United States Court of Appeals,
Fifth Circuit.
No. 93-2035.
RUSTON GAS TURBINES, INC., Plaintiff,
v.
DONALDSON COMPANY, INC., Defendant-Third Party, Plaintiff-Appellant,
v.
CORCHRAN, INC., Third-Party Defendant-Appellee.
Dec. 22, 1993.
Appeal from the United States District Court for the Southern District of Texas.
Before REYNALDO G. GARZA, KING and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
Appellant Donaldson Company, Inc. ("Donaldson") is appealing the decision of the court
below to dismiss its third-party claim against appellee Corchran, Inc. ("Corchran"), for lack of
personal jurisdiction. Because we find that the federal district court in Texas did have personal
jurisdiction over Corchran, we REVERSE and REMAND.
I. BACKGROUND
Ruston Gas Turbines, Inc. ("Ruston") originally filed this action against Donaldson in Texas
state court for breach of contract, breach of warranty and strict products liability in connection with
a contract between the two companies for the manufacture and sale of two gas-turbine engine
systems. Donaldson removed to federal court on the basis of diversity; Ruston is a Texas
corporation and Do naldson is a Delaware corporation with its principal place of business in
Minnesota. Donaldson then filed a third-party complaint for contribution or indemnity against
appellee Corchran, a Minnesota corporation that had subcontracted with Donaldson to manufacture
certain component parts of the systems sold by Donaldson to Ruston.
Corchran filed a motion to dismiss the third-party claim for lack of personal jurisdiction. In
the motion to dismiss, supported by the affidavit of its president, Corchran stated the following:
Corchran is a Minnesota corporation with its principal place of business in Waseca, Minnesota.
Corchran does not conduct business or maintain a place of business in Texas. It does not employ or
maintain a sales representative or manufacturer representative in Texas. It has not recruited any
employees in Texas. Corchran has not designated a registered agent for service of process in Texas,
and is not required by Texas law to do so. Corchran has not contracted by mail with any Texas
resident whereby the contract was to be performed in whole or part in Texas. Corchran has not
committed a tort in Texas.
Corchran claims that all of its actions related to its contract with Donaldson occurred in
Minnesota. The items sold by Corchran under that contract were shipped FOB Waseca, Minnesota.
Corchran claims it had no direct contract with Ruston and no verbal, written, or any other
communication with Ruston regarding the sale of the equipment at issue. Corchran says its only
communications were with Donaldson. Corchran says none of its employees communicated with or
performed any work with persons in Texas in fabricating, manufacturing or delivering the equipment.
In its responses to Corchran's motion to dismiss, supported by the affidavits of Donaldson and
Ruston employees, Donaldson lists the following facts: (1) Corchran agreed in its contract with
Donaldson to manufacture two air-infiltration systems that would be purchased by Ruston; (2)
Corchran was aware that the parts it was manufacturing would be shipped to Texas; (3) The
purchase order issued by Donaldson to Corchran specifically indicated that the air infiltration systems
were to be sold to Ruston in Houston; (4) Corchran delivered the equipment it manufactured into
the hands of a common carrier for direct shipment to Ruston in Houston; (5) The bills of lading
covering the goods Corchran shipped identified the consignee and destination as "Ruston Gas
Turbines, Inc." with Ruston's Houston address; (6) On 211 different occasions between December
1, 1977 and June 17, 1992, Corchran shipped equipment directly from its plant in Minnesota to
locations in Texas; (7) These 211 shipments were to 44 different entities and locations in Texas; (8)
On several occasions during this 15-year period, Corchran employees accompanied Donaldson
employees to Texas to assist and meet with Donaldson's customers in Texas who were purchasing
products containing Corchran components; and (9) Corchran's practice of shipping items directly to
Ruston continued even after the transaction that was made the subject of this lawsuit.
The district court found that it did not have personal jurisdiction over Corchran. It granted
Corchran's motion and dismissed Donaldson's claim against Corchran.
Upon motion by Donaldson, the trial court determined under Federal Rule of Civil Procedure
54(b) that its dismissal of the third-party claim against Corchran was a final, appealable order.1
Donaldson appealed to this Court, arguing t hat the trial court erred in dismissing its claim against
Corchran for lack of personal jurisdiction.
