Court Opinion

ID: 9480110
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:38:46.821288+00
Date Added: 2024-06-11T17:47:29.787436
License: Public Domain

REAVLEY, Circuit Judge,
dissenting:
I am not convinced that Corinth Pipe-works established the type of minimum contacts with Texas that would justify subjecting it to a Texas court’s jurisdiction in this contract action. I also believe that, even if Corinth had established minimum contacts with Texas, the exercise of jurisdiction under the circumstances of this case was unreasonable. Because I disagree with the majority’s conclusion that the district court’s exercise of jurisdiction over Corinth complied with the requirements of the due process clause, I dissent.
I. Minimum Contacts
A court may premise the exercise of jurisdiction over a nonresident defendant on either a specific or a general jurisdiction analysis. In either case, the “constitutional touchstone” of the due process inquiry is “whether the defendant purposefully established ‘minimum contacts’ in the forum State.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985) (citation omitted). We have explained the object of the minimum contacts analysis in the following terms:
We must look to see whether there has been some act by which the nonresident “ ‘purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws.’ The defendant’s conduct and connection with the forum state must be such that [it] should reasonably anticipate being haled into court in the forum state.”
Stuart v. Spademan, 772 F.2d 1185, 1190 (5th Cir.1985) (citations omitted).
A. Specific Jurisdiction
In a specific jurisdiction case, a court should focus its analysis on the relationship between the defendant, the forum, and the litigation. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 & n. 8, 104 S.Ct. 1868, 1872 & n. 8, 80 L.Ed.2d 404 (1984); Southmark Corp. v. Life Investors, Inc., 851 F.2d 763, 772 (5th Cir.1988). A court’s exercise of jurisdiction is appropriate if “the defendant has ‘purposefully directed’ his activities at residents of the forum, and the litigation results from alleged injuries that ‘arise out of or relate to’ those activities.” Burger King Corp., 471 U.S. at 472, 105 S.Ct. at 2182, 85 L.Ed.2d 528 (citations omitted).
The majority concludes that the district court properly exercised jurisdiction because Corinth delivered its oil well casing into the “stream of commerce” with the expectation that it would be used in Texas. I believe that the majority’s reliance on the stream of commerce rationale is inappropriate. The Supreme Court has explained the applicability of that jurisdictional doctrine.
[I]f the sale of a product of a manufacturer or distributor ... is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others. The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). As this excerpt suggests and other courts have recognized, the stream of commerce rationale developed as a means for consumers injured by defective products to acquire jurisdiction over the products’ manufacturers in products liability actions. See Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 298 (3d Cir.), cert. denied, 474 U.S. 980, 106 S.Ct. 383, 88 L.Ed.2d 336 (1985); Pacific Atl. Trading Co. v. M/V Main Express, 758 F.2d 1325, 1330 n. 1 (9th Cir.1985); Nelson v. Park Indus., Inc., 717 F.2d 1120, 1124 (7th Cir.1983), cert. denied, 465 U.S. 1024, 104 S.Ct. 1277, 79 L.Ed.2d 682 (1984), 465 U.S. 1024, 104 S.Ct. 1278, 79 L.Ed.2d 682 *1079(1984); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 285 (3d Cir.), cert. denied, 454 U.S. 1085, 102 S.Ct. 642, 70 L.Ed.2d 620 (1981). The Supreme Court has concluded that, when a manufacturer has attempted to exploit the market in a state and one of its products has injured a consumer in that state, the manufacturer should foresee that it will be subject to the jurisdiction of that state’s courts in a suit by the consumer.
The considerations that justify reliance on the stream of commerce rationale in such circumstances, however, do not justify the exercise of jurisdiction in all cases. See Bearry v. Beech Aircraft Cory., 818 F.2d 370, 375 (5th Cir.1987); Max Daetwyler Corp., 762 F.2d at 299 & n. 12. Thus, a foreign manufacturer is not required to litigate all disputes in a distant jurisdiction simply because it may be required to litigate some disputes there. This is why the jurisdictional analysis in a specific jurisdiction case must focus on the particular dispute giving rise to the litigation. It is the contacts that relate to the subject matter of the litigation that determine whether the defendant has the minimum contacts with the forum necessary to justify the exercise of jurisdiction.
