Michelin North America, Inc. v. Brenda Isela Lopez De Santiago, Individually and as Representative of the Estate of Eileen Arambula Lopez, and Pedro Arambula Meraz

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
MICHELIN NORTH AMERICA, INC.
§
Appellant, No. 08-17-00119-CV
§
v. Appeal from the
§
BRENDA ISELA LOPEZ DE County Court at Law No. 6
SANTIAGO, Individually and as §
Representative of the ESTATE OF of El Paso County, Texas
EILEEN ARAMBULA LOPEZ, §
Deceased, and PEDRO ARAMBULA (TC# 2016-DCV1638)
MERAZ §
Appellees. §
OPINION
Appellant, Michelin North America, Inc., has filed a motion for rehearing of our June 27,
2018, decision in this case. We deny Appellant’s motion for rehearing, withdraw our opinion
dated June 27, 2018, and substitute the following opinion in its place.
The fact pattern in this case involves a variation on a familiar theme in civil procedure
textbooks. An out-of-state tire manufacturer targets Texas as a marketplace and sells its products
extensively throughout Texas. The Texas resident driver of an automobile purchased in Texas is
injured and his Texas resident passengers are hurt or killed after one of the manufacturer’s tires
allegedly fails in Mexico. Can the tire manufacturer be haled to a Texas court to answer the driver
and passengers’ product liability charges?
Michelin North America says no. Conceding that it actively markets its products in Texas,
that it intends for its products to end up in Texas, that many of the tires it places into the stream of
commerce do in fact end up in the hands of Texas consumers, and that the company makes a
substantial amount of money from Texas sales, Michelin nevertheless insists the trial court cannot
assert jurisdiction over it based on a simple jurisdictional twist. Michelin only markets new tires
in Texas. This case involves a used Michelin tire, placed on the vehicle by a third party following
Michelin’s initial sale of the tire through distributors to an unknown party.
Michelin largely frames its argument in terms of the stream of commerce metaphor:
because an intervening retail customer removed the tire from the stream of commerce and then
sold the tire again on a secondary market before it ended up on the vehicle in question, Michelin
asserts that jurisdictional chain is broken for all purposes, and that no specific personal jurisdiction
exists over the company in Texas.
We are unconvinced by Michelin’s stream-of-commerce argument and will not today adopt
a per se rule holding that intervening retail sales necessarily cut off downstream personal
jurisdiction in products liability cases. We agree with Michelin that the plaintiffs’ status as Texas
residents, standing alone, is not enough to confer personal jurisdiction on Texas courts; there must
be a substantial connection between defendant Michelin’s allegedly tortious conduct, the injury
plaintiffs suffered, and the State of Texas. Walden v. Fiore, 571 U.S. 277, 134 S. Ct. 1115, 1123,
188 L. Ed. 2d 12 (2014). Thus, the real question in this case is not whether an intervening retail
sale serves as a jurisdictional chokepoint under the stream-of-commerce-plus test. The real
question is whether the plaintiff’s indirect purchase of an allegedly defective product on a
secondary market in Texas can sustain specific jurisdiction in a Texas court when most of the
2
tortious conduct and the brunt of the injury related to that product happened outside of Texas.
We conclude that due process will permit the exercise of specific jurisdiction in this case.
Michelin failed to refute the plaintiff’s claim that the original tire sale took place in Texas, and the
secondary sale here arose from and related to that Texas-based initial sale. The trial court’s order
is affirmed.
BACKGROUND
While the parties largely talk past each other in their pleadings, the facts alleged by each
side never directly clash, and Michelin has not pointed to affirmative evidence in the record—
either in its initial briefing or its motion for rehearing—that would contravene the plaintiff’s
version of events and create a fact question on jurisdiction. See Kelly v. Gen. Interior Constr.,
Inc., 301 S.W.3d 653, 659 (Tex. 2010)(once plaintiff pleads sufficient allegations to bring
nonresident within reach of Texas’ long-arm statute, nonresident defendant has burden to negate
the allegations in the pleading on either a legal or factual basis). As such, the jurisdictional
question here is legal, not factual, see id., and we may treat the facts as being undisputed and take
them as true for the purposes of deciding this appeal.1
Michelin North America (Michelin) is a tire manufacturer incorporated in New York with
its principal base of business in South Carolina. Michelin designs and manufactures tires, but it
1
We do note that while Michelin’s arguments in our initial hearing of this case—at the briefing stage, in oral argument,
and in several post-submission letter briefs—focused almost exclusively on the legal distinction between new and
used products under general personal jurisdiction principles at large, in its rehearing response to our initial opinion,
Michelin has sharpened its attack on Lopez’s pleadings and the evidentiary sufficiency of her affidavit as a basis for
supporting her pleading contention that the initial sale of the tire took place in Texas and/or through Michelin’s
distribution chain. We will address the effect of Michelin’s legal sufficiency-type challenge to the affidavit later in
this opinion, but suffice to say, we believe the pleadings and the state of the evidence as a whole were sufficient to
allow the trial court to reasonably infer that the subject tire entered Texas new through Michelin’s distribution chain.
However, even if we are incorrect about the tire’s precise origins, we believe personal jurisdiction can still be sustained
here because, as we explain below, we reject the two major thrusts of Michelin’s argument—that is, that the distinction
between new and used tires is meaningful under the stream-of-commerce-plus test, and that recent Supreme Court
opinions have abrogated this Court’s decision in Semperit Technische Produkte Gesellschaft M.B.H. v. Hennessy, 508
S.W.3d 569 (Tex.App.--El Paso 2016, no pet.).
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does not sell tires directly to consumers, nor are there facts in this record to support the inference
that Michelin maintains any physical presence in the state of Texas. Instead, Michelin uses
distributors to penetrate markets across the United States.
Michelin uses three distributor companies—Discount Tire Company of Texas, Wal-Mart
Stores, and Tire Dealer’s Warehouse—to sell new tires directly to consumers in Texas. At least
forty-six authorized dealers sell Michelin tires in brick-and-mortar stores in the El Paso area alone.
Michelin also runs a web site (www.michelinman.com) accessible to Texas consumers that allows
users to directly purchase officially licensed Michelin merchandise, join a mailing list to receive
Michelin promotional emails, use a configuration tool to determine which Michelin tires fit a
particular vehicle, communicate live with a “Tire Concierge” that assists in finding the right tire,
and search for Michelin dealerships. Michelin gathers data in Texas to monitor tire performance;
allows Texas individuals to register their tires for product updates; and distributes recall
information online, through its distributors, and directly to registered tire users.
Michelin is also no stranger to this State’s courts. From 2001 to 2016, Michelin has filed
lawsuits seeking affirmative relief in Texas courts and has answered lawsuits as a defendant in
other Texas cases without contesting jurisdiction, including in other cases involving alleged tire
failures.
The particular tire involved in this accident is known as a Uniroyal Tiger Paw Freedom
tire. It was designed and developed in 2005 in both Ohio and South Carolina by a Michelin
subsidiary company. Following the design phase, the tire was manufactured during the 11th week
of 2005 at a plant in Kitchener, Ontario, Canada. According to the first amended petition in this
case, “Defendant MNA [Michelin North America] shipped the subject tire to the State of Texas
and delivered the same to its distributor in Texas with the intent of delivering the tire to a retailer
4
for sale in the State of Texas because MNA had directed its business to Texas.” We take this to
mean that the subject tire was initially transferred to a Texas distributor for sale in the Texas
marketplace. Michelin never directly disputed this allegation in its special appearance.
