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A threshold issue in any lawsuit is the issue of personal jurisdiction. No Texas court, or court of any state for that matter, can exercise authority over a defendant in a lawsuit unless the court has personal jurisdiction over that defendant. In Texas, personal jurisdiction can be established if the defendant’s minimum contacts are sufficient to give rise to either general jurisdiction, or specific jurisdiction.
General jurisdiction is present when a defendant’s contacts with the state in which it has been sued are so systematic and continuous that the defendant is essentially at home in the forum state; in other words, if the defendant is subject to the general jurisdiction of the courts in a given state, the defendant could be sued in that state for conduct that has nothing to do with the defendant’s contacts with that state. This is, understandably, a fairly high bar to meet—typically, in the case of a defendant who is an individual, general jurisdiction exists in the state where that person has her domicile, and in the case of a defendant that is a corporate entity, general jurisdiction exists in the state where that corporation is equally as “at home,” usually the state where the corporation is headquartered as well as the state where it was incorporated.
A court has specific jurisdiction over a corporate defendant when (1) the defendant purposefully avails itself of the privilege of doing business in the forum state; and (2) the plaintiff’s cause of action arises out of the defendant’s contacts with the forum state—essentially, the cause of action and the defendant’s contacts must be sufficiently related. Both of these elements must be met so that the defendant is not unfairly surprised by being sued in that state; in other words, the lawsuit does not “offend ‘traditional notions of fair play and substantial justice.’” Int'l Shoe Co. v. Washington, 326 U.S. 310 (1945) (quoting Milliken v. Meyer, 311 U.S. 457 (1940)). The rationale behind the idea of specific jurisdiction is that a corporation that conducts a certain amount of business in a given state is availing itself not only of the economic opportunities in that state, but also the protection of its laws. On the flip side, however, along with the protection of the laws of a state usually comes the ability of the courts of that states to render judgments affecting the corporation’s interests.
The Texas Supreme Court recently took a closer look at the relatedness element of specific jurisdiction in the context of products liability actions. In LG Chem America, Inc. v. Morgan, the Court considered the question of whether a business that sells its products in a given state must market them specifically to the consumer demographic to which a plaintiff belongs, in order to satisfy the relatedness element of specific jurisdiction.
In that case, LG Chem was a company headquartered in South Korea that manufactured and sold lithium-ion batteries. Tommy Morgan was a Texas resident who was injured when a lithium-ion battery that he bought at a Texas smoke shop to charge his e-cigarette “exploded” in his pocket. Morgan sued LG Chem and its American distributor, LG Chem America, in Texas district court.
Both LG Chem and LG Chem America filed special appearances, claiming that neither was headquartered or incorporated in Texas and contending that while they did sell their products, including lithium-ion batteries, in Texas, they did not distribute, advertise, or sell the batteries directly to consumers, nor did they authorize the sale of these products directly to individual consumers or for use in e-cigarettes. Therefore, according to the LG Chem defendants, the court lacked specific jurisdiction, because their purposeful availment of Texas markets was not sufficiently related to the injury suffered by Morgan, an individual consumer using the battery in a way unauthorized by the manufacturer.
Morgan responded to the special appearances and argued that the requirements of specific jurisdiction were met because the defendants specifically targeted Texas markets with their products. Morgan supported these arguments with spreadsheets purportedly containing U.S. Customs data which showed the number of shipments defendants had made. Defendants did not object to this data, but still responded that the requirements of specific jurisdiction were not met because Morgan’s claims were not sufficiently related to the defendants’ contacts with the state. The trial court denied both special appearances, and the LG defendants filed an interlocutory appeal. The court of appeals affirmed, holding that the defendants could reasonably anticipate being hailed into a Texas court in relation to an alleged issue with a product they had marketed in Texas. The Supreme Court granted review to examine the question of how related the plaintiff’s claim needed to be.
The Court ultimately rejected the LG defendants’ argument that in order to satisfy specific jurisdiction, the company must have marketed its products to the particular “market segment” within the State of Texas. Rather, the analysis for specific jurisdiction is more broadly concerned with “the objective existence, nature, and extent of the Texas contacts rather than the particulars of what the parties thought, said, or intended about the course their product might take after the defendant targeted, and the product entered, Texas.” LG Chem Am., Inc. v. Morgan, 670 S.W.3d 341 (Tex. 2023). According to the Court, the dispositive question was whether exercising jurisdiction over the LG defendants in regards to Morgan’s claims would offend due process when Morgan was injured by a product that the defendants admittedly shipped into Texas markets in large quantities. Ultimately, the Court concluded that it would not.
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