In Re: Chinese Drywall ( 2014 )

Case: 12-31213 Document: 00512636188 Page: 1 Date Filed: 05/20/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 20, 2014
No. 12-31213
Lyle W. Cayce
Clerk
IN RE: CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY
LITIGATION
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TAISHAN GYPSUM COMPANY, LIMITED; TAI’AN TAISHAN
PLASTERBOARD, COMPANY, LIMITED,
Defendants-Appellants
v.
DAVID GROSS; CHERYL GROSS; LOIS VELEZ, individually and on behalf
of others similarly situated,
Plaintiffs-Appellees
------------------------------------------------------------------------------------------------------------
IN RE: CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY
LITIGATION
----------------------------------------------------------------------------------------------------------
TAISHAN GYPSUM COMPANY, LIMITED,
Defendant-Appellant
v.
MITCHELL COMPANY INCORPORATED, individually and on behalf of
others similarly situated,
Plaintiff-Appellee
------------------------------------------------------------------------------------------------------------
IN RE: CHINESE-MANUFACTURED DRYWALL PRODUCTS LIABILITY
LITIGATION
----------------------------------------------------------------------------------------------------------
TAISHAN GYPSUM COMPANY, LIMITED; TAI’AN TAISHAN
PLASTERBOARD, COMPANY, LIMITED,
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No. 12-31213
Defendants-Appellants
v.
KENNETH WILTZ, individually and on behalf of all others similarly
situated, BARBARA WILTZ, individually and on behalf of all others similarly
situated,
Plaintiffs-Appellees
Appeals from the United States District Court
for the Eastern District of Louisiana
Before SMITH, DeMOSS, and HIGGINSON, Circuit Judges.
HIGGINSON, Circuit Judge:
This appeal encompasses three cases in the Chinese Drywall
multidistrict litigation—Mitchell, Gross, and Wiltz. Picking up where we left
off in Germano v. Taishan Gypsum Company, Ltd., 742 F.3d 576 (5th Cir. 2014)
(affirming as to a fourth), we hold that personal jurisdiction lies over Taishan
Gypsum Company, Limited and Tai’an Taishan Plasterboard Company,
Limited, in their respective cases. We further hold that the district court did
not abuse its discretion when it refused to vacate the preliminary default
entered in Mitchell. We therefore AFFIRM.
I.
From 2005 to 2008, a housing boom coincided with the destruction of
Hurricanes Katrina and Rita to sharply increase the demand for construction
materials in the Gulf South and East Coast. In response, Chinese companies
manufactured considerable quantities of gypsum wallboard (“Chinese
drywall”) and sold it to United States companies. Homeowners experienced
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problems with the drywall, 1 and affected parties sued entities involved in
manufacturing, importing, and installing the Chinese drywall. The cases
multiplied, and the Judicial Panel on Multidistrict Litigation transferred the
cases to a single court in the Eastern District of Louisiana (the “MDL” court).
The Honorable Eldon E. Fallon presides over the MDL.
Four cases in the MDL have reached our court: Germano, Mitchell,
Gross, and Wiltz. Germano is a class action originally filed by Virginia
homeowners in the United States District Court for the Eastern District of
Virginia. Mitchell is a class action originally filed by homebuilders in the
United States District Court for the Northern District of Florida. Gross and
Wiltz are class actions on behalf of property owners and were directly filed in
the MDL in the Eastern District of Louisiana.
Plaintiffs-Appellees are the class-action plaintiffs in each of the four
cases. Defendants-Appellants are two Chinese companies that manufacture
and sell drywall: Taishan Gypsum Company, Limited (“TG”) and Tai’an
Taishan Plasterboard Company, Limited (“TTP”) (collectively “Taishan”). Both
entities are defendants in Gross and Wiltz, but only TG is a defendant in
Germano and Mitchell. TG and TTP appeal in their respective cases from the
MDL court’s omnibus September 4, 2012 order. In Germano v. Taishan
Gypsum Company, Ltd., 742 F.3d 576 (5th Cir. 2014), our court affirmed the
district court’s decision finding personal jurisdiction over TG. We are tasked
with the three remaining appeals: Mitchell, Gross, and Wiltz.
A. Mitchell, Gross, and Wiltz
1. Mitchell
1For example, they allege that the drywall “emits various sulfide gases,” damages the
structural, mechanical and plumbing systems of the home, and damages other appliances in
the home. We express no view on these allegations.
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The Mitchell Company (“Mitchell”) is an Alabama construction company
that has built homes and apartments in Alabama, Mississippi, Louisiana,
Georgia, and Florida. On March 6, 2009, Mitchell sued TG, among others, in
the United States District Court for the Northern District of Florida. Mitchell
sued on behalf of itself and a class “composed of all persons and entities” in
Alabama, Mississippi, Louisiana, Georgia, Texas, and Florida who
“constructed an improvement to real estate using drywall manufactured or
distributed by Defendants” and incurred expenses associated with repairing
the drywall itself, repairing property damage that the drywall caused, and
liability to property owners as a result of the damage.
Mitchell properly served TG on May 8, 2009. On June 15, 2009, the MDL
panel transferred Mitchell to the Eastern District of Louisiana. TG failed to
appear, and Mitchell moved for a default judgment. The Clerk entered a
preliminary default against TG on September 22, 2009, and on June 10, 2010,
TG made its first appearance. TG moved to vacate the preliminary default
under Rule 55(c) and also moved to dismiss the case for lack of personal
jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The MDL court
denied TG’s motions in its omnibus September 4, 2012 order.
2. Gross
The Gross plaintiffs filed directly in the MDL court on October 7, 2009.
The plaintiffs sued, among others, TG and TTP, on behalf of themselves and
all United States homeowners who have defective drywall in their homes. They
allege that defendants’ drywall has caused them economic harm from the costs
of inspection, costs of repairs, and devaluation of their homes, and physical
harm such as an increased risk of disease. Because plaintiffs concede that they
have failed to “identify the manufacturer of the product that caused the harm,”
they urge liability for the defendants “in ratio to their proportionate share of
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the relevant market.” 2 After jurisdictional discovery, TG and TTP moved to
dismiss for lack of personal jurisdiction under Rule 12(b)(2). The district court
denied the motion in its omnibus September 4, 2012 order.
