Court Opinion

ID: 9412389
Source: CourtListenerOpinion
Date Created: 2023-07-30 08:10:40.291713+00
Date Added: 2024-06-11T16:41:15.938060
License: Public Domain

Affirmed and Memorandum Opinion filed July 25, 2023.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-22-00371-CV

      LG CHEM AMERICA, INC. AND LG CHEM, LTD., Appellants
                                        V.
                          JUSTIN WILSON, Appellee

                    On Appeal from the 113th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2020-03817

                  MEMORANDUM OPINION

      Appellants LG Chem America, Inc. (“LG America”) and LG Chem, Ltd.
(“LG Chem”) appeal the denial of their special appearances in this products-
liability suit filed by appellee Justin Wilson. After reviewing the record and the
parties’ arguments, we hold that Wilson established that his claims are sufficiently
related to the appellants’ purposeful contacts with Texas, and we affirm.
                                     Background

      According to his live pleading, Wilson was standing in his driveway when,
without warning, the battery in his electronic cigarette “exploded” and caught fire
in his pants pocket. The device’s lithium-ion battery, model number 18650, was
designed, marketed, and/or manufactured by LG America and LG Chem. LG
America is a Delaware corporation headquartered in Georgia; LG Chem is a
Korean company headquartered in South Korea (collectively, the “LG
Defendants”). Wilson asserted various theories of products liability against the LG
Defendants.

      The LG Defendants filed special appearances challenging the trial court’s
personal jurisdiction.     The LG Defendants contended that they were not
incorporated or headquartered in Texas and thus were not subject to general
jurisdiction.   Additionally, to refute the exercise of specific jurisdiction, LG
Chem’s authorized representative admitted that LG Chem manufactures model
18650 lithium-ion cells “for use in specific applications by sophisticated
companies” but averred that LG Chem “does not design or manufacture 18650
lithium-ion cells for sale to individual consumers as standalone batteries” and
“does not distribute, advertise, or sell 18650 cells directly to consumers.”
Similarly, LG America’s compliance manager averred that LG America “never
designed, manufactured, distributed, advertised, or sold any lithium-ion cells for
use by individual consumers as standalone, replaceable, rechargeable batteries in
electronic cigarettes or vaping devices” and “never authorized any manufacturer,
wholesaler, distributor, retailer, or re-seller . . . to advertise, distribute, or sell LG
brand power cells in Texas . . . for use by individual consumers as power cells in e-
cigarette or vaping devices.”        The LG Defendants did not deny that they
manufacture, market, distribute, and sell model 18650 batteries to some customers

                                            2
in Texas, such as companies Stanley Black and Decker and Hewlett Packard,
which incorporate the batteries as components of those companies’ products.

       Wilson responded to the special appearances.                     Regarding specific
jurisdiction, Wilson contended that LG Chem “directly targets the Texas market
with its lithium-ion battery sales.” Wilson also asserted that LG American is LG
Chem’s wholly owned United States subsidiary, which “markets and sells [LG
Chem’s] lithium-ion batteries to retailers located . . . in Texas,” and that Wilson
was injured by a battery that he purchased from a retailer in Texas.

       Based on jurisdictional discovery, Wilson stated that LG America “produced
documentation showing that it shipped 23,600 18650 batteries to Austin, Texas in
just two days in late April of 2016,” and that LG Chem “produced documentation
showing that it shipped 481,555 18650 batteries to Austin, McAllen, Dallas, and
Houston, Texas from late 2016 through early 2018.” Wilson submitted numerous
exhibits consisting of, among other things, thousands of pages of spreadsheets,
purportedly reflecting U.S. Customs Service data, showing LG Chem’s shipments
of thousands of products to Texas companies or through Texas ports.1 Some, but
not all, of these entries show that LG Chem shipped lithium-ion batteries (and
specifically model 18650 batteries) to Texas. Many of those shipments were
consigned to LG America, a subsidiary that is wholly owned by LG Chem and that
is responsible for “sales and/or distribution” of LG Chem’s products in the United
States.    Wilson also produced an excerpt from a hearing in another lawsuit
involving LG Chem, in which LG Chem’s counsel allegedly conceded that LG
Chem ships lithium-ion model 18650 batteries directly into Texas. Wilson’s trial

       1
         These exhibits originally had been filed in another case against the LG Defendants that
was appealed to the First Court of Appeals and then to the Supreme Court. See LG Chem Am.,
Inc. v. Morgan, 663 S.W.3d 217, 224-25 (Tex. App.—Houston [1st Dist.] 2020), aff’d, LG Chem
Am., Inc. v. Morgan, ---S.W.3d---, 2023 WL 3556693 (Tex. May 19, 2023).