II. ANALYSIS
A. Applicable Law on Personal Jurisdiction
Absent any dispute as to the relevant facts, the issue of whether personal jurisdiction may be
exercised over a nonresident defendant is a question of law to be determined de novo by this Court.2
When alleged jurisdictional facts are disputed, we must reso lve all conflicts in favor of the party
seeking to invoke the court's jurisdiction.3 A federal district court sitting in diversity may exercise
personal jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state
confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum
state is consistent with due process under the United States Constitution.4 These two steps collapse
into one for our purposes because the Texas Supreme Court has established that the Texas long-arm
1
On or about October 15, 1993, the district court in this action granted summary judgment in
favor of defendant Donaldson on all claims brought by plaintiff Ruston. Ruston has appealed the
summary judgment to this Court, therefore the issue of personal jurisdiction over Corchran is not
moot.
2
E.g., Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir.1993); Command-Aire v.
Ontario Mechanical Sales & Service, 963 F.2d 90, 93 (5th Cir.1992).
3
Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir.1990) ("[O]n a motion to dismiss for lack of
jurisdiction, uncontroverted allegations in the plaintiff's complaint must be taken as true, and
conflicts between the facts contained in the parties' affidavits must be resolved in the plaintiff's
favor for purposes of determining whether a prima facie case for personal jurisdiction exists.")
(quoting D.J. Investments, Inc. v. Metzler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 546
(5th Cir.1985).).
4
E.g., Ham, 4 F.3d at 415; Irving v. Owens-Corning Fiberglas Corp., 864 F.2d 383, 385 (5th
Cir.), cert. denied sub nom. Jugometal Enterprise for Import and Export of Ores and Metals v.
Irving, 493 U.S. 823, 110 S.Ct. 83, 107 L.Ed.2d 49 (1989).
statute5 extends to the limits of federal due process.6
The due process clause of the Fourteenth Amendment, as interpreted by the Supreme Court,
permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has
established "minimum contacts" with the forum state; and (2) the exercise of jurisdiction over that
defendant does not offend "traditional notions of fair play and substantial justice."7 Both prongs of
the due process test must be met in this case if the United States Distri ct Court for the Southern
District of Texas is to exercise personal jurisdiction over Corchran.
B. Minimum Contacts
The "minimum contacts" prong of the test is perhaps the most difficult to ascertain and has
been refined to determine two types of personal jurisdiction—specific or general. A state exercises
"specific jurisdiction" over a non-resident defendant when the lawsuit arises from or relates to the
defendant's contact with the forum state.8 A single act by the defendant directed at the forum state,
therefore, can be enough to confer personal jurisdiction if that act gives rise to the claim being
asserted.9 In contrast, when the act or transaction being sued upon is unrelated to the defendant's
contacts with the forum state, personal jurisdiction does not exist unless the defendant has sufficient
"continuous and systematic cont acts" with the forum state to support an exercise of "general
jurisdiction."10
In this case, appellant Donaldson's claim against appellee Corchran arises out of Corchran's
5
TEX.CIV.PRAC. & REM.CODE §§ 17.041-045 (Vernon 1986).
6
E.g., Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990); Ham, 4 F.3d at 415 & n. 7.
7
International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95
(1945).
8
See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8, 104 S.Ct.
1868, 1872, 80 L.Ed.2d 404 (1984); Bearry v. Beech Aircraft Corp., 818 F.2d 370, 374 (5th
Cir.1987).
9
Ham v. La Cienega Music Co., 4 F.3d 413, 415-16 (5th Cir.1993); Dalton v. R & W Marine,
Inc., 897 F.2d 1359, 1361 (5th Cir.1990).
10
Ham, 4 F.3d at 416 n. 10 (citing Helicopteros, 466 U.S. at 414 & n. 9, 104 S.Ct. at 1872 &
n. 9).).
contacts with Texas, so we will perform a specific jurisdiction analysis. We do not decide today
whether Corchran's contacts with Texas are sufficiently "continuous and systematic" to support an
exercise of general jurisdiction.
The "minimum contacts" prong, for specific jurisdiction purposes, is satisfied by actions, or
even just a single act, by which the non-resident defendant "purposefully avails itself of the privilege
of conducting activities within the forum state, thus invoking the benefits and protections of its
laws."11 The non-resident's "purposeful availment" must be such that the defendant "should
reasonably anticipate being haled into court" in the forum state.12
The Supreme Court has stated that a defendant's placing of its product into the stream of
commerce with the knowledge that the product will be used in the forum state is enough to constitute
minimum contacts. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298, 100 S.Ct. 559,
567, 62 L.Ed.2d 490 (1980). The Fifth Circuit is among the circuits that have interpreted World-
Wide Volkswagen to hold that "mere foreseeability or awareness [is] a constitutionally sufficient basis
for personal jurisdiction if the defendant's product made its way into the forum state while still in the
stream of commerce." Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 111, 107 S.Ct.