In 2014, Brenda Isela Lopez de Santiago (Lopez) purchased a used 2002 Honda CR-V
SUV from a car dealership in El Paso, Texas. The car came with Uniroyal tires already installed,
and they had already been used at the time of purchase. On July 24, 2015, Lopez allowed Pedro
Arambula Meraz to drive her CR-V. Lopez, her daughter, and others were passengers. As
Arambula Meraz drove on a road in Ciudad Juarez, Chihuahua, Mexico, across the international
border from El Paso, the right back tire on the Honda CR-V failed, causing a rollover accident.
Lopez was injured in the crash, and her daughter died. Arambula Meraz was also injured.
Lopez sued both Arambula Meraz and Michelin in a Texas state district court in El Paso.
With respect to Michelin, Lopez brought negligence and product liability claims. Arambula Meraz
also filed cross-claims against Michelin for negligence and products liability.
According to the first amended petition in this case, “Defendant MNA [Michelin North
America] shipped the subject tire to the State of Texas and delivered the same to its distributor in
Texas with the intent of delivering the tire to a retailer for sale in the State of Texas because MNA
had directed its business to Texas.” We take this to mean that the plaintiffs allege that the subject
tire was initially transferred to a Texas distributor for sale in the Texas marketplace. Michelin
never directly disputed this allegation in its initial special appearance pleading by alleging, for
example, that the initial sale of the tire took place outside the territorial boundaries of the State of
Texas. Instead, Michelin averred in its initial special appearance pleading that “[u]pon information
and belief, the subject tire was purchased used from a third party wholly unrelated to MNA.”2
2
In a first amended verified special appearance filed later, Michelin substantially repeats this same averment:
“Jurisdictional discovery has shown that the subject tire was purchased in a used condition from a third party wholly
5
Michelin also did not file any affirmative evidence with its initial special appearance showing that
the tire was first sold new outside Texas.
Later, after the plaintiffs filed a reply to the special appearance pleading, Michelin
contended in a response that the stream of commerce ends at the point of first retail sale and that
the plaintiffs provided no evidence to show the tire was in the stream of commerce because there
was no evidence as to where and when the tire was originally purchased new. As with its initial
special appearance pleading, Michelin did not attach any affirmative evidence showing that the
subject tire was initially sold outside the State of Texas. Michelin did attach a title history from
the Texas Department of Motor Vehicles and other documents related to previous transactions for
the 2002 Honda CR-V to its response. The Texas Certificates of Title show that on April 3, 2002,
GECU of El Paso established a lien on the vehicle, which had an odometer reading of 11 miles, as
part of the vehicle’s sale from Rudolph Imports, Inc., in El Paso, Texas to a buyer whose address
was also located in El Paso, Texas. The Certificates of Title and other documents attached to
Michelin’s pleadings show that the vehicle was transferred several times among various entities
and persons—all of which had El Paso addresses—before ending up at the used car lot where
Lopez purchased the vehicle.
The trial court overruled Michelin’s special appearance request. This interlocutory appeal
followed.
DISCUSSION
Michelin advances a two-pronged attack on the trial court’s jurisdiction before this Court.
In Issue One, Michelin contends that it is not “at home” in Texas for purposes of claim-blind
general jurisdiction, meaning that any legitimate assertion of personal jurisdiction must tie Texas
unrelated to MNA.”
6
as a forum to the specific claim at bar. In Issue Two, Michelin argues that specific jurisdiction
fails because the suspect tire in this case was neither designed nor manufactured in Texas, nor did
Michelin directly sell the tire to Lopez. Because Michelin designs, manufacturers, and markets
only new tires, and this case involved a used tire purchased by an unidentified intervening retail
customer, specific jurisdiction does not exist.
We agree that no general jurisdiction exists over Michelin. A company can only be
considered “at home” either in the state of its incorporation or the state where it is headquartered.
Michelin is neither incorporated or headquartered in Texas. However, we disagree that specific
jurisdiction is unavailable. We hold that the intervening retail sale of a Michelin tire in Texas does
not per se insulate Michelin from personal jurisdiction in Texas, and there is a sufficient nexus
between the claim, the defendant, and the State of Texas as a forum to permit the exercise of
specific jurisdiction.
A.
Applicable Law
Standard of Review
The plaintiff and the defendant “bear shifting burdens of proof in a challenge to personal
jurisdiction.” Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). “[T]he
plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident defendant
within the reach of Texas’s long-arm statute.” Id. Once the plaintiff satisfies this initial burden,
the defendant challenging jurisdiction “bears the burden to negate all bases of personal
jurisdiction” and must tie its jurisdictional arguments “to the allegations in the plaintiff's pleading.”
Id. The defendant can challenge personal jurisdiction “on either a factual or legal basis.” Id. at
659. “Factually, the defendant can present evidence that it has no contacts with Texas, effectively
7
disproving the plaintiff’s allegations.” Id. “Legally, the defendant can show that even 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.
Michelin concedes that it has contacts with Texas, and it did not challenge any of Lopez’s
allegations regarding the nature of initial or intervening retail sales at all, either through conflicting
allegations made in its special appearance filings or by way of contravening affirmative evidence
offered at the trial court level. That converts this case from a mixed question of fact and law to a
purely legal question. We apply those uncontested jurisdictional facts to the law de novo. Kelly,
301 S.W.3d at 658.
When, as here, the trial court does not file findings of fact in a special appearance, all
questions of fact are presumed to support the judgment. Worford v. Stamper, 801 S.W.2d 108,
109 (Tex. 1990). A reviewing court must affirm if the judgment can be upheld on any legal theory
supported by the evidence. Happy Indus. Corp. v. American Specialties, Inc., 983 S.W.2d 844,
847 (Tex.App.--Corpus Christi-Edinburg 1998, writ dism’d w.o.j.).
Personal Jurisdiction
Many areas of the law are defined by clear, settled rules and crisp, linear analytical
approaches that spring from a common source of judicial understanding—one that is often
grounded less in high-minded philosophical debate and more in practical applications and the need
of litigants and courts for certainty and consistency. Personal jurisdiction is not one of those areas
of law. As we have previously noted, “[s]tating the maxims for personal jurisdiction is often easier
than applying them.” Semperit Technische Produkte Gesellschaft MBH v. Hennessy, 508 S.W.3d
8
569, 578 (Tex.App.--El Paso 2016, no pet.). We endeavor to state and apply these maxims as best
we can.
“[A] court must have both subject matter jurisdiction over the controversy and personal
jurisdiction over the parties” before it may exercise its power over a legal dispute. Spir Star AG
v. Kimich, 310 S.W.3d 868, 871 (Tex. 2010). “Subject matter jurisdiction involves a court’s
‘power to hear a particular type of suit,’ while personal jurisdiction ‘concerns the court’s power to
bind a particular person or party.’” TV Azteca v. Ruiz, 490 S.W.3d 29, 36 (Tex. 2016). This case
deals with the trial court’s ability to exercise personal jurisdiction.
A state court may exercise personal jurisdiction over a non-resident defendant so long as
that state’s long-arm statute permits it, and so long as the jurisdictional exercise is consistent with
the due process limitations imposed on state courts by the federal constitution. TV Azteca, 490
S.W.3d at 36. Because the Texas long-arm statute allows state courts to exercise personal
jurisdiction over nonresident tortfeasors to the fullest extent permitted by the federal constitution,
our jurisdictional analysis rises and falls entirely in tandem with federal due process case law. Id.;
see also TEX.CIV.PRAC.&REM.CODE ANN. § 17.042 (West 2015)(Texas long-arm statute).
The Threshold: Minimum Contacts and Notions of Fair Play
At a federal due process level, personal jurisdiction was initially conceptualized as a
function of a defendant’s physical presence; a state could not hale a defendant to court unless and
until the defendant was present within the forum state’s physical borders. Burnham v. Superior
Court of Cal., Cty. of Marin, 495 U.S. 604, 611-12, 110 S. Ct. 2105, 2110-11, 109 L. Ed. 2d 631
(1990)(Scalia, J., plurality op.); Int’l Shoe Co. v. State of Washington, Off. of Unemployment
Compensation & Placement, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945). This
physical presence approach to jurisdiction later evolved under the Burger and Warren Courts in
9
response to the rise of interstate commerce and the proliferation of corporations—legally fictitious
entities that had no physical bodies that could be subjected to jurisdiction. See Burnham, 495 U.S.
at 617, 110 S.Ct. at 2114.
