Doan v. Wal-Mart Stores Inc

• Court: Court of Appeals for the Fifth Circuit
• Decided: March 3, 2004
• Docket: 96-30744
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT _______________

No. 96-30744 Summary Calendar _______________

LAURA MAY KIMBALL DOAN,

Plaintiff-Appellant,

VERSUS

CONSUMER TESTING LABORATORIES (FAR EAST) LIMITED; CONSUMER TESTING LABORATORIES INCORPORATED; and PACIFIC RESOURCES EXPORT (USA) LTD.,

Defendants-Appellees.

_________________________

Appeal from the United States District Court for the Western District of Louisiana (94-CV-1602) _________________________

Before SMITH, DUHÉ, and BARKSDALE, Circuit Judges.

JERRY E. SMITH, Circuit Judge:*

Laura May Kimball Doan appeals the dismissal of her claims

against Consumer Testing Laboratories, Inc., Consumer Testing

Laboratories (Far East) Ltd. (collectively, the “CTL Companies”),

and Pacific Resources Export (USA) Ltd. (“PREL-USA”), for lack of

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. in personam jurisdiction, pursuant to FED. R. CIV. P. 12(b)(6).

Finding no error, we affirm.

I.

After being injured while seated in a rocking chair that

allegedly fell over during normal usage, Doan filed suit against

the Jennings, Louisiana, Wal-Mart store from which she purchased

the rocker, Wal-Mart Stores, Inc., Victory Land Entertainment

Co., Ltd., the manufacturer of the rocker, and their respective

insurers. Doan amended her complaint to add the CTL Companies,

which provide pre-market quality testing services to Wal-Mart

Stores, Inc., and PREL-USA, which provides housing and other

accommodations to the representatives of its foreign parent PREL,

Wal-Mart’s overseas purchasing agent, when said representatives

present product samples to Wal-Mart buyers in the United States.

Doan later settled her claims with the Wal-Mart and Victory

Land defendants but maintained her actions against the CTL

Companies and PREL-USA. Upon motion by the remaining defendants,

the district court granted each defendant's motion to dismiss for

lack of personal jurisdiction.

II.

A.

2 The Due Process Clause of the Fourteenth Amendment1 limits

the power of a state to exercise personal jurisdiction over a

nonresident defendant, except where that defendant has “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 (1945) (citation omitted). The “minimum contacts”

must evince the nonresident defendant’s intent to avail itself

purposefully of the privilege of conducting activities within the

forum state, thus invoking the benefits of and protections of the

forum’s laws. See Burger King Corp. v. Rudzewicz, 471 U.S. 462,

475 (1985).

Where the cause of action alleged relates to the nonresident

defendant’s contact with the forum state, “specific jurisdiction”

is appropriate where the defendant’s minimum contacts result from

its purposeful contacts with the state, rather than from the

unilateral activities of the claimant or a third party. See

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98

(1980). Where the claimant alleges harms caused by a product

within the forum state, the court has specific jurisdiction over

the nonresident defendant to the extent that the defendant

1 Because we have concluded previously that the Louisiana Long-Arm Statute, LA. REV. STAT. ANN. § 13:3201 (West. 1968 & Supp. 1984), extends to the full limits of the Due Process Clause, we apply circuit precedent construing the limits of such due process. See Bean Dredging Corp. v. Dredge Tech. Corp., 744 F.2d 1081, 1083 (5th Cir. 1984).

3 delivered the product into the stream of commerce with the

expectation that it would be purchased by or used by consumers in

the forum state. See id. Where, however, the cause of action

does not arise from or relate to the nonresident defendant’s

purposeful conduct within or directed at the forum state, a court

may exercise “general jurisdiction” over a defendant that has

continuous and systematic contacts with the forum state. See

Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408,

418-19 (1984).

Once a court determines that a nonresident defendant has

sufficient related or unrelated minimum contacts with the forum

state, it must then consider whether the exercise of personal

jurisdiction would “offend traditional notions of fair play and

substantial justice.” International Shoe, 326 U.S. at 316. The

factors to be considered are (1) the burdens upon the nonresident

defendant; (2) the interests of the forum state in the litiga-

tion; (3) the plaintiff’s interest in securing relief; (4) the

interstate judicial systems’ interest in obtaining the most

efficient resolution of controversies; and (5) the shared inter-

ests of the states in furthering fundamental substantive social

policies. See World-Wide Volkswagen, 444 U.S. at 292.

B.

Absent any dispute regarding the relevant facts, we review

4 de novo the district court’s decision not to exercise personal

jurisdiction over a nonresident defendant. See Ham v. LaCienega

Music Co., 4 F.3d 413, 415 (5th Cir. 1993). We construe all

jurisdictional factual disputes in favor of the party seeking to

invoke jurisdiction. See Bullion v. Gillespie, 895 F.2d 213, 217

(5th Cir. 1990).