1026, 1031, 94 L.Ed.2d 92 (1987) (citing Bean Dredging Corp. v. Dredge Technology Corp., 744
F.2d 1081 (5th Cir.1984).).
In Asahi, the Supreme Court's most recent statement on personal jurisdiction, four justices
favored a narrower interpretation of the stream of commerce doctrine.13 The plurality opinion by
Justice O'Connor advocated a requirement of "additional conduct" by the defendant to support
11
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528
(1985); see also Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283
(1958); Ham, 4 F.3d at 415-16; Irving, 864 F.2d at 385.
12
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62
L.Ed.2d 490 (1980); Irving, 864 F.2d at 385.
13
Asahi, 480 U.S. at 110, 107 S.Ct. at 1031; see also Irving, 864 F.2d at 385. While four
justices in Asahi supported the "stream-of-commerce-plus" theory and would decide the case on
the "minimum contacts" prong, the remaining four justices focused on an alternate rationale,
stating that the exercise of personal jurisdiction over the defendant did not meet the second, "fair
play" prong of the due process test. Asahi, 480 U.S. at 115-16, 107 S.Ct. at 1033-34.
personal jurisdiction under the stream of commerce theory:14
"The "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. The placement of a product into the stream of commerce,
without more, is not an act of the defendant purposefully directed toward the forum state....
[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."
Asahi, 480 U.S. at 112, 107 S.Ct. at 1032 (citations omitted).
The pluralit y opinion gave examples of "additional conduct" that would satisfy the
"stream-of-commerce-plus" test: (1) showing an intent or purpose to serve the market in the forum
state; (2) designing the product for that state's market; (3) advertising in the forum state; (4)
establishing channels to provide regular advice to customers in the forum state; or (5) marketing the
product through a distributor-agent in the forum state. Id.
In the years after Asahi, the Fifth Circuit has continued to follow the original
"stream-of-commerce" theory established in the majority opinion of World-Wide Volkswagen, and
has rejected the "stream-of-commerce-plus" theory advocated by the Asahi plurality. Irving v.
Owens-Corning Fiberglas Corp., 864 F.2d 383, 386 (5th Cir.), cert. denied sub nom. Jugometal
Enters. for Import and Export of Ores and Metals v. Irving, 493 U.S. 823, 110 S.Ct. 83, 107
L.Ed.2d 49 (1989); Bearry v. Beech Aircraft Co., 818 F.2d 370, 375 (5th Cir.1987) (noting that
"[t]he dimension of the "stream of commerce' doctrine now divides the Supreme Court" and referring
to the "uncertainty" evident in Asahi ). In Irving, 864 F.2d at 386, this circuit stated:
"Because the [Supreme] Court's splintered view of minimum contacts in Asahi provides no
clear guidance on this issue, we continue to gauge [the nonresident defendant]'s contacts with
Texas by the stream of commerce standard as described in World-Wide Volkswagen and
embraced in this circuit."
Our most recent post-Irving personal jurisdiction case reaffirms the Irving rationale. Ham v. La
Cienega Music Co., 4 F.3d 413 (5th Cir.1993). In Ham, we noted the disagreement of the Supreme
Court justices in Asahi regarding the stream of commerce theory and concluded: "Absent rejection
by a majority on the Supreme Court, we have continued to apply the stream of commerce analysis
14
Asahi, 480 U.S. at 110, 107 S.Ct. at 1031; see also Irving, 864 F.2d at 385.
found in our pre-Asahi cases."15
In its order finding a lack of personal jurisdiction over Corchran in this case, the district court
relied explicitly on the "stream-of-commerce-plus" theory advocated in the Asahi plurality opinion.
