1

 The parties have previously submitted argument on the issue of personal jurisdiction over

HerbAsia Corporation. (See HerbAsia Corp.’s Mot. to Dismiss, filed Mar. 23, 2005; Pl.’s Combined

Mot. to Extend Time for Resp., Mot. for Discovery, and Resp., filed April 11, 2005; Def.’s Reply, filed

April 27, 2005.) The Court considers these filings in ruling on the instant Motion. Additionally, the

Court considers the entire record as applicable.

2

 The background relating to this case is outlined in more depth in the Court’s Memorandum

Opinion and Order, entered August 2, 2005. For convenience and economy, the Court refers to that

background here, as applicable. 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

__________________________________

ADVOCARE INTERNATIONAL L.P., *

*

Plaintiff, *

*

v. * Civil No. 3:04-CV-1988-H

*

HORIZON LABORATORIES, INC., *

RICHARD PAUL SCHECKENBACH *

R-SQUARED NUTRITION, INC., and *

HERBASIA CORPORATION, *

*

Defendants. *

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant HerbAsia Corporation’s Second Motion to Dismiss,

filed June 17, 2005; and Plaintiff’s Response, filed June 24, 2005.1 For the following reasons

Defendant’s Motion is DENIED.

I. Background2

Defendant Horizon Laboratories, Inc. (“Horizon”), is one of Plaintiff’s

manufacturers. (Mem. Op. and Order, entered Aug. 2, 2005, at 2.) Horizon received its raw

materials from, inter alia, HerbAsia Corporation (“HerbAsia”). (Id.; Pl.’s 1st Am. Compl. at 6, 7,

11; Pl.’s App. at 3.) From 2001 through 2004, Richard Scheckenbach (“Scheckenbach”), along with

 

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 In April 2004, prior to the instant suit, Scheckenbach sold HerbAsia to Tai Brown and his wife. 

(Def.’s App. at 4.)

4

 Plaintiff alleges that between October 2001 and July 2003, Scheckenbach breached fiduciary

duties owed to Plaintiff, and defrauded Plaintiff. (Pl.’s 2nd Am. Compl. at 10-11.) Plaintiff alleges that

as a party to Scheckenbach’s fraud and breach of fiduciary duty, HerbAsia is liable as a joint tort feasor. 

(Pl.’s 2d Am. Compl. at 12.) Texas law recognizes joint tort feasor liability as pleaded by Plaintiff. 

Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 514 (Tex. 1942); Cox Tex. Newspapers,

L.P. v. Wootten, 59 S.W.3d 717, 721 (Tex. App.–Austin 2001) (fiduciary duty joint tort feasor); Kline v.

O’Quinn, 874 S.W.2d 776 786 (Tex. App.–Houston [14 Dist.] 1994) (fraud joint tort feasor).

2

his wife, were the sole owners and directors of HerbAsia.3

 (Pl.’s 1st Am. Compl. at 7; Pl.’s App.

2A at 9.)

Plaintiff’s original state court action did not name HerbAsia as a defendant. (Def.

Horizon’s Notice of Removal at 1.) After Horizon removed on diversity grounds, Plaintiff filed its

First Amended Complaint adding HerbAsia. (Pl.’s 1st Am. Compl., filed Jan. 11, 2005.) With leave

of the Court, Plaintiff then filed its Second Amended Complaint to cure pleading defects and allege

alternate theories of liability against HerbAsia.4

 Arguing that a jurisdiction defect still exists,

HerbAsia filed the instant motion on June 17, 2005. 