3. Wiltz
The Wiltz plaintiffs also filed directly in the MDL court. They are suing,
among others, TG and TTP, on behalf of themselves and all owners and
residents of property containing defective Chinese drywall. After completing
jurisdictional discovery, TG and TTP moved to dismiss Wiltz for lack of
personal jurisdiction under Rule 12(b)(2). The district court denied the motion
in its omnibus September 4, 2012 order. 3
B. The Taishan Entities (TG and TTP)
TG is a Chinese corporation with its principal place of business in Ta’in
City, Shandong Province, China. It began manufacturing drywall in 1992 and
has grown to be one of the largest drywall manufacturers in China. In 2006,
TG formed a wholly owned subsidiary, TTP. TTP stopped operating in 2008.
TG and TTP are referred to collectively as “Taishan.”
C. The District Court’s Order
On September 4, 2012, the district court ruled on Taishan’s motions in
Germano, Mitchell, Gross, and Wiltz in a 142-page order. In Germano the
2 Two sets of plaintiffs intervened in the Gross action contending that they were absent
class members: the Benes plaintiffs and the Jaen plaintiffs. Like Gross, both allege market-
share liability theories with respect to the manufacturers of the defective drywall. Unlike
Gross, the intervening plaintiffs have identified defendants in the chain of distribution.
Appellants point out that many of the plaintiffs in the Gross action (including the intervening
classes) do not reside in Louisiana. The district court held that this concern is resolved “by
the PSC’s [Plaintiffs’ Steering Committee] suggestion to sever and transfer any non-
Louisiana plaintiffs from Gross.”
3 The similarities between Gross and Wiltz allow for merged consideration of the
personal jurisdiction issues in this appeal. As the district court noted, the key difference in
the actions is that the Gross plaintiffs are alleging market-share liability because they cannot
determine the appropriate defendants, while the Wiltz plaintiffs identify TG and TTP as the
manufacturers of the drywall in their properties.
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district court determined that personal jurisdiction was proper over TG in
Virginia. The district court also denied TG’s motion to vacate the default
judgment. 4 In Mitchell, the district court determined that personal jurisdiction
was proper over TG in Florida. In so holding, the district court determined that
TTP’s contacts with Florida could be imputed to TG for the purposes of
personal jurisdiction. The district court also denied TG’s motion to vacate the
preliminary default. In Gross and Wiltz, 5 the district court determined that
personal jurisdiction was proper over TG and TTP in Louisiana. The district
court again held that TTP’s contacts could be imputed to TG for the purposes
personal jurisdiction. The district court subsequently certified an interlocutory
appeal under 28 U.S.C. § 1292(b), and this court granted permission to appeal.
II.
Whether personal jurisdiction can be exercised over a defendant is a
question of law subject to de novo review. Patin v. Thoroughbred Power Boats
Inc., 294 F.3d 640, 652 (5th Cir. 2002) (citing Dickson Marine, Inc. v.
Panalpina, Inc., 179 F.3d 331, 335 (5th Cir. 1999)). A district court’s
jurisdictional findings of fact, however, are reviewed for clear error. Lonatro v.
United States, 714 F.3d 866, 869 (5th Cir. 2013). “The burden of establishing
personal jurisdiction over a non-resident defendant lies with the plaintiff.”
Ainsworth v. Moffett Eng’g, Ltd., 716 F.3d 174, 176 (5th Cir.), cert. denied, 134
S. Ct. 644 (2013). Because the district court held an evidentiary hearing on
personal jurisdiction, the plaintiffs must establish personal jurisdiction by a
preponderance of the evidence. Germano, 742 F.3d at 585; see also Walk Haydel
& Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 241–42 (5th Cir. 2008).
4 As discussed, our court affirmed this ruling.
5 The district court applied the same analysis to both cases.
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Under Federal Rules of Civil Procedure 55(c) and 60(b), a district court
may set aside an entry of default for “good cause.” Lacy v. Sitel Corp., 227 F.3d
290, 291–92 (5th Cir. 2000). The denial of such relief is reviewed for abuse of
discretion and any factual determinations underlying the district court’s
decision are reviewed for clear error. Id.
III.
We begin with the Mitchell appeal, in which TG argues that the district
court erred in finding specific jurisdiction over it in Florida. “The inquiry
whether a forum State may assert specific jurisdiction over a nonresident
defendant focuses on the relationship among the defendant, the forum, and the
litigation.” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (internal quotations
omitted). “This is in contrast to ‘general’ or ‘all purpose’ jurisdiction, which
permits a court to assert jurisdiction over a defendant based on a forum
connection unrelated to the underlying suit (e.g., domicile).” Id. at n. 6; see also
Daimler AG v. Bauman, 134 S. Ct. 746, 757–58 (2014).
A. TTP’s contacts may be imputed to TG
TG first argues that TTP’s contacts with Florida may not be imputed to
TG for purposes of personal jurisdiction. We hold that they can.
1. Choice of law
TG faults the district court for applying the forum state’s law (Florida
law) instead of Chinese law to the question of whether to impute TTP’s Florida
contacts to TG. TG concedes, however, that “Chinese law is not materially
different on this issue from Florida law, and the outcome should be the same
under either law.” Accordingly, we need not choose because “if the laws of both
states relevant to the set of facts are the same, or would produce the same
decision in the lawsuit, there is no real conflict between them.” Phillips
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Petroleum Co. v. Shutts, 472 U.S. 797, 839 n.20 (1985). Therefore, we apply
Florida law. 6
2. Imputation under Florida Law
Under Florida law, a foreign parent corporation is generally not “subject
to the jurisdiction of a forum state merely because a subsidiary is doing
business there.” Meier ex rel. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264,
1272 (11th Cir. 2002). But if:
the subsidiary is merely an agent through which the parent
company conducts business in a particular jurisdiction or its
separate corporate status is formal only and without any
semblance of individual identity, then the subsidiary’s business
will be viewed as that of the parent and the latter will be said to
be doing business in the jurisdiction through the subsidiary for
purposes of asserting personal jurisdiction.
Id. (quoting Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 1069.4 (3d ed. 2002)). Indeed, Florida’s long-arm statute
recognizes that an agent’s contacts with Florida can be imputed to its principal
6 Applying Florida law is also consistent with Lennar Homes, LLC v. Knauf GIPS KG,
No. 09-07901 CA 42 (Fla. Cir. Ct. Aug. 31, 2012). As noted in the district court opinion, Judge
Fallon and Judge Farina coordinated their hearings because of the overlapping issues in TG’s
motions in the MDL court and those in the Florida court. In Lennar Homes, the court held
that Florida law applied to the imputation question:
Here, Florida is not only the place of business for many of the parties, but it is also
the place where the injuries that gave rise to the causes of action occurred. The
property damage suffered by hundreds of Florida residents comprises the foundation
of this litigation, and this factor weighs heavily in finding that Florida law should
apply in determining whether TTP’s actions can be attributed to TG under Florida
principles of agency.
