Opinion
Civil Action No. 5:19-CV-159
09-25-2020
Maria RAWLS, Plaintiff, v. OLD REPUBLIC GENERAL INSURANCE GROUP, INC., et al., Defendants.
Kathryn Snapka, The Snapka Law Firm, Gregory Wayne Turman, Corpus Christi, TX, for Plaintiff. Ronald Lee Bair, Bair Hilty PC, Houston, TX, for Defendants.
Kathryn Snapka, The Snapka Law Firm, Gregory Wayne Turman, Corpus Christi, TX, for Plaintiff.
Ronald Lee Bair, Bair Hilty PC, Houston, TX, for Defendants.
MEMORANDUM & ORDER
Diana Saldaña, United States District Judge
This is a personal injury case arising from the injuries, and eventual death, of Roger Rawls ("Rawls"). (Dkt. 1, Ex. 4 at ¶ 14.) The injury and death were allegedly caused by a workplace accident that occurred on October 26, 2017 in Luling, Texas, at a facility owned by Defendant Quality Carriers, Inc. ("Quality Carriers"). (Id. ) Rawls was employed by Quality Carriers as a trailer truck driver and operator at the time of the incident. (Id. ; see Dkt. 17 at ¶ 13.) Plaintiffs are Maria Rawls, individually, as the representative of the Estate of Rawls, and as next friend of Rawls's minor children. (Dkt. 1, Ex. 4 at ¶ 2.) Maria Rawls is the surviving spouse of Rawls. (Id. ) Plaintiffs allege that Rawls was injured while conducting a pre-trip inspection of a Quality Carriers-owned International-brand truck (the "Tractor") when his foot fell through a gap in the Tractor's catwalk and that these injuries ultimately led to his death on November 3, 2017. (Dkt. 1, Ex. 4 at ¶ 16.) Plaintiffs are thus suing Quality Carriers for negligence, alleging that Quality Carriers breached its duty of care to Rawls with regard to his workplace safety. (Id. at ¶¶ 21–23.) Plaintiffs are also suing Defendant Navistar, Inc. ("Navistar") on products liability grounds, alleging that Navistar improperly designed and/or manufactured the Tractor on which Rawls was injured. (Id. at ¶¶ 24–28.) Plaintiffs further allege that Defendant Old Republic General Insurance Group, Inc. ("Old Republic") has wrongfully refused to pay the claim related to Rawls's death, for which a decision by the Texas Workers' Compensation Commission is forthcoming. (Id. at ¶ 17.) As of the date this case was removed to federal court, the "final appeals denial [for Plaintiffs' workers' compensation claim] has not yet been made." (Dkt. 8 at 5.)
Exhibit numbers refer to the numbers automatically generated by the Electronic Court Filing System (ECF), not to the exhibit numbers generated by Parties. For instance, "Dkt. 1, Ex. 4" is a citation to Plaintiffs' "Original Petition." Similarly, page citations refer to the page numbers automatically generated by ECF.
Plaintiffs allege in their Original Petition (Dkt. 1, Ex. 4) that Quality Carriers is a "common or assumed name" of Quality Distribution, Inc. ("Quality Distribution"), who is also a defendant in this case. (Dkt. 1, Ex. 4 at ¶ 3.) This assertion is denied by both Quality Carriers and Quality Distribution in their Original Answer (Dkt. 17). (Id. at ¶ 4.) However, both Quality Carriers and Quality Distribution admit the fact that Rawls was employed by Quality Carriers at the time of his injury. (Id. at ¶ 9.) Accordingly, for purposes of this Order, the distinction is irrelevant.
Defendant Navistar, Inc. admits that it was involved in the manufacture of the tractor portion of the tractor trailer upon which Rawls was injured but claims not to have manufactured any trailer portion that may or may not have been attached. (Dkt. 11 at 2, 14.) Plaintiffs seem not to dispute this fact and refer to the automobile in question as "the tractor" or "the subject tractor" in subsequent pleadings. (See Dkt. 12.) Because the incident involving Rawls seems to have taken place on the tractor portion of the vehicle in question, the Court adopts the language used by Navistar and Plaintiffs for the purposes of this order. (See Dkt. 4 at 3.)
Plaintiffs, in their Original Petition (Dkt. 1, Ex. 4) state that Navistar International Corporation ("NIC"), Navistar International Transportation and International Truck and Engine Corporation are names by which Navistar was formerly known. (Id. at 1.) Navistar, in its Motion to Dismiss (Dkt. 2), admits that the latter two are former names for Navistar but claims that NIC is, in fact, a separate entity that "serves as a holding company and does not manufacture, sell, lease or distribute motor vehicles." (Dkt. 2 at 2; Dkt. 1, Ex. 11 at ¶¶ 3–6.) Plaintiff has made no claim that she sought to sue NIC since being given notice of its separate status, so the Court assumes any reference to Navistar, by itself or any other party, is directed at Defendant Navistar, Inc.
The Texas Workers' Compensation Commission prescribes a step-by-step appeal process for workers' compensation claims at the administrative level. See Texas Mut. Ins. Co. v. Ruttiger , 381 S.W.3d 430, 437 (Tex. 2012) (citing Tex. Labor Code Ann. §§ 410.021, 410.151, 410.202, 410.251 ). The Court clarifies this process in a later section of this Order.
Now pending are Plaintiffs' Motion to Remand (Dkt. 3) and Navistar's Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim Upon Which Relief Can be Granted, and Motion to Dismiss or Transfer Venue (collectively, the "Motion to Dismiss"). (Dkt. 2).
Background & Procedural History
Plaintiffs originally filed this suit in Texas State court in Webb County, but in November of 2019, Navistar removed the case to the Laredo Division of the Southern District of Texas. (Dkt. 1 at 1–2.) Navistar's removal invokes the Court's diversity jurisdiction under 28 U.S.C. § 1332. (Id. at 3.) Navistar alleges that Plaintiffs are citizens of Texas, all Defendants are citizens of other States, and the amount in controversy exceeds $75,000. (Id. at 3–4.) Plaintiffs' Motion to Remand (Dkt. 3) does not contest these allegations, but rather hinges on the statutory non-removability of workers' compensation claims under 28 U.S.C. § 1445(c). (Dkt. 3 at 4.) According to Plaintiffs, because the suit includes a workers' compensation claim related to an alleged wrongful denial of Rawls's death benefits, it must be remanded to state court. (Id. ) In its response (Dkt. 7), Navistar counters that Plaintiffs' workers' compensation claim was improperly joined to defeat removal and the Court must therefore dismiss the claim and dispose of Plaintiffs' sole justification to remand the case. (Id. at 1–2.)
The Court notes that Plaintiffs also ask that the workers' compensation claim not be severed and that the entire action be remanded. (Dkt. 3 at 5.) Because the Court finds that the workers' compensation claim was improperly joined and should be dismissed, the Court need not address the severance issue.
Navistar uses the term "fraudulent joinder" to describe its argument against remand. (See Dkt. 7.) While "there is no substantive difference between" the terms fraudulent joinder and improper joinder, the Fifth Circuit has adopted the term "improper joinder," so the Court will do the same, except in situations where it is quoting other authorities. See Hoyt v. Lane Constr. Corp. , 927 F.3d 287, 292 n.1 (5th Cir. 2019), as revised (Aug. 23, 2019).