II. Standard of Review 

“In a diversity action, a federal court may exercise personal jurisdiction over a

defendant only to the extent permitted by the applicable law of the forum state.” Cent. Freight Lines

Inc. v. APA Transport Corp., 322 F.3d 376, 380 (5th Cir. 2003) (citing FED.R.CIV.P. 4(e)(1), (h)(1),

and (k)(1)). In Texas, the exercise of personal jurisdiction over a nonresident defendant is proper

where: 1) the defendant has committed an act that confers jurisdiction under the Texas long-arm

statute; and 2) the exercise of jurisdiction under that statute does not deprive the defendant of the

due process of law guaranteed by the Fourteenth Amendment of the United States Constitution. See

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); Delgado v. Reef Resort Ltd., 364 F.3d 642,

 

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645 (5th Cir. 2004), cert. denied, --- U.S. ---, 125 S. Ct. 623 (Nov. 29, 2004); Cent. Freight Lines,

322 F.3d at 380.

The Texas long-arm statute provides, inter alia, that a nonresident does business in

Texas if the nonresident commits a tort in whole or in part in Texas. TEX.CIV. PRAC.&REM.CODE

ANN. § 17.042(2) (Vernon Supp. 2004). Because courts have interpreted the Texas long-arm statute

to extend to the limits of due process, see Cent. Freight Lines, 322 F.3d at 380, the sole inquiry is

whether the assertion of personal jurisdiction over a defendant comports with federal constitutional

requirements. Id.; Aviles v. Kunkle, 978 F.2d 201, 204 (5th Cir. 1992). Obtaining personal

jurisdiction over a nonresident comports with constitutional requirements if (1) the nonresident

purposefully availed himself of the benefits and protections of Texas law by establishing minimum

contacts with Texas such that he could reasonably anticipate being haled into court in Texas, and

(2) the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.

See Cent. Freight Lines, 322 F.3d at 380; TIG Ins. Co. v. NAFCO Ins. Co., Ltd., 177 F. Supp. 2d

561, 565 (N.D. Tex. 2001). 

Minimum contacts with a forum state “can be established either through contacts

sufficient to assert specific jurisdiction, or contacts sufficient to assert general jurisdiction.” Cent.

Freight Lines, 322 F.3d at 381 (citing Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999)

(quoting Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945))). General jurisdiction exists when a

nonresident defendant has engaged in continuous and systematic contacts with the forum state. Id.

Specific jurisdiction exists if the plaintiff can establish that “defendant has purposefully directed its

activities at the forum state and the litigation results from alleged injuries that arise out of or relate

to those activities.” Id. (citing Burger King, 471 U.S. at 472). 

 

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“When . . . the district court [does] not conduct an evidentiary hearing on defendant’s

motion to dismiss, the party seeking to assert jurisdiction is required only to present sufficient facts

to make out a prima facie case supporting jurisdiction.” Cent. Freight Lines, 322 F.3d at 380 (citing

Alpine View Co. v. Atlas Copco A.B., 205 F.3d 208, 214 (5th Cir. 2000)); TIG Ins. Co., 177 F. Supp.

2d at 565. In determining whether a prima facie case for personal jurisdiction exists, the Court

accepts as true only non-conclusory uncontroverted allegations “and resolve[s] all factual conflicts

in favor of the party seeking to invoke the court’s jurisdiction.” Cent. Freight Lines, 322 F.3d at 380;

Bullion v. Gillespie, 895 F.2d 213, 215 (5th Cir. 1990). 

III. Analysis

In the instant diversity action, an evidentiary hearing has not been conducted.

Therefore, the Court determines whether Plaintiff has met its prima facie burden. Plaintiff’s prima

facie burden is to show whether HerbAsia established minimum contacts with Texas such that it

could reasonably anticipate being haled into Texas courts and whether the exercise of jurisdiction

offends traditional notions of fair play and substantial justice.