Lennar Homes, No 09-07901 at 2. The Third District Court of Appeal in Florida summarily
affirmed Judge Farina’s decision. Taishan Gypsum Co. Ltd. v. Lennar Homes, LLC, 123 So.
3d 637 (Fla. Dist. Ct. App. Sept. 11, 2013) (per curiam). In support of its affirmance, the court
relied on the portion of Judge Fallon’s September 4, 2012 Order discussing Mitchell, which
applied Florida law to the imputation decision. Lennar Homes is instructive because “when
the supreme court of a state has not spoken to a particular issue, the well-established practice
of this Circuit is to follow the opinion of the highest court which has written on the matter.”
Birmingham Fire Ins. Co. of Pa. v. Winegardner & Hammons, Inc., 714 F.2d 548, 550 (5th
Cir. 1983); see also Temple v. McCall, 720 F.3d 301, 307 (5th Cir. 2013).
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for jurisdictional purposes: “A person, whether or not a citizen or resident of
this state, who personally or through an agent does any of the acts enumerated
in this subsection thereby submits . . . to the jurisdiction of the courts of this
state.” Fla. Stat. Ann. § 48.193(1)(a) (emphasis added); see also Dev. Corp. of
Palm Beach v. WBC Constr., LLC, 925 So. 2d 1156, 1161 (Fla. Dist. Ct. App.
2006) (“While a parent corporation is not subject to jurisdiction in Florida
solely because its subsidiary does business here, the control of a parent over a
subsidiary may permit the conclusion that the subsidiary is acting as the agent
of the parent, thus subjecting the parent to jurisdiction under section 48.193(1)
and supporting ‘minimum contacts.’” (internal citations omitted)).
“Essential to the existence of an actual agency relationship is (1)
acknowledgment by the principal that the agent will act for him, (2) the agent’s
acceptance of the undertaking, and (3) control by the principal over the actions
of the agent.” Goldschmidt v. Holman, 571 So. 2d 422, 424 n.5 (Fla. 1990). “The
issue of control is critical to the determination of agency.” State v. Am. Tobacco
Co., 707 So. 2d 851, 854 (Fla. Dist. Ct. App. 1998). The parent’s control “must
be high and very significant.” Enic, PLC v. F.F. S. & Co., Inc., 870 So. 2d 888,
891 (Fla. Dist. Ct. App. 2004). “[T]he parent corporation, to be liable for its
subsidiary’s acts under the . . . agency theory, must exercise control to the
extent the subsidiary manifests no separate corporate interests of its own and
functions solely to achieve the purposes of the dominant corporation.” Id.
3. Imputation and Due Process
While Florida law contemplates the imputation of jurisdictional contacts
between an agent and its principal, authority is split over whether imputation
on the basis of an agency relationship comports with Federal Due Process. In
Daimler AG v. Bauman, the Supreme Court was presented with the question
of whether a principal can be subject to general jurisdiction based on its agent’s
contacts with the forum state. 134 S. Ct. 746 (2014). The court recognized:
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“Daimler argues, and several Courts of Appeals have held, that a subsidiary’s
jurisdictional contacts can be imputed to its parent only when the former is so
dominated by the latter as to be its alter ego.” The court, however, then decided
“we need not pass judgment on invocation of an agency theory in the context of
general jurisdiction, for in no event can the appeals court’s analysis be
sustained.” Daimler, 134 S. Ct. at 759. As for agency imputation in specific
jurisdiction cases, the Court noted:
Agency relationships, we have recognized, may be relevant to the
existence of specific jurisdiction. . . . As such, a corporation can
purposefully avail itself of a forum by directing its agents or
distributors to take action there. . . . It does not inevitably follow,
however, that similar reasoning applies to general jurisdiction.
Id. at 759 n.13 (emphasis added). Daimler therefore embraces the significance
of a principal-agent relationship to the specific-jurisdiction analysis, though it
suggests that an agency relationship alone may not be dispositive. See id. at
759 (“Agencies . . . come in many sizes and shapes . . . [a] subsidiary, for
example, might be its parent’s agent for claims arising in the place where the
subsidiary operates, yet not its agent regarding claims arising elsewhere.”). 7
7 Even accepting that the principles of imputation translate to specific-jurisdiction
analysis, there are material differences between the Ninth Circuit’s agency test and Florida’s
(and the Eleventh Circuit’s) agency test that mitigate concerns about imputation in this case.
Daimler described the Ninth Circuit’s test as “a less rigorous test” than alter-ego inquiries
focusing on the parent’s domination of the subsidiary. Daimler, 134 S. Ct. at 759. The Ninth
Circuit’s agency analysis “is satisfied by a showing that the subsidiary functions as the parent
corporation’s representative in that it performs services that are sufficiently important to the
foreign corporation that if it did not have a representative to perform them, the corporation’s
own officials would undertake to perform substantially similar services.” Bauman v.
DaimlerChrysler Corp., 644 F.3d 909, 920 (9th Cir. 2011), rev’d sub nom. Daimler AG v.
Bauman, 134 S. Ct. 746 (2014). An alter-ego finding in the Ninth Circuit, however, “is
predicated upon a showing of parental control over the subsidiary.” Id. As discussed, unlike
the agency test in the Ninth Circuit, under Florida law an agency relationship is predicated
on the parent’s control of the subsidiary: “[T]he parent corporation, to be liable for its
subsidiary’s acts under the . . . agency theory, must exercise control to the extent the
subsidiary manifests no separate corporate interests of its own and functions solely to achieve
the purposes of the dominant corporation.” Enic, 870 So. 2d at 891. This control-focused
inquiry overlaps with the alter-ego test adopted by most circuits. See Daimler, 134 S. Ct. at
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Daimler’s illustrative example of when the principal-agent relationship
informs the specific-jurisdiction analysis of related entities is present here. The
agency relationship between TG and TTP reflects TG’s purposeful availment
of the Florida forum. See Daimler, 134 S. Ct. at 759 n.13. The record, as set
forth by the district court, and assessed below, demonstrates that TG’s
parental control over its agent, TTP, pervaded TTP’s dealings with the forum,
and therefore allows TTP’s contacts with Florida to be imputed to TG for the
purpose of specific jurisdiction. See, e.g., Pesaplastic, C.A. v. Cincinnati
Milacron Co., 750 F.2d 1516, 1521–23 (11th Cir. 1985) (upholding finding of
specific jurisdiction based on agency relationship); John Scott, Inc. v. Munford,
Inc., 670 F. Supp. 344, 347 (S.D. Fla. 1987) (assessing specific jurisdiction, and
holding that “the contacts of ASIAN ARTS’s agent MUNFORD, whose agency
relationship has been established by prima facie evidence, may be attributed
to ASIAN ARTS for the purposes of satisfying due process.”).
