Lawyers and wannabe lawyers like to use Latin words and phrases without always understanding their original meaning. English, a Germanic language according to the family tree, is peppered with words that are derived from Latin. Being the conglomeration that it is, English includes some words—egregious comes to mind—that now mean the opposite of their Latin progenitors. Others have stayed closer to the root’s meaning, even as their forms have expanded. Fors meant both luck and (random) chance, which are not exactly the same thing. When we use “fortune” in the old saw “fortune favors the bold,” the suggestion is that bold people have better luck than others. When we read “fortuitous” in “contacts must be the defendant’s own choice and not random, isolated, or fortuitous,” we understand it to mean that the contacts must not be by some sort of chance that happens to favor the plaintiff’s position. You may be wondering who would say that and why we have such a convoluted introduction. As to the first question, the Supreme Court wrote it (internal citations omitted above) in Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 592 U.S. ___, 141 S. Ct. 1017, 1025 (2021) (citing Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)), the latest high court pronouncement on specific personal jurisdiction.
LG Chem. Am. v. Morgan, No. 21-0994, 2023 Tex. LEXIS 420 (Tex. S. Ct. May 19, 2023), purports to apply Ford in connection with product liability claims against the foreign manufacturer and U.S. subsidiary/distributor of a battery that was misused with an e-cigarette and exploded. (We use “product liability,” the Texas code uses “products liability,” and the Morgan decision uses “products-liability” with a novel hyphen. We briefly considered an introduction based on that weird hyphen. You are welcome.) We have previously discussed two post-Ford federal circuit personal jurisdictions decisions in these types of cases against the same or related defendants. Each found no specific personal jurisdiction over out-of-state defendants. While Morgan involves a claim in state court—removal was defeated by including the vape shop that sold the battery—the controlling law is all federal because limits on personal jurisdiction are imposed by the due process. Thus, it was a bit surprising that Morgan’s citation to personal jurisdiction decisions in this type of case included three Texas state cases, one Mississippi state case, one California state case, and one Texas federal case, but not either federal circuit decision. In fairness, Morgan cited one of them, the Ninth Circuit’s, for an explanation of the model number of the battery at issue, but not for its holding. We also found it a bit weird that Walden was not cited on the need to look at each asserted claim and Bauman was not cited on the issue of whether a domestic subsidiary’s contacts can be imputed to its foreign parents. File all of these observations under foreshadowing.
Morgan makes it clear that Ford controls its inquiry. Ford, as we have discussed before, focused on what it means for the asserted claims to “arise out of or relate to” the defendant’s conduct creating a relationship with the state seeking to exercise personal jurisdiction, a requirement dating to Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408 (1984). While it did not require a “causal relationship” between the contact and the claims, it emphasized that there have to be “real limits” and it cannot be that “anything goes.” 2023 Tex. LEXIS 420, *13. Morgan characterized its own standard as “stream-of-commerce-plus” based on a post-Ford case called Luciano and 2007 case called Moki Mac. Id. at *11. Again, we find this unusual, because Ford made no mention of “stream of commerce.” Neither did the Supreme Court’s next most recent dive into specific personal jurisdiction in Bristol-Myers Squibb Co. v. Superior Court, 582 U.S. 255 (2017). Morgan also cited, in one form or another, every sentence from a paragraph in Ford defining the standards for specific personal jurisdiction except for the one we cited in our first paragraph. Omitting that the contacts could not be “random, isolated, or fortuitous” was fortuitous for Texas plaintiffs, who seem to operate under more liberal specific personal jurisdiction standards than plaintiffs elsewhere.
The Morgan court’s analysis based on those standards was fairly short and not terribly consistent. Because the Georgia defendant and sometimes even the Korea defendant had shipped batteries directly to manufacturers in Texas, albeit to be included as a component part in other products not sold as a standalone product, the court concluded that both the purposeful availment and “arise out of or relate to” requirements had been met unless the defendants’ intent and market segmentation mattered. Id. at *15. As you probably surmised, neither did. The rejection of the relevance of “defendants’ intent to serve the industrial versus the individual-consumer market segment” was grounded on the idea that the test was objective not subjective. Id. at *11 & *20. However, the Moki Mac case that Morgan said continued to define the standard requires that there be “additional conduct [beyond placing product into the stream of commerce] evincing an intent or purpose to serve the market in the forum State.” Id. at *11 (internal citation omitted). Sure sounds like “intent” matters. And not to be too picky, but “the market” is different than “a market.” The former sounds limited to the market that was relevant to the claims being asserted, not just any old market anywhere in Texas. Instead, Morgan concluded that the “the whole forum—the entire state of Texas—[is] the relevant market in the minimum-contacts analysis.” Id. at *15-16. This may be—if Moki Mac’s statements about intent can be ignored—but it does not make sense in conjunction with the relatedness requirement.