Regarding the Motion to Dismiss (Dkt. 2), because the Court finds that Navistar's motion to dismiss for lack of personal jurisdiction (Dkt. 2 at 4–9) should be granted, it need not address arguments made for and against dismissal on other grounds. However, over the course of multiple responses, replies, and supplements, the issue of personal jurisdiction has evolved as the parties alleged more jurisdictional facts and provided relevant evidence of such facts. (See Dkts. 2, 4, 6, 11, 12, 15.) In its most current form, the question has boiled down to whether Navistar should have expected the Tractor to be purchased or used in Texas given Navistar's affiliations with both the State itself and the entities to which the Tractor was transferred prior to its eventual arrival in Texas. Plaintiffs also ask that the Court provide opportunity for jurisdictional discovery on these topics. (See Dkt. 12 at 9–10.)
Having considered Parties' filings and the applicable law, the Court concludes that Plaintiffs' Motion to Remand (Dkt. 3) must be denied, and Navistar's Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. 2) must be granted. The Court also concludes that transfer of venue would not be proper either pursuant to Navistar's Motion to Dismiss or Transfer Venue (Dkt. 2) or as a matter of the Court's sua sponte authority at this time. See Caldwell v. Palmetto State Sav. Bank of S.C. , 811 F.2d 916, 919 (5th Cir. 1987) (holding that "a district court may transfer a case upon a motion or sua sponte" under both 28 U.S.C. § 1404 and § 1406 ). Because Plaintiffs' claims against Navistar are dismissed for lack of personal jurisdiction, the Court does not reach Navistar's Motion to Dismiss for Failure to State a Claim (Dkt. 2). See Mejia v. Travis Buquet Constr., LLC , No. CV 6:16-01504, 2017 WL 946715, at *1 (W.D. La. Mar. 8, 2017) ("Generally the court should not consider challenges under Rule 12(b)(6) until after jurisdiction and venue challenges are resolved.")
Discussion
"Customarily, a federal court first resolves doubts about its jurisdiction over the subject matter" before addressing objections to personal jurisdiction. Ruhrgas AG v. Marathon Oil Co. , 526 U.S. 574, 578, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999). Keeping with this custom, the Court first considers Plaintiffs' Motion to Remand (Dkt. 3) before turning to Navistar's Motion to Dismiss (Dkt. 2).
A. Motion to Remand
Diversity jurisdiction exists where the amount in controversy exceeds $75,000 and no plaintiff is a citizen of the same state as any defendant. 28 U.S.C. § 1332(a)(1) ; Lincoln Prop. Co. v. Roche , 546 U.S. 81, 89, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005) (citing Strawbridge v. Curtiss , 7 U.S. (3 Cranch) 267, 267, 2 L.Ed. 435 (1806) ). Here, Plaintiffs do not argue that the amount in controversy and diversity of citizenship requirements are not met, and the Court finds that they are. (See Dkt. 3.) Thus, the only question for the Court is whether the inclusion of a non-removable workers' compensation claim requires that the entire action be remanded to state court.
As a preliminary note, most federal courts deciding an improper joinder issue are faced with an alleged improper joinder of parties , rather than an improper joinder of claims , as is the case here. However, the few courts that have addressed improper joinder of claims have applied improper joinder of parties jurisprudence. See Parent v. Murphy Expl. & Prod. Co. - USA , No. CIV. A. 07-446-C, 2008 WL 191636, at *5 (M.D. La. Jan. 22, 2008) ("[T]he court can see no reason not to apply [an improper joinder of parties] analysis to an assertion of [improper] joinder of claims."); see also Dagon v. BNSF Ry. Co. , No. 19-CV-00417-JPG, 2020 WL 4192348, at *5 (S.D. Ill. July 21, 2020) (concluding that the same jurisprudence should be used for "these analogous doctrines" because any reason to apply different evidentiary standards was "not readily apparent"). Joining with these sister courts, the Court applies the Fifth Circuit jurisprudence on improper joinder of parties to the alleged improper joinder of claims here.
Arguably, Navistar is alleging an improper joinder of parties because Plaintiffs' workers' compensation claim is only brought against Old Republic, but given the identical analysis, there is no need to parse Navistar's response (Dkt. 7) to find a distinction. (Dkt. 1, Ex. 4 at ¶ 17.)
1. Legal Standard
The removing party bears the heavy burden of demonstrating improper joinder. Smallwood v. Ill. Cent. R.R. Co. , 385 F.3d 568, 574 (5th Cir. 2004) (en banc). To establish improper joinder, the removing party must demonstrate either (1) actual fraud in the pleading of jurisdictional facts, or (2) the plaintiff's inability to establish a cause of action in state court against the party or claim alleged to be improperly joined. Id. at 573 (citing Travis v. Irby , 326 F.3d 644, 646-47 (5th Cir. 2003) ). Only the second prong, which requires the removing party to show that there is "no possibility of recovery by the plaintiff" on the claim meant to defeat federal jurisdiction, is relevant here. See id.
To determine whether a plaintiff has any possibility of recovery, a court should "conduct a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant. Id. Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder." Id. But in some cases, a court may, in its discretion, "pierce the pleadings and conduct a summary inquiry." Id. Regardless of which route it takes, "the district court must examine the plaintiff's possibility of recovery against the defendant at the time of removal. " Flagg v. Stryker Corp. , 819 F.3d 132, 137 (5th Cir. 2016) (emphasis added).
2. Analysis
In this case, the Court need not look past the face of the pleadings because Plaintiffs' workers' compensation claim is barred by the Fifth Circuit's en banc opinion in Flagg and should be dismissed as having been improperly joined. See Flagg , 819 F.3d at 139.
In Flagg , the Fifth Circuit considered a malpractice and products liability case in Louisiana where the plaintiff sued the medical professionals who had allegedly botched his toe implant surgery and the manufacturers of the implant itself. 819 F.3d at 134. The manufacturing defendants were not Louisiana citizens, but the medical defendants, like the plaintiff, were all Louisiana citizens. Id. at 135. The diverse manufacturing defendants removed the case under diversity jurisdiction despite the apparent lack of subject matter jurisdiction due to the inclusion of the non-diverse medical defendants. Id. at 134. The manufacturing defendants argued that removal was still proper because the plaintiff had not yet exhausted his administrative remedies against the non-diverse defendants, as required by the Louisiana Medical Malpractice Act ("LMMA"), so those defendants should be dismissed as improperly joined. Id. at 134–35. The Fifth Circuit agreed and held that the medical defendants had been improperly joined because "the LMMA explicitly prohibited [the plaintiff] from suing the Medical Defendants in any court .... [, so he] had no possibility of recovery against [them]." Id. at 139. The Flagg Court emphasized that "if a statute requires the plaintiff to exhaust his administrative remedies before filing suit, we enforce that statutory mandate as written." Id.