4. TG and TTP
To find that TTP was acting as TG’s agent in order to impute its contacts
to TG, we must examine their corporate relationship. The district court based
its factual findings on the entities’ relationship on almost two years of
jurisdictional discovery, multiple rounds of briefing, and a hearing. The district
judge also personally attended depositions taken in Hong Kong. With the
benefit of these efforts, we describe the entities’ relationship.
a. TG creates TTP.
759 (noting that several Courts of Appeals impute jurisdictional contacts when “when the
former is so dominated by the latter as to be its alter ego.”). Accordingly, the Eleventh Circuit
(and the Fifth Circuit) recognize that imputation of jurisdictional contacts between an agent
and its principal can comport with Due Process. See, e.g., Dickson Marine, 179 F.3d at 339
(“Therefore we are convinced that Dickson failed to carry the burden of establishing a prima
facie showing of sufficient control to establish an alter-ego or agency relationship between
Air Sea and Panalpina Gabon.”).
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TG is a Chinese corporation with its principal place of business in Ta’in
City, Shandong Province, China. TG began manufacturing drywall in 1992 and
has become one of the largest drywall manufacturers in China. TG’s former
names include Shandong Taihe Taishan Plasterboard Main Factory (Group)
and Shandong Taihe Dongxin Co., Ltd. (“Taihe”). Because TG uses recycled
materials, it was exempt from the value added tax (“VAT”), but in 2006 the
Chinese tax bureau informed TG that if it “wants to continue to enjoy the
exemption for VAT tax, [it] cannot issue VAT invoices to these customers.”
Some of TG’s customers, however, still required VAT invoices. Accordingly, in
2006, TG formed a wholly owned subsidiary, TTP, to execute its sales
accompanied with VAT invoices.
b. TG employees sit on TTP’s Board of Directors.
TTP appointed Peng Shiliang (“Peng”), Fu Tinghuan (“Fu”), and Wang
Fengquin (“Wang”) to its Board of Directors. All three directors of TTP “came
from TG.” Peng had offices at both TG and TTP. Fu did not receive
compensation for his position on TTP’s board, and was “only compensated by
TG” for his position as TG’s Deputy General Manager and Director of Sales.
TTP held board meetings “irregularly, [but] usually once a year.” TTP
submitted written monthly reports to TG, and at times TTP’s directors—
specifically Peng—would report directly to TG. These reports would tell TG
“the specifics of the production and also the volume of sales.”
c. TG capitalizes, staffs, and deals with TTP.
TG provided TTP with a capital contribution, sold it equipment, and
rented it a factory. TG’s initial capital contribution was RMB 15,000,000, and
TG provided a subsequent capital contribution of RMB 7,234,900. TTP
purchased manufacturing equipment from TG, but TTP’s financial records do
not show how much TTP paid for the equipment. When TTP ceased operation,
TG purchased back the equipment, offices, and factory it had sold or rented to
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TTP. TG’s financial reports do not account for the amounts of the buy-back
purchases.
TG’s headquarters was located about 1,000 meters west of TTP’s office,
and TG and TTP maintained separate offices and factories. But TTP conducted
“all of the export sales” previously executed by TG. TG also authorized TTP to
“use the Taishan name,” i.e. the “brand name.” TTP did not pay TG for the use
of the Taishan brand, which is TG’s trademark. Many of TTP’s employees had
previously worked for TG, and when TTP ceased operation, they “went back to
work at TG.” To staff TTP, TG instructed its employees to simply “volunteer.”
TTP’s employees continued to use TG email addresses, and phone numbers;
sign emails “Taihe Group”; and use TG business cards when dealing with
customers. TTP employees also directed their customers and potential
customers to TG’s website at “www.taihegroup.com.” When TTP salespeople
gave an introduction to their company they would introduce their company as
TG, would not mention TTP at all, and would include “Taihe Dongxin Co., Ltd.”
(TG) under their signature.
d. TTP holds itself out to be the same entity as TG.
TTP consistently held itself out as being synonymous with TG in its
dealings with two American companies. In particular, it referred to itself as
“Taihe.” Guardian Building Supplies (“Guardian”), a South Carolina company,
entered into dealings with an entity it knew only as “Taihe.” When Guardian’s
representative, John Gunn, visited China, Taihe’s representatives did not
discuss TG or TTP. Gunn met with Taihe representative Apollo Yang, who told
Gunn that he worked for Taihe and gave Gunn a business card that
represented he worked for Taihe Dongxin. Taihe, however, was the “only name
[Gunn] knew.” Guardian purchased drywall from Taihe, and Gunn
“understood it was buying Taihe drywall.”
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While Gunn’s purchase order went to Taihe, Taian Taigo Trading
Corporation (“TTT”) served as the broker. At the time of the transaction,
however, Gunn “had no idea of [TTT’s] existence.” When homeowners began to
complain about the drywall, Guardian alerted Taihe and went to China to meet
with them. When Gunn traveled to China in October 2006, he met with TTT,
and “[t]his was the first time [he] realized there’s someone else involved.” Gunn
testified that TTT “was a front set up by Taihe to distance . . . Guardian[] from
Taihe.” Gunn traveled to China again in 2008 to work out a settlement with
Taihe. In these discussions, however, Gunn was dealing with Taihe.
Specifically, Gunn thought he was meeting with the General Manager of Taihe.
Nevertheless, Guardian eventually settled with TTP.