                                               3
counsel filed a sworn declaration, stating that each exhibit was a true and correct
copy.

        The LG Defendants objected to some of Wilson’s exhibits—principally the
evidence purporting to be importation records from U.S. Customs—as containing
inadmissible hearsay, speculation, and conclusory statements, as well as being
unauthenticated, and lacking a foundation. The trial court did not sign an order
ruling on the LG Defendants’ objections or otherwise rule orally during a hearing.

        The trial court denied the LG Defendants’ special appearances, and they
filed this interlocutory appeal. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(7).

                                 Scope of Evidence

        Before turning to the merits, we first address the LG Defendants’ argument
that the trial court erroneously overruled their objections to Wilson’s evidence.
We determine that the LG Defendants did not preserve their complaint for appeal.

        As a prerequisite for presenting a complaint on appeal, the record must show
that the complaining party timely asserted a proper objection and obtained an
explicit or implicit ruling from the trial court. See Tex. R. App. P. 33.1(a)(1), (2).
If the trial court refuses to rule on the objection, the complaining party must object
to the refusal. Tex. R. App. P. 33.1(a)(2)(B).

        The LG Defendants did not obtain an explicit ruling on their evidentiary
objections. They contend that the trial court “implicitly overruled [their]
evidentiary objections” by specifying in its order that the court considered the
“pleadings, evidence, and arguments of counsel.” “An implicit overruling is one
that, though unspoken, reasonably can be inferred from something else.” Trevino
v. City of Pearland, 531 S.W.3d 290, 299 (Tex. App.—Houston [14th Dist.] 2017,
no pet.). A ruling may be implied from the record when the implication is “clear.”

                                          4
Seim v. Allstate Tex. Lloyds, 551 S.W.3d 161, 166 (Tex. 2018) (per curiam) (citing
In re Z.L.T., 124 S.W.3d 163, 165 (Tex. 2003) (finding that when the trial court
proceeded to trial without ruling on the request for a bench warrant, it was clear the
trial court implicitly denied the request)). When, for example, a court rules on a
motion without first addressing a party’s objections to certain evidence, the court’s
disposition on the objections may not be sufficiently clear. See id. (a statement
that the court considered “the [summary-judgment] motion, briefs, ‘all responses,
and all competent summary-judgment evidence’” does not constitute a “clearly
implied ruling”).

      Here, the trial court’s order denying the special appearances stated that the
court considered Wilson’s response, Wilson’s supplemental response, and the
“evidence.” But Wilson’s evidence consisted of numerous exhibits, only four of
which drew objection from the LG Defendants and none of which the court
specifically addressed in its order denying the special appearances. Accordingly, it
is not clear whether the trial court denied the special appearances after determining
(correctly or incorrectly) the challenged evidence was admissible or because, after
sustaining (some or all of) the LG Defendants’ objections, the court found
(correctly or incorrectly) the remaining admissible evidence was otherwise
sufficient to support personal jurisdiction. See id. Thus, we conclude the record
does not reveal clearly that the trial court implicitly overruled the LG Defendants’
objections. See id. at 164; see also Hause v. LG Chem, Ltd., 658 S.W.3d 714, 720
(Tex. App.—El Paso 2022, pet. filed) (LG Defendants waived objections to
evidence by not obtaining ruling in trial court).

      For this reason, we reject the LG Defendants’ argument that an earlier
decision from this court, LG Chem America, Inc. v. Zapata, controls the disposition
of this case. In Zapata, we held that the trial court abused its discretion in

                                           5
overruling the LG Defendants’ objections to the same evidence they challenge in
this case and, further, that the remaining admissible evidence was not sufficient to
establish personal jurisdiction. See LG Chem Am., Inc. v. Zapata, No. 14-21-
00695-CV, 2022 WL 16559339, at *4-6 (Tex. App.—Houston [14th Dist.] Nov. 1,
2022, no pet.) (mem. op.).       Zapata is distinguishable because there the LG
Defendants obtained an explicit adverse ruling on their objections. See id. at *2
(“At the oral hearing, appellants renewed their previous objections to Zapata’s
exhibits. Zapata responded that the trial court could take judicial notice of the
documents. The trial court announced that it was denying appellants’ special
appearances and was overruling their objections to Zapata’s exhibits. The trial
court subsequently signed an order memorializing its oral rulings.”). Because the
LG Defendants preserved error, we analyzed whether the trial court abused its
discretion in overruling their objections. See id. at *4-5.

