The Texas Long-Arm Statute Does Not Reach French Equipment Manufacturer (but Maybe It Should)

Article excerpt

SUMMARY

The Texas Supreme Court has provided an example of why reforming personal jurisdiction jurisprudence for international defendants may be proper. In CMMC v. Salinas the Supreme Court reversed a court of appeals decision that extended long-arm jurisdiction to a French equipment manufacturer in a products liability suit.(1) The ruling purports to sidestep the debate regarding the minimum contacts test and the stream of commerce test in Asahi Metal Industry Co. v. Superior Court.(2) However, the Texas Supreme Court decision clearly favors Justice O'Connor's plurality opinion,(3) which recommends a "stream of commerce plus" test--that is, requiring the defendant to purposefully direct action toward the forum state.(4) The decision hinges on the limited nature of CMMC's contact with Texas, the forum state, and the State's fledgling wine industry.(5) It ignores, as it must, the likelihood of substantial sales by the manufacturer with other states(6) that may have large, well-established wine and juice industries.

This Note reviews the Texas decision in light of the history of personal jurisdiction and the stream of commerce test. It argues that a revised minimum contacts test for international defendants based on national contacts would produce a fairer result for plaintiffs without violating defendants' due process rights. Part II outlines the facts in CMMC v. Salinas. Part III reviews the history of personal jurisdiction under International Shoe and its progeny, focusing on the stream of commerce test for minimum contacts as developed by the Supreme Court and applied in the Fifth Circuit and in Texas. Part IV analyzes the court of appeals' and the Supreme Court's application of the test in CMMC v. Salinas and suggests an alternative.

I. BACKGROUND OF CMMC v. SALINAS

The case arose as a products liability suit filed by Ambrocio Salinas, a worker at Hill Country Cellars, a small winery in Cedar Park, Texas.(7) Salinas was injured while cleaning an allegedly defective wine press manufactured by CMMC and purchased by Hill Country through KLR Machines, Inc., an independent distributor of wine- and juice-making equipment.(8) CMMC sold its equipment in the United States directly and through KLR; it did no direct U.S. advertising, but KLR advertised CMMC's products in national wine-making periodicals.(9) CMMC had no direct contact with Hill Country or Texas and had only a few isolated sales of equipment in Texas.(10) The deposition of KLR Vice President R. Ivan Linderman cites significant sales by KLR to wine and juice producers in western states, but did not provide detailed information on CMMC sales within the United States.(11) KLR sold the wine press to Hill Country and arranged for transport to Hill Country through the port of Houston.(12) CMMC knew KLR was sending the press to Hill Country for use in Texas.(13) CMMC rewound the press for use in the United States, and Hill Country made one warranty claim on the press, which KLR honored, billing CMMC.(14)

CMMC entered a special appearance in the trial court contesting jurisdiction.(15) The trial court dismissed the case for want of personal jurisdiction.(16) The court of appeals reversed and remanded, finding that CMMC had sufficient minimum contacts with Texas to justify the exercise of personal jurisdiction in the case.(17) The court of appeals held that the Texas long-arm statute conferred jurisdiction over CMMC because CMMC delivered its product into the stream of commerce that carried the product into the State.(18) Although CMMC did not do business systematically with Texas customers, did not solicit buyers specifically in Texas through advertisements or a designated instate distributor, and had no direct contact with anyone in Texas, CMMC was aware of the ultimate destination of its wine press.(19) The court of appeals held that direct placement of a product into the stream of commerce establishes minimum contacts, but may not establish minimum contacts in instances where the unilateral activity of an entity in another state was the sole means of transporting it into the State. …