Oriental Trading Company (“OTC”), a Florida company, had a similar
experience. TTP’s representatives never differentiated between TG and TTP,
but instead consistently represented themselves to be “Taihe.” TTP and OTC
entered into an agreement in which TTP agreed to sell OTC “DUN” brand
drywall, and make OTC the sole sales agent of “DUN” drywall in the United
States. Importantly, TG exclusively produced DUN drywall, and TG never
formally authorized TTP to produce DUN brand drywall. But authorization
was obvious: TTP sold OTC 60,000 pieces of DUN drywall. Moreover, OTC
made a $100,000 deposit to TTP, but it was TG that worked to return that
deposit to TTP at the end of their business relationship.
e. TG winds down TTP.
In 2008, the boards of directors of TG and TTP decided to have TTP
discontinue producing drywall. TTP remains incorporated, though it has no
income and TG or one of its subsidiaries pays TTP’s remaining employees.
5. Imputation is Proper
The record demonstrates that TTP acted as TG’s agent under Florida
law when it conducted its Florida contacts. This principal-agent relationship
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allows for imputation of TTP’s contacts to TG for the purposes of personal
jurisdiction. See Pesaplastic, 750 F.2d at 1522–23. First, TG allowed TTP to act
on its behalf, and TTP did act on TG’s behalf. See, e.g., Stubbs v. Wyndham
Nassau Resort & Crystal Palace Casino, 447 F.3d 1357, 1361–63 (11th Cir.
2006) (finding an agency relationship supporting imputation when, among
other things, the agent “acted as an advertising and booking department” for
the principal); Benson v. Seestrom, 409 So. 2d 172, 173 (Fla. Dist. Ct. App.
1982) (“Even where an agent’s act is unauthorized, the principal is liable if the
agent had the apparent authority to do the act and that apparent authority
was reasonably relied upon by the third party dealing with the agent.”). For
instance, TG authorized TTP to use TG’s trademark in producing drywall but
did not charge TTP for this authorization. TTP also sold the exclusive right to
purchase TG’s “DUN” brand of drywall even though TG did not formally
authorize TTP to sell this brand. See id. at 173 (“While Paschall was not
cloaked with authority to execute contracts on appellant’s behalf, he certainly
had the apparent authority necessary to conduct negotiations between the
parties.”).
Second, TG and TTP held themselves out to be the same entity to
customers such as OTC (a Florida company) and Guardian. See, e.g., John
Scott, 670 F. Supp. at 346 (finding fact that entity acted on behalf of principal
in negotiating contracts was a factor favoring agency relationship). TTP
employees used TG email address, fax numbers, phone numbers, business
cards, and websites when dealing with customers. See Stubbs, 447 F.3d at 1362
(finding an agency relationship supporting imputation when, among other
things, the principal listed the agent’s address on checks). Moreover, the
entities settled each other’s debts.
Third, TTP was formed to conduct a narrow function for TG and it acted
only to serve TG. See, e.g., Stubbs, 447 F.3d at 1362–63 (noting that imputation
15
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was appropriate when the Florida subsidiary conducted business “solely for the
nonresident corporation[]”); Meier, 288 F.3d at 1275 (finding that one factor to
consider in determining imputation is whether the subsidiary “render[s]
services on behalf of” the parent that are “sufficiently important” to the parent
that the parent would “perform the equivalent services if [the subsidiary] did
not exist”). For example, some of TTP’s board members did not receive
compensation from TTP, TG rented or sold to TTP offices, factories, and
equipment, and TTP returned these properties to TG when it ceased operating;
TG and TTP did not accurately report their dealings with each other in their
financial reports, 8 and TTP and TG were used interchangeably in contracts.
See, e.g., PFM Air, Inc. v. Dr. Ing. hc. F. Porshe A.G., 751 F. Supp. 2d 1264,
1276 (M.D. Fla. 2010) (finding imputation appropriate when, among other
things, the parent paid the salaries of the subsidiary’s employees and the
parent “controlled the warranty program” that issued in the subsidiary’s
name).
These factors demonstrate TG’s control over TTP. As Lennar Homes
summarized, “TTP had no independent purpose outside of servicing TG’s needs
and, as such, was its agent under Florida law.” Lennar Homes, No. 09-7901 CA
42, at 5. Accordingly, because TTP acted as TG’s agent when it executed its
Florida contacts, those contacts can be imputed to TG for the purposes of
personal jurisdiction.
B. The Florida Long-Arm Statute
“A federal district court sitting in diversity may exercise personal
jurisdiction over a nonresident defendant if (1) the long-arm statute of the
forum state confers personal jurisdiction over that defendant; and (2) exercise
8As the district court found: “[T]he financial records of the companies do not reflect
the exact amount of these transactions” and “[t]hese rental and sales transactions were not
accurately reflected in the financial records of either company.”
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of such jurisdiction by the forum state is consistent with due process under the
United States Constitution.” Ainsworth, 716 F.3d at 177 (quoting Latshaw v.
Johnston, 167 F.3d 208, 211 (5th Cir. 1999)). The first prong of this two-prong
jurisdictional analysis asks “whether the long-arm statute of the forum state
confers personal jurisdiction over the defendant.” Stripling v. Jordon Prod. Co.,
LLC, 234 F.3d 863, 869 (5th Cir. 2000). It is undisputed that Florida’s long-
arm statute—Fla. Stat. Ann. § 48.193—applies. Florida’s long-arm statute
provides in relevant part:
(1)(a) A person, whether or not a citizen or resident of this state, who
personally or through an agent does any of the acts enumerated in this
subsection thereby submits himself or herself and, if he or she is a
natural person, his or her personal representative to the jurisdiction of
the courts of this state for any cause of action arising from any of the
following acts:
1. Operating, conducting, engaging in, or carrying on a business or
business venture in this state or having an office or agency in this
state.
2. Committing a tortious act within this state.
...
6. Causing injury to persons or property within this state arising out
of an act or omission by the defendant outside this state, if, at or
about the time of the injury, either:
a. The defendant was engaged in solicitation or service
activities within this state; or
b. Products, materials, or things processed, serviced, or
manufactured by the defendant anywhere were used or
consumed within this state in the ordinary course of
commerce, trade, or use.
§ 48.193. “Florida’s long-arm statute is to be strictly construed,” Sculptchair
Inc. v. Century Arts, Ltd., 94 F.3d 623, 627 (11th Cir. 1996) (citing Oriental
Imports & Exports, Inc. v. Maduro & Curiel’s Bank, N.V., 701 F.2d 889, 891
(11th Cir. 1983)), and some courts interpreting Florida’s statute have noted
that it “confers less jurisdiction upon Florida courts than allowed by the Due
Process Clause.” Am. Investors Ins. Co. v. Webb Life Ins. Agency, Inc., 876 F.