      But here, in contrast, the trial court did not explicitly overrule the LG
Defendants’ objections, and the record does not clearly show that the trial court
ruled implicitly. Thus, as a prerequisite to presenting their evidentiary complaint
on appeal, the LG Defendants were required to object to the court’s failure to rule.
See Tex. R. App. P. 33.1(a)(2)(B). The record does not indicate that they complied
with this rule. Therefore, in the absence of a properly preserved complaint, we will
not examine the propriety of the trial court’s consideration of the challenged
evidence, which remains part of the record before us.

      We now turn to the merits of the LG Defendants’ special appearances.

                                           6
                              Personal Jurisdiction

A.    Governing Standards

      A court must have personal jurisdiction over a defendant to issue a binding
judgment. Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 7-8 (Tex.
2021). Texas courts may assert in personam jurisdiction over a nonresident if
(1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the
exercise of jurisdiction is consistent with federal and state constitutional due-
process guarantees. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574
(Tex. 2007). The Texas long-arm statute authorizes Texas courts to exercise
jurisdiction over a nonresident defendant who “does business” in the state, which
includes committing a tort in whole or in part in Texas. See Tex. Civ. Prac. &
Rem. Code §§ 17.042, 17.043.

      The exercise of jurisdiction is consistent with federal and state constitutional
due-process guarantees when (1) the nonresident defendant has minimum contacts
with the forum state and (2) the assertion of jurisdiction complies with traditional
notions of fair play and substantial justice. Int’l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945); Peters v. Top Gun Exec. Grp., 396 S.W.3d 57, 62 (Tex. App.—
Houston [14th Dist.] 2013, no pet.). Minimum contacts are sufficient for personal
jurisdiction when the nonresident defendant purposefully avails itself of the
privilege of conducting activities within the forum state, thus invoking the benefits
and protections of the state’s laws. M&F Worldwide Corp. v. Pepsi-Cola Metro.
Bottling Co., 512 S.W.3d 878, 886 (Tex. 2017).

      “[T]o the extent that a corporation exercises the privilege of conducting
activities within a state, it enjoys the benefits and protection of the laws of that
state.” Int’l Shoe, 326 U.S. at 319; see also Hanson v. Denckla, 357 U.S. 235, 253
(1958). These benefits and protections include “the enforcement of contracts, the
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defense of property, [and] the resulting formation of effective markets.” Ford
Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1029 (2021). But the
forum state’s assistance creates reciprocal obligations, including an obligation that
products the defendant sells or distributes in the state be safe for its citizens to use.
Id. at 1030. A state’s enforcement of that commitment through the exercise of
personal jurisdiction can “hardly be said to be undue.” Id. (internal quotation
omitted).

       A nonresident defendant’s purposeful contacts with a forum state can give
rise to either general or specific jurisdiction, id. at 1024, but Wilson contends the
court has jurisdiction over the LG Defendants only under the theory of specific
jurisdiction.   Specific jurisdiction generally exists if the defendant’s alleged
liability arises out of or is related to his purposeful activity conducted within the
forum. See Moki Mac, 221 S.W.3d at 576. Thus, the specific-jurisdiction analysis
involves “two co-equal components”: purposeful availment and relatedness. Id. at
579.

       Regarding the first component, the defendant must have purposefully
availed itself of the privilege of conducting activities in the forum state. Luciano,
625 S.W.3d at 8. In products liability cases, the Supreme Court of Texas has
adopted the “stream-of-commerce-plus” standard. LG Chem Am., Inc. v. Morgan,
---S.W.3d---, 2023 WL 3556693, at *4 (Tex. May 19, 2023) (citing Luciano, 625
S.W.3d at 13; Moki Mac, 221 S.W.3d at 577). Under that standard, the defendant’s
act of placing a product into the stream of commerce does not establish purposeful
availment unless there is “additional conduct” evincing “an intent or purpose to
serve the market in the forum State.” Moki Mac, 221 S.W.3d at 577 (internal
quotations omitted). Mere knowledge that the defendant’s product will reach the

                                           8
forum state is not sufficient. Luciano, 625 S.W.3d at 13 (citing CMMC v. Salinas,
929 S.W.2d 435, 439 (Tex. 1996)).