In International Shoe Co., the United States Supreme Court dealt with the issue of
corporate “presence” in discussing a state’s exercise of extraterritorial jurisdiction over a non-
resident corporate defendant. 326 U.S. at 315, 66 S.Ct at 158. The Court held that due process
allowed states to exercise personal jurisdiction over non-resident defendants if a defendant had
“certain minimum contacts” with the forum “such that the maintainance of the suit does not offend
‘traditional notions of fair play and substantial justice.’” Id. at 316, 66 S.Ct. at 158. Subsequent
interpretations of International Shoe have treated this language as creating a test with two prongs:
(1) a minimum contacts prong and (2) a fair play/substantial justice prong. See Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 476, 105 S. Ct. 2174, 2184, 85 L. Ed. 2d 528 (1985).
“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.” [Internal quotation marks and citation omitted]. Retamco Operating, Inc.
v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009). “Significant contacts suggest that the
defendant has taken advantage of forum-related benefits, while minor ones imply that the forum
itself was beside the point.” Spir Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010). “Once it
has been decided that a defendant purposefully established minimum contacts within the forum
State, these contacts may be considered in light of other factors to determine whether the assertion
of personal jurisdiction would comport with fair play and substantial justice.” [Internal quotation
marks and citation omitted]. Burger King, 471 U.S. at 476, 105 S. Ct. at 2184. Fair
play/substantial justice factors include (1) the burden on the defendant, (2) the forum state’s
10
interest in adjudicating the dispute, (3) the plaintiff’s interest in obtaining convenient and effective
relief, (4) the interstate judicial system’s interest in obtaining the most efficient resolution of
controversies, and (5) the shared interests of the several States in furthering fundamental
substantive social policies. Burger King, 471 U.S. at 477, 105 S.Ct. at 2184.
The distinction between the minimum-contacts prong and the fair play/substantial justice
prong of International Shoe is not well-delineated. Instead, both prongs interact synergistically
with each other. As long as some minimum contacts have been established, deficiencies in one
prong may be alleviated by countervailing strong factors on the other, and vice versa. Id.; cf.
Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., 137 S. Ct. 1773, 1780,
198 L. Ed. 2d 395 (2017)(fair play/substantial justice factors could not justify the exercise of
personal jurisdiction because there was zero link between the plaintiffs, the defendant, and the
forum).3
General v. Specific Jurisdiction and the Need for a Forum Nexus
The Court in International Shoe opined that personal jurisdiction could either spring from
a defendant’s “continuous and systematic” activities in a state, or from single or occasional acts
that “because of their nature and quality and the circumstances of their commission[] may be
3
Plaintiffs and defendants alike can employ this multi-dimensional approach to either affirm or negate jurisdiction.
As the United States Supreme Court explained in Burger King, where minimum contacts with a forum state are present
but sparse, fair play/substantial justice factors may provide the extra push needed to render a state’s exercise of
personal jurisdiction over an out-of-state defendant constitutional. Burger King, 471 U.S. at 477, 105 S.Ct. at 2184
(listing cases in which fair play/substantial justice consideration “serve[d] to establish the reasonableness of
jurisdiction upon a lesser showing of minimum contacts than would otherwise be required”). Similarly, a defendant
who purposefully directs activities at a forum state’s residents and who otherwise has minimum contacts with the
forum can defeat personal jurisdiction by “present[ing] a compelling case that the presence of some other
considerations would render jurisdiction unreasonable” under the fair play/substantial justice prong—though this task
is admittedly more difficult. Id. at 477, 105 S.Ct. at 2185 (observing that most fair play/substantial justice
considerations “may be accommodated through means short of finding jurisdiction unconstitutional” such as through
the use of choice-of-law rules and procedural mechanisms like change of venue). This is because the minimum
contacts analysis “encompasses so many considerations of fairness” that “[o]nly in rare instances will the exercise of
jurisdiction not comport with fair play and substantial justice when the nonresident defendant has purposefully
established minimum contacts with the forum state.” Angelou v. African Overseas Union, 33 S.W.3d 269, 281
(Tex.App.--Houston [14th Dist.] 2000, no pet.).
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deemed sufficient to render the corporation liable to suit.” Id. at 317-18, 66 S.Ct. at 159. These
two situations identified in International Shoe “presaged the development of two categories of
personal jurisdiction:” general and specific. Daimler AG v. Bauman, 571 U.S. 117, 126, 134 S. Ct.
746, 754, 187 L. Ed. 2d 623 (2014).
“Continuous and systematic contacts with a state give rise to general jurisdiction, while
specific jurisdiction exists when the cause of action arises from or is related to purposeful activities
in the state.” Moncrief Oil Int’l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013). “A
court with general jurisdiction may hear any claim against that defendant, even if all the incidents
underlying the claim occurred in a different State.” [Emphasis in orig.]. Bristol-Myers Squibb
Co., 137 S. Ct. at 1780. By contrast, specific jurisdiction is jurisdiction that springs from claims
raised “in a suit arising out of or related to the defendant’s contacts with the forum.” Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8, 104 S. Ct. 1868, 1872 n.8, 80 L. Ed. 2d
404 (1984). “[F]or a nonresident defendant’s forum contacts to support an exercise of specific
jurisdiction, there must be a substantial connection between those contacts and the operative facts
of the litigation.” Searcy v. Parex Res., Inc., 496 S.W.3d 58, 70 (Tex. 2016).
General Jurisdiction
The differences between general jurisdiction and specific jurisdiction under the
International Shoe framework were not always clear, particularly as a defendant’s contacts with
the forum state became more and more extensive. See, e.g., Schlobohm v. Schapiro, 784 S.W.2d
355, 356 (Tex. 1990)(finding general jurisdiction in Texas over a Pennsylvania resident based on
his “continuous and systematic” involvement as an “investor, stockholder, director, advisor,
lender, and guarantor” with his son’s Texas dry cleaning business). But the somewhat fluid
distinction between general and specific jurisdiction sharpened dramatically when the Roberts
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Court recently refined the concept of general jurisdiction to greatly narrow its scope in a trio of
recent cases.
In Goodyear Dunlop Tires Operations, S.A. v. Brown, the United States Supreme Court
unanimously held that the exercise of general jurisdiction is limited to situations in which a
defendant’s “continuous and systematic contacts” with a forum state render the defendant
“essentially at home” in that state. 564 U.S. 915, 919, 131 S. Ct. 2864, 2851, 180 L. Ed. 2d 796
(2011). Any ambiguity about what “essentially at home” meant was dispelled by Daimler AG v.
Bauman, in which the Court ruled that absent “exceptional” circumstances,4 a corporate defendant
was deemed to be “at home” for general jurisdiction purposes only in either (1) the state where it
is incorporated or (2) the state in which it is headquartered. 571 U.S. at 135-36, 134 S. Ct. at 759.