Citing Asahi, 480 U.S. at 112, 107 S.Ct. at 1032, the court concluded that because Donaldson did
not show that Corchran engaged in acts "purposefully directed toward the forum state," a federal
district court in Texas could not exercise personal jurisdiction over Corchran. This reasoning fails
to recognize the Fifth Circuit's interpretation of the stream of commerce test and is therefore
erroneous. In Irving, 864 F.2d at 386, and again in Ham, 4 F.3d at 416 n. 11, this circuit expressed
its position that Asahi does not provide clear guidance on the "minimum contacts" prong, and
therefore we will continue to follow the stream of commerce analysis in World-Wide Volkswagen,
444 U.S. at 298, 100 S.Ct. at 559. Under the World-Wide Volkswagen test, Corchran's contacts with
Texas are more than enough to justify an exercise of personal jurisdiction. See Irving, 864 F.2d at
386-87; Bean Dredging, 744 F.2d at 1085.16 Corchran intentionally placed its products into the
stream of commerce by delivering them to a shipper destined for delivery in Texas. At the time the
goods left Corchran's plant in Minnesota, Corchran not only could have foreseen that the products
might end up in Texas, it knew as a fact that the products were going to be delivered to a specific user
in Houston, Texas. Given Corchran's 211 contacts with Texas through its business relationship with
Donaldson over the years, as well as the visits of its own employees to Texas to serve Donaldson's
customers, Corchran reasonably should have anticipated that it could be haled into court in Texas.
C. Fair Play and Substantial Justice
15
Ham, 4 F.3d at 416 & n. 11; Gulf Consol. Services, Inc. v. Corinth Pipeworks, S.A., 898
F.2d 1071, 1073 (5th Cir.) (citing Bearry, 818 F.2d at 375) (follows the original World-Wide
Volkswagen test without comment), cert. denied, 498 U.S. 900, 111 S.Ct. 256, 112 L.Ed.2d 214
(1990); See also Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1548 & n. 17 (11th Cir.)
(noting that the Fifth Circuit in Irving, as well as federal district courts in Utah, Guam, Indiana,
Kansas and Virginia, have declined to follow the Asahi plurality), cert. denied sub nom. Regie
Nationale Des Usines Renault S.A. v. Vermeulen, --- U.S. ----, 113 S.Ct. 2334, 124 L.Ed.2d 246
(1993).
16
All facts alleged by Donaldson regarding jurisdictional issues must be taken as true for
purposes of determining whether Donaldson has met its burden of proving a prima facie case for
the existence of personal jurisdiction. Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir.1990).
Even if minimum contacts exist, the exercise of personal jurisdiction over a non-resident
defendant will fail to satisfy due process requirements if the assert ion of jurisdiction offends
"traditional notions of fair play and substantial justice."17 In determining this fundamental fairness
issue we must examine (1) the defendant's burden; (2) the forum state's interests; (3) the plaintiff's
interest in convenient and effective relief; (4) the judicial system's interest in efficient resolution of
controversies; and (5) the state's shared interest in furthering fundamental social policies.18
In this case, Donaldson has a strong interest in obtaining convenient and effective relief. The
claims Donaldson asserts against Corchran are third-party claims arising from Ruston's claims against
Donaldson in the same case. The Texas forum will bring all the parties into one courtroom for a
single resolution. Texas, as forum state, also has an interest in adjudicating a dispute that involves
a sale of goods to a Texas consumer, Ruston. Corchran participated in the transaction by delivering
component parts to Texas that were incorporated into a finished good in Texas. The burden on
Corchran to defend in Texas is not unreasonable, given that Corchran employees have traveled to
Texas in connection with its business relationship with Donaldson. It is not unfair or unjust to require
the manufacturer of a good that is knowingly delivered to a specific state to respond to a lawsuit
arising out of defects in the good in that state. Therefore, the second prong of the due process test
is satisfied; the exercise of personal jurisdiction over Corchran in Texas does not offend fair play and
substantial justice.
III. CONCLUSION
Our decision in this case is governed by our opinions in Bean Dredging, 744 F.2d at 1085,
and Irving, 864 F.2d at 386. Because we hold, under the original "stream-of-commerce" theory
established in World-Wide Volkswagen, 444 U.S. at 298, 100 S.Ct. at 567, that the federal district
court in Texas did have personal jurisdiction over Corchran, we REVERSE the trial court's dismissal
17
International Shoe, 326 U.S. at 316, 66 S.Ct. at 158; See also Asahi, 480 U.S. at 112, 107
S.Ct. at 1032; World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. at 559; Command-Aire v.
Ontario Mechanical Sales & Service, 963 F.2d 90, 95 (5th Cir.1992); Irving, 864 F.2d at 387.
18
Asahi, 480 U.S. at 112, 107 S.Ct. at 1032; World-Wide Volkswagen, 444 U.S. at 292, 100
S.Ct. at 559; Irving, 864 F.2d at 387.
of Donaldson's third-party claims and REMAND the case for further proceedings in accordance with
this opinion.