Court Opinion

ID: 8507274
Source: CourtListenerOpinion
Date Created: 2022-11-23 07:10:58.608817+00
Date Added: 2024-06-11T16:50:56.561883
License: Public Domain

Affirm and Opinion Filed November 16, 2022

                                               In The
                                 Court of Appeals
                          Fifth District of Texas at Dallas
                                      No. 05-21-01056-CV

                            LG CHEM, LTD., Appellant
                                      V.
                         CHRISTOPHER W. TULLIS, Appellee

                  On Appeal from the 193rd Judicial District Court
                               Dallas County, Texas
                       Trial Court Cause No. DC-19-05481

                              MEMORANDUM OPINION
                              Before Justices Nowell and Smith1
                                 Opinion by Justice Nowell
       Appellee Christopher W. Tullis sued appellant LG Chem, Ltd. and others for

injuries he allegedly suffered when an 18650 lithium-ion battery manufactured by

LG Chem exploded in his pocket. LG Chem, a South Korean company, filed a

special appearance, which the trial court denied. In this interlocutory appeal, LG

Chem argues the trial court erred by denying its special appearance because Tullis

failed to allege the existence of purposeful contacts between LG Chem and Texas

   1
      The Honorable Leslie L. Osborne participated in the submission of this case; however, she did not
participate in the issuance of this memorandum opinion due to her resignation on October 24, 2022.
that relate or give rise to his claim, and the undisputed evidence disproves the

existence of such contacts. We affirm.2

                                           BACKGROUND
        Tullis sued LG Chem and others after a lithium-ion 18650 battery used in an

e-cigarette device exploded and injured him. Tullis alleged LG Chem marketed,

manufactured, designed, and sold defective 18650 lithium-ion batteries. Further, he

alleged, LG Chem placed its products, including its 18650 lithium-ion batteries, into

the stream of commerce with the expectation and intent that they would be sold in

Texas and they were sold in Texas, such that LG Chem purposefully availed itself

of the privileges and benefits of doing business in Texas.

           A.      LG Chem’s Special Appearance
        LG Chem filed a special appearance supported by an affidavit from Joon

Young Shin, a senior manager and authorized company representative. Shin averred

that LG Chem is not incorporated or headquartered in Texas. It is a Korean company

with its headquarters and principal offices in Seoul, South Korea. LG Chem has

    2
       This appeal is one of several cases in Texas involving allegedly defective 18650 battery cells
manufactured by LG Chem and used in vaping or electronic cigarette devices and in which LG Chem has
filed special appearances. See Hause v. LG Chem, Ltd., No. 08-20-00197-CV, 2022 WL 5241787 (Tex.
App.—El Paso Oct. 6, 2022, no pet. h.) (reversing trial court’s order granting LG Chem’s special
appearance); LG Chem, Ltd. v. Turner, No. 14-19-00326-CV, 2021 WL 2154075 (Tex. App.—Houston
[14th Dist.] May 27, 2021, no pet.) (mem. op.) (reversing trial court’s denial of LG Chem’s special
appearance and remanding for jurisdictional discovery); LG Chem, Ltd. v. Granger, No. 14-19-00814-CV,
2021 WL 2153761 (Tex. App.—Houston [14th Dist.] May 27, 2021, no pet.)(mem. op.) (reversing trial
court’s order denying special appearance and rendering order of dismissal for claims against LG Chem);
LG Chem Am., Inc. v. Morgan, No. 01-19-00665-CV, 2020 WL 7349483 (Tex. App.—Houston [1st Dist.]
Dec. 15, 2020, pet. filed)(mem. op.) (affirming trial court’s order denying LG Chem’s special appearance);
Schexnider v. E-Cig Cent., LLC, No. 06-20-00003-CV, 2020 WL 6929872 (Tex. App.—Texarkana Nov.
25, 2020, no pet.) (affirming trial court’s order granting LG Chem’s special appearance). In its Hause
opinion, the Eighth Court of Appeals summarized and analyzed these cases. See Hause, 2022 WL 5241787.
                                                  –2–
never had any physical presence in Texas, registered to do business in Texas, owned

or leased any real property in Texas, or had a registered agent, telephone number,

post office box, mailing address, or bank account in Texas.