The lines drawn by Daimler AG appear to act as absolute hard boundaries in the general
jurisdiction context. In BNSF Railway Company v. Tyrrell, 137 S. Ct. 1549, 198 L. Ed. 2d 36
(2017), the Court rejected substantial business activities as evocative of a corporate defendant
being “essentially at home” in a state, again reiterating that the test for general jurisdiction required
that a corporate defendant either be incorporated or headquartered in the forum state. In BNSF
Railway, nonresident class action litigants sought to sue a railroad company in Montana, a state
where the company did extensive business. Id. at 1553-54. Although “BNSF has over 2,000 miles
of railroad track and more than 2,000 employees in Montana[,]” the Court held those contacts
alone were insufficient to show BNSF was “at home” in Montana, especially in light of the fact
that BNSF did as much business in Montana as it did in other states, which undercut any claim
4
The Court in Daimler used Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 447-48, 72 S. Ct. 413, 419-20, 96
L. Ed. 485 (1952), as an example of an exceptional case. In Perkins, a company headquartered in the Philippines
moved its corporate office to Ohio during World War II. Id. The company was later sued in Ohio. The Supreme
Court found general jurisdiction over the company in Ohio. Id. The Daimler Court explained that even though the
company’s principle place of business was in the Philippines and there was no formal incorporation of the company
in Ohio, under the case’s unusual facts, general jurisdiction was proper. See Daimler, 571 U.S. at 139 n.19, 134 S. Ct.
at 761 n.19.
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that BNSF was “at home” in Montana. Id. at 1554, 1559.
As such, absent extraordinary circumstances, general jurisdiction is limited to those locales
in which a corporate defendant is either incorporated or headquartered.
Specific Jurisdiction
The Stream of Commerce Metaphor
Although the general jurisdiction analysis has shifted in recent years, the specific
jurisdiction analysis at the United States Supreme Court level has largely remained static since the
late 1980s: specific jurisdiction requires a defendant’s minimum contacts with the forum along
with a nexus between those contacts and the claim at hand.
In Asahi Metal Industry Company, Ltd. v. Superior Court of California, Solano County,
480 U.S. 102, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987), the justices unanimously agreed that a
Japanese tire valve manufacturer that sold components to a Taiwanese tire manufacturer that in
turn sold a defective tire in California could not be made to answer the Taiwanese company’s
indemnity charge in California state court. The justices all thought that such an exercise of
personal jurisdiction would not comport with traditional notions of fair play and substantial justice
under the second prong of International Shoe. However, the justices splintered over the issue of
minimum contacts under the first prong of International Shoe and what test should be used to
determine whether specific jurisdiction over a certain defendant exists in a given state.
One four-member wing of the Court, led by Justice Brennan, espoused the “stream of
commerce” test arising out of a metaphor first articulated in World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980). “The stream of commerce refers
not to unpredictable currents or eddies, but to the regular and anticipated flow of products from
manufacture to distribution to retail sale.” Asahi Metal Indust. Co., 480 U.S. at 117, 107 S.Ct. at
14
1034 (Brennan, J., plurality op.). The Brennan plurality believed that after an item is placed into
circulation, jurisdiction travels with that item regardless of where it is swept by the regular stream
of commerce. Quoting language from World-Wide Volkswagen, this wing of the Court held that
“if 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 owners or to
others.” [Emphasis in orig.]. Asahi Metal Indust. Co., 480 U.S. at 119, 107 S.Ct. at 1036 (quoting
World-Wide Volkswagen, 444 U.S. at 297-98). The Brennan plurality also noted the difference
“between a case involving goods which reach a distant State through a chain of distribution and a
case involving goods which reach the same State because a consumer . . . took them there.” Asahi
Metal Indust. Co., 480 U.S. at 120, 107 S.Ct. at 1036. The former situation would justify an
exercise of jurisdiction. Id. The latter situation was more complicated. The Brennan plurality
contemplated possibilities in which a product enters a forum state not through regular distribution
channels, but through “the course of its intended use by the consumer” or “foreseeable resale in
another State.” Id. at 120 & n.3, 107 S. Ct. at 1036 & n.3. Under those circumstances, the Brennan
plurality believed jurisdiction would still inhere in the situs of the product’s presence, provided
that the item’s presence in the forum was not the result of an unforeseeable fortuitous or one-off
unilateral action of a consumer. Id. In essence, the only limit on personal jurisdiction under the
stream of commerce test is foreseeability: jurisdiction inheres in whatever forum the item is
present, so long as the item’s presence in the forum was foreseeable and not the result of some
unforeseen “eddies” in the stream of commerce. Id. at 117, 107 S.Ct. at 1035.
Another four-member wing of the Court, led by Justice O’Connor, insisted that the stream
15
of commerce test was too lenient, and instead advocated for a stream-of-commerce plus test in
which placement of an item into the stream of commerce was necessary—but not sufficient—to
allow a state court to assume jurisdiction over a claim. For them, “[t]he ‘substantial connection’ .
. . between the defendant and the forum State necessary for a finding of minimum contacts must
come about by an action of the defendant purposefully directed toward the forum State.”
[Emphasis in original]. Asahi Metal Indust. Co., 480 U.S. at 112, 107 S.Ct. at 1032 (O’Connor,
J., plurality op.). Certain additional factors beyond placement into the stream of commerce could
show that the defendant purposefully targeted the forum. Id. “Additional conduct of the defendant
may indicate an intent or purpose to serve the market in the forum State, for example, designing
the product for the market in the forum State, advertising in the forum State, establishing channels
for providing regular advice to customers in the forum State, or marketing the product through a
distributor who has agreed to serve as the sales agent in the forum State.” Id. But for Justice
O’Connor and her cohort, a “defendant’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 into
the stream into an act purposefully directed toward the forum State.” Id. The O’Connor plurality
never addressed the hypothetical situations brought up by Justice Brenann involving the
foreseeable arrival of an item after retail sale.
Justice Stevens, the lone holdout in Asahi, declined to join either plurality opinion, but
issued one of his own. Justice Stevens criticized the other pluralities for addressing the minimum
contacts issue at all, instead arguing that the Court should have limited itself to considering only
the question of fair play/substantial justice and resolved the case on those grounds. Id. at 121-22,
107 S.Ct. at 1036-37 (Stevens, J., plurality op.).
Because no one minimum contacts rationale garnered the necessary five votes to command
16
a majority, no one test for specific jurisdiction was ever adopted as federally controlling. In the
intervening years since Asahi, the United States Supreme Court has still not decided which specific
jurisdiction test should ultimately control. Indeed, during the United States Supreme Court’s last
foray into specific jurisdiction, the Court has either issued decisions that either reinforce settled
principles, see Bristol-Myers Squibb, 137 S. Ct. at 1780 (holding that non-California plaintiffs
could not sue a New York headquartered company in California court when their injuries from
taking an allegedly defective drug had nothing to do with the California forum), or split again into
different plurality rationales that all ultimately failed to carry the day. See J. McIntyre Mach., Ltd.
v. Nicastro, 564 U.S. 873, 883-885, 131 S. Ct. 2780, 2788-90, 180 L. Ed. 2d 765 (2011)(Kennedy,
J., plurality op.)(four justices reject the stream of commerce test and proposed an intent-to-submit-
to-a-sovereign approach in an attempt to clarify Asahi); id. at 890-92, 131 S.Ct. at 2792-94 (Breyer,
J., concurring)(two justices agree that an exercise of jurisdiction would be unfair but explicitly
decline to endorse the test espoused by the plurality or to reject the stream of commerce metaphor);
id. at 899-906, 131 S.Ct. at 2797-2802 (Ginsburg, J., dissenting)(three justices reject plurality’s
state sovereignty-based/implied consent analysis).
Given this void, approaches to specific jurisdiction vary from state to state and federal
circuit to federal circuit. Some jurisdictions adhere to Justice Brennan’s broader stream of
commerce test while others use Justice O’Connor’s narrower stream of commerce plus test in
assessing specific jurisdiction. The Fifth Circuit uses the stream of commerce test; Texas courts
use the stream-of-commerce-plus test. Semperit Technische Produckte Gesellschaft M.B.H., 508
S.W.3d at 576. Under the principles of stare decisis, until the United States Supreme Court
resolves the Asahi conflict and issues a decision that supersedes the Texas Supreme Court’s
approach, we as an intermediate Texas appellate court must apply the stream of commerce plus
17
test to assess specific jurisdiction. Id.
