Opinion ID: 2716180
Heading Depth: 2
Heading Rank: 2

Heading: V&M Tubes

Text: V&M Tubes is an entity incorporated in France with its registered office and principal place of business in that country. It is a holding company with no office, property, bank accounts, or employees in Texas. V&M’s involvement in this suit arises out of its meetings with SII in Europe regarding V&M’s cooperation in the OCTG plant in Saudi Arabia. Meetings between V&M Tubes and Zamil led to V&M’s acquisition of Saudi Pipes. SII’s complaint against V&M Tubes alleged a single cause of action for tortious interference based on the allegation that V&M Tubes interfered with SII’s exclusive representation agreement with the Zamil defendants. SII contends this court may assert general jurisdiction over V&M Tubes by virtue of the fact that V&M Tubes has subsidiaries in Texas that do business there. The argument is premised on an alter ego theory, that V&M Tubes is a single corporate entity holding itself out as a functional whole with its subsidiaries in Texas. See BMC Software Belgium N.V., 83 S.W.3d at 799 (identifying that this circuit and some Texas courts have relied on the alter ego rule in determining personal jurisdiction). 11 Case: 13-20231 Document: 00512723405 Page: 12 Date Filed: 08/05/2014 No. 13-20231 “Generally, a foreign parent corporation is not subject to the jurisdiction of a forum state merely because its subsidiary is present or doing business there . . . . [I]n some circumstances a close relationship between a parent and its subsidiary may justify a finding that the parent ‘does business’ in a jurisdiction through the local activities of its subsidiaries.” Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983). The relationship between the subsidiary and parent must be such that they are in reality the same corporation. Typically, this requires the corporate separation to be a fiction. Id. at 1159-60 (citing Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 337 (1925)). On the other hand, “so long as a parent and subsidiary maintain separate and distinct corporate entities, the presence of one in a forum state may not be attributed to the other.” Id. at 1160. “The party seeking to ascribe one corporation’s actions to another by disregarding their distinct corporate entities must prove this allegation.” BMC Software Belgium, 83 S.W.3d at 798. SII identifies eight entities, either wholly or majority-owned by V&M Tubes, that operate in Texas. It highlights representations V&M Tubes makes on its website and online promotional material regarding its global structure and integration as a “single corporate entity.” Officers and directors of V&M Tubes sit on the boards of each of the subsidiaries. There is evidence from representations made on the websites of V&M Tubes’ subsidiaries in Texas which identify V&M Tubes, link to V&M Tubes’ website, or otherwise depict the global and unified nature of V&M’s corporate structure. V&M Tubes is also party to service agreements with many of its subsidiaries under which it provides human resources management and services in finance, tax, investments, legal, and intellectual property. V&M Tubes is party to Patent and Trademark Services Agreements with its Texas subsidiary, VAM USA, and also party to license agreements with many of its subsidiaries for the right 12 Case: 13-20231 Document: 00512723405 Page: 13 Date Filed: 08/05/2014 No. 13-20231 to use the V&M trademark logo. Finally, V&M Tubes is a party, as a lender, to a loan agreement with V&M Holdings and makes payments to V&M Holdings’ account in Texas. These facts support that V&M Tubes holds itself out to the public as a unified company doing business in Texas. SII argues that is enough for general jurisdiction over V&M Tubes on an alter ego theory. We conclude otherwise. Factors guiding Texas courts in determining whether the parent and subsidiary should be considered joined for jurisdictional purposes include: (1) whether distinct adequately capitalized units are maintained; (2) whether daily operations are separate; (3) if formal barriers exist between management, each functioning in its own interest; (4) whether the entities file consolidated tax returns; (5) ownership of the subsidiary’s stock by the parent; (6) whether the two share common officers and directors; (7) the extent to which books and accounts are kept separate; (8) whether officers and directors of one determine the policies of the other; (9) whether others are informed of their separate identity; and (10) whether they have separate meetings of shareholders and directors. Daimler-Benz Aktiengesellschaft v. Olson, 21 S.W.3d 707, 720-21 (Tex. App. — Austin 2000, pet. dism’d w.o.j.). SII has presented evidence only that V&M Tubes has substantial ownership in the stock of its subsidiaries, shares common officers and directors, and the public may be misled about the companies separate identities due to V&M’s public representations. Stock ownership and commonality of officers, alone, are insufficient to conclude a parent company is the alter ego of its subsidiaries. See Alpine View Co. Ltd. v. Atlas Copco AB, 205 F.3d 208, 219 (5th Cir. 2000). SII has not alleged the companies failed to maintain distinct, adequately capitalized units with separate books, accounts, tax filings, meetings, or other formal barriers. SII’s pleadings are devoid of allegations that V&M Tubes exercised a greater than normal degree of control 13 Case: 13-20231 Document: 00512723405 Page: 14 Date Filed: 08/05/2014 No. 13-20231 over the daily operations of its Texas subsidiaries. SII simply points to V&M’s promotional literature boasting “complete control” and the existence of a “Vallourec Group” of companies, which does not indicate anything other than a standard corporate-family structure. We also note this court has concluded that formal contractual relationships in the form of service, patent, trademark, licensing, and interest-bearing loan agreements, like the ones V&M has here with its subsidiaries, could be more indicative of separateness than unity. Id. One Texas court has explained that ownership of a locally operating subsidiary, while it may be considered “in toto with the defendant’s other forum contacts[,] . . . may not be enough for minimum contacts outside the context of alter ego or similar conceptual devices.” Villagomez v. Rockwood Specialties, Inc., 210 S.W.3d 720, 732 (Tex. App. — Corpus Christi-Edinburg 2006, pet. denied). SII has alleged no Texas contacts other than V&M’s ownership of subsidiaries and the representations we have detailed. The alter ego theory of jurisdiction, though, requires proof of a greater than normal degree of control over the daily operations of the subsidiaries. Hargrave, 710 F.2d at 1160. In one Texas decision, the court did rely in part on the fact that the foreign parent corporation held itself out as doing business through its subsidiary operating in the forum. Daimler-Benz, 21 S.W.3d at 723-24. The court also relied heavily on the extensive evidence indicating that Daimler-Benz exercised actual and significant control over the daily operation of its subsidiaries. Id. We find no authority allowing for the assertion of general jurisdiction over a foreign parent corporation premised only on the foreign corporation’s ownership of subsidiaries in the forum and representations by the foreign parent of its “unified” corporate structure. The assertion of jurisdiction must be premised either on sufficient minimum contacts of the foreign parent with the forum or on some evidence demonstrating the parent company’s actual control over the internal business operations and affairs of the subsidiary. 14 Case: 13-20231 Document: 00512723405 Page: 15 Date Filed: 08/05/2014 No. 13-20231 The district court correctly concluded that personal jurisdiction was lacking. AFFIRMED. 15