      Shin averred that LG Chem manufactures lithium-ion “power cells for use in

specific applications by sophisticated companies.” The company does not design,

manufacture, distribute, advertise, or sell these power cells as standalone batteries

for sale to individual consumers and has never authorized any manufacturer,

wholesaler, distributor, retailer, or re-seller to do so either. Further, Shin averred,

LG Chem does not design, manufacture, distribute, or sell lithium-ion power cells

for use by individual consumers as replaceable, rechargeable power cells in

electronic cigarettes or vaping devices. Shin denied that the battery that allegedly

injured Tullis was designed or manufactured in Texas.

      After LG Chem filed its special appearance, Tullis sought and the trial court

permitted some jurisdictional discovery.

         B.     Tullis’s Response to LG Chem’s Special Appearance
      Tullis supported his response to the special appearance with information LG

Chem provided in discovery. In its discovery responses, LG Chem acknowledged

that if the cell that harmed Tullis was an 18650 cell, then it would have been

manufactured by LG Chem in Korea and China. Tullis asked LG Chem to identify

every purchaser, distributor, and reseller to whom it or its American subsidiaries sold

                                         –3–
“the LG MG1 and/or LG HG2,3 and/or the 18650 battery” in Texas since January 1,

2012. LG Chem responded with a list of ten companies, including Green Battery

Technologies LLC and Black and Decker, Inc., which has multiple manufacturing

plants in Texas. Tullis provided invoices showing LG Chem shipped 18650 batteries

to Green Battery Technologies in Texas. LG Chem also provided a “list of LG

Chem’s and its American subsidiaries’ annual revenue related to sales and shipments

of 18650 lithium-ion cells into Texas since 2012.” The revenue numbers are:

              2012: $140,884
              2013: $64,170
              2014: $1,811,845
              2015: $481,556
              2016: $260,270
              2017: $1,651,148
              2018: $1,095,559
              2019: $138,600
              2020: $4,040,710.

       After considering the pleadings, evidence, and arguments of counsel, the trial

court overruled LG Chem’s special appearance. This appeal followed.

                                       GOVERNING LAW

          A.      Personal Jurisdiction
       Whether a trial court has personal jurisdiction over a nonresident defendant is

a question of law that we review de novo. Old Republic Nat’l Title Ins. Co. v. Bell,

549 S.W.3d 550, 558 (Tex. 2018). When, as here, a trial court does not issue findings

   3
      No party clarified what “LG MG1” and “LG HG2” are. However, from the record, they appear to be
types of 18650 batteries.
                                               –4–
of fact and conclusions of law with its ruling on a special appearance, we imply all

relevant facts necessary to support the judgment that are supported by evidence. Id.

      Texas courts may exercise personal 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.” Id. The long-arm statute provides in relevant part that “[i]n addition to

other acts that may constitute doing business,” a nonresident does business in Texas

if the nonresident commits a tort in whole or in part in the state. TEX. CIV. PRAC. &

REM. CODE ANN. § 17.042. However, a plaintiff alleging that a tort was committed

in Texas does not necessarily satisfy the United States Constitution. Bell, 549

S.W.3d 559.