Nexus
Although United States Supreme Court case law often elides the difference between
minimum contacts and nexus and sometimes treat them as one syncretic analysis, Texas courts
choose to treat minimum contacts and nexus as separate inquiries. See Moki Mac Expeditions v.
Drugg, 221 S.W.3d 569, 579 (Tex. 2007). To establish nexus, the plaintiff must show a substantial
connection between the nonresident defendant, the litigation, and the forum. Id.
Personal Jurisdiction Today
Synthesized to its core, the Texas personal jurisdiction analysis can be broadly expressed
as a two-step theory:
1. If a corporate defendant is incorporated or headquartered in Texas, Texas state
courts have general jurisdiction over the defendant. The courts may hale the
defendant to answer any claim brought by any plaintiff—even where the claims
involve actions occurring outside the forum of Texas, and even where the plaintiff is
not a Texas resident.
2. If a corporate defendant is not incorporated or headquartered in Texas, Texas state
courts may only exercise specific jurisdiction over the out-of-state defendant if the
defendant’s actions are sufficiently related to Texas so as to subject the defendant
to specific jurisdiction in Texas. In determining whether an exercise of specific
jurisdiction is permissible, Texas courts use the stream-of-commerce-plus test.5 That
test requires:
• A defendant’s minimum contacts with Texas, as evinced by the defendant’s
purposeful availment of Texas;
• The lack of any fair play/substantial justice considerations that would stand as an
obstacle to jurisdiction; and
• A nexus (i.e. a “substantial connection”) between the defendant, the forum, and the
claim at hand.
5
We note that even when a Texas court’s exercise of jurisdiction, general or specific, is constitutionally permissible,
the Texas court can decline to exercise jurisdiction under the doctrine of forum non conveniens if “in the interest of
justice and for the convenience of the parties a claim or action to which this section applies would be more properly
heard in a forum outside this state[.]” TEX.CIV.PRAC.&REM.CODE ANN. § 71.051(b)(West Supp. 2017). Because
Michelin did not argue forum non conveniens in the trial court, we do not reach that issue on appeal.
18
B.
Analysis
The plaintiffs maintain that the trial court could have properly exercised personal
jurisdiction over the case on either general or specific grounds. We address these arguments in
turn.
1.
General Jurisdiction
We first address general jurisdiction, and dispel the notion that it applies in this case. While
the plaintiffs are correct that Michelin’s ongoing efforts to target Texas are pervasive,
longstanding, lucrative, and highly successful, those contacts do not subject Michelin to general
jurisdiction in Texas. Whatever door may have been open under the previous general jurisdiction
framework has since been shut by Goodyear, Daimler, and BNSF Railway. This trio of cases is
clear. General jurisdiction applies only in states where a corporate defendant’s systematic and
continuous contacts render it “essentially at home.” Goodyear, 564 U.S. at 919, 131 S.Ct. at 2851.
A corporate defendant is only “essentially at home” in those states in which it is incorporated or
headquartered. Daimler, 571 U.S. at 135-36, 134 S.Ct. at 759. And even extensive, longstanding,
continuing business activity within a state will not render the corporate defendant amenable to
claim-blind general jurisdiction if that corporation is neither incorporated or headquartered in the
forum state. BNSF Railway, 137 S. Ct. at 1559. Because Michelin North America is not
incorporated in Texas, nor is it headquartered here, Texas as a forum cannot exercise general
jurisdiction over the company. Michelin has successfully negated general jurisdiction. Only
specific jurisdiction that ties Michelin’s activities in the forum with the claims asserted could
support the trial court’s exercise of personal jurisdiction.
19
Issue One is sustained. To prevail on appeal, Michelin must also succeed on Issue Two.
It cannot do so.
2.
Specific Jurisdiction
Michelin also asserts that specific jurisdiction does not exist in this case. Although the
majority of Michelin’s brief focuses on the stream of commerce and the minimum contacts prong,
we construe Michelin’s brief as challenging both the minimum contacts prong and the nexus prong.
i.
Minimum Contacts
Point-of-First Sale as Jurisdictional Chokepoint
The bulk of Michelin’s brief urges this Court to find that the intervening retail sale of a
product automatically cuts off personal jurisdiction over the product’s manufacturer, and that
jurisdictional “liability” extends only as far as the point of first retail sale. To put this in terms of
the stream of commerce metaphor, Michelin believes that every stream of commerce stops at the
point of first retail sale. Any sale that takes place on a secondary market involves placement of
the product into a second stream of commerce unconnected to the first stream.
Michelin contends that multiple jurisdictions have ruled across that board that used
products exit the stream of commerce at the point of first retail sale. In support of this contention,
Michelin cites more than a dozen cases, mostly from federal district courts, in which personal
jurisdiction was lacking.6 But none of the cases announce a per se rule. Indeed, the case that
6
D’Jamoos ex rel Estate of Weingeroff v. Pilatus Aircraft, Ltd., 566 F.3d 94, 106 (3rd Cir. 2009); Hinrichs v. Gen.
Motors of Canada, Ltd., 222 So. 3d 1114 (Ala. 2016), cert. denied 137 S. Ct. 2291, 198 L. Ed. 2d 724 (2017); Istre v.
Montco Offshore, Inc., No. 12-2054, 2016 WL 1110227, at *3 (E.D.La. Mar. 22, 2016); Eddy v. Printers House (P),
Ltd., 627 F.App’x 323, 327 (5th Cir. 2015); Francis v. Bridgestone Corp. No. 2010/30, 2011 WL 2650599 (D.V.I.
July 6, 2011)(mem. opn.); Erwin v. Ford Motor Co., No. 8:16-cv-01322-T-24 AEP, 2016 WL 7655398 (M.D. Fla.
Aug. 31, 2016); Gaillet v. Ford Motor Company, No. 16-13789, 2017 WL 1684639 (E.D. Mich. May 3, 2017); Walters
v. Nakata Eng'g Co., Ltd., No. 08-1458, 2009 WL 1813131 (W.D.Pa. June 25, 2009); Haines v. Get Air, L.L.C., No.
20
comes closest to announcing the rule that Michelin advances, like so many other specific
jurisdiction cases before it, resulted in a splintered opinion. In Hinrichs v. General Motors of
Canada, Ltd., while a four-member plurality of the nine-member Alabama Supreme Court did
seem to agree with the argument that an allegedly defective truck manufactured in Canada exited
the stream of commerce at the point of first sale in Pennsylvania, see, 222 So. 3d 1114, 1138 (Ala.
2016)(per curiam)(“it is undisputed that the stream of commerce for the Sierra ended at its sale in
Pennsylvania . . . ”), a fifth justice concurred only in the result reached by the main opinion, not
the rationale. See id. at 1142 (Bolin, J., concurring). We note that under similar facts, the Supreme
Court of Appeals of West Virginia explicitly rejected a rule that would set the point of first retail
sale as a jurisdictional chokepoint in the stream of commerce analysis. See State ex rel Ford Motor
Company v. McGraw, 788 S.E.2d 319, 342-43 (W.Va. 2016)( “We decline to use the place of sale
as a per se rule to defeat specific jurisdiction.”).
Rather than showing a concerted effort by numerous courts to mark the point of first retail
sale as a jurisdictional chokepoint, the cases Michelin cites are highly-fact bound and show only
the application of standard specific jurisdiction principles to the facts at hand. A closer look
reveals that the distinction between new versus used was not dispositive in those cases. Rather,
those cases all involve defendants who never purposefully availed themselves of the forum state,
see, e.g., D’Jamoos ex rel Estate of Weingeroff v. Pilatus Aircraft, Ltd., 566 F.3d 94, 103 (3rd Cir.
