CSR LTD. v. Link

925 S.W.2d 591, 1996 WL 325590

• Court: Texas Supreme Court
• Decided: August 16, 1996
• Docket: 95-0933
• Status: Published

Opinions

SPECTOR, Justice,

delivered the opinion of the Court,

in which PHILLIPS, Chief Justice, HECHT, CORNYN, ENOCH, OWEN and ABBOTT, JJ., join.

This original proceeding concerns the exercise of personal jurisdiction over a foreign corporation by Texas courts. Although mandamus does not ordinarily lie from the denial of a special appearance, exceptional circumstances may warrant this extraordinary relief. In this case, we find that mandamus is appropriate and conditionally grant the writ.

I.

CSR Limited is a corporation organized under the laws of New South Wales, Australia, with its principal place of business in Sydney, Australia. For a period of time before 1967, CSR was the agent for sales of raw asbestos fiber mined by a subsidiary, Australian Blue Asbestos Proprietary, Limited. The Johns-Manville Corporation purchased this raw asbestos fiber and resold it in the United States. Johns-Manville was the only company marketing CSR’s fiber in this country.

On August 23, 1957, CSR sold 363 tons of raw Australian blue asbestos to Johns-Man-ville. CSR sold the asbestos to Johns-Man-ville F.O.B. Fremantle, Australia, so that title to the fiber passed to Johns-Manville when Johns-Manville loaded the fiber onto the ship in Australia. Johns-Manville shipped the asbestos to Houston; the fiber was eventually used for the manufacture of transite pipe. The plaintiffs in the underlying suit allege that they were injured by exposure to CSR asbestos used to manufacture pipe.

Because of the large number of asbestos cases that have been filed, the Harris County district courts have created a Master Asbestos File under the authority of local rule. HARRIS County (Tex) Dist. Ct. Loe. R. 3.2.3(c); In re: Asbestos Cases, Cause No. 90-23333. The judge presiding over the Master Asbestos File rules on issues common to the individual asbestos cases in Harris County. Those rulings in the Master Asbestos File control all asbestos eases currently pending or that may be filed in Harris County. See Standing Order No. 2, In re: Asbestos Cases, Cause No. 90-23333 (Dist. Ct. of Harris County). CSR filed a special appearance in the Master Asbestos File asserting that the trial court lacked personal jurisdiction over the company. Judge Link, the respondent in this case, overruled the motion. The court of appeals denied CSR leave to file its petition for writ of mandamus. CSR now seeks mandamus relief in this Court to prevent the trial court from asserting personal jurisdiction over it.

II.

A court must possess both subject matter jurisdiction over a case and personal jurisdiction over a party to issue a binding judgment. See Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701-03, 102 S.Ct. 2099, 2103-05, 72 L.Ed.2d 492 (1982). While subject matter jurisdiction refers to the court’s power to hear a particular type of suit, personal jurisdiction concerns the court’s power to bind a particular person or party. See 1 Casad, JURISDICTION IN ClVIL ACTIONS § 1.01 (2d ed.1991). This case involves the trial court’s personal jurisdiction over CSR.

A court may assert personal jurisdiction over a nonresident defendant only if the requirements of both the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution and the Texas long-arm statute are satisfied. See U.S. Const. amend. XIV, § 1; Tex. Civ. Prac. & Rem. Code § 17.042; Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 413-14, 104 S.Ct. 1868, 1871-72, 80 L.Ed.2d 404 (1984). The long-arm statute allows a court to exercise personal jurisdiction over a nonresident defendant that does business in Texas. In addition to a discrete list of activities that constitute doing business in Texas, the statute provides that “other acts” by the nonresident can satisfy the requirement. See Tex. Civ. Prac. & Rem.Code § 17.042; Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.1991). Our Court has repeatedly interpreted this broad statutory language “to reach as far as the federal constitutional requirements of due process will allow.” Guardian Royal, 815 S.W.2d at 226; see also U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 762 (Tex.1977). Consequently, the requirements of the Texas long-arm statute are satisfied if the exercise of personal jurisdiction comports with federal due process limitations. See Guardian Royal, 815 S.W.2d at 226.

Under the Due Process Clause of the Fourteenth Amendment, a defendant must have certain minimum contacts with the forum “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310,316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)). A nonresident defendant that has purposefully availed itself of the privileges and benefits of conducting business in the foreign jurisdiction has sufficient contacts with the forum to confer personal jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174, 2183-84, 85 L.Ed.2d 528 (1985). A defendant should not be subject to the jurisdiction of a foreign court based upon “random,” “fortuitous,” or “attenuated” contacts. Id. Minimum contacts are particularly important when the defendant is from a different country because of the unique and onerous burden placed on a party called upon to defend a suit in a foreign legal system. See Asahi Metal Industry Co., Ltd. v. Superior Court, 480 U.S. 102, 114, 107 S.Ct. 1026, 1033, 94 L.Ed.2d 92 (1987).