      To establish personal jurisdiction over a nonresident, federal due process

requires that the nonresident must have “certain minimum contacts with [the forum

state] such that the maintenance of the suit does not offend ‘traditional notions of

fair play and substantial justice.’” Id. (quoting Int’l Shoe Co. v. State of Wash., Office

of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945)). A defendant

establishes minimum contacts with a state when it “purposefully avails itself of the

privilege of conducting activities within the forum state, thus invoking the benefits

and protections of its laws.” Id. Thus, the defendant’s activities “must justify a

conclusion that the defendant could reasonably anticipate being called into a Texas

                                           –5–
court.” Id. Courts consider three factors when determining whether a defendant

purposefully availed itself of the privilege of conducting activities in Texas:

      First, only the defendant’s contacts with the forum are relevant, not the
      unilateral activity of another party or a third person. Second, the
      contacts relied upon must be purposeful rather than random, fortuitous,
      or attenuated. . . . Finally, the defendant must seek some benefit,
      advantage or profit by availing itself of the jurisdiction.

Id. (quoting Moncrief Oil Int’l Inc. v. OAO Gazprom, 414 S.W.3d 142, 151 (Tex.

2013)).

      A defendant’s contacts may give rise to general or specific jurisdiction. Id.

General jurisdiction, which is not at issue in this case, is established by continuous

and systematic contacts with a state. Id. Specific jurisdiction exists when the cause

of action arises from or is related to a defendant’s purposeful activities in the state.

Id. For a Texas court to exercise specific jurisdiction over a defendant, “(1) the

defendant’s contact with Texas must be purposeful, and (2) the cause of action must

arise from those contacts.” Id. When analyzing specific jurisdiction, we focus on the

relationship between the forum, the defendant, and the litigation. Id.

          B.    Purposeful Availment
      The touchstone of jurisdictional due process is “purposeful availment.”

Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 9 (Tex. 2021) (cleaned

up). There must be “some act by which the defendant purposefully avails itself of

the privilege of conducting activities within the forum State, thus invoking the

benefits and protections of its laws.” Id. Where the defendant has “deliberately”

                                          –6–
engaged in significant activities within a state, he “manifestly has availed himself of

the privilege of conducting business there.” Id. (quoting Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 475–76 (1985) (cleaned up)). And because such activities

are shielded by the “benefits and protections” of the forum’s laws, it is

“presumptively not unreasonable to require him to submit to the burdens of litigation

in that forum as well.” Id. (quoting Rudzewicz, 471 U.S. at 476).

       When assessing minimum contacts, we look only to the defendant’s contacts

with the forum and not the “unilateral activity” of some third party to determine

whether minimum contacts with the state are satisfied. Id. Nor will “fortuitous” or

“attenuated” contacts be relied upon to satisfy the requirements of due process. Id.

Rather, whether due process is satisfied depends upon “the quality and nature of the

activity in relation to the fair and orderly administration of the laws.” Id. (quoting

Int’l Shoe, 326 U.S. at 319).

       When a corporation purposefully avails itself of the privilege of doing

business in the forum state, it has “clear notice that it is subject to suit there, and can

act to alleviate the risk of burdensome litigation by procuring insurance, passing the

expected costs on to customers, or, if the risks are too great, severing its connection

with the State.” Id. (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

286, 297 (1980)). A nonresident defendant may “purposefully avoid” a particular

jurisdiction “by structuring its transactions so as neither to profit from the forum’s

laws nor be subject to its jurisdiction.” Id. But “a truly interstate business may not

                                           –7–
shield itself from suit by a careful, but formalistic structuring of its business

dealings.” Id.

      “The stream-of-commerce doctrine is a useful tool to conceptualize minimum

contacts in product liability cases.” Id. Its utility derives from the recognition that

specific jurisdiction over nonresident manufacturers is often premised on “indirect”

sales by independent distributors or agents. Id. But a seller’s awareness “that the

stream of commerce may or will sweep the product into the forum State does not

convert the mere act of placing the product in the stream into an act purposefully

directed toward the forum State.” Id. at 9-10. Texas courts require “additional

conduct” evincing “an intent or purpose to serve the market in the forum State,”

whether directly or indirectly. Id. at 10 (cleaned up). Evidence of such additional

conduct may include advertising in the forum state, soliciting business through

salespersons, or creating, controlling, or employing the distribution system that

brought the product into the forum state. Id.