The situation before the Court presents a nearly identical legal question. While Plaintiffs' Motion to Remand (Dkt. 3) rests on a non-removable workers' compensation claim rather than non-diverse parties, the issue of exhaustion requires no distinguishing analysis. Plaintiffs argue that their action cannot be removed because the workers' compensation claim is nonremovable under 28 U.S.C. § 1445(c). (Dkt. 3 at 4.) Title 28, United States Code, Subsection 1445(c) states that "[a] civil action in any State court arising under the workmen's compensation laws of such State may not be removed to any district court of the United States." Navistar does not dispute Plaintiffs' statement that "[a] claim seeking wrongful denial of workers' compensation benefits under the Texas Labor Code is a suit arising under the workers' compensation laws of Texas which is nonremovable based on section 1445(c)." (Dkt. 3 at 4 (citing Jones v. Roadway Express, Inc. , 931 F.2d 1086, 1092 (5th Cir. 1991) ); see Dkt. 7.) Therefore, the sole question is whether Plaintiffs have improperly joined the workers' compensation claim because they have failed to exhaust it at the administrative level before proceeding to court.
Under Flagg , the Court must first examine Texas State law to determine whether an exhaustion requirement exists that bars Plaintiffs from filing suit under a workers' compensation claim. If an exhaustion requirement exists, the Court must then decide whether Plaintiffs have fulfilled it. If they have not, Plaintiffs have no possibility of recovery, and the Court must dismiss the claim as improperly joined. Texas Labor Code § 410.251 states that "[a] party that has exhausted its administrative remedies under this subtitle and that is aggrieved by a final decision of the appeals panel may seek judicial review." Texas courts, both federal and state, have interpreted that language to mean "[a] party must exhaust their administrative remedies and there must be a final decision of the [Texas Workers' Compensation Commission's] Appeals Panel before a party may seek a judicial remedy." Evaro v. Cont'l Cas. Co. , 118 F. App'x 867, 870 (5th Cir. 2005) (citing Cervantes v. Tyson Foods, Inc. , 130 S.W.3d 152, 157 (Tex. App. 2003) ); see also Hinkley v. Envoy Air, Inc. , 968 F.3d 544, 552 (5th Cir. 2020) ("[T]he Texas Labor Code's administrative-exhaustion requirement is ... mandatory and, therefore, requires Texas courts to dismiss the Texas Labor Code claim where defendant shows it has not been satisfied."); LaBlanche v. Spring ISD , 2017 WL 6409030, at *3 (S.D. Tex. June 22, 2017) (holding that "[a] plaintiff must both exhaust her administrative remedies, and there must be a final DWC appeals panel decision" for judicial review to be available). A trial court must therefore dismiss a case if the plaintiff has not exhausted the available administrative remedies pursuant to the Texas Workers' Compensation Act because the trial court has no jurisdiction over the matter. See In re Crawford & Co. , 458 S.W.3d 920, 929 (Tex. 2015) (citing City of Houston v. Rhule , 417 S.W.3d 440, 442 (Tex. 2013) ).
Exhaustion of remedies through the Texas Workers' Compensation Act requires three steps prior to seeking judicial review: (1) a benefit review conference; (2) a contested case hearing; and (3) review by an administrative appeals panel. Texas Mut. Ins. Co. v. Ruttiger , 381 S.W.3d 430, 437 (Tex. 2012) (citing Tex. Labor Code Ann. §§ 410.021, 410.151, 410.202, 410.251 ).
By Plaintiffs' own admission, they had not exhausted their administrative remedies at the time of removal. (See Dkt. 1, Ex.4 at ¶ 17; Dkt. 3 at 3; Dkt. 8 at 5.) Accordingly, if Defendants "had not removed this case to federal court, there is no doubt that the state court would have been required to dismiss" Plaintiffs' workers' compensation claim. See Flagg , 819 F.3d at 138. Even if Plaintiffs' administrative appeal process has concluded since the removal of the case to this Court, the Fifth Circuit has made clear that "jurisdictional facts are determined at the time of removal." Id. at 140 (citing Louisiana v. Am. Nat. Prop. Cas. Co. , 746 F.3d 633, 635 (5th Cir. 2014) ). Because Plaintiffs have "no possibility of recovery" under the workers' compensation claim, the Court must dismiss Plaintiffs' workers' compensation claim as improperly joined, and the Court must therefore deny Plaintiffs' Motion to Remand (Dkt. 3). Moreover, Plaintiffs' worker's compensation claim seems to be their only claim against Old Republic. (Dkt. 1, Ex. 4 at ¶ 17.) The Court will therefore dismiss Old Republic from this suit. 3. Attorney's Fees
It is unclear how close Plaintiffs are to satisfying the exhaustion requirement. (Dkt. 1, Ex.4 at ¶ 17 ("A decision by the Texas Workers' Compensation Commission through the DWC Contested Case Hearing process is forthcoming and appeal imminent."); Dkt. 3 at 3 ("Because the Texas Workers' Compensation Commission through the DWC Contested Case Hearing process denied Plaintiffs their proper compensation ....").) Regardless, Plaintiffs' filings clearly demonstrate that they had not exhausted their remedies at the time of removal. (See Dkt. 3 at 3.)
Plaintiffs appear to have listed "Old Republic Insurance Company" as either a name that Old Republic is "also known as" or as a separate defendant. (Dkt. 1, Ex. 4 at 2.) Even if Old Republic Insurance Company is a separate entity, absent any indication that Plaintiffs have alleged anything besides the workers' compensation claim against it, the Court will dismiss Old Republic Insurance Company as a defendant as well.
Navistar also claims that Plaintiff should be "subject to Rule 11 sanctions" and requests that "the Court award it the reasonable and necessary attorneys' fees it incurred" in litigating Plaintiff's Motion to Remand (Dkt. 3). (Dkt. 7 at 8.) "Typically[,] the fraudulent joinder of a defendant merely results in the non-inclusion of the fraudulently joined defendant in the diversity analysis." Phillips ex rel. Estate of Fullingim v. First Nat. Bank of Weatherford , 258 F. Supp. 2d 501, 506 (N.D. Tex. 2002). The exceptional situations where sanctions are warranted involve attempts to mislead the opposing party or the court and acts made in bad faith. See id. ("Plaintiffs' counsel have at least twice committed a fraud on Defendants and on the district court of the Northern District of Texas."). Plaintiffs and Plaintiffs' counsel's actions do not bear the hallmarks of fraud or bad faith. Navistar has proven no actual fraud by Plaintiffs in joining the workers' compensation claim; it has only shown that Plaintiffs have no possibility of recovery for that claim. Plaintiffs assert that they have "been transparent with the parties" about their failure to exhaust remedies, and the Court agrees. (Dkt. 8 at 5.) While Plaintiffs' transparency means their Motion to Remand (Dkt. 3) must be denied, it is also evidence of their lack of bad faith. Navistar's request for sanctions and attorneys' fees should therefore be denied.
B. Motion to Dismiss for Lack of Personal Jurisdiction
Turning next to the issue of personal jurisdiction, Navistar asserts that no personal jurisdiction exists over it, so the claims against it must therefore be dismissed. (Dkt. 2 at 4.) Finding no jurisdiction over Navistar, the Court concludes that Plaintiffs' claims against Navistar should be dismissed for lack of personal jurisdiction.