17
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Supp. 1278, 1280 (S.D. Fla. 1995); see also McRae v. J.D./M.D., Inc., 511 So.
2d 540, 543 n.4 (Fla. 1987) (“It has been held by other courts that our long arm
statute requires more activities or contacts than is mandated by the
constitution.” (citing Mallard v. Aluminum Co. of Canada, Ltd., 634 F.2d 236,
241 (5th Cir. Jan. 1981))).
First we overlay Taishan’s (TTP and TG’s) contacts with Florida and
then analyze their sufficiency under § 48.193(1)(a)(1). 9
1. Taishan’s contacts with Florida
Having concluded that TTP was TG’s agent under Florida law allowing
imputation of TTP’s contacts to TG, we next ask whether the entities’ contacts
with Florida were sufficient to allow personal jurisdiction over TG in Florida.
Again, we benefit from the district court’s extensive factual findings on
Taishan’s contacts with Florida.
a. Taishan deals with OTC.
Taishan sold 200,000 sheets of its drywall to Florida customers or
customers doing business in Florida and made almost $800,000 from these
sales. Taishan’s specific dealings with OTC, however, are particularly relevant
to our jurisdictional analysis. TTP entered into a sole agency agreement with
OTC—a Florida company—in which OTC agreed to purchase at least 20,000
sheets of TTP drywall between November 2006 and February 2007, and not
less than 1,000,000 sheets in the following twelve months. The agreement with
OTC was notarized under Florida law, OTC paid a $100,000 deposit to TTP
under the agreement, and OTC purchased about 57,800 sheets of drywall for
$208,711.20 from TTP.
9 Though the district court found that jurisdiction was proper under § 48.193(1)(a)(1),
(2), and (6), because we find § 48.193(1)(a)(1) satisfied, we do not need to address these
alternative grounds for long-arm jurisdiction.
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Taishan knew through communications with OTC that its drywall would
be shipped to Florida, as invoices and emails provided that shipments would
be to Miami, Florida. 10 TTP also issued export invoices on 44,490 pieces of
drywall sold to OTC and shipped to Miami. OTC and Taishan discussed
expanding the sales in the United States, and Taishan said it would help OTC
market and sell the drywall.
Further, OTC requested that the drywall meet American Codes and
Standards. Specifically, Taishan customized its drywall to meet American
Society for Testing and Materials (“ASTM”) standards and provided ASTM
certificates. Taishan also manufactured its drywall in inches, altered its DUN
brand colors to reflect the colors of the American flag, and shipped samples of
its drywall to Florida. Moreover, Taishan hosted OTC’s representative for a
visit in China.
Taishan arranged shipments from China to Florida, and although the
shipping was FOB China, Taishan handled and paid for the shipping of drywall
to Florida. 11 Taishan made suggestions as to which Florida port would be best
for shipping, 12 and all of OTC’s shipments went to Florida. Taishan also
complied with Florida Department of Transportation’s regulations. After their
business relationship ended, OTC and Taishan discussed a new business
relationship, in which Taishan would provide electronics to OTC in the United
States.
10 Indeed OTC emailed TTP instructing, “I think the best thing to do right now is to
let you operate the ocean freight and shipping from Qingdao to Miami, Fl” and “Half of this
order will have Miami, FL as a destination; the other half will go to Orlando, FL.”
11 As Ivan Gonima of OTC testified: “[T]hey were in charge of finding the shipping
company, they were in charge of making the deal with the shipping company, and we were
to pay, because they said that they could get a better price through their connections in China
. . . So, yes, it was free on board, the price they were giving us was free on board, but they
were the ones hiring or making the arrangements for the shipping.”
12 Gonima explained that they would take care of the shipping and that “they also
mentioned . . . Jacksonville, Florida” as a possible port.
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b. Taishan deals with B. America.
TTP also sold drywall to B. America Corporation through Onyx GBB
Corporation—both Florida companies. B. America purchased 1,320 sheets of
TTP drywall, compliant with ASTM standards, and delivered “CFR MIAMI.”
B. America wired half of the purchase price to TTP, but the deal fell through
when the American market suffered. B. America tried to get a refund for the
wire transfer, but TTP refused. As a result, B. America purchased the drywall
from TTP and contacted R&R Building Materials (“R&R”) to purchase this
drywall from B. America. TTP prepared an invoice selling 660 sheets to B.
America in exchange for $5,656.20 and noting that the delivery was “CIF [cost,
insurance, freight] Miami Port.” In communications to Onyx and B. America,
Taishan wrote: “We will arrange the shipping to Miami Port at an early time.”
TTP took out insurance on its shipment to B. America, and the policy notes
that the shipment is going to Florida. After the shipment reached Florida,
Onyx sold it to R&R in Miami.
c. Taishan deals with Wood Nation.
Wood Nation, Inc.—another Florida company—also purchased drywall
from TTP. Richard Hannam, the president of Wood Nation, visited TTP in
China, and entered into a contract with TTP for the purchase of 333,000 sheets
of TTP drywall. The contract provided that the port of discharge was Tampa,
Florida and that Wood Nation was registered at Tampa, Florida. TTP provided
Wood Nation with test reports showing that it qualified with ASTM standards.
Wood Nation requested that TTP customize the drywall by putting “ASTM C
1396-04” on the back of each piece of drywall, and TTP stamped each board
with “Tampa, Florida” as the contact location as well as a Florida phone
number as the contact phone number. 13 Wood Nation revised its contract to
13 Wenlong Peng testified, “We would stamp it for the customer.”
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purchase only 26,000 sheets of drywall in order to accommodate a smaller
order from its customer. Wood Nation handled shipping the drywall from
China to Florida.
d. Taishan sells drywall to Devon.