A. Minimum Contacts

1. General Jurisdiction

The continuous and systematic contacts test required for general jurisdiction is a

difficult standard to satisfy. Submersible Sys., Inc. v. Perforadora Cent., S.A. de C.V., 249 F.3d 413,

419 (5th Cir. 2001) (citing 16 James Wm. Moore et. al., Moore’s Federal Practice ¶ 108.41[3] (3d

ed.1999)); see, e.g., Brokerwood Int’l (U.S.), Inc. v. Cuisine Crotone, Inc., 104 Fed. Appx. 376, 382

(5th Cir. 2004); Cent. Freight Lines, 322 F.3d at 381 (no general jurisdiction even though defendant

“routinely arranges and receives interline shipments to and from Texas and apparently sends sales

 

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 Although Plaintiff argues that HerbAsia is Scheckenbach’s alter ego and therefore

Scheckenbach’s trips to Texas should be imputed to HerbAsia, Plaintiff has not demonstrated that those

contacts are unrelated to the cause of action. 

5

people to the state on a regular basis to develop business, negotiate contracts, and service national

accounts”); Wilson v. Belin, 20 F.3d 644, 650-51 (5th Cir. 1994) (even if possibly continuous,

defendant’s contacts were not substantial enough for general personal jurisdiction). General

jurisdiction requires that HerbAsia engage in extensive contacts with the forum. See Submersible

Sys., 249 F.3d at 419; Brokerwood Int’l, 104 Fed. Appx. at 382. “[T]he general jurisdictional

inquiry focuses exclusively on whether the nonresident defendant’s contacts with the forum

unrelated to the cause of action are sufficiently ‘continuous and systemic’ to satisfy due process

requirements.” Freudensprung v. Offshore Technical Servs., Inc., 379 F.3d 327, 345 (5th Cir. 2004)

(citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 417 (1984)); see

Revell v. Lidov, 317 F.3d 467 (5th Cir. 2002) (“General jurisdiction exists when a defendant’s

contacts with the forum state are unrelated to the cause of action but are ‘continuous and

systematic.’”)

Nothing in Plaintiff’s pleadings present sufficient facts to make out a prima facie case

supporting general jurisdiction. There is no allegation that Herbasia conducts regular business or

makes any business decisions in Texas, substantial or otherwise. Plaintiff has not shown any general

contacts unrelated to the cause of action. Indeed, Plaintiff posits that all Scheckenbach’s, i.e.,

HerbAsia’s contacts are related to the cause of action.5

 (Pl.’s Resp. at 3-4.) Scheckenbach’s eight

business trips to Texas are not “continuous and systematic” required for general personal

jurisdiction to attach. 

 

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2. Specific Jurisdiction

Specific jurisdiction may exist where the cause of action is predicated on or directly

related to defendant’s contacts with the forum. Freudensprung, 379 F.3d at 343 (“A court may

exercise specific jurisdiction when (1) the defendant purposely directed its activities toward the

forum state or purposely availed itself of the privileges of conducting activities there; and (2) the

controversy arises out of or is related to the defendants contacts with the forum state.”) (citing

Helicopteros, 466 U.S. 408); Revell, 317 F.3d at 470. The Court determines whether the quality,

not merely the quantity, of the contacts “suggest that the nonresident defendant purposefully availed

himself of the benefits of the forum state.” Brown v. Flowers Indus., Inc., 688 F.2d 328, 333 (5th

Cir. 1982), cert. denied, 460 U.S. 1023 (1983). “This ‘purposeful availment’ requirement ensures

that a defendant will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or

‘attenuated’ contacts, or of the unilateral activity of another party or a third person.” Burger King

Corp., 471 U.S. at 475 (citations omitted).

In the context of intentional torts, the Fifth Circuit’s standard for minimum contacts

is less stringent than its standard for general jurisdiction. See Lewis v. Fresne, 252 F.3d 352, 358-59

(5th Cir. 2001). “A single act by a defendant can be enough to confer personal jurisdiction if that

act gives rise to the claim being asserted.” Id.; Wien Air Alaska, 195 F.3d at 213; Brown, 688 F.2d

at 332-33 (one contact, a single tort, sufficient under the due process clause to subject the defendants

to in personam jurisdiction). Plaintiff complains of various acts of HerbAsia as joint tort-feasor in

Scheckenbach’s scheme to defraud Plaintiff and breach his fiduciary duties owed to Plaintiff.

