This Ain't the Texas Two Step Folks: Disharmony, Confusion, and the Unfair Nature of Personal Jurisdiction Analysis in the Fifth Circuit

• Author: Angela M. Laughlin
• Position: Associate Professor of Law, Mahon Research Fellow, Texas Tech University School of Law
• Pages: 681-728

THIS AIN’T THE TEXAS TWO STEP FOLKS:

DISHARMONY, CONFUSION, AND THE UNFAIR NATURE

OF PERSONAL JURISDICTION ANALYSIS IN THE FIFTH

CIRCUIT

ANGELA M. LAUGHLIN*

I. INTRODUCTION

The state of the “stream of commerc e” test is in flux. The Su preme

Court’s last pronouncement on the subject, Asahi Metal Industry Co. v.

Superior Court of Calif ornia, So lano Cou nty,1 muddi ed the water in cas es

involving products that travel “through” interstate commerce to reach a

distant forum state.2 The Court has yet to resolve its division o n the proper

analysis for stream-of-co mmerce cases , and federal ci rcuit co urts and state

courts are equall y divided on the issue.3 As evidenced by a recent Fift h

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* Associate Professor of Law, Mahon Research Fellow, Texas Tech Universi ty School

of Law. I would like to thank my colleagues, Paul Whitfield, Horn Professor of Law

William Casto, Professo r Alison Myhra, and my research assista nts Zac Cornish, An gela

Clark, and Ryan Brown for all of their help on this article.

1 480 U.S. 102 (1987). While the Court agreed on the result, that Asahi, a third-party

defendant, was not subject to jurisdiction in Californ ia, the Court split badly on the

rationale. O’Connor, plus three, stated that there were no “minimum contacts” and

therefore no personal jurisd iction because the due process clause required more than mere

placement in commerc e of a product for establishment of min imum contacts. Id. at 112–13.

She wrote that foreseeabil ity, plus some other evidence of “purpo seful direction” was

required to establish minim um contacts. Id. at 111–12. Br ennan plus thre e other Justice s

disagreed. They found “minimum contacts” sufficient to satisfy t he Due Process Clause,

based on the me re foreseeability of a product placed in the stream of commerce reaching

the forum state. Id. at 116–17 (Brennan, J., concurring). Justice Stevens articulated yet a

third appro ach. He believed for eseeability should be based on an analysis of the volume,

value, and hazardous nature of the product placed into the stream of commerce. Id. at 122

(Stevens, J., concurring).

2 For thorough and interesting discussions of the legacy of the Asahi split, see Robert J.

Condlin, “Defenda nt Veto” or “Total ity of the Circums tances”? It’s Time for the Supreme

Court to Straighten Out the Personal Jurisdiction Stand ard Once Again, 54 CATH. U. L.

REV. 53 (2004); Russell J. Weintraub , A Map Out of the Personal Jurisdiction L abyrinth,

28 U.C. DAVIS L. REV. 531 (1995).

3 See discussion infra notes 94–97.

682 CAPITAL UNIV ERSITY LAW R EVIEW [37:681

Circuit decis ion, Luv N’ Care, Ltd. v. Insta-Mix, Inc.,4 none of the theories

of minimum contacts have been fully accep ted. This case i n particular,

through its vigorous concurring opinion and powerful majority opinion,

demonstrates that the un resolved issues of how to determine mini mum

contacts still i mpact import ant decis ions in cases daily.5 Addit ionally, the

Fifth Circuit, as well as other cir cuits, have co mplicated the is sue by

combining their particular reading of the minimum contacts test with a

burden-shifting test, often s hifting the b urden on the defendant to articulate

“compelling reasons” why after a find ing of purposeful contact,

jurisdiction s hould not lie in the foru m.6

This d ivision in the ci rcuits and th e states causes not only uncertainty

in the law, but also undesirable forum shopping.7 Personal jurisdiction

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4 438 F.3d 465 (5th Cir. 20 06). For a good discussion of this case, see Alison Myhra,

Fifth C ircuit Survey June 2005–May 2006 : Civil Procedure, 39 TEX. TECH L. REV. 689 ,

707–12 (2007).

5 Luv N’ Care, 438 F.3d at 474 (DeMoss, J., con curring); id. at 46 9–70 (majo rity

opinion).

6 Id. at 473 (citing Nuovo Pignone, SpA v. Storman Asia M /V, 310 F.3d 37 4, 382 (5th

Cir. 2002)).

