies in availing thems el ves of the ben efi ts and protect ions

of the laws and judic ia

l s ys tem of the state. The Ch ar ly

companie s ha ve als o init iat ed co nt ac t in T ex as wit h T ex as r es ide nt s, in addi ti onto Er ickso n, in at t empt s t o s et t le and r eneg ot iate t he t er ms of t he o riginal re co rd ing and songwr iter’s contrac

ts. The Char ly companies hired a Ho ust on law firm to re pr ese nt t hem and contact form

er 13th Floor Elev

ator s ban d me mb ers to r enegotiate a

nd co nfir m contr act t erms. Letters sent by the H ou st on firm o ffered adva nces aga inst fu t ur e r oyalt ies for co nfirmatio n of t he Ch ar ly com pan i es’ purch ase and own ersh

i p of the 1 3th F l oor Eleva

tors’ rec ordi

ngs . Th e Ch ar ly compan ie s al so s en

t a s ol i ci tor re pre senti ng the m f rom Europe t o Texas to enter into an agr eement wi th No ble Ginthe r, a fo rmer ow ner of I nt er nat ional Ar t ists and Tapier, conf irm in g that Gint her no longe rcl ai med an y i nte res t i n th e m us i cal righ ts of Eri ck son or t he 13th Floor Elevato rs. In busi ness unrelated to ei

the r Eri ck son orthe 13t h Fl

oo r Elevator s, th e Ch arl

y com pa n i es also h av e en tered i n to con tra cts wi th oth er Te x as m us i ci ans obl i ga ti n g th e c om pa n i es to de l i v er ac cou n ti n gsan d p ay men ts on a regular basis to such musi cians in Texas. The nat ur e and qu al

i ty of th e Ch arl y com pa n i es ’ c on tacts w i th Texas support the trial
co urt ’s finding o f in personam jurisd ictio n. T he Cha rly co mpanies k new t hey wer e as suming
con tra cts nego t iate d in Te xas t hat obligat ed t hem to send regular acc ountings and royal tiesto Texas residents. The compan

ie s were like

wis e aware of the l

iti gation i n Texas bef ore t hey t oo k as signment of suc h co nt ra ct s, mak ingit for ese eable t hat t he co mpanies w ou ld in some manne r be involved in t he ong oing li tigation. The C

harl y c ompan ie s al so utiliz ed

t he be ne fit s a nd pr o t ec t io ns o f T ex as law s in13

soli ci ting, nego t iating , a nd

en t er ing int o ag r ee men t s in T ex as . We find it diffic ult to understand h ow, gi ven the ev i de nc e of such con tac ts, th e C ha rl y com pa ni esca n ass ert th

ey ha ve tak en no ac t io n directed towa rd th e f oru m sta te. W e th er ef oreh ol d th

at th e Ch arl y com pa n i es ’ c on tacts wi th Texas
sa t isfy the mi ni mum contacts t est of due process. Havi ng determi

ned that the tr ial cour t’s exercise of jur isd ict io n in t he se cir cu mst an ce s w it hstan ds a mini mum cont act s ana lysi s, w e next det er mine whether thi s exercise comports with f ai r play and sub stantial

jus tice. Fair Play and Substantial Jus tice

Because the mi

ni mum contacts anal

ys is in cl udes many cons ider at ions of f ai rness, once suf fi ci ent contacts are established the l i ke l i hood tha t the exerc i se of j urisd i cti on violates a f

ai r play
an alys is l ess en s. See Schlobohm , 784 S.W.2d at 357-58. We n everthel ess consi der the fai

r play
an alys is because

case l aw m akes clear t hat it co nst itu t es a sep ar at e and dis tinct i ssue f

rom m in im um contact s. See id. at 358. I n determi ni ng whether

th e a ss er ti on of pers on al j uri sd i cti on com por ts wi th fair play and substa ntial j ust ice, we evaluate the no nresident defendant s’ c o nt ac t s in li ght of other factors, including ( 1) t he bu rde n on the de f en da nts , (2 ) th e i

nte res t of t he fo ru m sta t e in adjud icat ing t he dispute, (3) the plaintiff ’s int er es t in o bt aining co nve nient and effe ct ive r elief, (4 ) the i n ter sta te judi ci al sys t em’ s int er es t in

obt aining t he mos t efficient r eso lut ion o f co nt ro ver sies, and (5) the shared i ntere st of the se

veral statesi n f urthe ri ng f und am en tal sub stan tiv e soci al pol i ci es. See Guar

dia n Royal , 815 S.W.2d at 228 (citi ng Burger King , 4 71 U .S . a t 477 ). The defend ant assu mes t he burden to show “a c ompel

li ng case tha

t t he presen

ce of som

e co nsid era

ti on woul d re nd er j urisd i cti on unreasonab le .” Id . at 231.14 Evi dence re l ati n g to t he factors for determi ni ng whether assertion of

personal j urisd i cti on o ve ra n o nr es ide nt de fen da nt is fa ir a nd r ea so na ble weighs agains t t he Charl

y com pani es. Fi rs t, no t hing in

the record indi

cates that defendi

ng an action i n Texas wil l un duly burden t he Ch ar ly companies. Di sta

n ce al on e is n ot ord i n ari l y suf f i ci en t to de f ea t j uri sd i cti o n. Id . O ver t ime, t he Ch ar ly compan ie s hav e sent at lea st one representative f rom Engl an d to Tex as and h

ired a Tex

as la wyer to engage i

n other contract negotiations ; they have not demonstratedtha t de f en di ng thi s acti on wo uld b e u

n dul y moreb ur den som

e. Se con d, T ex as h as an i n terest i n adj udi ca

ti n g th e d i spute because the origi

nal contracts were executed here, the action was origin al ly fi le d here, and the l

aws of T ex as will appl

y to the contracts’ interpretation. Thi rd, as T ex as r es ide nt s, Ro ky E r ick so n a nd his
m other, as Atto rney-i

n-Fact, can o btain the m

ost co nvenient and e ffi

cient re lief i

n Te xas. Co nsider ing all of the above

factors, we concl

ude that requiri

ng the Ch arly compan ie s to s ub m i t to the j urisd i cti on of Texas c ourt s does not offen d traditional

notions of f

ai r play and sub stantial

jus tice. CONCLU SION Ha vin g de ter

m i n ed th at th e Ch arl y com pa n i es estab l i sh ed m i n i m um con tacts w i th Texasand that

t he as se r t io n o f jur isd ict io n c o mpo r t s w it h fa ir p lay a nd su bst an t ial ju st ice , we o ve rrule t he Char ly companies ’ po ints o f err or and a ffi rm t he t rial co ur t ’s disc ove ry sanc t ion and denial o f the Charly companies’ special

appearances.

Mari ly n A boussie, Chief J

ustice15

Befo re Chief Just ice Abo uss ie, Ju st ices B. A. S mith and Pat t er so n Af fi rmed File d: October 5, 2000 Do No t Publis

h