1. Legal Standard
When a defendant challenges a court's exercise of personal jurisdiction and the deciding court, like here, has not conducted an evidentiary hearing, the plaintiff "bears the burden of establishing only a prima facie case of personal jurisdiction." Sangha v. Navig8 ShipManagement Private Ltd. , 882 F.3d 96, 101 (5th Cir. 2018). To determine whether a prima facie case has been made, the Court "must accept the plaintiff's uncontroverted allegations, and resolve in his favor all conflicts between the facts contained in the parties' affidavits and other documentation." Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd. , 818 F.3d 193, 211 (5th Cir. 2016). However, the district court "is not obligated to consult only the assertions in the plaintiff's complaint," and it "may consider the contents of the record at the time of the motion." Sangha , 882 F.3d at 101 (citing Paz v. Brush Engineered Materials, Inc. , 445 F.3d 809, 812 (5th Cir. 2006) ).
In a diversity case, a federal court may exercise jurisdiction over a non-resident corporate defendant only if "the forum state's long-arm statute [confers] personal jurisdiction" and "the exercise of jurisdiction [does] not exceed the boundaries of the Due Process Clause of the Fourteenth Amendment." Seiferth v. Helicopteros Atuneros, Inc. , 472 F.3d 266, 270 (5th Cir. 2006). Texas's long-arm statute authorizes personal jurisdiction over foreign defendants to the fullest extent allowed by the federal Constitution. Tex. Civ. Prac. & Rem. Code Ann. § 17.042 ; see Religious Tech. Ctr. v. Liebreich , 339 F.3d 369, 373 (5th Cir. 2003). Thus, questions of personal jurisdiction in Texas federal court require only a single, federal due process inquiry. Sangha , 882 F.3d at 101. To satisfy the demands of due process, a plaintiff "must establish that the non-resident defendant purposely availed himself of the benefits and protections of the forum state by establishing minimum contacts with the state and that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice." Zoch v. Magna Seating (Germany) GmbH , 810 F. App'x 285, 288 (5th Cir. 2020) (internal quotation marks omitted). Personal jurisdiction within the bounds of due process can be either "general" or "specific." Mink v. AAAA Dev., LLC , 190 F.3d 333, 336 (5th Cir. 1999). By moving to dismiss for lack of personal jurisdiction, Navistar asserts that the Court has neither. (Dkt. 2 at 5–9.) The Court agrees and addresses both in turn.
2. Analysis
a. General Jurisdiction
For a court to exercise general jurisdiction over a corporate defendant, it must have affiliations with a state that are "so continuous and systematic as to render [it] essentially at home in the forum State." Frank v. P N K (Lake Charles) L.L.C. , 947 F.3d 331, 337 (5th Cir. 2020) (citing Daimler AG v. Bauman , 571 U.S. 117, 138–39, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) ). The continuous and systematic test is a "difficult one to meet, requiring extensive contacts between a defendant and a forum." Johnston v. Multidata Systems Intern. Corp. , 523 F.3d 602, 609 (5th Cir. 2008) (citing Submersible Sys., Inc. v. Perforadora Cent. S.A. , 249 F.3d 413, 419 (5th Cir. 2001) ). If, however, a court finds such continuous and systematic affiliations, "the court may exercise ‘general’ jurisdiction over any action brought against the defendant" regardless of whether the action is related to the forum contacts. Luv N' Care, Ltd. v. Insta-Mix, Inc. , 438 F.3d 465, 469 (5th Cir. 2006) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 414–15, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) ).
Accordingly, the Court must determine if Navistar has contacts so "continuous and systematic, as to render [it] essentially at home" in Texas. See Daimler , 571 U.S. at 139, 134 S.Ct. 746 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) ). Both the Supreme Court and Fifth Circuit have recognized that it is only in an exceptional case that "a corporation's operation in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render [it] subject to general jurisdiction" in the forum state. See Whitener v. Pliva, Inc. , 606 F.App'x 762, 765 (5th Cir. 2015) (citing Daimler , 571 U.S. at 139 n. 19, 134 S.Ct. 746 ) (internal quotation marks omitted).
As described by the Supreme Court, the "textbook case of general jurisdiction" is Perkins v. Benguet Consol. Mining Co. See Daimler , 571 U.S. at 129, 134 S.Ct. 746. In Perkins , the Supreme Court found that general jurisdiction existed in Ohio over a company incorporated in the Philippines. Perkins v. Benguet Consol. Mining Co. , 342 U.S. 437, 448, 72 S.Ct. 413, 96 L.Ed. 485 (1952). The company in question had ceased its mining operations in the Philippines due to Japanese occupation during WWII. Id. at 447, 72 S.Ct. 413. As a result, the president of the company returned to his home in Ohio where he: (1) maintained an office from which he essentially ran the company during that period; (2) retained company files; (3) carried out correspondence related to the business of the company and its employees; (4) maintained two active bank accounts holding a substantial amount of company funds; and (5) held directors' meetings. Id. at 447–48, 72 S.Ct. 413. Looking at all these contacts together, the Supreme Court concluded that there were sufficient contacts to establish general jurisdiction in Ohio. Id. As the Supreme Court would note about Perkins in a later case, the president's activities made Ohio "the corporation's principal, if temporary, place of business." Keeton v. Hustler Magazine, Inc. , 465 U.S. 770, 780 n. 11, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984).
The Supreme Court's more recent decisions in both Daimler and BNSF Railway , demonstrate just how much of an "exceptional case" Perkins was. In Daimler , the Supreme Court considered whether "a foreign corporation may be subjected to a court's general jurisdiction based on the contacts of its in-state subsidiary." Daimler , 571 U.S. at 134, 134 S.Ct. 746. Ultimately, however, the Supreme Court found that it did not need to answer that question because even with the subsidiary's contacts imputed to the defendant corporation, Daimler AG, "there would still be no basis to subject Daimler to general jurisdiction." See id. at 136, 134 S.Ct. 746. The subsidiary had "multiple California-based facilities" and was "the largest supplier of luxury vehicles to the California market," but the Supreme Court still refused to find general jurisdiction over the parent company. Daimler , 571 U.S. at 136, 134 S.Ct. 746. In summing up its previous cases involving general jurisdiction, the Supreme Court explained that for a court to exercise general jurisdiction over a foreign corporation, the corporation's contacts with the forum state must make it "comparable to a domestic enterprise in that state." Id. at 133 n. 11, 134 S.Ct. 746.
Similarly, in BNSF Railway Co. v. Tyrrell , the Supreme Court held that defendant BNSF was not subject to general jurisdiction in Montana despite extensive contacts with the state. ––– U.S. ––––, 137 S. Ct. 1549, 1559, 198 L.Ed.2d 36 (2017). The BNSF Court first found that BNSF was neither incorporated nor had its principal place of business in Montana and was therefore not a "paradigm forum" to find general jurisdiction. See id. at 1558–59 (holding that a corporation is paradigmatically "at home" where it is incorporated or has its principal place of business). The Supreme Court then acknowledged that BNSF did have an automotive facility, "over 2,000 miles of railroad track and more than 2,000 employees in Montana." See id. at 1555–59. Despite those connections, the Supreme Court still found no general jurisdiction. Id. at 1559. The Supreme Court explained that a general jurisdiction inquiry must look at "a corporation's activities in their entirety" because a corporation "that operates in many places," like BNSF, cannot be "at home" in all of them. See id. (citing Daimler , 571 U.S. at 139 n. 20, 134 S.Ct. 746 ).