A defendant’s contacts with a forum can give rise to either general or specific jurisdiction. General jurisdiction is present when a defendant’s contacts are continuous and systematic, permitting the forum to exercise personal jurisdiction over the defendant even if the cause of action did not arise from or relate to activities conducted within the forum state. See Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990). General jurisdiction requires a showing that the defendant conducted substantial activities within the forum, a more demanding minimum contacts analysis than for specific jurisdiction. See Guardian Royal, 815 S.W.2d at 228. In contrast, specific jurisdiction is established if the defendant’s alleged liability arises from or is related to an activity conducted within the forum. See id. at 227.

CSR is an Australian company headquartered in Sydney. It has no offices in Texas, no employees in Texas, and no bank accounts in Texas. CSR has not solicited business in Texas and has not sent any correspondence to Texas. CSR has never owned property in Texas and has never paid taxes in Texas. CSR has never entered into a contract in Texas. Under these facts, CSR did not have systematic and continuous contacts with Texas sufficient to support general jurisdiction.¹

CSR also argues that the trial court does not have specific jurisdiction in this case because the company conducted no activity in or related to Texas. It is undisputed that CSR sold Johns-Manville a shipment of 363 tons of raw asbestos that was sent directly to Houston in August of 1957. But title to the asbestos passed to Johns-Manville in Australia and there is no evidence that CSR controlled or participated in the decision to ship the fiber to Texas. The plaintiffs contend, however, that CSR knew that one of Johns-Manville’s plants was in Denison, Texas. The plaintiffs argue that CSR could have foreseen that its raw asbestos fiber would be used in Texas. Therefore, they argue, CSR should be subject to the personal jurisdiction of Texas courts.

Although foreseeability is a factor to consider in a minimum contacts analysis, foreseeability alone will not support personal jurisdiction. See Guardian Royal, 815 S.W.2d at 227. The defendant must take an action “purposefully directed toward the forum state” to be subject to the jurisdiction of its courts. Asahi, 480 U.S. at 112, 107 S.Ct. at 1032 (emphasis added). Assuming that CSR could have known that the raw asbestos it sold to Johns-Manville might be distributed in Texas, “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. Additionally, CSR’s knowledge that there was a Johns-Manville plant in Texas is not determinative in establishing jurisdiction because there are also Johns-Manville plants located in at least four other states: Louisiana, New Jersey, Illinois and California. See State ex rel. CSR Ltd. v. MacQueen, 190 W.Va. 695, 441 S.E.2d 658, 660 (1994). There must be some indication that CSR intended to serve the Texas market.

CSR did not advertise its asbestos in Texas. CSR did not provide advice to Texas buyers or have any sales agents in Texas. CSR did not “create, control, or employ” the distribution system that brought the asbestos into Texas. Asahi, 480 U.S. at 112, 107 S.Ct. at 1032. There is no direct evidence that CSR knew that Johns-Manville would distribute its fiber in Texas. In short, the record contains no evidence that CSR took any act purposefully directed toward selling or distributing the raw asbestos fiber in Texas. Absent such a purposeful act, foreseeability alone cannot create minimum contacts between CSR and Texas. The Harris County courts, therefore, cannot exercise personal jurisdiction over CSR consistent with due process.

In Texas, a nonresident defendant must negate all bases of personal jurisdiction to prevail in a special appearance. See Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex.1985). CSR has demonstrated that it had no systematic and continuous contacts with Texas, that it did not purposefully direct any act toward Texas, and that it took no act within Texas that gave rise to the plaintiffs’ cause of action. We therefore conclude that CSR has carried its burden to negate all bases of personal jurisdiction.

III.

Because the trial court exceeded the limitations imposed by the Due Process Clause of the federal Constitution, it clearly abused its discretion in denying CSR’s special appearance. We now decide whether CSR has met the second requirement for showing itself entitled to mandamus relief, that it does not have an adequate remedy by ordinary appeal. Mandamus is an “extraordinary” remedy that is “available only in limited circumstances.” Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992). Mandamus is appropriate “only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy by law.” Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985). Generally, increased cost and delay alone do not make an ordinary appeal an inadequate remedy. Walker, 827 S.W.2d at 842. Because in the ordinary case no circumstances apart from the increased cost and delay of trial and appeal are present, we have held that mandamus typically will not lie from the denial of a special appearance. See Canadian Helicopters Ltd. v. Wittig, 876 S.W.2d 304, 307 (Tex.1994).

This Court has recognized, however, that in some situations a challenge to personal jurisdiction cannot be adequately remedied on appeal. For example, an ordinary appeal may be inadequate in cases involving family law or impheating comity in foreign affairs. See id. at 306-07. In addition, this Court has recognized that there may be other “extraordinary situation[s]” in which the denial of a special appearance cannot be adequately remedied on appeal. Id. at 309-10; see also National Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 776 (Tex.1995).

