Doan v. Wal-Mart Stores Inc ( 2004 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 96-30744
Summary Calendar
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LAURA MAY KIMBALL DOAN,
Plaintiff-Appellant,
VERSUS
CONSUMER TESTING LABORATORIES (FAR EAST) LIMITED;
CONSUMER TESTING LABORATORIES INCORPORATED; and
PACIFIC RESOURCES EXPORT (USA) LTD.,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Western District of Louisiana
(94-CV-1602)
_________________________
Before SMITH, DUHÉ, and BARKSDALE, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
Laura May Kimball Doan appeals the dismissal of her claims
against Consumer Testing Laboratories, Inc., Consumer Testing
Laboratories (Far East) Ltd. (collectively, the “CTL Companies”),
and Pacific Resources Export (USA) Ltd. (“PREL-USA”), for lack of
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited circumstances
set forth in 5TH CIR. R. 47.5.4.
in personam jurisdiction, pursuant to FED. R. CIV. P. 12(b)(6).
Finding no error, we affirm.
I.
After being injured while seated in a rocking chair that
allegedly fell over during normal usage, Doan filed suit against
the Jennings, Louisiana, Wal-Mart store from which she purchased
the rocker, Wal-Mart Stores, Inc., Victory Land Entertainment
Co., Ltd., the manufacturer of the rocker, and their respective
insurers. Doan amended her complaint to add the CTL Companies,
which provide pre-market quality testing services to Wal-Mart
Stores, Inc., and PREL-USA, which provides housing and other
accommodations to the representatives of its foreign parent PREL,
Wal-Mart’s overseas purchasing agent, when said representatives
present product samples to Wal-Mart buyers in the United States.
Doan later settled her claims with the Wal-Mart and Victory
Land defendants but maintained her actions against the CTL
Companies and PREL-USA. Upon motion by the remaining defendants,
the district court granted each defendant's motion to dismiss for
lack of personal jurisdiction.
II.
A.
2
The Due Process Clause of the Fourteenth Amendment1 limits
the power of a state to exercise personal jurisdiction over a
nonresident defendant, except where that defendant has “certain
minimum contacts with [the forum] such that the maintenance of
the suit does not offend 'traditional notions of fair play and
substantial justice.'” International Shoe Co. v. Washington, 326
U.S. 310, 316 (1945) (citation omitted). The “minimum contacts”
must evince the nonresident defendant’s intent to avail itself
purposefully of the privilege of conducting activities within the
forum state, thus invoking the benefits of and protections of the
forum’s laws. See Burger King Corp. v. Rudzewicz, 471 U.S. 462,
475 (1985).
Where the cause of action alleged relates to the nonresident
defendant’s contact with the forum state, “specific jurisdiction”
is appropriate where the defendant’s minimum contacts result from
its purposeful contacts with the state, rather than from the
unilateral activities of the claimant or a third party. See
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98
(1980). Where the claimant alleges harms caused by a product
within the forum state, the court has specific jurisdiction over
the nonresident defendant to the extent that the defendant
1
Because we have concluded previously that the Louisiana Long-Arm Statute,
LA. REV. STAT. ANN. § 13:3201 (West. 1968 & Supp. 1984), extends to the full limits
of the Due Process Clause, we apply circuit precedent construing the limits of
such due process. See Bean Dredging Corp. v. Dredge Tech. Corp., 744 F.2d 1081,
1083 (5th Cir. 1984).
3
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. See id. Where, however, the cause of action
does not arise from or relate to the nonresident defendant’s
purposeful conduct within or directed at the forum state, a court
may exercise “general jurisdiction” over a defendant that has
continuous and systematic contacts with the forum state. See
Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408,
418-19 (1984).
Once a court determines that a nonresident defendant has
sufficient related or unrelated minimum contacts with the forum
state, it must then consider whether the exercise of personal
jurisdiction would “offend traditional notions of fair play and
substantial justice.” International Shoe, 326 U.S. at 316. The
factors to be considered are (1) the burdens upon the nonresident
defendant; (2) the interests of the forum state in the litiga-
tion; (3) the plaintiff’s interest in securing relief; (4) the
interstate judicial systems’ interest in obtaining the most
efficient resolution of controversies; and (5) the shared inter-
ests of the states in furthering fundamental substantive social
policies. See World-Wide Volkswagen, 444 U.S. at 292.
B.
Absent any dispute regarding the relevant facts, we review
4
de novo the district court’s decision not to exercise personal
jurisdiction over a nonresident defendant. See Ham v. LaCienega
Music Co., 4 F.3d 413, 415 (5th Cir. 1993). We construe all
jurisdictional factual disputes in favor of the party seeking to
invoke jurisdiction. See Bullion v. Gillespie, 895 F.2d 213, 217
(5th Cir. 1990).