HerbAsia does not dispute that Scheckenbach and his wife were the sole owners of

HerbAsia between October 2001 and July 2003. (Def.’s App. at 4.) HerbAsia also does not

 

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 Application of the stream of commerce theory is not limited exclusively to products liability

cases. See e.g. Nuovo Pignone, 310 F.3d at 381; Gulf Consol. Servs., Inc. v. Corinth Pipe Works, F.A.,

898 F.2d 1071, 1072-74 (5th Cir. 1990).

7

challenge that Scheckenbach’s knowledge of the relationships between Scheckenbach, Plaintiff,

Horizon and HerbAsia is imputed to HerbAsia (by virtue of Scheckenbach’s ownership of

HerbAsia). HerbAsia avers that it did not have minimum contacts with Texas other than selling raw

materials to an intermediary with the knowledge that those goods would be used to manufacture a

product shipped to Plaintiff in Texas. HerbAsia argues that the stream of commerce theory is

inapplicable to assert personal jurisdiction. 

“The stream-of-commerce principle is applied to companies that . . . ‘purposefully

serve markets broader than the states in which [their] initial or direct sales are made.’” Nuovo

Pignone, SpA v. STORMAN ASIA M/V, 310 F.3d 374, 381 (5th Cir. 2002) (quoting Petroleum

Helicopters, Inc. v. Avco Corp., 804 F.2d 1367, 1370 (5th Cir. 1987) (en banc)). The Fifth Circuit,

in Nuovo Pignone, cautioned that it “ has been reluctant to extend the stream-of-commerce principle

outside the context of products liability cases.”6

 Id. However, in Petroleum Helicopters, the en banc

panel “held that jurisdiction may be asserted over a company that manufactures a component part

in one state for incorporation into a finished product in a second state and sale to customers in a third

state.” Petroleum Helicopters, 804 F.2d 1370. Although the present action is not a products liability

case, application of the stream of commerce theory is consistent with Fifth Circuit precedent. See

Nuovo Pignone, 310 F.3d at 381; Gulf Consol. Servs., Inc. v. Corinth Pipe Works, F.A., 898 F.2d

1071, 1072-74 (5th Cir. 1990).

“Application of the stream-of-commerce principle is warranted here.” Nuovo

Pignone, 310 F.3d at 381. HerbAsia did not contract with Plaintiff, “a citizen of the home forum,

 

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but rather with third party intermediar[y]” Horizon. Id. Although the transaction between HerbAsia

and Horizon took place in California, “the [D]efendant sold the [raw materials] in anticipation that

it would be shipped to Texas” pursuant to Scheckenbach’s recommendations to Plaintiff as to the

source and types of raw materials. Gulf Consol. Servs., 898 F.2d at 1074. HerbAsia had no doubt

as to the purpose of selling raw materials to Horizon: for use in manufacturing of products to be

shipped to Plaintiff in Texas. Informed with Scheckenbach’s knowledge, HerbAsia should have

considered the ramifications of selling to Plaintiff’s manufacturer and the possible consequences that

its choice might cause in Texas. “In this sense, the same public policy concerns that justify use of

the stream-of-commerce principle in the products liability context are present here.” Nuovo

Pignone, 310 F.3d at 381.

HerbAsia is correct in arguing that under Asahi “placement of a product into the

stream of commerce, without more, is not an act of the defendant purposefully directed toward the

forum State.” Asahi Metal Industry Co., Ltd. v. Superior Court of Cal., Solano County, 480 U.S.

102, 112 (1987). (Def.’s Mot. at 4.) Plaintiff’s pleadings and jurisdictional evidence, however,

demonstrate that HerbAsia’s conduct vis-à-vis Scheckenbach, “may indicate an intent or purpose

to serve the market in the forum State, for example, designing the product for the market in the

forum State, . . ., establishing channels for providing regular advice to customers in the forum State.”