2009)(Swiss airplane manufacturer could not be sued in Pennsylvania for product defect because
manufacturer had limited contacts with forum); and products that would not have foreseeably made
their way to the forum state but for the unilateral actions of a third person. See, e.g., Eddy v.
CV-15-00002-TUC-RM (EJM), 2017 WL 1067777 (D.Ariz. Feb, 24, 2017); Ganey v. Kawasaki Motors Corp., U.S.A.,
234 S.W.3d 838 (Ark. 2006); Abraham v. Agusta, S.P.A., 968 F. Supp. 1403 (D.Nev. 1997); Parry v. Ernst Home Ctr.
Corp., 779 P.2d 659 (Utah 1989).
21
Printers House (P) Ltd., 627 F.App’x. 323, 327-28 (5th Cir. 2015)(Indian manufacturer that
custom designed a printing press for a customer in Mississippi could not be sued in Texas where
subsequent purchasers unilaterally brought the press to Texas because Indian company did not
target Texas); Francis, 2011 WL 2650599 at *6 (no jurisdiction over Bridgestone tires in the U.S.
Virgin Islands because Bridgestone did not sell tires in the Virgin Islands and the specific tires
were sold and designed for European market and ended up in the territory by unilateral actions of
others); Istre, 2016 WL 1110227, at *3 (Indonesian manufacturer of defective switch could not be
sued in Louisiana under maritime law for accident in Louisiana waters where switch was
manufactured in Indonesia, shipped to a distribution center in France, then to another distribution
center in Hungary, then eventually to a Czech company that incorporated the switch into a winch
system that was shipped and sold to Alabama).
If anything, these cases show why a bright-line rule is not needed here. The stream-of-
commerce-plus framework of purposeful availment and foreseeability is flexible enough to deal
with different fact patterns raised in different procedural postures. A rigorous and fair application
of personal jurisdiction principles will lead to different results in different cases, but ultimately
still protect defendants from litigating in unfair forums while still allowing plaintiffs to sue at home
when appropriate.
Nearly two years ago, litigants in Semperit Technische Produckte Gesellschaft MBH, tried
to advance a similar bright-line first-sale argument before this Court. Semperit involved an
Austrian manufacturer of high-pressure hoses used in oilfield equipment. The manufacturer sold
an allegedly defective hose to a wholly-owned subsidiary in New Jersey. The New Jersey
subsidiary sold it to an Oklahoma distributor, who then resold the hose into Texas. 508 S.W.3d at
573-74. The Austrian manufacturer, sued in Texas, argued that jurisdiction stopped at the point
22
of first sale in New Jersey, and that the product ended up in Texas only by virtue of the unilateral
third actions of the downstream distributor. This Court disagreed, finding that personal jurisdiction
flowed through to Texas because the Austrian manufacturer deliberately targeted Texas as a
marketplace, and that the manufacturer profited from the direct sale of hoses to Texas; the direct
sale of hoses to its New Jersey subsidiary, which sold to Texas; and indirectly once the New Jersey
subsidiary sold hoses to the Oklahoma distributor, who in turn sold the hoses to Texas. Id. at 579-
81.
In deciding Semperit, we expressed hesitation in adopting “a rule that mechanically focuses
only on whether the actual failed product was sold in Texas,” opining that such a rule could have
the unforeseen consequence of arbitrarily cutting off home forum relief for Texas resident product
liability plaintiffs who buy a product online through Amazon.com and find their order being
fulfilled by a different distributor than the authorized one that services a brick-and-mortar store
selling the exact same product down the road. Id. at 584. We continue to harbor such hesitations,
and will not adopt such a rule today. Accord McGraw, 788 S.E.2d at 342-43 (West Virginia
Supreme Court declining to use place of sale as a per se rule to defeat specific jurisdiction and
finding proposed rule to be inconsistent with specific jurisdiction principles).
Michelin complains that without a bright-line rule declaring retail sales to be the end of the
stream of commerce, various problems will arise. For example, Michelin argues that without an
explicit first sale limitation, the extensive business Michelin does through distributorships in all
fifty states would lead to exercises of specific jurisdiction in all fifty states that start to look
functionally like general jurisdiction in all states.
In the first place, it is axiomatic that business activities in a state are a double-edged sword.
“When a nonresident defendant has purposefully availed itself of the privilege of conducting
23
business in a foreign jurisdiction, it is both fair and just to subject that defendant to the authority
of that forum’s courts.” Spir Star AG, 310 S.W.3d at 872. An entity that purposefully avails itself
of a state for profit also subjects itself to that state’s legal regulation and cannot escape that
regulation by attempting to hide behind the shield of federalism. “There is nothing wrong with an
enterprise arranging its affairs so that it avoids doing business in or engaging in activities directed
toward a particular forum and thereby precludes that forum’s exercise of jurisdiction over it.” Moki
Mac, 221 S.W.3d at 589 (Johnson, J., dissenting). But if a defendant has not so arranged its affairs,
then it “should reasonably anticipate being haled into court” in the forum. Id.
In the second place, Michelin overstates the ability of state courts to resolve claims against
it. As Bristol-Myers Squibb teaches, there are limits even when a corporation does business in all
fifty states. The nexus requirement cabins a court’s jurisdiction to the specific facts of a case.
Plaintiffs’ claims against a defendant must still relate to the forum in which suit is brought. An
Ohio resident cannot bring a personal injury claim in California against a New York defendant
corporation if the Ohioan did not purchase, use, or suffer injury from the product in California—
even if other people similarly situated people in California did suffer injury in California. 137
S. Ct. at 1780.
It may be that under current personal jurisdiction principles, manufacturers are generally
more likely to be subject to jurisdiction than lower-tiered distributors and sub-distributors in the
stream of commerce. Compare Semperit, 508 S.W.3d at 584 (jurisdiction over manufacturer
despite the presence of intervening steps in a distribution chain because manufacturer targeted
forum state) with World-Wide Volkswagen, 444 U.S. at 297-98, 100 S.Ct. at 567-68 (no jurisdiction
in Oklahoma over New York car dealership that only targeted New York area in sales). But even
among manufacturers, there is a difference. A huge manufacturer that does business in all fifty
24
states and intends for its products to be sold nationwide is more likely to be subject to personal
jurisdiction more often in more places7 than, say, a foreign manufacturer selling component parts
to another foreign manufacturer,8 a European airplane manufacturer whose plane ended up in New
Jersey by a fluke eddy in the stream of commerce,9 an Indian manufacturer that custom-makes a
printing press for a Mississippi customer but is then sued in Texas,10 a tire manufacturer whose
products only ended up in the U.S. Virgin Islands by the unilateral acts of a third party, 11 or a
boutique manufacturer whose pottery made it from an Appalachian storefront to Hawaii by sheer
happenstance.12 That is not a bug in the system; that is the entire point of the system.
As is, the stream-of-commerce-plus test provides an adequate framework by which we may
determine whether the point of first sale represents an item’s last foreseeable or intentional
destination.
The Stream of Commerce Test: One Stream or Two?
Now we turn to the heart of the matter—or at least, what the parties believe the heart of the
matter to be. The opposing sides argue their positions in broad terms and frame the dispute as
7
Tarver v. Ford Motor Company, No. CIV-16-548-D, 2016 WL 7077045, *5 (W.D. Okla. Dec. 5, 2016)(rejecting
Ford's special appearance in case involving a defective F-150 that caused injury in Oklahoma where truck was
manufactured in Missouri and purchased at a dealership in Indiana; "The pivotal inquiry under the stream of commerce
theory is whether a defendant has attempted to serve a market and expects its product to be used there.").