Doan argues first that Louisiana courts may exercise spe-
cific jurisdiction over the CTL Companies2 because they “knew
that in acting as the tester and quality control department of a
national retailer like Wal-Mart, they could reasonably expect to
be subject to the jurisdiction of the courts where these products
were sold, used, and caused injury.” It is undisputed that the
CTL Companies do not own or manufacture either the allegedly
defective rocker or any of its constituent parts; their sole
function is to conduct pre-market testing and inspection of
products that later may be purchased by Wal-Mart buyers and sold
at Wal-Mart retail stores.3 The CTL Companies do not know
2
We address together Doan’s claims against CTL and CTL (Far East) because
Doan alleges that each is in fact the same entity physically located in different
places. That is, because CTL (Far East) is owned solely by Stewart Satter (the
100% owner of CTL) and CTL, because the only officers and directors of CTL (Far
East) are Stewart, his wife, and his son, and because each acts as Wal-Mart’s
quality control department, Doan contends that they are the same. Because our
analysis does not turn upon this issue, we assume arguendo that Doan’s contention
is correct. See, e.g., Rashidi v. American President Lines, 96 F.3d 124 (5th
Cir. 1996) (noting that we may assume arguendo the validity of any facts or legal
arguments in controversy to the extent that each does not affect the ultimate
disposition of the case).
3
In addition to actually testing and inspecting the products, the pre-
market testing and inspection activities include educating Wal-Mart buyers about
(continued...)
5
whether a product that they test will ever be placed into the
stream of commerceSStheir influence on a particular product is
limited to rendering test results. Wal-Mart itself has sole
discretion to make and sole participation in the final purchasing
decision.
Doan emphasizes, however, that the CTL Companies are aware
that Wal-Mart has stores in Louisiana and thus that they could
have foreseen that the products that they test for Wal-Mart could
find their way to Louisiana via Wal-Mart’s stream of commerce.
We have held previously that foreseeability that products might
end up in the stream of commerce is not a sufficient basis,
standing alone, for a court to invoke specific personal jurisdic-
tion. See Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert.
denied, 115 S. Ct. 322 (1994). “'[T]he foreseeability that is
critical to due process analysis is . . . that the defendant’s
conduct and connection with the forum State are such that he
should reasonably anticipate being haled into court there.'” Id.
at 648-49 (quoting World-Wide Volkswagen, 444 U.S. at 295)
(emphasis added). Such a foreseeability requirement is satisfied
where the defendant purposefully directs his activities at the
forum state by, among other things, actually injecting a product
into the stream of commerce. See Wilson, 20 F.3d at 649 (citing
(...continued)
the product, testing competitive products from other manufacturers, and after-
production testing to ensure that Wal-Mart receives the product that had been
tested previously.
6
Burger King, 471 U.S. at 476).4
Hence, specific personal jurisdiction will attach only if
the CTL Companies have in fact injected a product into the stream
of commerce. We do not so find. The decision whether to place
any of the products tested by the CTL Companies into the stream
of commerce is entrusted to the sole discretion of Wal-Mart, and,
unlike other nonresident defendants against whom we have invoked
specific personal jurisdiction, the CTL Companies are not a
conduit in the seamless web of interactions that injects a
product into the stream of commerce.5 Although the testing
4
The Supreme Court's and this court's jurisprudence on the stream of
commerce requirements for specific personal jurisdiction are not models of
clarity. In Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1987), four
Justices endorsed the “stream of commerce plus” theory, by which jurisdiction
attaches only if the nonresident defendant injected products into the stream of
commerce plus engaged in some additional conduct directed toward the forum state
(i.e. advertising in the forum). See id. at 112 (O’Connor, J., writing for the
Court). Four other Justices endorsed the “stream of commerce only” theory, by
which the nonresident defendant's placing a product into the stream of commerce
with knowledge that the product may reach the forum state is sufficient to
subject it to specific personal jurisdiction. See id. at 117 (Brennan, J.,
concurring).
In light of the Court’s split in Asahi, we have noticed our intention
to follow the “stream of commerce only” theory and to reject the “stream of
commerce plus” theory. See Ruston Gas, 9 F.3d at 420 (citing Irving v. Owens-
Corning Fiberglas Corp., 864 F.2d 383, 386 (5th Cir.) (“Because the Court’s
splintered view of minimum contacts in Asahi provides no clear guidance on this
issue, we continue to gauge Jugometal's contacts with Texas by the stream of
commerce standard as described in World-Wide Volkswagen and embraced in this
circuit.”), cert. denied, 493 U.S. 823 (1989)).
5
See, e.g., Ruston Gas, 9 F.3d at 420 (finding specific personal jurisdiction
in Texas against a Minnesota shipper that delivered products to a shipper destined
for Texas); Irving, 864 F.2d at 387 (finding specific personal jurisdiction in Texas
against a Yugoslavian licensed trading company that sold raw asbestos to an American
broker who then sold the asbestos to a Texas asphalt company); Bean Dredging, 744
F.2d at 1085 (finding specific personal jurisdiction in Louisiana against a
(continued...)