Doan argues first that Louisiana courts may exercise spe-

cific jurisdiction over the CTL Companies2 because they “knew

that in acting as the tester and quality control department of a

national retailer like Wal-Mart, they could reasonably expect to

be subject to the jurisdiction of the courts where these products

were sold, used, and caused injury.” It is undisputed that the

CTL Companies do not own or manufacture either the allegedly

defective rocker or any of its constituent parts; their sole

function is to conduct pre-market testing and inspection of

products that later may be purchased by Wal-Mart buyers and sold

at Wal-Mart retail stores.3 The CTL Companies do not know

2 We address together Doan’s claims against CTL and CTL (Far East) because Doan alleges that each is in fact the same entity physically located in different places. That is, because CTL (Far East) is owned solely by Stewart Satter (the 100% owner of CTL) and CTL, because the only officers and directors of CTL (Far East) are Stewart, his wife, and his son, and because each acts as Wal-Mart’s quality control department, Doan contends that they are the same. Because our analysis does not turn upon this issue, we assume arguendo that Doan’s contention is correct. See, e.g., Rashidi v. American President Lines, 96 F.3d 124 (5th Cir. 1996) (noting that we may assume arguendo the validity of any facts or legal arguments in controversy to the extent that each does not affect the ultimate disposition of the case).

3 In addition to actually testing and inspecting the products, the pre- market testing and inspection activities include educating Wal-Mart buyers about (continued...)

5 whether a product that they test will ever be placed into the

stream of commerceSStheir influence on a particular product is

limited to rendering test results. Wal-Mart itself has sole

discretion to make and sole participation in the final purchasing

decision.

Doan emphasizes, however, that the CTL Companies are aware

that Wal-Mart has stores in Louisiana and thus that they could

have foreseen that the products that they test for Wal-Mart could

find their way to Louisiana via Wal-Mart’s stream of commerce.

We have held previously that foreseeability that products might

end up in the stream of commerce is not a sufficient basis,

standing alone, for a court to invoke specific personal jurisdic-

tion. See Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert.

denied, 115 S. Ct. 322 (1994). “'[T]he foreseeability that is

critical to due process analysis is . . . that the defendant’s

conduct and connection with the forum State are such that he

should reasonably anticipate being haled into court there.'” Id.

at 648-49 (quoting World-Wide Volkswagen, 444 U.S. at 295)

(emphasis added). Such a foreseeability requirement is satisfied

where the defendant purposefully directs his activities at the

forum state by, among other things, actually injecting a product

into the stream of commerce. See Wilson, 20 F.3d at 649 (citing

(...continued) the product, testing competitive products from other manufacturers, and after- production testing to ensure that Wal-Mart receives the product that had been tested previously.

6 Burger King, 471 U.S. at 476).4

Hence, specific personal jurisdiction will attach only if

the CTL Companies have in fact injected a product into the stream

of commerce. We do not so find. The decision whether to place

any of the products tested by the CTL Companies into the stream

of commerce is entrusted to the sole discretion of Wal-Mart, and,

unlike other nonresident defendants against whom we have invoked

specific personal jurisdiction, the CTL Companies are not a

conduit in the seamless web of interactions that injects a

product into the stream of commerce.5 Although the testing

4 The Supreme Court's and this court's jurisprudence on the stream of commerce requirements for specific personal jurisdiction are not models of clarity. In Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1987), four Justices endorsed the “stream of commerce plus” theory, by which jurisdiction attaches only if the nonresident defendant injected products into the stream of commerce plus engaged in some additional conduct directed toward the forum state (i.e. advertising in the forum). See id. at 112 (O’Connor, J., writing for the Court). Four other Justices endorsed the “stream of commerce only” theory, by which the nonresident defendant's placing a product into the stream of commerce with knowledge that the product may reach the forum state is sufficient to subject it to specific personal jurisdiction. See id. at 117 (Brennan, J., concurring).

In light of the Court’s split in Asahi, we have noticed our intention to follow the “stream of commerce only” theory and to reject the “stream of commerce plus” theory. See Ruston Gas, 9 F.3d at 420 (citing Irving v. Owens- Corning Fiberglas Corp., 864 F.2d 383, 386 (5th Cir.) (“Because the Court’s splintered view of minimum contacts in Asahi provides no clear guidance on this issue, we continue to gauge Jugometal's contacts with Texas by the stream of commerce standard as described in World-Wide Volkswagen and embraced in this circuit.”), cert. denied, 493 U.S. 823 (1989)).

5 See, e.g., Ruston Gas, 9 F.3d at 420 (finding specific personal jurisdiction in Texas against a Minnesota shipper that delivered products to a shipper destined for Texas); Irving, 864 F.2d at 387 (finding specific personal jurisdiction in Texas against a Yugoslavian licensed trading company that sold raw asbestos to an American broker who then sold the asbestos to a Texas asphalt company); Bean Dredging, 744 F.2d at 1085 (finding specific personal jurisdiction in Louisiana against a (continued...)