      Regarding the second component, the plaintiff’s claim must arise out of or
relate to the defendant’s contacts with the forum.         Id. at 9.    “This so-called
relatedness inquiry defines the appropriate ‘nexus between the nonresident
defendant, the litigation, and the forum.’” Id. at 14 (quoting Moki Mac, 221
S.W.3d at 579).      The plaintiff must demonstrate a “substantial connection”
between the defendant’s contacts and the operative facts of the litigation. Moki
Mac, 221 S.W.3d at 585.

      A nonresident defendant may challenge a Texas court’s personal jurisdiction
over it by filing a special appearance. Tex. R. Civ. P. 120a. In a challenge to
personal jurisdiction, the plaintiff and the defendant bear shifting burdens of proof.
Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). The
plaintiff bears the initial burden of pleading sufficient facts to bring a nonresident
defendant within the reach of the Texas long-arm statute. Id.; see also Tex. Civ.
Prac. & Rem. Code § 17.042; Perna v. Hogan, 162 S.W.3d 648, 653 (Tex. App.—
Houston [14th Dist.] 2005, no pet.). If the plaintiff meets its initial burden, the
burden then shifts to the defendant to negate all bases of personal jurisdiction
alleged by the plaintiff. Kelly, 301 S.W.3d at 658. A defendant can negate
jurisdiction on either a factual or a legal basis.       Id. at 659.    “Factually, the
defendant can present evidence that it has no contacts with Texas, effectively
disproving the plaintiff’s allegations.” Id. Or the defendant can show that even if
the plaintiff’s alleged facts are true, the evidence is legally insufficient to establish
jurisdiction. Id. If the defendant meets his burden of negating all alleged bases of
personal jurisdiction, then the plaintiff must respond with evidence “establishing
the requisite link with Texas.” Id. at 660.

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       We review de novo a trial court’s decision regarding a special appearance.
See M&F Worldwide, 512 S.W.3d at 885.

B.     Application

       In two related issues, the LG Defendants contend that the trial court erred in
denying their special appearances. The LG Defendants first argue that Wilson did
not meet his initial pleading burden. Wilson’s amended petition included the
following jurisdictional allegations:

               • LG Chem does “a substantial amount of business in Texas.”

               • The LG Defendants are “in the business of designing,
                  manufacturing, marketing, constructing, and/or otherwise placing
                  batteries, such as the one in question, into the stream of
                  commerce.”

               • The battery that injured Wilson was “designed, manufactured,
                  marketed, and constructed by the [LG Defendants].”

Wilson also alleged that he bought the model 18650 battery from a store in Texas,
that the battery did not include any warning about foreseeable risks, and that the
battery’s defective condition was not observable by Wilson.

       In his special appearance response, Wilson further alleged that LG Chem
manufactured lithium-ion model 18650 batteries like the one that injured him and
that it targeted the Texas market for such batteries by selling them to Texas
customers through its distributor, LG America.2 Wilson also asserted that LG
America markets, distributes, and sells LG Chem’s batteries in Texas, that LG

       2
          We may consider the plaintiff’s response to a special appearance in conjunction with the
pleadings in determining whether the plaintiff met the initial burden to plead sufficient
jurisdictional allegations. See Wash. DC Party Shuttle, LLC v. IGuide Tours, 406 S.W.3d 723,
738 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (en banc).

                                               10
America “likely fulfills delivery and distribution” of lithium-ion batteries in Texas,
and that, “on information and belief, [LG America] also participates in the delivery
of goods directly to the State of Texas.” Wilson allegedly bought one of those
batteries in Texas, which did not have a warning label, and claims he was injured
when it exploded and caught fire in his pocket. According to Wilson, the battery
contained an inherent risk of harm that could arise from its intended or reasonably
anticipated use. These allegations are sufficient to meet Wilson’s initial burden to
show that the LG Defendants were doing business in Texas under the long-arm
statute. See Tex. Civ. Prac. & Rem. Code § 17.042; Spir Star AG v. Kimich, 310
S.W.3d 868, 871, 873 (Tex. 2010) (stating that a manufacturer is subject to specific
personal jurisdiction in Texas when it intentionally targets Texas as the
marketplace for its products, and that marketing product in forum is additional
conduct beyond merely placing product into stream of commerce indicating intent
or purpose to serve market in forum); see also Morgan, 2023 WL 3556693, at *1-
2.

      The burden thus shifted to the LG Defendants to negate all bases of alleged
jurisdiction. See Kelly, 301 S.W.3d at 658. They contend that, even if Wilson’s
allegations are true, the claims do not give rise to personal jurisdiction because the
LG Defendants never sought to sell to or market to an individual consumer market
for standalone lithium-ion batteries for e-cigarettes.