      While “a nonresident need not have offices or employees in a forum state” to

purposefully avail itself of the forum, the operation of a sales and distribution

network or directing marketing efforts to the forum state in the hope of soliciting

sales may render a nonresident subject to the state’s jurisdiction in disputes arising

from that business. Id. (cleaned up).

                                         –8–
         C.     Burden Shifting
      In a challenge to personal jurisdiction, the plaintiff and the defendant bear

shifting burdens of proof. Bell, 549 S.W.3d at 559. The plaintiff bears the initial

burden to plead sufficient allegations to bring the nonresident defendant within the

reach of Texas’s long-arm statute. Id. The plaintiff “must meet its initial burden on

a special appearance by pleading, in its petition, sufficient allegations to invoke

jurisdiction under the Texas long-arm statute. Steward Health Care Sys. LLC v.

Saidara, 633 S.W.3d 120, 129 (Tex. App.—Dallas 2021, no pet.) (en banc). Once it

has done so, the burden shifts to the defendant to negate all bases of personal

jurisdiction alleged by the plaintiff. Bell, 549 S.W.3d at 559. The defendant can

negate jurisdiction on either a factual or legal basis. Kelly v. Gen. Interior Constr.,

Inc., 301 S.W.3d 653, 659 (Tex. 2010). A defendant negates jurisdiction on a factual

basis by presenting evidence to disprove the plaintiff’s jurisdictional allegations. Id.

“The plaintiff can then respond with its own evidence that affirms its allegations,

and it risks dismissal of its lawsuit if it cannot present the trial court with evidence

establishing personal jurisdiction.” Id. (footnotes omitted). A defendant negates

jurisdiction on a legal basis by showing:

      [E]ven if the plaintiff’s alleged facts are true, the evidence is legally
      insufficient to establish jurisdiction; the defendant’s contacts with
      Texas fall short of purposeful availment; for specific jurisdiction, that
      the claims do not arise from the contacts; or that traditional notions of
      fair play and substantial justice are offended by the exercise of
      jurisdiction.

Id.
                                          –9–
                                      ANALYSIS

         A.     Pleading Sufficient Jurisdictional Allegations
      LG Chem, a foreign corporation with its principal place of business in South

Korea, is a nonresident defendant. Accordingly, Tullis had the initial burden of

pleading sufficient allegations to permit a court to exercise personal jurisdiction over

the company. “This minimal pleading requirement is satisfied by an allegation that

the nonresident defendant is doing business in Texas or committed tortious acts in

Texas.” Saidara, 633 S.W.3d at 126. To meet his burden, Tullis pleaded that LG

Chem placed its products, including its 18650 batteries, into the stream of commerce

with the expectation and intent that the batteries would be sold in Texas, and the

company’s 18650 batteries were sold in Texas. Further, Tullis alleged, he was

injured by one of LG Chem’s defectively designed and manufactured 18650

batteries that he purchased in Texas when it exploded. We conclude these allegations

are sufficient to meet Tullis’s minimal initial pleading burden. See id.

         B.     Purposeful Availment
      LG Chem then bore the burden to negate all bases of jurisdiction alleged by

Tullis. See Bell, 549 S.W.3d at 559. LG Chem does not deny that it has contacts with

Texas; rather, LG Chem denies that it has ever sought to serve a Texas consumer

market for standalone batteries. LG Chem acknowledges it manufactures 18650

power cells for use in specific applications by sophisticated manufacturers, but

argues that, “[a]t most, LG Chem manufactured and placed into the stream of

                                         –10–
commerce a cell that eventually reached Texas and Tullis as a standalone consumer

battery because of the unilateral acts of third parties.”