7 See Semtek Intern. Inc. v. Lockheed Martin Corp., 531 U.S. 4 97, 498 (2001) (“Any

other rule would produce the sort of forum shopp ing and inequitable administration of the

laws that Erie seeks to avoid.”); Fla. P repaid Postsecondary Educ. Expense Bd . v. College

Sav. Bank, 527 U.S . 627, 651 n.3 (1999) (“In its Report o n the Federal Courts Improvement

Act of 1982 , the House stated, ‘Pa tent litigation long has been identified as a problem area,

characterized by undue forum-shoppin g and unsettling inconsistency in adjudications.’” );

G. Marcus Cole, Protecting Consumers Fro m Consumer Pro tection: Watters v . Wachovia

Bank, CATO SUP. CT. REV. 251, 275 (2007) (“Forum shopping is bad when it occurs ex

post, when parties to a transaction seek a favor able outcome by seeking a b iased arbiter. On

the contrary, ex an te forum shopping is what federalism is all about. P arties should exercise

their constitutional right to interstate travel, for example, and ‘vote with their feet’ w hen

encountering an inhospitable leg al or regulatory climat e.”) (citations omitted) ; Emil

Petrossian, II, In Pursuit o f the Perfect Fo rum: Transnational Forum Shopping, 4 0 LOY.

L.A. L. REV. 1257, 1264, 1265 (2007) (“But despite these differences in conceptualization,

the aversion toward and regulation of procedural forum shopping app ears to stem from the

same root: the wel l-established legal princ iple that disputes should be resolved on th eir

merits and not on pro cedural technicali ties. This principl e is offended when ever a party

obtains a favorable outcome simply by bringing o r remo ving an action to a p articular

forum, b ecause the party doe s so irrespective of the rela tive strength or weakness of tha t

party’s legal position.”); Daniel Tan, D amages for Breach of Forum Selection Clauses,

(continued)

2009] THIS AIN’T TH E TEXAS TWO S TEP FOLKS 683

analysis now varies depending on which circuit a litig ant files in. If a

plaintiff i s savvy enough to p ick a ci rcuit embracing Brennan’s

foreseeability view, minimu m contacts will likely be fou nd.8 This is

particularly true where that same jurisdiction , after finding “purposefu l

conduct” then transfers the b urden t o the defendant to demonstrat e

“unfairness.”9 Conversely, if a plaintiff fi les in the First, Fo urth, Sixth , or

Eleventh Circuits, a finding of personal jurisdiction may be less likely,

given the same facts, because thos e circuits employ the O’Connor test

requiring a much more speci alized sho wing to reach “purposeful

conduct.”10

This divis ion in th e circuits creates uncertain ty for bus inesses an d fails

to g ive compan ies su fficient notice to structure their business to minimize

risks, a com mon theme and concern in the Cou rt’s prior mi nimum contact s

jurisprudence.11 The impact of the Co urts’ disagre ement may make

Principled Remedi es, and Control of International Civil L itigation, 40 TEX. INT’L L.J. 623,

638–39 (200 5) (“Classically speaking, forum shopping is bad. Principles of f airness

demand that the plaintiff n ot be allowed an unfettered right to arbitrarily comm ence

proceedings in any forum he w ishes. ‘At the heart of the c lassical view [against forum

shopping] li es a desire for fairness to the defendant. Forum-shopping is seen as subjecting

the defendant to unanticipated and perhaps u nforeseeable risks.’ The courts are especially

reluctant to allow p roceedings in ‘unnatura l’ courts—courts that have on ly a remote

connection with the dispute itself—unless there are good reasons for this. The forum

shopper is often seen as ‘one who manipulates looph oles in the system to thwart [the] ideals

of neutrality to hurt the d efendant.’”) (citations omitted).

8 See Asahi Metal Indus. Co. v. Sup erior Court, 480 U.S. 102 , 116–17 (1987)

(Brennan, J., concurring).

9 See Luv N’ Care, 438 F.3d at 473 (citing Nuovo Pignone, 310 F.3d at 382).

10 For a collection of cases, see infra n ote 129.

11 See, e.g ., Burger King Corp. v . Rudzewicz, 471 U.S. 462 , 474–76 (1985); World-

Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297–98 (1980); Int’l Sho e Co. v.

Washington, 326 U.S. 310, 316–19 (1945); see also Danie l Wanat, Copyright In fringement

Litigation and the Exercise o f Personal Jurisdiction Within Due Process Limits: Judicial

Application of P urposeful Availm ent, Purposeful Direction, or Purposeful Ef fects

Requirements to Finding that a Pla intiff Has Established a Defendant’s Minimum Contacts

Within the Forum State, 59 MERCER L. REV. 553, 564, 589–93 (2008) (discussing the

impact o f Asahi on copyright cases); Randall B. Weill, T he Internet and Personal

Jurisdiction in the United Sta tes, in INTERNATIONAL JUDICIAL ASSISTAN CE IN CIVIL

MATTERS 20 9, 213 (Suzanne Rodriguez & Bertrand Prell eds., 1999) (“The d etermination

of whether minimum contacts exist ‘is one in which few answers will be written ‘in black

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