      The Supreme Court of Texas recently rejected this precise argument as to
these defendants. Morgan, 2023 WL 3556693, at *5-8. In that case, Morgan sued
LG Chem and LG America for products liability after allegedly sustaining injuries
when his model 18650 e-cigarette battery exploded in his pocket. Id. at *1. To
support his position that the trial court had personal jurisdiction over the LG
Defendants, Morgan submitted the same evidence that Wilson submitted in this

                                          11
case, including the importation data from U.S. Customs. The trial court denied the
LG Defendants’ special appearances, which the First Court of Appeals affirmed.
Id. at *3. On review, the supreme court affirmed and held that Morgan’s claims
were sufficiently related to the LG Defendants’ contacts with Texas to satisfy due
process for the exercise of personal jurisdiction. Id. at *5-8.

      In reaching its decision, the supreme court rejected the LG Defendants’
argument that they should not be subjected to personal jurisdiction because they
only target industrial manufacturers in Texas, not individual consumers like
Morgan. Id. at *5. The court stated that “there is no requirement for jurisdictional
purposes that the market segment the [LG Defendants] served be precisely the
same one from which [the plaintiff consumer] purchased the battery.” Id. at *6.
By selling and distributing model 18650 batteries in Texas, the court continued, the
LG Defendants “purposefully availed themselves of Texas and have enjoyed the
benefits and protection of Texas laws,” regardless whether the LG Defendants may
not have anticipated a claim would be brought by someone outside their intended
chain of distribution. Id. The court concluded that it does not violate due process
for Texas to exercise personal jurisdiction over the LG Defendants when Morgan
was injured by the very product—the model 18650 lithium-ion battery—they sold
and shipped to Texas. Id. at *5-6.

      The facts, evidence, and arguments in today’s case are materially
indistinguishable from Morgan, which controls our disposition. As in Morgan, the
LG Defendants in this case do not dispute that they purposefully availed
themselves of the privilege of conducting activities in Texas through the sale,
shipment, or distribution of model 18650 batteries to, at the least, Texas
manufacturers.    Rather, also as in Morgan, the crux of the LG Defendants’
argument is that they never targeted a consumer market for model 18650

                                          12
standalone batteries Texas or anywhere else. In other words, they argue that the
second component of personal jurisdiction—relatedness—is lacking because
Wilson’s claims are insufficiently related to the LG Defendants’ Texas contacts.

      Following the supreme court’s precedent, we decline the LG Defendants’
invitation to focus on whether Wilson is within the particular market segment they
intended to serve in Texas. Our focus instead is whether it would violate due
process for a Texas court to exercise personal jurisdiction over the LG Defendants
for claims by a plaintiff allegedly injured by the very product the LG Defendants
sold and shipped by the thousands to Texas, the forum state. Id. at *5; see also
Bristol-Myers Squibb Co. v. Superior Ct. of Cal., San Francisco Cnty., 582 U.S.
255, 262 (2017) (“The primary focus of our personal jurisdiction inquiry is the
defendant’s relationship to the forum State.”) (emphasis added). Although there
need not be “a strict causal relationship between the defendant’s in-state activity
and the litigation,” Ford, 141 S. Ct. at 1026, there still must be a “‘connection’
between a plaintiff’s suit and the defendant’s activities.”    Morgan, 2023 WL
3556693, at *4 (quoting Ford, 141 S. Ct. at 1026). This relatedness requirement is
satisfied when a company “serves a market for a product in the forum State and the
product malfunctions there.” Ford, 141 S. Ct. at 1026-27.

      Therefore, we conclude that the LG Defendants’ due process rights are not
violated by the court’s exercise of personal jurisdiction over them in this case. By
selling and distributing model 18650 batteries in Texas, the LG Defendants
purposefully availed themselves of the privilege of conducting business in Texas
and have enjoyed the benefits and protection of Texas laws. See Morgan, 2023
WL 3556693, at *5-6; see also Ford, 141 S. Ct. at 1029. Texas’s enforcement of
the LG Defendants’ reciprocal obligation to ensure that model 18650 batteries are

                                        13
safe for Texas citizens such as Wilson can “hardly be said to be undue.” Ford, 141
S. Ct. at 1030.

         For these reasons, we hold that the LG Defendants are subject to specific
personal jurisdiction in Texas for this case.

                                     Conclusion

         We overrule the LG Defendants’ issues on appeal and affirm the trial court’s
order.

                                        /s/     Kevin Jewell
                                                Justice

Panel consists of Justices Jewell, Hassan, and Wilson.

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