As to that, citing Luciano and Moki Mac, the Morgan court held:
The LG Chem defendants undisputedly sold and distributed model 18650 batteries in Texas, and they do not dispute that is the same model battery Morgan alleges injured him in Texas. That is sufficient to satisfy the relatedness prong and establish specific personal jurisdiction in Texas.
Id. at *17. The sale of the same model battery to manufacturers in Texas who would then include it as a component in their own products seems to us to be more in the fortuitous category than related to plaintiff’s claims about the battery he bought from a store to use with his e-cigarette. To be related, the particular battery needed to have been shipped from defendants (both of them given Bauman) to Texas. Given that there was clearly something amiss for the battery to have made its way from a shipment to a manufacturer (for use as a component) to a store selling it to consumers for use with e-cigarettes, it clearly could have been shipped from defendants to a location outside of Texas before the detour to the Texas “vape shop” where plaintiff purchased it. By contrast, in Ford:
By every means imaginable—among them, billboards, TV and radio spots, print ads, and direct mail—Ford urges Montanans and Minnesotans to buy its vehicles, including (at all relevant times) Explorers and Crown Victorias. Ford cars—again including those two models—are available for sale, whether new or used, throughout the States, at 36 dealerships in Montana and 84 in Minnesota. And apart from sales, Ford works hard to foster ongoing connections to its cars’ owners. The company’s dealers in Montana and Minnesota (as elsewhere) regularly maintain and repair Ford cars, including those whose warranties have long since expired. And the company distributes replacement parts both to its own dealers and to independent auto shops in the two States. Those activities, too, make Ford money. And by making it easier to own a Ford, they encourage Montanans and Minnesotans to become lifelong Ford drivers . . . . In other words, Ford had systematically served a market in Montana and Minnesota for the very vehicles that the plaintiffs allege malfunctioned and injured them in those States.
None of this was present in Morgan. Selling other batteries of the same model to a different market segment in the state is just not the same.
If the case were about something other than a battery and e-cigarette, perhaps the lack of relatedness would be more obvious. Assume the lawsuit was about an injury sustained by a bull rider at a rodeo and, looking for deep pockets, the plaintiff decided to sue the Korean company that raised the calf/bull he ended up riding and its Georgia subsidiary that distributed the calves for sale once they sufficiently large. (Sure, the rodeo rider assumed the risk of injury and suing these companies instead of the rodeo company or facility would be weird, but we can say the same things about misusing a battery for vaping.) Now, add in that the cows were raised to be docile and were sold only to petting zoos, never to rodeos, in Texas and the rest of the country. (There obviously had to be some sort of resale or diversion to get the calf to become a rodeo bull, so that should break the chain of causation. Again, same with Morgan.) Clearly, if there were to be personal jurisdiction for a Texas court over the Korean and Georgia companies, then any asserted claims would need to satisfy the Ford standards for arising out of or relating to the companies purposeful contacts with Texas. The contacts could not be random, isolated, or fortuitous. Absent the sort of continuous forum ties like in Ford—advertising in Texas that they raised the toughest rodeo bulls around—there would need to be some proof that the rodeo bull the plaintiff attempted to ride when he got injured was sold to a pet zoo in Texas. If the bull had been sold to a petting zoo in North Dakota, he busted out, and he moseyed on down to Texas—or was absconded with by a cattle rustler, your choice—then certainly the plaintiff’s claims did not arise out or relate to the defendants’ contacts with Texas, which are properly characterized as fortuitous in this context. (In case you think this is farfetched, the definitions of seller and manufacturer in Tex. Civ. Prac & Rem. Code § 82.001(3)-(4) probably cover the defendants here and “product” is not a defined term.)
We would be surprised to see this case go up to the United States Supreme Court, even with its conflict with the two federal circuit cases. However, as this litigation and others with generally similar “stream of commerce” fact patterns continue, we are sure to see more inconsistency in the application of specific personal jurisdiction. What will continue is the not so subtle desire for some states to cast a wide net—to the point of “anything goes”—to bring in defendants for an in-state plaintiff with an in-state injury.