Fifth Circuit case law on general jurisdiction provides Plaintiffs no respite on this issue. In Johnston , the Fifth Circuit emphasized that it "has consistently imposed the high standard set by the Supreme Court when ruling on general jurisdiction issues." Johnston , 523 F.3d at 611 ; see, e.g., Cent. Freight Lines Inc. v. APA Transp. Corp. , 322 F.3d 376, 381 (5th Cir. 2003) (holding that routine shipments to and from Texas and regularly sending salespeople to Texas for the purpose of doing business were not enough to establish general jurisdiction); Bearry v. Beech Aircraft Corp. , 818 F.2d 370, 372–73 (5th Cir. 1987) (holding that nearly $250 million in goods sent to Texas, $72 million worth of manufacturing work done in Texas, the existence of an in-state indirect subsidiary, and visits with Texas dealers were not enough to establish general jurisdiction). Decisions from other courts in the Southern District of Texas have consistently applied this exceedingly narrow reading of general jurisdiction as well. See Garcia Hamilton & Assocs., L.P. v. RBC Capital Markets, LLC , 466 F.Supp.3d 692, 701 (S.D. Tex. 2020) ("[T]he Court is not convinced, given the standards set in [ BNSF Railway Co. v. Tyrrell ], that four offices, a division focused on wealth management in Texas, 240 employees, and a business presence in Texas ... are substantial enough to render [the defendant] at home here."); Aziz v. MMR Grp., Inc. , No. CV H-17-3907, 2018 WL 3439637, at *4 (S.D. Tex. July 17, 2018) (refusing to exercise general jurisdiction over a foreign defendant that owned and operated four permanent facilities and employed multiple people in the forum state).
In the instant case, Navistar is incorporated in Delaware and has its principal place of business in Illinois. (Dkt. 2 at 7.) Consequently, Texas is not a "paradigm forum" in which the Court may exercise general jurisdiction over Navistar. See BNSF Railway , 137 S. Ct. at 1558–59. The Court must therefore determine whether Navistar is nonetheless "essentially" at home due to its contacts with Texas. It is not. Even if the Court resolves all facts in Plaintiffs' favor, the contacts between Navistar and Texas do not present an "exceptional case."
Plaintiffs assert contacts in three general categories, which the Court will address in order: (1) Physical presence in Texas; (2) Business presence in Texas; and (3) Previous or future contacts with Texas. First, Plaintiffs claim that Navistar's physical presence consists of over 80 Navistar-owned dealer locations throughout Texas where it sells and services Navistar trucks and also "multiple official Navistar Factory Service Centers." (Dkt. 12 at 4–5.) Defendant responds through affidavit that the dealerships are not owned by Navistar but are instead "independently-owned and operated dealerships authorized to sell and/or service" Navistar's products. (Dkt. 15, Ex. 1 at ¶ 9.) While the Court must resolve factual conflicts in favor of Plaintiffs at this stage, it must only do so where factual conflicts occur between affidavits or other documentation. See Zoch , 810 F.App'x at 287. The Court will therefore take Navistar's affidavit as true on this matter because Plaintiffs' documentation consists only of a link to Navistar's "Find a Dealer" webpage, which does not indicate that the dealers listed are anything more than independent entities entitled to sell Navistar products. Find a Dealer , International Trucks, https://www.internationaltrucks.com/dealer-locator (last visited Sept. 18, 2020).
Navistar makes this claim in the "2nd Declaration of Richard Van Laar." (Dkt. 15 at Ex. 1 at 2–4.) Richard Van Laar declares that he is "a Product Integrity and Compliance Manager" at Navistar. (Id. at ¶ 2.)
It is unclear whether "Navistar Factory Service Centers" are different from these independent dealers. Yet, even if they are, their presence in Texas would not affect the Court's lack of general jurisdiction over Navistar. If the defendant in BNSF is not "at home" in a state that contains facilities, employees, and instruments of its primary business, multiple Navistar service facilities will not make Navistar "at home" in the state. See BNSF , 137 S. Ct. at 1559. Moreover, unlike in Perkins , where the president was essentially running the company from Ohio, Plaintiffs have not shown that Navistar is in some way directing its operations from Texas or that Navistar even has an office or physical location in Texas from which that would be possible. See Perkins , 342 U.S. at 448, 72 S.Ct. 413. At best, the operation of these dealerships and service centers are reminiscent of a company selling its goods in a state through a subsidiary, but the Court declines to find that the sales operations of independent dealers and service centers are enough when the Supreme Court found far greater subsidiary-like contacts to be insufficient in Daimler. Daimler , 571 U.S. at 136, 134 S.Ct. 746. Finally, Plaintiffs are silent on Navistar's claim that it "does not own any manufacturing plants in the State of Texas," so Navistar's contacts with Texas, as presented, do not extend to its primary manufacturing business. (See Dkt. 11 at 13.)
Second, Plaintiffs claim that Navistar's business presence in Texas can be used to establish general jurisdiction. This presence includes sale of Navistar goods in Texas, its Texas-facing advertisement, and the fact that it is registered to do business and maintains a registered agent for service of process in Texas. (See Dkt. 4 at 8–9.) While these contacts evidence that Navistar does business with Texas, the Fifth Circuit has made clear that "in order to confer general jurisdiction a defendant must have a business presence in Texas." See Johnston , 523 F.3d at 611. Substantial sales of goods, advertisement, and business registration, even with other contacts, have not been found to confer general jurisdiction. See Frank v. P N K (Lake Charles) L.L.C. , 947 F.3d 331, 339 (5th Cir. 2020) (holding that extensive advertisements targeted at the forum state and a subsidized shuttle service were not enough to confer general jurisdiction over defendant casino); Wenche Siemer v. Learjet Acquisition Corp. , 966 F.2d 179, 183 (5th Cir. 1992) (holding that "the mere act of registering an agent [does] not create [defendant's] general business presence in Texas); Bearry , 818 F.2d at 372–73 (5th Cir. 1987) (finding that nearly $250 million in goods sent to Texas was not enough to establish general jurisdiction, despite numerous other in-state contacts with the forum state). Even considered alongside Navistar's limited physical presence in Texas, these business contacts do not make Navistar's affiliations "comparable to a domestic enterprise in that state." Daimler , 571 U.S. at 133 n. 11, 134 S.Ct. 746.
Finally, Plaintiffs argue that the Court should look to Navistar's past and future contacts with Texas to exercise general jurisdiction. Relevant to this argument are "a manufacturing or assembly plant in Garland, Texas" that Navistar "appears to have had" and a "$250 million manufacturing or assembly plant in San Antonio, Texas" that Navistar is planning to build. (See Dkt. 4 at 8–9.) These claims, regardless of truth, do not support general jurisdiction. Using a defendant's prior, but now non-existent, contacts with the forum state to establish general jurisdiction would demonstrate neither continuous nor systematic affiliations. It would, in fact, demonstrate the opposite. Consideration of a potential future contact would be no less improper. Such an inquiry would force courts to speculate on the possible existence and extent of a defendant's future contacts when determining current jurisdiction over the defendant. See Quazzani-Chahdi v. Greensboro News & Record, Inc. , No. CIV.A. H-05-1898, 2005 WL 2372178, at *3 (S.D. Tex. Sept. 27, 2005) ("Any future plans that Defendant may have to expand its business into Texas are irrelevant to the Court's existing jurisdiction over Defendant."). The Court declines to make that gamble.