8
Asahi, 480 U.S. at 112-13, 107 S.Ct. at 1032-33 (O’Connor, J., plurality op.)(manufacturer’s subjective awareness
that part may be incorporated into product sold in California, standing alone, did not grant California the right to
exercise jurisdiction over part manufacturer); Istre, 2016 WL 1110227, at *3 (Indonesian manufacturer of defective
switch could not be sued in Louisiana under maritime law for accident in Louisiana waters where switch was
manufactured in Indonesia, shipped to a distribution center in France, then to another distribution center in Hungary,
then eventually to a Czech company that incorporated the switch into a winch system that was shipped and sold to
Alabama).
99
D’Jamoos, 566 F.3d at 106.
10
Eddy, 627 F.App’x at 327.
11
Francis, 2011 WL 2650599 at *6.
12
Nicastro, 131 S. Ct. at 2793 (Breyer, J., concurring).
25
being over whether there was only one stream of commerce, or two. In truth, we see strengths and
weakness with the approached advanced by both Michelin and Lopez.
On the one hand, Texas’ assertion of specific jurisdiction in a products liability case like
this seems to fit the basic requirements of the stream-of-commerce-plus test. Michelin placed the
tire into the stream of commerce. The stream of commerce ultimately swept the tire into Texas
and into the hands of a Texas end-user. Michelin targets Texas and intends for its tires to end up
in the hands of Texas consumers. And it is not the foreseeability of a defendant causing injury in
another state that serves as the benchmark for personal jurisdiction; the real question is whether
“the defendant’s conduct and connection with the forum State are such that he should reasonably
anticipate being haled into court there.” Burger King Corp, 471 U.S. at 474, 105 S.Ct. at 2183.
Michelin could have reasonably foreseen that the tire would end up in Texas, and given the
company’s extensive targeting of the state, it could hardly be surprised that it would be haled to
court to answer defect charges in Texas. “[I]f the sale of a product of a manufacturer . . . is not
simply an isolated occurrence, but arises from the efforts of the manufacturer . . . 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.” Spir Star AG, 310 S.W.3d at 878 (citing World–Wide Volkswagen, 444 U.S.
at 297, 100 S.Ct. at 567). We would not be alone in reaching this conclusion. See, e.g., Tarver v.
Ford Motor Company, No. CIV-16-548-D, 2016 WL 7077045, at *5 (W.D. Okla. Dec. 5,
2017)(rejecting Ford’s special appearance in case involving a defective F-150 that caused injury
in Oklahoma where truck was manufactured in Missouri and purchased at a dealership in Indiana;
“[t]he pivotal inquiry under the stream of commerce theory is whether a defendant has attempted
to serve a market and expects its product to be used there”).
26
On the other hand, this case does not involve the predictable sale of a product from a
primary tier distributor to a sub-tier distributor that directly targets the Texas forum. This case
involves sale on a secondary market outside of Michelin’s direct control—a secondary market that
does not adhere to Michelin’s business priorities and that could send Michelin products to places
the company never targeted or contemplated. Given the United States Supreme Court’s
instructions to not elide the distinction between general and specific jurisdiction, we are cautious
about ensuring that the nexus requirement is met. And given that the Texas Supreme Court has
stated that the fact “that similar products were sold in Texas would not create a substantial
connection as to products that were not[,]” Spir Star, 310 S.W.3d at 875, we do not wish to adopt
a close-enough-for-horseshoes approach that leaves litigants uncertain and leaves this case
exposed to the possibility of reversal.
The stream of commerce metaphor, “like other metaphors, has its deficiencies as well as
its utility.” Nicastro, 564 U.S. at 881, 131 S.Ct. at 2788 (Kennedy, J., plurality op.). This case
exposes the limits of using the stream of commerce metaphor as a legal test. Whether this case
involves one continuous stream of commerce or the portaging of an item from one stream to
another is less a matter of legality and more a matter of perspective. We are inclined to believe
this scenario represents the uninterrupted, albeit indirect, flow of one stream of commerce
foreseeably bringing an item into a forum targeted by Michelin—a forum, we note, in which
Michelin should have reasonably expected to be subject to litigation.
But at the hazard of mixing metaphors, perhaps a shotgun analogy better describes this
situation. If a manufacturer takes a shotgun shell approach to marketing and deliberately aims a
batch of product at multiple states, it seems odd to let the manufacturer complain that even though
its product actually struck a targeted state, the point should not count simply because there was an
27
unexpected ricochet along the way.
Michelin targeted Texas. The tire hit its target. Michelin expected and wanted the tire to
hit its target. Whether Michelin made money off the specific sale to Lopez is not strictly relevant
to the minimum contacts theory. Cf. Semperit, 508 S.W.3d at 584 (mentioning the indirect benefit
an Austrian manufacturer got from an Oklahoma sub-tier distributor’s sales of the manufacturer’s
product to Texas).
The distinction Michelin draws between the tire being “new” and “used” is a distinction
without a jurisdictional difference for minimum contacts purposes. The focus of a products
liability case is the condition of the product at the time it left the manufacturer’s possession. Id. at
584. Part of what makes Michelin’s new-versus-used argument so compelling at first glance is the
implicit idea that the tire’s condition may have been altered by intervening downstream purchasers
in different locales. It is true that the potential for a change in condition increases as time passes
and the item changes multiple hands. But that, to us, sounds like a merits question on whether the
tire’s failure was actually Michelin’s fault. That question has zero bearing on the trial court’s
ability to exercise personal jurisdiction over Michelin. We do not resolve merits-based questions
in reviewing a special appearance. Pulmosan Safety Equip. Corp. v. Lamb, 273 S.W.3d 829, 839
(Tex.App.--Houston [14th Dist.] 2008, pet. denied).
In sum, Michelin has purposefully availed itself of Texas as a marketplace for its tires, and
it was reasonably foreseeable that it would have to answer suit in Texas related to those tires.
Minimum contacts are established.
ii.
Nexus
Minimum contacts alone are not enough to confer personal jurisdiction. “Specific-
28
jurisdiction analysis has two co-equal components.” Moki Mac, 221 S.W.3d at 579. “[P]urposeful
availment has no jurisdictional relevance unless the defendant’s liability arises from or relates to
the forum contacts.” Id. A nexus must be shown “between the nonresident defendant, the
litigation, and the forum.” Id.
The United States Supreme Court has given little guidance as to how much of a nexus is
required. The Court recently touched on the nexus requirement in Bristol-Myers Squibb v.
Superior Court of California, San Francisco County. There, several hundred nonresident plaintiffs
joined a few dozen California resident plaintiffs in a suit against a pharmaceutical company over
the drug Plavix. 137 S. Ct. at 1778. The nonresident plaintiffs “were not prescribed Plavix in
California, did not purchase Plavix in California, did not ingest Plavix in California, and were not
injured by Plavix in California.” Id. at 1781. The California Supreme Court found there was
jurisdiction over the nonresident plaintiffs under a sliding scale approach the state employed which
excused a lack of ties between the litigation and the forum if the defendant’s contacts with the
forum were pervasive. Id. at 1778-79.
The United States Supreme Court reversed. But apart from repudiating California’s
“sliding scale” approach to specific jurisdiction, id. at 1781-82, Bristol-Myers Squibb did not
illuminate much about the nexus standard, but largely involved an application of “settled
principles:” when there is no factual connection between a defendant’s contacts in a forum and
the plaintiffs’ claims, there is no personal jurisdiction over the defendant. Id. Contrary to
Michelin’s argument, we do not read Bristol-Meyers Squibb as having any bearing on this case,
nor do we read the case as abrogating this Court’s decision in Semperit. Rather, Bristol-Meyers
Squibb deals primarily with nonresident plaintiffs seeking to join in class actions with resident
plaintiffs against nonresident defendants despite the fact that the nonresident plaintiffs were
29
injured outside the forum and there was no substantial connection between the defendant’s
conduct, the forum, and their injuries. See id. at 1785 (Sotomayor, J., dissenting)(noting that
Bristol-Meyes Squibb operated to limit the ability of nonresident claimants to join in class action
suits). Here, the plaintiffs are Texas residents. Bristol-Meyers Squibb does not apply. Accord
Align Corp., Ltd. v. Allister Mark Boustred, 421 P.3d 163 (Colo. 2017), cert. denied -- S.Ct. --,
2018 WL 1142978 (June 11, 2018)(finding Bristol-Meyers Squibb inapplicable where plaintiff
was resident of the forum state).