7
results issued by the CTL Companies with respect to a particular
product may in fact influence Wal-Mart’s decision to place a
product into the stream of commerce, the CTL Companies themselves
do not purposefully direct their activities toward Louisiana
sufficiently to confer specific personal jurisdiction upon
Louisiana courts; the unilateral activity of Wal-Mart in deciding
to place a product into the stream of commerce is simply insuffi-
cient.
C.
Doan next argues that Louisiana may exercise general per-
sonal jurisdiction over the CTL Companies because they have
continuous and systematic contacts with Louisiana. According to
Doan, that the CTL Companies conduct similar pre-market quality
testing for other national retailers that have stores in Louisi-
ana, including Venture Stores, Home Depot, and Ace Hardware,
among others, “demonstrates an ongoing, continuous series of
contacts with Louisiana, giving rise to 'general' jurisdiction
over them.”
It is undisputed, however, that the CTL Companies (1) have
no offices or other facilities in Louisiana, nor do they own any
property in the state; (2) have no employees living or working
(...continued)
Washington manufacturer of steel castings that sold the castings to a California
cylinder maker, which cylinders were used ultimately as parts of a dredge
constructed by a Louisiana shipper).
8
within the state; (3) maintain no bank accounts, telephone
listings, or other books or records in the state; (4) pay no
taxes in or to the state; (5) neither solicit nor advertise for
business in the state; and (6) do not manufacture, broker, or
distribute any products that are placed into the stream of
commerce and may ultimately end up in Louisiana, nor do they
personally manufacture, broker, or distribute any products there.
Because the CTL Companies have no substantial, systematic, or
continuous contacts with Louisiana, Louisiana courts may not
exercise general personal jurisdiction over them. See Wilson, 20
F.3d at 649-50.6
D.
Doan contends finally that Louisiana courts have specific
personal jurisdiction7 over PREL-USA, the liaison between its
parent company PREL, the exclusive overseas buyer for Wal-Mart,
and Wal-Mart. PREL-USA provides various services to the PREL
foreign subsidiaries when representatives of these subsidiaries
visit Wal-Mart buyers in Arkansas, including arranging housing
and transportation, scheduling appointments, receiving product
samples, and providing a place for the PREL representatives to
6
Because we find that the CTL Companies do not have minimum contacts with
Louisiana, we need not decide whether conferring jurisdiction on Louisiana courts
would offend traditional notions of fair play and substantial justice.
7
Doan does not raise on appeal the question whether Louisiana courts may
assert general personal jurisdiction over PREL-USA.
9
show product samples to the Wal-Mart buyers. According to Doan,
specific jurisdiction is appropriate because “PREL-USA facili-
tates the review, testing, purchase, and sale of products . . .
and the delivery of that product into the stream of commerce that
ultimately reached Laura Doan and caused her injury.”
Doan’s reliance on Irving and Bean Dredging is unavailing;
each is factually distinct. As discussed above, Irving involved
the application of personal jurisdiction in Texas against a
Yugoslavian licensed trading company that sold raw asbestos to an
American broker who then sold the asbestos to a Texas asphalt
company, see 864 F.2d at 387, whereas Bean Dredging conferred
personal jurisdiction on the Louisiana courts against a Washing-
ton manufacturer of steel castings that sold the castings to a
California cylinder maker, which cylinders were used ultimately
as parts of a dredge constructed by a Louisiana shipper, see 744
F.2d at 1085.
Each of these cases involved nonresident defendants that
were links in the continuous chain of brokers, manufacturers, and
distributors that permitted the introduction of a product into
the stream of commerce. That is, because a particular product or
component of the product passed through the hands of the nonresi-
dent defendant during its journey into the stream of commerce,
the defendant’s “touching” of the product or component was
sufficient to satisfy the requirement that it personally inject a
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product into the stream of commerce.
In contrast, PREL-USA is not a link in the chain of events
that injects a particular product into the stream of commerce.
Granted, PREL-USA facilitates Wal-Mart’s process of determining
which products to place into the stream of commerceSSby accommo-
dating the housing and other logistical needs of its foreign
representatives so that they may perform more easily their task
of presenting product samples to the Wal-Mart buyersSSbut the
services it provides are not the conduit (or a link therein) by
which products enter into the stream of commerce, nor are they
sufficiently connected with a particular product so as actually
to “touch” the product. PREL-USA simply helps its foreign
representatives present product samples to Wal-Mart buyers, which
buyers then choose unilaterally to purchase the product and then
place it into the stream of commerce, or not to purchase the
product. Mere foreseeability that a product might end up in the
stream of commerce because of the unilateral act of another is an
insufficient ground for specific personal jurisdiction. See
Wilson, 20 F.3d at 649 (citing Burger King, 471 U.S. at 476).
AFFIRMED.
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