The extraordinary circumstances present in this case stem from the problems inherent in many, if not all, mass tort eases. Although only five plaintiffs have sued CSR in the present case, thousands of potential claimants exist based on possible exposure to transite pipes containing CSR asbestos since 1957.² See, e.g., Reina, Recovery for Fear of Cancer and Increased Risk of Cancer: Problems with Gideon and a Proposed Solution, 7 Rev. Litig. 39, 40 (1987) (estimating that more than 21,000,000 American workers have been exposed to asbestos, with Texas being “one of the five states generating the greatest volume of asbestos-related litigation”). Mass tort litigation such as this places significant strain on a defendant’s resources and creates considerable pressure to settle the case, regardless of the underlying merits. See Matter of Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1297, 1298-1300 (7th Cir.1995). The large number of lawsuits to which CSR could potentially be exposed is significant to our determination that appeal is not an adequate remedy in this case.

The most efficient use of the state’s judicial resources is another factor we consider in determining whether an ordinary appeal would provide an adequate remedy. Over 1490 asbestos cases are pending in Harris County alone as of April 30, 1996. HARRIS County DistRict COURTS, Justice InforMATION AND MANAGEMENT SYSTEMS (May 13, 1996) (public document available at Harris County District Clerk’s Office). As evidenced by the creation of the Master File in Harris County, asbestos litigation in Texas is complicated, potentially involves a multitude of parties, and is usually quite lengthy: “No litigation in American history has involved as many individual claimants, been predicated upon the severity of injury, [or] consumed as many judicial resources ... as asbestos litigation.” Brickman, The Asbestos Litigation Crisis: Is There a Need for an Administrative Alternative?, 13 Caedozo L. Rev. 1819, 1819 (1992). As a result, the state expends a large amount of its limited judicial resources resolving these massive controversies. Under these circumstances, a trial on the merits and appeal would further overtax the state’s judicial resources. See Walker, 827 S.W.2d at 848. The Arizona Supreme Court has noted that “in cases of this magnitude, the interests of all parties and of the public demand that serious questions of law pertaining to ... jurisdiction ... be decided by this court and settled at the earliest possible moment.” United States v. Superior Court, 144 Ariz. 265, 697 P.2d 658, 662 (1985). Because of the size and complexity of the asbestos litigation, the most prudent use of judicial resources in this case is to permit a preliminary resolution of the fundamental issue of personal jurisdiction by writ of mandamus.

Our approach of permitting mandamus relief from the denial of a special appearance only when personal jurisdiction is clearly and completely lacking and when there are exceptional circumstances is in accord with the approach of other jurisdictions. See Canadian Helicopters, 876 S.W.2d at 309-10 (citing United States v. Superior Court, 697 P.2d at 662; Lupo v. Lineberger, 313 Ark. 315, 855 S.W.2d 293, 294 (1993) (permitting writs of prohibition to lie only when a trial court is “clearly without jurisdiction or [has] acted without authority and the petitioner is unquestionably entitled to such relief’); Conn v. ITT Aetna Fin. Co., 105 R.I. 397, 252 A.2d 184, 188 (1969) (finding that certiorari does not lie from preliminary jurisdiction rulings except if “the circumstances have been unusual or exceptional ... or where not to act might result in irreparable injury or loss”)); see also State ex rel. Fogle v. Steiner, 74 Ohio St.3d 158, 656 N.E.2d 1288, 1292 (1995) (finding that although mandamus does not normally lie from the denial of a lack of jurisdiction, it will lie “where an inferior court patently and unambiguously lacks jurisdiction over the cause”). We emphasize that we do not relax or retreat from the requirement that a relator must show an inadequate remedy by appeal. While the question of personal jurisdiction is remediable by appeal in most cases, we hold that under the circumstances of this case, the concerns of judicial efficiency in mass tort litigation combined with the magnitude of the potential risk for mass tort actions against the defendant makes ordinary appeal inadequate.

IV.

A single sale of 363 tons of raw asbestos in 1957 that was not purposefully directed toward this state is not sufficient to establish minimum contacts between CSR and Texas for personal jurisdiction. The trial court therefore clearly abused its discretion in denying CSR’s special appearance. Although a writ of mandamus will not ordinarily lie from the denial of a special appearance, this case presents an extraordinary situation warranting such relief. Accordingly, we conditionally grant CSR’s petition for writ of mandamus. This writ will only issue if the trial court fails to withdraw its order overruling CSR’s special appearance.

GONZALEZ, J., concurs. BAKER, J., dissents.

1 . The plaintiffs claim that CSR waived the right to contest personal jurisdiction in Texas because of admissions CSR allegedly made before the West Virginia Supreme Court during unrecorded oral argument. See State ex rel. CSR Ltd. v. MacQueen, 190 W.Va. 695, 441 S.E.2d 658 (1994). CSR disputes that contention. Because there is a dispute about what was said, we do not find a judicial admission that knowingly waives a constitutional right under these circumstances.

2 . As of June 11, 1996, CSR had been sued by approximately 1610 plaintiffs in at least twelve different lawsuits. Docket, 80th District Court, Harris County, Texas (June II, 1996).