Given that there is no federally controlling standard for nexus, the standard set down by
the Texas Supreme Court in Moki Mac Expeditions v. Drugg controls. In Moki Mac, Texas
resident parents sued a Utah-based travel company in Texas after their son died on a hiking trip in
Arizona. 221 S.W.3d at 573. The parents alleged that the travel company misrepresented the
nature of safety measures that would be undertaken on the trip in literature and advertising that the
company distributed in Texas. Id.
The Texas Supreme Court, after surveying the approaches to nexus taken in other
jurisdictions, see generally id. at 580-84, adopted a “substantial connection” rule in which there
must be a substantial connection between a defendant’s contacts with Texas and the operative facts
of the litigation. Id. at 584-85. The Court characterized this as a middle-ground approach that
eschewed the problems created by having a broad but-for causation test (i.e. but for an advertising
misrepresentation the plaintiff would have never gone on a trip in which the plaintiff was injured),
a narrow substantive relevance/proximate cause test that makes a defendant’s purposeful contact
“an essential liability element,” or a sliding scale approach like the one that would ultimately be
struck down in Bristol-Myers Squibb. Moki Mac, 221 S.W.3d at 582.
Applying the substantial connection test, the Texas Supreme Court found that the trial court
30
could not exercise personal jurisdiction over the Utah travel company. The Court accepted as true
the plaintiffs’ contention that their son would not have gone on the trip but for Moki Mac’s
advertising suggesting the trip would be safe for a beginning hiker, but nevertheless held that
advertising in Texas was not a substantial enough connection. Id. at 585-86. The operative facts
of the case overwhelmingly concerned the actions of Moki Mac’s guides in Arizona, and Moki
Mac’s contacts with Texas in light of the operative facts of the case were peripheral. Summarizing
its analysis, the Court stated: “Whatever connection there may be between Moki Mac’s
promotional materials sent to Texas and the operative facts that led to Andy’s death, we do not
believe it is sufficiently direct to meet due-process concerns.” Id. at 585.
Moki Mac and this case do share one important, under-briefed aspect: the situs of injury
happened outside the territorial boundaries of the State of Texas. Neither party in its briefs or oral
argument emphasized this as an issue, instead choosing to focus their attention on the new-versus-
used issue, so we ourselves will not belabor it as an issue. We take our lead from the parties’
briefs. However, the nexus tie between the claim in this case and Texas as a forum is much stronger
than the tie presented in Moki Mac. Moki Mac held that an out-of-state defendant’s advertising
activities in Texas, standing alone, were not enough to support specific jurisdiction in a personal
injury case. 221 S.W.3d at 585-86.
By contrast, here, Lopez has alleged that Michelin, through its distribution network, offered
the tire for sale in Texas. On rehearing, Michelin cautions us against resting an opinion on the
“false premise” that the trial court had sufficient evidence to find that the initial tire sale took place
in Texas. Specifically, Michelin contends that Lopez’s allegation that the initial tire sale took
place in Texas must be supported by evidence, and that Lopez fails to point to any evidence that
would suggest an initial tire sale took place in Texas. Lopez counters that she properly pleaded
31
affirmative facts establishing personal jurisdiction and that Michelin in its initial special
appearance pleading never directly contested her allegation that the initial tire sale took place in
Texas, meaning that absent affirmative contravening evidence from Michelin that the tire sale did
not take place in Texas, Lopez’s allegation is sufficient to support the trial court’s finding that the
initial sale did take place in Texas. See Kelly, 301 S.W.3d at 658-59 (if a plaintiff pleads sufficient
allegations to bring nonresident defendant within Texas long-arm statute, nonresident defendant
must negate allegation as matter of law or matter of fact).
We agree with Lopez that Michelin did not specifically contest the allegation that the tire
was sold in Texas in its initial special appearance pleading. Lopez contended that the initial tire
was sold through Michelin’s distribution networks in Texas, whereas Michelin’s response only
stated that Lopez bought the tire used from a party unconnected to Michelin. These allegations do
not clash. Only later in a responsive pleading did Michelin raise a no-evidence-type challenge to
Lopez’s first sale allegation. It is unclear as a matter of course whether that belated challenge to
the allegation was enough to put the issue before the trial court. Still, we need not delve too far
into the issue of who bore what burden or whether Michelin properly refuted Lopez’s allegation.
We must affirm the trial court’s judgment if it was valid on any theory advanced in the court below.
Happy Indus. Corp. v. American Specialties, Inc., 983 S.W.2d 844, 847 (Tex.App.--Corpus
Christi-Edinburg 1998, pet. dism’d w.o.j.). And we make all factual inferences in favor of the trial
court’s judgment so long as those inferences are reasonable and the facts underlying those
inferences find legally sufficient footing in the record. Id. Viewing the record that was before the
trial court, we believe there was sufficient evidence to support Lopez’s allegation that the initial
tire sale took place in Texas.
The record before us shows that the 2002 Honda CR-V was purchased in 2002 by a buyer
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in El Paso from a seller in El Paso. Title to the vehicle then transferred several times until the
vehicle reached Lopez. All title transfers for the vehicle that appear in the record took place among
buyers and sellers located in El Paso. The record also shows that the specific tire was manufactured
in 2005, after the vehicles’ initial purchase in El Paso. From this information, it is reasonable to
infer that some person or entity that owned the vehicle changed the tires out from the original tires
on the CR-V sometime after 2005. Given that all the CR-V’s owners since 2002 have been El Paso
residents, given Michelin’s pervasive penetration of the El Paso market through distributors, and
given the lack of any affirmative evidence showing that the tire was purchased elsewhere, we
believe it would be reasonable for the trial court to infer from the evidence before it that the El
Paso owner of the CR-V purchased the tire new in El Paso, within the territorial boundaries of the
State of Texas.
We previously stated in Semperit that we were not “impressed with a rule that mechanically
focuses only on whether the actual failed product was sold in Texas.” Semperit, 508 S.W.3d at
584. We continue to believe that a mechanical application of a first sale chokepoint in assessing
both stream of commerce and nexus is not only unwise; it runs contrary to the fact-intensive nature
of personal jurisdiction jurisprudence. Indeed, the state of the record shows there is a more direct
nexus to the forum in this case that in Semperit. In Semperit, a foreign manufacturer targeting
Texas shipped product to a U.S. subsidiary, which in turn shipped to a sub-distributor, which in
turn shipped the product to the plaintiffs. Id. Here, the record is sufficient to have allowed the
trial court to determine that the first sale took place in Texas after Michelin transferred the tire for
a first retail sale in Texas through the usual distribution pattern. That falls squarely within the
ambit of Semperit.
The tire’s subsequent purchase, again in Texas by a Texas resident, arose from and relates
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to the tire’s initial sale in the state. In our view, the nexus here is strong enough to support
specific jurisdiction. Cf. Pulmosan Safety Equip. Corp., 273 S.W.3d at 841 (finding personal
jurisdiction in Texas over New York manufacturer of defective respiratory hood where worker
was injured in Texas and there was no direct evidence the hood was sold in Texas, although it
could have been).
Issue Two is overruled.
CONCLUSION
The trial court properly exercised personal jurisdiction over this case. The judgment of the
trial court is affirmed.
August 2, 2018
YVONNE T. RODRIGUEZ, Justice
Before McClure, C.J., Rodriguez, and Palafox, JJ.
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