To clarify Plaintiffs' somewhat ambiguous statement on a Garland plant, Navistar did have a plant in Garland, Texas, but it closed in 2013. Tammy Mutasa, Navistar Closing Garland Plant, 900 Employees Out of Work , NBC DFW (Apr. 8, 2013, 7:42 PM), https://www.nbcdfw.com/news/local/navistar-closing-garland-plant-900-employees-out-of-work/2073472/.
Taken together, the contacts between Navistar and Texas that Plaintiffs allege could be fairly categorized as "continuous and systematic." But that is not enough. For the Court to exercise general jurisdiction over it, Navistar must be "essentially at home" in Texas, but independent dealerships, service facilities, and even extensive business with customers in Texas are not enough to demonstrate general jurisdiction given the winnowing of that standard by the higher courts over the past decades. See generally Daimler , 571 U.S. at 128, 134 S.Ct. 746 ("[S]pecific jurisdiction has become the centerpiece of modern jurisdiction theory, while general jurisdiction [has played] a reduced role." (citing Goodyear , 564 U.S. at 925, 131 S.Ct. 2846 )). Accordingly, the Court does not find general jurisdiction over Navistar and now turns to the issue of specific jurisdiction.
b. Specific Jurisdiction
If the defendant's contacts with the state do not reach the requisite level of "continuous and systematic" for general jurisdiction, a court "may still exercise specific jurisdiction in a suit arising out of or related to the defendant's contacts with the forum." Luv N' Care , 438 F.3d at 469 (internal quotations omitted). The Fifth Circuit has established a three-part test to determine whether a court may exercise specific jurisdiction, which requires the court to consider:
(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable.
Carmona v. Leo Ship Mgmt., Inc. , 924 F.3d 190, 193 (5th Cir. 2019). As to the first and second prongs, "there must be an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation." Zoch , 810 F. App'x at 288 (citing Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco Cty. , ––– U.S. ––––, 137 S. Ct. 1773, 1780, 198 L.Ed.2d 395 (2017) ). "Such activity or occurrence must ‘create a substantial connection with the forum State.’ " Id. (citing Walden v. Fiore , 571 U.S. 277, 284, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) ). "Absent this connection, ‘specific jurisdiction is lacking regardless of the extent of a defendant's unconnected activities in the State.’ " Id. ; see Bristol-Myers , 137 S. Ct. at 1781 ("[A] defendant's general connections with the forum are not enough."). If a plaintiff satisfies the first two prongs, the burden then shifts to the defendant to make a "compelling case" that the exercise of jurisdiction is not fair or reasonable. Id.
In products liability cases, like the present case, "[the stream of commerce doctrine] is often employed to assess whether the non-resident defendant has minimum contacts with the forum." Zoch , 810 F. App'x at 289. This doctrine "recognizes that a defendant may purposely avail itself of the protection of a state's laws—and thereby will subject itself to personal jurisdiction—‘by sending its goods rather than its agents’ into the forum." In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig. , 888 F.3d 753, 778 (5th Cir. 2018) (citing J. McIntyre Mach., Ltd. v. Nicastro , 564 U.S. 873, 882, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011) ). Pursuant to Fifth Circuit precedent, minimum contacts are satisfied under the doctrine "so long as the court determines ‘that the defendant 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.’ " Zoch , 810 F. App'x at 290 (citing Ainsworth v. Moffett Eng'ring, Ltd. , 716 F.3d 174, 177 (5th Cir. 2013) ). As a result, "mere foreseeability or awareness [is] a constitutionally sufficient basis for personal jurisdiction if the defendant's product made its way into the forum state while still in the stream of commerce." Id. However, when a product exits the stream of commerce by, for example, a consumer's purchase, "[the] consumer's unilateral decision to take a product to a distant state, without more, is insufficient to confer personal jurisdiction over the manufacturer or distributor." Seiferth , 472 F.3d at 273.
The Court now evaluates the information provided on the record to examine the Tractor's journey through the stream of commerce. In its Supplement in Support of its 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. 11), Navistar attached documents that recorded the Tractor's sale "to [Hunter Truck Sales & Service, Inc. ("Hunter Sales")] in Pennsylvania to specifications requested by Hunter Leasing, LLC ("Hunter Leasing"), a Pennsylvania company." (Dkt. 11 at 2, 14.) From there, Hunter Leasing purchased and leased the Tractor to a Texas company, J3 Oil & Gas. (Dkt. 11 at 2, 23; Dkt. 15 at 6.) In 2017, Quality Carriers purchased the tractor and titled it in Illinois. (Dkt. 11 at 2, 25.) Navistar makes two primary arguments in relation to these facts. First, "the tractor exited the stream of commerce when it was purchased by Hunter Leasing in Pennsylvania," so any further movement of the tractor by another party would be a unilateral action by that party which cannot be considered in determining specific jurisdiction. (Dkt. 15 at 6.) See ITL Intern., Inc. v. Constenla, S.A. , 669 F.3d 493, 498–99 (5th Cir. 2012) ("The defendant's contacts with the forum state must be more than random, fortuitous, or attenuated, or of the unilateral activity of another party or third person." (internal quotations omitted)). Second, even if the tractor did not leave the stream of commerce when purchased by Hunter Leasing, Navistar did not deliver the tractor "into the stream of commerce with the expectation that it would be purchased by or used by consumers" in Texas. (Dkt. 11 at 2 (citing Ainsworth , 716 F.3d at 177 ).)
In response to Navistar's first argument that the Tractor had left the stream of commerce once it was purchased by Hunter Leasing, Plaintiffs argue that Hunter Leasing was "not a consumer but an entity in the business of selling and leasing International trucks," so "the tractor never left the stream of commerce in its path to Quality Carriers." (Dkt. 12 at 8 (comparing the present case to Eddy v. Printers House (P) Ltd. , 627 F. App'x 323, 327 (5th Cir. 2015) ).) In response to Navistar's second argument, Plaintiffs make several contentions about why Navistar should have expected that the Tractor would be purchased or used in Texas. First, Plaintiffs claim that "Hunter leases and sells International tractors around the United States and conducts advertising and promotional marketing for Navistar's products that are specifically directed at consumers in the State of Texas." (Dkt. 12 at 2.) Given this wide-ranging network of sales, Plaintiffs claim that Navistar could have reasonably expected or foreseen that the Tractor would reach Texas, given the "extensive business relations" between Navistar and Hunter Sales. (Id. at 7 (citing Ainsworth , 716 F.3d at 177 ).)
Plaintiffs refer to Hunter Leasing as "Hunter" in their Response in Opposition to Defendant Navistar's Motion to Dismiss (Dkt. 12) and seems to conflate Navistar's relationship with Hunter Leasing and Hunter Sales as one and the same. (Id. at 7.) Navistar clarifies in its reply (Dkt. 15) that Hunter Leasing "has no direct business relationship with Navistar" and is an affiliate of Hunter Sales, which is an "independently-owned dealer authorized to sell and service" Navistar vehicles. (Id. at 3.) The Court will not speculate into the business relationship of Hunter Leasing and Hunter Sales, but the Court notes that Plaintiffs' conflation of the two does not affect its stream of commerce analysis.