7 results issued by the CTL Companies with respect to a particular

product may in fact influence Wal-Mart’s decision to place a

product into the stream of commerce, the CTL Companies themselves

do not purposefully direct their activities toward Louisiana

sufficiently to confer specific personal jurisdiction upon

Louisiana courts; the unilateral activity of Wal-Mart in deciding

to place a product into the stream of commerce is simply insuffi-

cient.

C.

Doan next argues that Louisiana may exercise general per-

sonal jurisdiction over the CTL Companies because they have

continuous and systematic contacts with Louisiana. According to

Doan, that the CTL Companies conduct similar pre-market quality

testing for other national retailers that have stores in Louisi-

ana, including Venture Stores, Home Depot, and Ace Hardware,

among others, “demonstrates an ongoing, continuous series of

contacts with Louisiana, giving rise to 'general' jurisdiction

over them.”

It is undisputed, however, that the CTL Companies (1) have

no offices or other facilities in Louisiana, nor do they own any

property in the state; (2) have no employees living or working

(...continued) Washington manufacturer of steel castings that sold the castings to a California cylinder maker, which cylinders were used ultimately as parts of a dredge constructed by a Louisiana shipper).

8 within the state; (3) maintain no bank accounts, telephone

listings, or other books or records in the state; (4) pay no

taxes in or to the state; (5) neither solicit nor advertise for

business in the state; and (6) do not manufacture, broker, or

distribute any products that are placed into the stream of

commerce and may ultimately end up in Louisiana, nor do they

personally manufacture, broker, or distribute any products there.

Because the CTL Companies have no substantial, systematic, or

continuous contacts with Louisiana, Louisiana courts may not

exercise general personal jurisdiction over them. See Wilson, 20

F.3d at 649-50.6

D.

Doan contends finally that Louisiana courts have specific

personal jurisdiction7 over PREL-USA, the liaison between its

parent company PREL, the exclusive overseas buyer for Wal-Mart,

and Wal-Mart. PREL-USA provides various services to the PREL

foreign subsidiaries when representatives of these subsidiaries

visit Wal-Mart buyers in Arkansas, including arranging housing

and transportation, scheduling appointments, receiving product

samples, and providing a place for the PREL representatives to

6 Because we find that the CTL Companies do not have minimum contacts with Louisiana, we need not decide whether conferring jurisdiction on Louisiana courts would offend traditional notions of fair play and substantial justice. 7 Doan does not raise on appeal the question whether Louisiana courts may assert general personal jurisdiction over PREL-USA.

9 show product samples to the Wal-Mart buyers. According to Doan,

specific jurisdiction is appropriate because “PREL-USA facili-

tates the review, testing, purchase, and sale of products . . .

and the delivery of that product into the stream of commerce that

ultimately reached Laura Doan and caused her injury.”

Doan’s reliance on Irving and Bean Dredging is unavailing;

each is factually distinct. As discussed above, Irving involved

the application of personal jurisdiction in Texas against a

Yugoslavian licensed trading company that sold raw asbestos to an

American broker who then sold the asbestos to a Texas asphalt

company, see 864 F.2d at 387, whereas Bean Dredging conferred

personal jurisdiction on the Louisiana courts against a Washing-

ton manufacturer of steel castings that sold the castings to a

California cylinder maker, which cylinders were used ultimately

as parts of a dredge constructed by a Louisiana shipper, see 744

F.2d at 1085.

Each of these cases involved nonresident defendants that

were links in the continuous chain of brokers, manufacturers, and

distributors that permitted the introduction of a product into

the stream of commerce. That is, because a particular product or

component of the product passed through the hands of the nonresi-

dent defendant during its journey into the stream of commerce,

the defendant’s “touching” of the product or component was

sufficient to satisfy the requirement that it personally inject a

10 product into the stream of commerce.

In contrast, PREL-USA is not a link in the chain of events

that injects a particular product into the stream of commerce.

Granted, PREL-USA facilitates Wal-Mart’s process of determining

which products to place into the stream of commerceSSby accommo-

dating the housing and other logistical needs of its foreign

representatives so that they may perform more easily their task

of presenting product samples to the Wal-Mart buyersSSbut the

services it provides are not the conduit (or a link therein) by

which products enter into the stream of commerce, nor are they

sufficiently connected with a particular product so as actually

to “touch” the product. PREL-USA simply helps its foreign

representatives present product samples to Wal-Mart buyers, which

buyers then choose unilaterally to purchase the product and then

place it into the stream of commerce, or not to purchase the

product. Mere foreseeability that a product might end up in the

stream of commerce because of the unilateral act of another is an

insufficient ground for specific personal jurisdiction. See

Wilson, 20 F.3d at 649 (citing Burger King, 471 U.S. at 476).

AFFIRMED.