A Pennsylvania company, Devon International Trading, was also
interested in purchasing Chinese drywall. Devon’s president toured Taishan’s
factory in China, and TG sent samples of its drywall to Devon. Devon and
another company, North Pacific Group, entered a purchase order of 485,044
sheets of drywall to be sent to Pensacola, Florida. Devon requested to purchase
drywall from TG to satisfy the North Pacific purchase order. The product was
purchased through a trading company, Shanghai Yu Yuan Import & Export
Company, and the Devon logo was stamped on each package. Each piece of
drywall was also stamped with a guarantee that it met ASTM standards. In
the course of the drywall’s transit to Pensacola, Florida, about half of the
drywall was damaged, and North Pacific only purchased a fraction of what it
original ordered. Devon sold the left over drywall to distributors, wholesalers,
and some individuals. Devon sold some drywall to Emerald Coast Building
Supply, and Emerald Coast sold 840 boards of drywall to Rightway Drywall,
who finally sold it to Mitchell—the named plaintiff. This drywall had the same
markings requested by Devon, specifically, the drywall is stamped that it is
“made in China” and “Meet[s] or exceeds ASTM C1396 04 standard.” Mitchell
then used the drywall to build homes in Florida.
e. Taishan sends Carn Construction samples in Florida.
Carn Construction Corporation, a Florida corporation, also contacted
Taishan to purchase drywall after it discovered Taishan through Alibaba.com.
Taishan represents on this website that it exports drywall on Alibaba.com, and
when Carn contacted Taishan and informed Taishan that it was a Florida
company, Taishan represented that it exported to the United States and said
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it was willing to “ship their products to [Carn] in Florida.” Taishan sent
drywall samples to Carn in Florida. “[F]or marketing purposes,” Taishan
would “give [Carn] the option in [the] order to mark a brand” on the drywall. 14
2. Conducting business within Florida
Under § 48.193(1)(a)(1) TG is subject to jurisdiction in Florida for “any
cause of action arising from . . . [o]perating, conducting, engaging in, or
carrying on a business or business venture in this state or having an office or
agency in this state.” In order to satisfy this provision, “[t]he activities of the
[defendant] sought to be served . . . must be considered collectively and show a
general course of business activity in the State for pecuniary benefit.”
Sculptchair, 94 F.3d at 627 (quoting Dinsmore v. Martin Blumenthal Assocs.,
Inc., 314 So. 2d 561, 564 (Fla. 1975)); see also Future Tech Today, Inc. v. OSF
Healthcare Sys., 218 F.3d 1247, 1249 (11th Cir. 2000) (per curiam); Golant v.
German Shepard Dog Club of Am., Inc., 26 So. 3d 60, 63 (Fla. Dist. Ct. App.
2010) (noting the same); Citicorp Ins. Brokers (Marine), Ltd. v. Charman, 635
So. 2d 79, 81 (Fla. Dist. Ct. App. 1994) (noting the same).
Further, “[i]t is not necessarily the number of transactions, but rather
the nature and extent of the transaction(s) that determines whether a person
is ‘carrying on a business venture’ within the state.” Joseph v. Chanin, 869 So.
2d 738, 740 (Fla. Dist. Ct. App. 2004). In Horizon Aggressive Growth, L.P. v.
Rothstein-Kass, P.A., 421 F.3d 1162, 1167 (11th Cir. 2005), the court
highlighted “[f]actors relevant, but not dispositive” to this analysis. These
14 The district court also noted other contacts between Taishan and Florida. For
instance, Taishan sold drywall to Beijing Building Materials Import and Export Co., Ltd.,
which sold the drywall to Rothchilt International, Ltd., which shipped it to La Suprema
Enterprises, Inc. and La Suprema Trading, Inc., which finally sold it to Banner in Florida.
Taishan also represented that it could ship to Florida when contacted by SCI Co., Ltd.
Guardian also purchased drywall from Taishan, which was subsequently shipped to Stock
Building Supplies, which in turn sold it to builders in Florida.
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include: (1) “the presence and operation of an office in Florida,” (2) “the
possession and maintenance of a license to do business in Florida,” (3) “the
number of Florida clients served,” and (4) “the percentage of overall revenue
gleaned from Florida clients.” Id. (citing Florida cases utilizing each factor).
The third and fourth factors are relevant here. First, Taishan sold
200,000 sheets of drywall for about $800,000 in Florida. 15 Second, Taishan
negotiated with Florida companies, and arranged shipping to Florida. See
Robert D. Harley Co. v. Global Force (H.K.) Ltd., No. 05-21177-CIV-
SEITZ/MCALILEY, 2007 WL 196854, at *4 (S.D. Fla. Jan. 23, 2007)
(jurisdiction proper under Florida law because, among other reasons,
defendant “shipped from [its] factories in Jordan and China directly to VF
Corp’s Tampa location”). Third, Taishan granted a Florida company the sole
right to purchase a specific brand of its drywall. See Sierra v. A Betterway Rent-
A-Car, Inc., 863 So. 2d 358, 360 (Fla. Dist. Ct. App. 2003) (finding statute
satisfied when defendants “were aware that its vehicles were driven in
Florida,” “did not discourage or prohibit its customers from driving in Florida,”
and advertised itself as a “global system of rental agencies, available for
worldwide rental arrangements”). Fourth, Taishan specifically altered some
boards by stamping “Tampa, Florida” and a Florida phone number; shipped
samples to Florida; and insured its shipments to Florida.
These and the other Florida contacts “show a general course of business
activity in the state for pecuniary benefits.” Citicorp Ins., 635 So. 2d at 81
(deriving commissions of $600,000 over five years, “sending numerous letters
15TG argues that the amounts attributed to TG were clearly erroneous and takes issue
with Exhibit 1, which it objected to below. The district court overruled its objection. On
appeal, TG argues that this exhibit was based on inadmissible evidence, but does not explain
in any detail how the district court abused its discretion in admitting it beyond this assertion.
Further, the district court computed its amounts by looking at multiple sources including
testimony explaining that 30% of the $4,000,000 purchase order was paid up front.
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and telefaxes back and forth to negotiate a deal with a Florida insurance
broker,” and responding to a request by the Florida Insurance broker to provide
coverage for a vessel moored in Florida, all supported long-arm jurisdiction);
see Lennar Homes, No. 09-07901 CA 42, at 8 (holding that “Taishan was
‘carrying on business’ in Florida and that the Court may assert jurisdiction
over Taishan under Section 48.193(1)(a)(1) of the Florida long-arm statute.”),
aff’d sub nom. Taishan Gypsum Co. Ltd., 123 So. 3d at 637.