This litigation arose out of a contract dispute between Gulf Consolidated Services, Inc. and Corinth. Courts have not typically applied the stream of commerce rationale to justify the exercise of jurisdiction in contract disputes. Moreover, the public policy considerations that compel the application of the rationale in products liability cases are not present in breach of contract litigation, where the parties have had some type of direct contact and were able to structure the transaction in light of jurisdictional considerations. The Supreme Court has emphasized that “with respect to interstate contractual obligations, ... parties who ‘reach out beyond one state and create continuing relationships and obligations with citizens of another state’ are subject to regulation and sanctions in the other State for the consequences of their activities.” Burger King Corp., 471 U.S. at 473, 105 S.Ct. at 2182, 85 L.Ed.2d 528 (citation omitted). The issue in this case, therefore, is not whether Corinth placed the oil well casing into the stream of commerce, but whether with respect to the contract of sale Corinth purposefully availed itself of the benefits and protections of Texas law and thus could reasonably anticipate being haled into court in a dispute over that contract. See Stuart, 772 F.2d at 1194; Loumar, Inc. v. Smith, 698 F.2d 759, 764 (5th Cir.1983).
It is well-settled that “merely contracting with a resident of the forum state is insufficient to subject the nonresident to the forum’s jurisdiction.” Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778 (5th Cir.1986), cert. denied, 481 U.S. 1015, 107 S.Ct. 1892, 95 L.Ed.2d 499 (1987); see Burger King Cory., 471 U.S. at 478, 105 S.Ct. at 2185, 85 L.Ed.2d 528. Other “factors — prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing— ... must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.” Id. at 479, 105 S.Ct. at 2185, 85 L.Ed.2d 528.
There is absolutely no evidence in the record indicating that Corinth reached out and attempted to establish a contractual relationship with Gulf Consolidated. Corinth is a Greek corporation and has its principal factory and offices in Greece. Corinth is not registered to do business in Texas or in any other location in the United States, and it maintains no agents, offices, or assets in the United States. Gulf Consolidated has presented no evidence that Corinth advertises in Texas or in the United States. Corinth is licensed by the American Petroleum Institute, but at most this indicates Corinth was prepared to sell to purchasers requiring pipe meeting API standards. The licensing agreement in itself is not evidence that Corinth was attempting to exploit the Texas oil well pipe market.
With respect to the particular contract at issue, the record indicates that the center of the contracting process was in Greece. Gulf Consolidated opened negotiations with a telex to the Corinth offices in Athens. *1080Corinth manufactured the casing in its factory in Greece, and the risk of loss passed to Gulf Consolidated when the casing was loaded onto a ship in Port of Corinth, Greece. Payment was made and the transaction completed when Corinth drew upon a letter of credit previously opened by Gulf Consolidated at the National Bank of Greece in Athens. The only connection Corinth had with Texas was its exchange of telexes with Gulf Consolidated and the shipment of the casing, at Gulf Consolidated’s direction, to Texas. These contacts are insufficient to justify the exercise of jurisdiction over Corinth by a Texas court. See Stuart, 772 F.2d at 1193; Loumar, Inc., 698 F.2d at 763; Charia v. Cigarette Racing Team, 583 F.2d 184, 188-89 (5th Cir.1978).
The majority suggests that Corinth chartered the vessel that delivered the oil well casing to Texas and that this is significant for jurisdictional purposes. The contract between Corinth and Gulf Consolidated required Corinth to pay shipping costs and arrange delivery of the casing. There is testimony in the record that Corinth sometimes chartered1 vessels to deliver its pipe when the contract required it to arrange delivery. The witness who gave this testimony, however, indicated that he was not involved in this aspect of Corinth’s business and that he was not certain about how shipping arrangements were made. Moreover, there was absolutely no testimony about Corinth’s arrangements for delivery of the casing that was the subject of the contract involved in this case. Assuming the majority is correct that Corinth chartered the vessel that delivered the casing, this fact has no bearing on the jurisdictional analysis. The evidence in the record indicates that, regardless of the shipping arrangements, Corinth’s obligations under the contract were complete and the risk of loss passed to Gulf Consolidated when the casing was loaded onto the vessel in Greece and Corinth received a bill of lading. It thus would appear somewhat misleading to suggest that the mere chartering of a vessel to deliver the casing creates some kind of contact with Texas. Indeed, the cases cited above indicate that the mere shipment of goods to the forum does not justify the exercise of jurisdiction. In this case it is clear that what contact there is resulted not from any purposeful activity of Corinth but rather from the mere fortuity that Gulf Consolidated is a Texas resident and thus specified that the casing should be delivered to Texas. See Patterson v. Dietze, Inc., 764 F.2d 1145, 1147 (5th Cir.1985).
The contract at issue did not contemplate a long-term relationship with continuing obligations but instead involved an isolated sale of oil well casing. Although it has shown that Corinth knew its products would be shipped to Texas, Gulf Consolidated has not shown that Corinth “reached out” and created contacts with Texas such as would justify an exercise of specific jurisdiction in this contract dispute.