      LG Chem’s only evidence supporting its special appearance is Shin’s

affidavit. While Shin averred that LG Chem manufactures lithium-ion “power cells

for use in specific applications by sophisticated companies” and the batteries are not

designed or manufactured as standalone batteries for sale to individual consumers,

he did not deny that LG Chem manufactured and distributed the 18650 batteries to

Texas customers for some applications. The documents produced during

jurisdictional discovery confirm that LG Chem shipped its 18650 batteries into

Texas, it sold its 18650 batteries to at least ten Texas customers, and its sales to

Texas customers produced several million dollars in revenue for LG Chem during

the preceding eight years. Accordingly, Tullis’s undisputed jurisdictional allegations

and the evidence show that LG Chem sold batteries of the type that allegedly injured

Tullis to customers in Texas, did so for many years, and earned millions of dollars

in revenue from those sales. See Morgan, 2020 WL 7349483, at *7. Although LG

Chem did not sell the 18650 battery that injured Tullis directly to him and, based on

the evidence, did not intend to serve a consumer market in Texas, when a foreign

manufacturer “specifically targets Texas as a market for its products,” as LG Chem

did, “that manufacturer is subject to a product liability suit in Texas based on a

product sold here, even if the sales are conducted through a Texas distributor or

                                         –11–
affiliate.” Id. at *9 (quoting Spir Star AG v. Kimich, 310 S.W.3d 868, 874 (Tex.

2010)).

      LG Chem argues that jurisdiction does not exist over a nonresident that merely

places a product into the stream of commerce with an awareness that the product

could move into the forum state, which is what happened in this case. We disagree

with LG Chem’s analysis. Tullis provided evidence of more than just a few isolated

sales from LG Chem to Texas companies. Tullis’s evidence shows LG Chem has

shipped batteries to at least ten companies in Texas, shipped batteries into Texas for

at least eight consecutive years, and earned several million dollars in revenue from

those shipments. The evidence demonstrates that LG Chem’s batteries did not

fortuitously end up in Texas after being placed in the stream of commerce; the

evidence shows LG Chem purposefully engaged in business in the Texas market.

LG Chem had more than mere knowledge that its products could end up in Texas —

LG Chem itself shipped the products to Texas. See Hause, 2022 WL 5241787, at *9

(citing Semperit, 508 S.W.3d at 582 (noting the manufacturer’s contacts went

beyond foreseeability that its products would be used in Texas because it actually

shipped those products to Texas)). LG Chem did more than place its product into the

stream of commerce.

      LG Chem argues throughout “that its contacts do not evince purposeful

availment of the e-cigarette or vaping industry or the market for standalone

consumer batteries in Texas.” Id. at *10 (citing Kelly, 301 S.W.3d at 658–59). “This

                                        –12–
nuance is not relevant for jurisdictional purposes because the longstanding inquiry

is whether LG Chem targeted the Texas market, not whether it targeted the market

in a particular industry.” Id. (citing Bristol-Myers Squibb Co. v. Superior Court of

California, San Francisco Cnty., ––– U.S. ––––, 137 S.Ct. 1773, 1779, 198 L.Ed.2d

395 (2017) (“The primary focus of our personal jurisdiction inquiry is the

defendant’s relationship to the forum State.”); Moki Mac, 221 S.W.3d at 575

(personal jurisdiction is proper when a defendant establishes minimum contacts with

the forum state)).

      The undisputed evidence shows LG Chem deliberately engaged in significant

activities in Texas and purposefully availed itself of the privileges of conducting

business in Texas, thus invoking the benefits and protections of Texas law. By

purposefully availing itself of the privilege of doing business in Texas, LG Chem

had clear notice it would be subject to suit in the state.