Generally, the question of where the product exits the stream of commerce is quite obvious. Exit takes place where the product is purchased or used by consumers. See Goodyear Dunlop Tires Operations, S.A. , 564 U.S. at 926, 131 S.Ct. 2846 (describing the stream of commerce doctrine as one concerned with a product traveling through "an extensive chain of distribution before reaching the ultimate consumer"); Zoch , 810 F. App'x at 289 (citing Goodyear ); see also Istre v. Montco Offshore, Inc. , No. CIV.A. 12-2054, 2014 WL 790872, at *4 (E.D. La. Feb. 26, 2014) (citing Seiferth , 472 F.3d at 273 ). Here, however, there is a question of what entity should be categorized as the "consumer." Navistar maintains that "Hunter Leasing was the end consumer," whereas Plaintiffs argue that Hunter Leasing could not have been the consumer given that it is "in the business of selling and leasing International trucks." (Compare Dkt. 15 at 4 with Dkt. 12 at 8.) Fortunately, the Court need not dive into the question of whether the purchase of a product by a company that intends to lease the product is enough to push the product out of the stream of commerce. Cf. Seiferth , 472 F.3d 266 at 273–74 (declining to extend the stream of commerce doctrine to leased products). Instead, because the Court finds that even if the Tractor's purchase by Hunter Leasing did not end the stream of commerce, Navistar did not reasonably expect or foresee the purchase or use of the Tractor in Texas. See id. at 274 ("The exercise of personal jurisdiction would not be proper even if the stream-of-commerce theory applied to leased products, because [the defendant] did not expect the lessee to take the [product] to [the forum state].")
The question of whether Navistar could have foreseen or was aware that the tractor would end up in Texas is a fact-intensive question. See Zoch , 810 F. App'x at 293 ("Specific jurisdiction should be determined on a case-by-case basis under the facts of each individual case.") However, several Fifth Circuit cases are instructive to the situation presented.
The expectation that the Tractor would reach Texas consumers turns on Navistar's relationship with Hunter Sales, a dealer that would eventually send the tractor to its end-destination in the stream of commerce. (See Dkt. 15 at 3.) This kind of dealer or distribution relationship has been played out in the specific jurisdiction context a number of times in the higher court. Plaintiffs ask that we look to the Fifth Circuit's decision in Ainsworth as dispositive. (See Dkt. 12 at 6.) In Ainsworth , the Fifth Circuit found specific jurisdiction over the defendant, Moffet, for an allegedly defective forklift Moffet had manufactured and designed. 716 F.3d at 179. The Ainsworth court determined that Moffet had contracted with a distributor that sold or marketed Moffett products in all fifty states, and "Moffett [made] no attempt to limit the territory in which [the distributor] [sold] its products." Id. Additionally, the circuit court noted that even without specific knowledge of its product sales in the forum state, it should have reasonably expected those sales because the forum state had a significant poultry-producing industry, for which Moffett's forklifts were specifically created. Id.
The Fifth Circuit recently qualified the Ainsworth holding with its opinion in Zoch. In Zoch , the Fifth Circuit held that a German manufacturer of an automobile seat that had allegedly contributed to injuries arising from a car accident was not amenable to specific jurisdiction in Texas. Zoch , 810 F.App'x at 293. Despite a number of similarities to the defendant in Ainsworth , including a distribution network to the United States as a whole, the Fifth Circuit noted that specific jurisdiction requires a plaintiff to allege more than just that a defendant's circumstances "might lead to [their] products being sold in any of the fifty states." Id. at 292 (citing McIntyre , 564 U.S. at 890–91, 131 S.Ct. 2780 (Breyer, J.)). It specifically pointed to the fact that the Ainsworth defendant, unlike the defendant seat manufacturer, had reason to know that its product would end up in a state with strong ties to the industry the defendant was serving. Id.
The Court finds the instant situation to be more akin to Zoch than Ainsworth. The record reflects that Navistar would have not actually expected the Tractor to end up in Texas. To prove this, Navistar has provided: (1) screenshots from the Hunter Sales website containing relevant information about Hunter Sales and its geographical market (Dkt. 15, Ex. 2); and (2) the Dealer Agreement between Navistar and Hunter Sales (Dkt. 15, Ex. 1).
According to the agreement, Navistar and Hunter Sales entered into the Dealer Agreement on April 13, 2015. (Dkt. 15, Ex. 1 at 7.) The Court is cognizant of the fact that this is after the date the Tractor was transferred from Navistar to Hunter Sales. (Dkt. 11 at 21 (showing a transfer date of January 11, 2015).) Given the possibility that the terms of agreement were different at the time that Navistar sold the Tractor to Hunter Sales, the Court will not treat the agreement as dispositive, as it might otherwise, but will still view the Dealer Agreement as illustrative of the relationship between Navistar and Hunter Sales.
The screenshots from the Hunter Sales website evince a dealership that provides its goods and services to a limited geographical portion of the United States, not including the State of Texas. Hunter Sales describes itself as the "Northeast's Largest Heavy Commercial Truck Provider" and notes that it serves "the entire mid-Atlantic region with a footprint extending across 19 locations throughout Pennsylvania, New York, New Jersey and West Virginia." (Dkt. 15, Ex. 2 at 5.) The website also provides a map of the dealership locations, and there are none in or near the State of Texas. (See id. at 7–11.)
For the sake of due diligence, the Court notes that the exhibit provided by Navistar (Dkt. 15, Ex. 2) is identical to the current state of the Hunter Sales website, but both list 20, not 19, locations—none of which are in or near Texas. See Hunter Truck, https://huntertruck.com/hunterlocator/ (last visited on Sept. 19, 2020).
The Dealer Agreement supports this characterization of Hunter Sales and demonstrates that Navistar's relationship with Hunter Sales was based upon the same limited geographical expectations. The Dealer Agreement refers to "the Trade Area where the Dealer's retail establishment is located." (Dkt. 15, Ex. 1 at 7.) The agreement lists these retail establishments as four locations in Pennsylvania and one in New Jersey. (Id. ) The agreement then goes on to lay out various requirements regarding this "Trade Area" such as "[t]o achieve a reasonable share of the market for the goods and services covered by the Agreement, in the Trade Area served by Dealer's location." (Dkt. 15, Ex. 1 at 16.)
Thus, although Plaintiffs assert that Hunter Sales is a dealer that "sells, leases, markets, advertises and distributes around the United States and Texas, with Navistar's knowledge," the documentation provided by Navistar shows otherwise and remains uncontroverted. (See Dkt. 11 at 7.) Regardless, the Court need not credit Plaintiffs' conclusory allegations about Hunter Sales' seemingly extensive contacts with Texas and Navistar's knowledge of these undocumented contacts. See Panda Brandywine Corp. v. Potomac Elect. Power , 253 F.3d 865, 868–69 (5th Cir. 2001) (holding that a district court need not "credit conclusory allegations, even if uncontroverted").