B. General Jurisdiction
In a general jurisdiction case, a court should focus its analysis on the sum total of the defendant’s contacts with the forum state to determine whether the defendant has established a general presence in the state. If there are sufficiently “continuous and systematic contacts between the State and the foreign corporation,” Bearry, 818 F.2d at 374 (emphasis omitted), the foreign corporation may be sued in that state's courts even though a specific jurisdiction analysis would not support a court’s exercise of jurisdiction. As discussed above, the issue remains whether the nonresident defendant purposefully established minimum contacts with the forum state, thereby invoking the benefits and protections of the state’s laws and making it foreseeable that the party would be haled into court there. See Stuart, 772 F.2d at 1191.
Gulf Consolidated notes that between 1978 and 1985 Corinth made forty-two sales of pipe, worth $73 million, to Texas buyers. The record indicates that each of these sales was made on the same terms as *1081the transaction that is the subject of this dispute. As was noted previously, there is no evidence that Corinth advertised or solicited business in Texas or otherwise reached out to Texas businesses to establish these contractual relationships. Indeed, the evidence suggests that Corinth made efforts to center its activities in Greece and thereby avoid actions that would subject it to the jurisdiction of Texas courts.
The Supreme Court consistently has recognized that the due process analysis “allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.” World-Wide Volkswagen Corp., 444 U.S. at 297, 100 S.Ct. at 567, 62 L.Ed.2d 490; see Burger King Corp., 471 U.S. at 472, 105 S.Ct. at 2182, 85 L.Ed.2d 528. In Bearry v. Beech Aircraft Corp., this court relied on those holdings in overturning a Texas federal district court’s exercise of jurisdiction over Beech Aircraft, a Delaware corporation with its principal place of business in Kansas. Beech Aircraft had the following contacts, among others, with Texas.
There was ... evidence that from 1980 to 1985, Beech engaged in a nationwide marketing campaign, employing over 300 marketing employees at its Kansas office. During this five year period, nearly $250 million of Beech manufactured products flowed to seventeen independent Texas dealers from sales carefully negotiated and completed in Kansas.... Beech also manufactured airframe assemblies for Bell Helicopters in Fort Worth, Texas, under contracts exceeding $72 million with all products delivered to Bell “F.O.B. Wichita.” Furthermore, Beech representatives visited the Texas dealers on occasion to assist them with maintenance problems, to demonstrate new aircraft, and to offer sales incentives to the Texas dealers, but only at a dealer’s request.
The flow of goods also ran to Beech who purchased over $195 million of goods and services from over 500 Texas vendors under sales agreements with Texas dealers carefully negotiated in Kansas, with delivery of all goods accepted in Kansas.
Bearry, 818 F.2d at 372-73. Notwithstanding these relationships with Texas residents, the court concluded that Beech Aircraft was not subject to the general jurisdiction of Texas courts. Specifically, the court held that
Beech exercised its right to structure its affairs in a manner calculated to shield it from the general jurisdiction of the courts of other states such as Texas, carefully requiring the negotiation, completion, and performance of all contracts in Kansas. Beech has not afforded itself the benefits and protections of the laws of Texas, but instead has calculatedly avoided them.
... [Distributors selling Beech manufactured products for their own account do not create minimum contacts sufficient to warrant general jurisdiction over Beech. Beech has no office in Texas, has no agents in Texas, and has no control over the Texas dealers. As such, Beech is not “doing business” in Texas.
In short, that Beech products flow into Texas does not create a general presence in that state. Each transaction was completed outside of Texas. The laws of Texas neither protected nor benefited Beech.
Id. at 375-76 (citation omitted). Because Beech Aircraft’s actions were not such as would result in the establishment of a general presence within the state, the court’s exercise of jurisdiction was improper.
Corinth’s contacts with Texas clearly are not as extensive as Beech Aircraft’s contacts set forth above. Like Beech Aircraft, Corinth took steps to avoid contact with Texas by centering its activities in Greece. Through its actions, Corinth successfully avoided any appearance either that it was “doing business” in Texas or that it was seeking the benefits and protections of Texas law. Corinth has not established a general presence in Texas, and accordingly, *1082it is not subject to the general jurisdiction of Texas courts.