         C.     Arise from or Relate to
      For specific jurisdiction, LG Chem’s alleged liability must arise from or be

related to its purposeful contacts with the state; that is, there must be a substantial

connection between the company’s forum-state contacts and the underlying

litigation. See Spir Star, 310 S.W.3d at 872; Moki Mac, 221 S.W.3d at 585. When

considering whether the substantial connection requirement is met in this case, we

separate LG Chem’s jurisdictional arguments from its arguments on the merits. See

Hause, 2022 WL 5241787, at *12. LG Chem argues it only sells its battery cells to

                                          –13–
“sophisticated” manufacturers and not to individual consumers for use in electronic

cigarettes or vaping devices, and Shin’s affidavit states that LG Chem manufactures

the 18650 power cells “for use in specific applications by sophisticated

manufacturers.” “LG Chem has embellished its argument with nuances that pertain

to the merits of a products liability case.” Id. (citing Morgan, 2020 WL 7349483, at

*10 (stating the same)). “That a consumer abuses a defendant’s product by using it

in an application it was not designed for or in a manner the defendant did not intend,

thereby causing injury, is not jurisdictionally relevant.” Id. (citing Bell, 549 S.W.3d

at 560 (“Jurisdiction cannot turn on whether a defendant denies wrongdoing—as

virtually all will.”)). Rather, so long as the nonresident defendant targets the forum

market for the precise product at issue in the litigation, the defendant is subject to

jurisdiction for any claims arising out of or related to its sale of the allegedly

defective products. Id. (citing Ford Motor Co. v. Montana Eighth Judicial Dist.

Court, 141 S. Ct. 1017, 1027 (2021)).

      As discussed above, LG Chem does not deny it placed 18650 batteries, the

type of battery that allegedly injured Tullis, into the stream of commerce with the

expectation and intent that the batteries would be sold in Texas, and the company’s

products were sold in Texas. LG Chem fostered a market for its lithium-ion batteries

in Texas, which is the precise product at issue in this case. See Hause, 2022 WL

5241787, at *11. Tullis’s claim that these batteries are defective, which caused his

vaping device to explode and injure him, is “related to a defendant’s contacts where

                                        –14–
the defendant serves a market for the allegedly defective products in the forum state.

Id. (discussing Ford, 141 S.Ct. at 1027). “That is, where the defendant serves a

market for allegedly defective products in a forum state and a plaintiff sues for injury

related to the defect, jurisdiction over the defendant is proper.” Hause, 2022 WL

5241787, at *11 (discussing Ford, 141 S.Ct. at 1027).

      We conclude the substantial-connection requirement also is met in this case.

         D.     Fair Play and Substantial Justice
      Because LG Chem’s Texas contacts support jurisdiction, the next inquiry is

whether jurisdiction is consistent with traditional notions of fair play and substantial

justice. Spir Star, 310 S.W.3d at 878. However, LG Chem does not raise any

argument that a trial court exercising jurisdiction would offend traditional notions of

fair play and substantial justice. See Spir Star, 310 S.W.3d at 878–79 (party must

present “a compelling case that the presence of some consideration would render

jurisdiction unreasonable” to defeat jurisdiction). Accordingly, any argument LG

Chem could have raised has been waived. See Morgan, 2020 WL 7349483, at *13

(concluding LG Chem waived argument that asserting jurisdiction would offend

traditional notions of fair play and substantial justice by not arguing the issue).

                                         –15–
                                CONCLUSION
     We overrule LG Chem’s sole issue, and we affirm the trial court’s order

denying LG Chem’s special appearance.

                                        /Erin A. Nowell//
                                        ERIN A. NOWELL
                                        JUSTICE

211056f.p05

                                   –16–
                           Court of Appeals
                    Fifth District of Texas at Dallas
                                 JUDGMENT

LG CHEM, LTD., Appellant                     On Appeal from the 193rd Judicial
                                             District Court, Dallas County, Texas
No. 05-21-01056-CV          V.               Trial Court Cause No. DC-19-05481.
                                             Opinion delivered by Justice Nowell.
CHRISTOPHER W. TULLIS,                       Justice and Smith participating.
Appellee

     In accordance with this Court’s opinion of this date, the trial court’s
November 12, 2021 Order overruling LG Chem, Ltd.’s special appearance is
AFFIRMED.

      It is ORDERED that appellee Christopher W. Tullis recover his costs of this
appeal from appellant LG Chem, Ltd.

Judgment entered this 16th day of November 2022.

                                      –17–