Asahi Metal, 480 U.S. at 112. In his position as consultant and advisor to Plaintiff, Scheckenbach,

owner of HerbAsia, recommended, i.e., marketed HerbAsia’s raw materials for manufacturer and

ultimate delivery into Texas, the forum state. See id. 

In participating in the alleged scheme, HerbAsia was “purposefully availing [itself]

of ‘the privilege of causing a consequence’ in Texas.” Wien Air Alaska, 195 F.3d at 213. The Court

 

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concludes that HerbAsia purposefully directed its raw materials toward the forum State.

Accordingly, Plaintiff has made a prima facie showing of minimum contacts.

B. Fair Play and Substantial justice

Once the plaintiff makes a prima facie showing of minimum contacts, “the burden

of proof shifts to the defendant to show that the assertion of jurisdiction is unfair and unreasonable.”

Cent. Freight Lines, 322 F.3d at 384. To prevail, the “defendant must make a ‘compelling case.’”

Id. (citing Burger King, 471 U.S. at 477). In determining whether the assertion of jurisdiction is fair

and reasonable, the Court engages in a balancing of interests. Id.; TIG Ins. Co., 177 F. Supp. 2d at

567. The interests the Court considers are: “(1) the burden on the nonresident defendant of having

to defend itself in the forum; (2) the interests of the forum state in the case; (3) the plaintiff’s interest

in obtaining convenient and effective relief; (4) the interstate judicial system’s interest in the most

efficient resolution of controversies; and (5) the shared interests of the states in furthering

fundamental social policies.” Cent. Freight Lines, 322 F.3d at 384 (citing Asahi Metal Indus. Co.,

Ltd. v. Super. Ct. of Cal., 480 U.S. 102, 115 (1987)).

HerbAsia does not make a “compelling case.” Indeed, none of HerbAsia’s filings

with respect to its motion(s) to dismiss even mention whether assertion of jurisdiction is fair and

reasonable. Like the defendant in Petroleum Helicopters, HerbAsia “deliver[ed] its [raw materials]

into the stream of commerce with the expectation that [a Texan] would purchase [the manufactured

product.]” Id., 804 F.2d at 1370; see Cent. Freight Lines, 322 F.3d at 380 (“the court has [specific]

jurisdiction if it finds that the defendant delivered the product into the stream of commerce with the

expectation that it would be purchased by or used by consumers in the forum state.”) (citing Bearry

v. Beech Aircraft Corp., 818 F.2d 370, 374 (5th Cir. 1987). HerbAsia purposefully availed itself of

 

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 The Supreme Court has stated that “[w]hen minimum contacts have been established, often the

interests of the plaintiff and the forum will justify even the serious burdens placed on the alien

defendant.” Asahi Metal Indus., 480 U.S. at 114-15. HerbAsia does not address the interests of: the

forum state in the case; the Plaintiff in obtaining relief; the judicial system in efficient resolution of the

controversy; or the states in furthering fundamental social policies. Nor has HerbAsia “identified any

conflict between the interests of Texas and other states that would flow from the exercise of personal

jurisdiction here.” Irving v. Owens-Corning Fiberglas Corp., 864 F.2d 383, 387 (5th Cir. 1989), cert.

denied, Jugometal Enter. for Imp. and Exp. of Ores and Metals v. Irving, 493 U.S. 823 (1989). Litigating

in Texas satisfies the Plaintiff’s interest in obtaining convenient and effective relief and provides an

efficient resolution of the controversy. 

10

the benefits of doing business in Texas; consequently, it is not unfair to require HerbAsia to appear

in Texas courts. Petroleum Helicopters, 804 F.2d at 1370 (internal quotes omitted). HerbAsia has

not met his burden of showing that the assertion of jurisdiction would be unfair.7 The exercise of

jurisdiction over HerbAsia does not offend traditional notions of fair play and substantial justice.

IV. Conclusion

For the foregoing reasons, Defendant HerbAsia’s Second Motion to Dismiss is

DENIED.

SO ORDERED.

DATED: August 2, 2005.

 

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