Finally, the case here presents a crucial distinction from both Ainsworth and Zoch. In both, the Fifth Circuit was contending with situations where the defendant had agreements with, and sent their products to, nationwide distributors with no clear geographical limit on their sales network. See Zoch , 810 F.App'x at 292 ; Ainsworth , 716 F.3d at 179. This meant that the Ainsworth court, in particular, had to look past the distribution agreements and dive into the minutiae of the poultry industry's strength in a given state. Id. The situation before the Court does not require that much work. Instead, the network of sales that Hunter Sales provides to Navistar is limited both by geographical constraints in dealership location and formal agreement. Navistar could not have foreseen and would not have expected that the Tractor would end up in Texas and give rise to the instant cause of action. The Court therefore finds that it does not have specific jurisdiction over Navistar.
3. Jurisdictional Discovery
Plaintiffs also ask that the Court "grant leave to conduct personal jurisdiction discovery" on "(1) Navistar's knowledge of Hunter's business and marketing ploys in Texas, (2) the nature and quality of the commercial contacts between Navistar, Hunter and Texas, and (3) Navistar's [allegedly] extensive contacts with Texas that Plaintiffs believe rise to the level of continuous and systematic such as to render Navistar essentially at home." (Dkt. 12 at 9.)
A district court has "broad discretion in all discovery matters," and may decline to permit discovery on matters of personal jurisdiction where no issue of material fact exist and when "the lack of personal jurisdiction is clear." Wyatt v. Kaplan , 686 F.2d 276, 283–84 (5th Cir. 1982). The party moving for jurisdictional discovery should specify "what facts they expect to discover and how that information would support jurisdiction." Evergreen Media Holdings, LLC v. Safran Co. , 68 F. Supp. 3d 664, 685 (S.D. Tex. 2014). Finally, discovery rulings on personal jurisdiction are reviewed for abuse of discretion and "will not be disturbed ordinarily unless there are unusual circumstances showing a clear abuse." Seiferth , 472 F.3d at 270 (5th Cir. 2006) (citing Wyatt , 686 F.2d at 283 ).
Exercising its "broad discretion," the Court declines to allow further discovery on the issue of personal jurisdiction. Although Plaintiffs have listed the topics they would like to investigate, the Court finds that the absence of personal jurisdiction is clear. Even so, the Court will address each of Plaintiffs' request in turn. First, Plaintiffs ask for additional discovery on Navistar's knowledge of Hunter's business and marketing in Texas. (Dkt. 12 at 9.) Plaintiffs' description of either Hunter Leasing or Hunter Sales' contacts with Texas as "extensive dealings" is conclusory and unsupported. Discovery on that matter would constitute nothing more than a search of the public domain for marketing materials created by either Hunter entity, something that does not require the formality or procedure of discovery. Further, the Court has no reason to believe that Hunter's marketing departments are in possession of a smoking gun that will confer jurisdiction over Navistar. Second, Plaintiffs ask for discovery to look into "the nature and quality of the commercial contacts between Navistar, Hunter and Texas." (Dkt. 12 at 9.) However, specific jurisdiction concerns "the relationship among the defendant, the forum, and the litigation." Zoch , 810 F. App'x at 288. Vaguely requesting discovery on a third-party's "commercial contacts" with Texas would only provide information on that third-party's "unilateral activity," which does not matter for specific jurisdiction purposes. See Eddy , 627 F. App'x at 326. To the extent that Plaintiffs ask the Court for discovery on these contacts to find out Navistar's knowledge of Hunter Leasing or Hunter Sales' contacts with Texas, the Court has already declined to provide discovery on that topic.
Third, Plaintiffs request discovery on "Navistar's extensive contacts with Texas that Plaintiffs believe rise to the level of continuous and systematic such as to render Navistar essentially at home." (Dkt. 12 at 9.) The Court declines this request as well. Plaintiffs have not made a preliminary showing of general jurisdiction that would warrant the need for discovery, especially in light of the high threshold to find general jurisdiction. For these reasons, Plaintiffs' request for jurisdictional discovery should be denied.
C. Transfer of Venue
Prior to ordering the dismissal of the claims against Navistar, the Court turns next to the transfer of venue. See Herman v. Cataphora, Inc. , 730 F.3d 460, 463–64 (5th Cir. 2013) (holding that a district court's dismissal of an action "mak[es] a transfer invalid because the court no longer has authority over the matter"). It is settled law in the Fifth Circuit that "[w]here a court finds it lacks personal jurisdiction, it may dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(2). In the alternative, a federal court is authorized under 28 U.S.C. § 1406(a) to transfer the action to ‘any district or division in which it could have been brought [and where personal jurisdiction is proper]’ if the court finds that it is ‘in the interest of justice’ to transfer the action." Herman , 730 F.3d at 466. Thus far, Navistar is the only party who requested that the action be transferred to the Western District of Texas—Austin Division if dismissal was not granted on other grounds. (Dkt. 2 at 1.) Yet, transferring this suit to another district court in Texas would not cure the jurisdictional defect over Navistar.
More importantly, it would not be in the "interest of justice" for the Court to make the decision on where Plaintiffs' claims should be brought given that the Court has determined that Navistar is subject to personal jurisdiction in at least Delaware and Illinois. See Fogarty v. USA Truck, Inc. , 242 F. App'x 152, 154 (5th Cir. 2007) (holding that a district court may, but is not required to , transfer a case when the court lacks personal jurisdiction over the defendant(s)). The Court therefore declines to transfer Plaintiffs' claims against Navistar and will dismiss the claims instead.
"Typically, courts employ 28 U.S.C. § 1406(a) transfers to protect plaintiffs against procedural bars to refiling claims, such as a statute of limitations bar." Garcia Hamilton & Assocs., L.P. v. RBC Capital Markets, LLC , 466 F.Supp.3d 692, 704 (S.D. Tex. 2020). No such concerns have been alleged here and, at the very least, both Delaware and Illinois appear to have statutes that would effectively toll the statute of limitations period for an action that had previously been dismissed due to lack of personal jurisdiction. See Ill.Rev.Stat.1991, ch. 110, ¶ 13-217 ; Del. Code Ann. tit. 10, § 8118 ; Valentin v. Ocean Ships, Inc. , 38 F. Supp. 2d 511, 514 (S.D. Tex. 1999) (holding that State "saving clauses" that effectively toll statute of limitations periods can be applied by federal courts in diversity actions).
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CONCLUSION
For the foregoing reasons, Plaintiffs' Motion to Remand (Dkt. 3) is hereby DENIED, and Navistar, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction (Dkt. 2) is GRANTED. Navistar, Inc.'s alternative motions to dismiss for improper venue and failure to state a claim (Dkt. 2) are DENIED AS MOOT.
Plaintiffs' claims against Old Republic General Insurance Group, Inc., Old Republic Insurance Company, Navistar, Inc. and Navistar International Corporation are hereby DISMISSED without PREJUDICE.
The Clerk is directed to TERMINATE "Navistar, Inc.," "Navistar International Corporation," "Navistar International Transportation," "International Truck and Engine Corporation," "Old Republic General Insurance Group, Inc.," and "Old Republic Insurance Company" from the list of defendants.
IT IS SO ORDERED.