II. Reasonableness
Even if a foreign corporation has established minimum contacts with the forum state, a forum court should refuse to exercise jurisdiction if requiring the corporation to defend in a particular case would not be fair and reasonable. See Burger King Corp., 471 U.S. at 476, 105 S.Ct. at 2184, 85 L.Ed.2d 528. The reasonableness determination will turn on the evaluation of several factors: (1) the burden on the defendant; (2) the interests of the forum state; (3) the plaintiffs interest in obtaining convenient and effective relief; (4) the interest in the efficient resolution of controversies; and (5) the interests of the several states in furthering fundamental substantive social policies. See Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 113, 107 S.Ct. 1026, 1033-34, 94 L.Ed.2d 92 (1987); Burger King Corp., 471 U.S. at 476-77, 105 S.Ct. at 2184, 85 L.Ed.2d 528.
Although the majority concedes that requiring Corinth to come to Texas to defend this suit involved a substantial burden that should be given “significant weight,” it nevertheless concludes that Texas’ interest in the litigation made the district court’s exercise of jurisdiction reasonable. Specifically, the majority argues that “Texas has a demonstrable interest in providing a forum for litigation involving an allegedly defective product where the product was intended for use in Texas, where the defect surfaced in Texas, and where the economic injury befell a Texas resident.” If the majority is suggesting that Texas has an interest in providing a forum because a Texas resident has an interest in the outcome of the litigation, the contention is without support in the record. The real party in interest is American Motorists Insurance Company, an Illinois corporation with its principal place of business in Illinois. All the Texas residents with some connection to the litigation have been made whole. If on the other hand the court is suggesting that Texas has an interest in providing a forum because maintenance of the suit in Texas will deter Corinth and other manufacturers from selling products that do not meet specified warranties, I would simply suggest that the deterrent factor in itself is an insufficient justification to make the assertion of jurisdiction reasonable. As the Supreme Court noted in Asahi Metal Industry, pressure to produce quality goods may be placed on manufacturers by the purchasers of their goods so long as those who ultimately sell the goods are subject to the forum state’s tort laws. See Asahi Metal Indus., 480 U.S. at 115, 107 S.Ct. at 1034, 94 L.Ed.2d 92. Texas has little if any interest in providing a forum for this litigation, and any interest it does have would not outweigh the heavy burden on Corinth.
Evaluation of the third and fourth factors does not compel the conclusion that the district court’s exercise of jurisdiction was reasonable. Although American Motorists does have an interest in obtaining indemnification, it has not shown that Texas is the only forum in which it could obtain that relief. Moreover, it is not clear why litigating this dispute in Texas is the most convenient forum when the real parties in interest are an Illinois corporation and a Greek corporation. Finally, this is not a situation in which a refusal by the Texas court to exercise jurisdiction would result in piecemeal litigation in multiple forums.
With respect to the fifth factor listed above, the Supreme Court has directed courts to carefully consider the interests of other nations before asserting jurisdiction over a foreign defendant. The Court has stated:
The procedural and substantive interests of other nations in a state court’s assertion of jurisdiction over an alien defendant ..., as well as the Federal interest in its foreign relations policies, will be best served by a careful inquiry into the reasonableness of the assertion of jurisdiction in the particular case, and an un*1083willingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum State. “Great care and reserve should be exercised when extending our notions of personal jurisdiction into the international field.”
Id. at 115, 107 S.Ct. at 1034-35, 94 L.Ed.2d 92 (quoting United States v. First Nat’l City Bank, 379 U.S. 378, 404, 85 S.Ct. 528, 542, 13 L.Ed.2d 365 (1965) (Harlan, J., dissenting)). Given the heavy burden on Corinth to defend in Texas, Corinth’s efforts to structure its relations to avoid the jurisdiction of Texas courts,2 the minimal interest of Texas in providing a forum for the litigation, and the Supreme Court’s direction to exercise caution in subjecting alien defendants to United States courts’ jurisdiction, I conclude the district court’s exercise of jurisdiction was unreasonable.
Corinth did not have sufficient minimum contacts with Texas to justify an exercise of either specific or general jurisdiction. Even if Corinth did establish minimum contacts, the district court’s exercise of jurisdiction was unreasonable under the facts of this case. Because the exercise of jurisdiction was not permissible under the due process clause, the judgment in favor of Gulf Consolidated should be vacated and the cause dismissed.

. It is not clear from the record exactly how the witness and attorney examining him were using the term "charter.” One interpretation of the testimony is that the witness simply meant that Corinth paid a shipping company to deliver the casing to the designated port.

. The majority suggests that Corinth’s "brisk activity” in shipping goods to Texas made the district court’s exercise of jurisdiction reasonable. I think it unlikely, however, that connections with a forum that are insufficient to establish minimum contacts would be significant in determining the reasonableness of an exercise of jurisdiction. To the extent Corinth’s actions are significant in evaluating reasonableness, I would place greater emphasis on the corporation’s efforts to center its activities in Greece than on sales to Texas businesses that sought out the foreign corporation to purchase its goods.