3. “Arise-from” requirement
Florida’s long-arm statute also requires that plaintiff’s cause of action
arise from the defendant’s acts. TG argues that the statute is not satisfied
because plaintiffs’ causes of action do not arise from its contacts with Florida. 16
As the Court in Lennar Homes recognized: “It is enough under the long-arm
statute that the type of Taishan drywall that injured homeowners, and caused
the damages sustained by plaintiffs, was otherwise available for purchase in
Florida.” 17 The arise-from requirement is met because Mitchell’s complaint
alleges that the homebuilders incurred costs because they installed Taishan’s
drywall, the profile forms submitted by the parties demonstrate that the
drywall at issue in Mitchell is traceable to Taishan, and testimony from
Lennar—a Florida homebuilder—identifies 400 homes containing Taishan
drywall.
Additional evidence supports tracing Taishan drywall to the Mitchell
plaintiffs: Devon and North Pacific Group, entered a purchase order of 485,044
sheets of drywall to be sent to Pensacola, Florida. Devon requested to purchase
drywall from TG to satisfy the North Pacific purchase order. The product was
purchased through a trading company, Shanghai Yu Yuan Import & Export
16 § 48.193.
17 No. 09-07901 CA 42, at 10.
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Company, and the Devon logo was stamped on each package. Devon sold some
drywall to Emerald Coast Building Supply, and Emerald Coast sold 840 boards
of drywall to Rightway Drywall, who finally sold it to Mitchell—the named
plaintiff. Accordingly, the district court properly found the Florida long-arm
statute satisfied.
C. Due Process
Having satisfied Florida’s long-arm statute, Taishan’s contacts must also
support a finding of personal jurisdiction consistent with Due Process. For
specific jurisdiction to be proper, Due Process requires (1) minimum contacts
by the defendant purposefully directed at the forum state, (2) a nexus between
the defendant’s contacts and the plaintiff’s claims, and (3) that the exercise of
jurisdiction over the defendant be fair and reasonable. ITL Int’l, Inc. v.
Constenia, S.A., 669 F.3d 493, 498 (5th Cir. 2012). In sum, to satisfy Due
Process, the defendant’s connection with the forum state must be such that it
“should reasonably anticipate being haled into court” in the forum state.
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
1. Choice of Law
As explained below, circuit authority varies in interpreting the Due
Process requirements of personal jurisdiction. TG argues that the district court
should have applied the Eleventh Circuit’s more demanding minimum-
contacts test instead of the Fifth Circuit’s more permissive interpretation. As
in Germano, “we need not reach the issue of which circuit’s law should apply
because regardless of which circuit’s approach we use, the outcome is the
same.” Germano, 742 F.3d at 586. Even under the Eleventh Circuit’s more
demanding test, TG (through its agent TTP) has the requisite contacts with
Florida.
2. Minimum Contacts
a. Supreme Court Precedent
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Fractured opinions in the Supreme Court have allowed for two different
understandings of the quality of contacts a defendant must have with the
forum state in order to satisfy Due Process. In Ashahi Metal Industry Co. v.
Superior Court of Cal., Solano Cnty., 480 U.S. 102 (1987), the Court split over
whether simply placing products in the stream of commerce could satisfy
personal jurisdiction. Justice O’Connor’s plurality opinion explained:
The placement of a product into the stream of commerce, without
more, is not an act of the defendant purposefully directed toward
the forum State. Additional conduct of the defendant may indicate
an intent or purpose to serve the market in the forum State . . .
[b]ut 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.
480 U.S. at 112. Justice Brennan’s concurrence disagreed with Justice
O’Connor’s “stream of commerce plus” test:
The stream of commerce refers not to unpredictable currents or
eddies, but to the regular and anticipated flow of products from
manufacture to distribution to retail sale. As long as a participant
in this process is aware that the final product is being marketed in
the forum State, the possibility of a lawsuit there cannot come as
a surprise. . . .
Id. at 1034 (Brennan, J., concurring). Most recently in J. McIntyre Machinery,
Ltd. v. Nicastro, 131 S. Ct. 2780 (2011), the Court was divided still. Justice
Kennedy’s plurality opinion embraced the “stream of commerce plus” test:
Since Asahi was decided, the courts have sought to reconcile the
competing opinions. But Justice Brennan’s concurrence,
advocating a rule based on general notions of fairness and
foreseeability, is inconsistent with the premises of lawful judicial
power. This Court’s precedents make clear that it is the
defendant’s actions, not his expectations, that empower a State’s
courts to subject him to judgment.
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McIntyre, 131 S. Ct. at 2789. Justice Breyer’s concurring opinion, however, did
not explicitly embrace Justice O’Connor’s stream of commerce plus theory, but
instead opined:
I do not doubt that there have been many recent changes in
commerce and communication, many of which are not anticipated
by our precedents. But this case does not present any of those
issues. So I think it unwise to announce a rule of broad
applicability without full consideration of the modern-day
consequences. . . . In my view, the outcome of this case is
determined by our precedents.
Id. at 2791 (Breyer, J., concurring).
Circuit courts interpreting McIntyre have concluded that under Marks v.
United States, 430 U.S. 188, 193 (1977), Justice Breyer’s concurring opinion
“furnished the narrowest grounds for the decision and controls.” Ainsworth,
716 F.3d at 178; see also AFTG-TG, LLC v. Nucoton Tech. Corp., 689 F.3d 1358,
1363 (Fed. Cir. 2012). As this court noted in Ainsworth, the narrowest ground,
as expressed in Justice Breyer’s concurrence, is that the law remains the same
after McIntyre, and that circuit courts may continue to attempt to reconcile the
Supreme Court’s competing articulations of the stream of commerce test. See
Ainsworth, 716 F.3d at 178–79 (noting that “Justice Breyer’s concurrence was
explicitly based on Supreme Court precedent and on McIntyre’s specific facts”
and citing with approval the Federal Circuit’s holding that the Supreme
Court’s framework had not changed and that it should apply its circuit
precedent interpreting these decisions).
b. TG satisfies the stream of commerce plus test
Unlike the Fifth Circuit, see Ainsworth, 716 F.3d at 178, the Eleventh
Circuit has not yet interpreted McIntyre; instead “[r]elevant Eleventh Circuit
case law is unclear as to which test it would adopt,” because “the Eleventh
Circuit had applied, but had never explicitly adopted [the stream of commerce
plus test], which arose from Justice O’Connor’s plurality opinion in [Asahi].”
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Hatton v. Chrysler Canada, Inc., 937 F. Supp. 2d 1356, 1365 (M.D. Fla. 2013);
Simmons v. Big No.1 Motor Sports, Inc., 908 F. Supp. 2d 1224, 1228–29 (N.D.
Ala. 2012) (“It is unclear which of the two tests the Eleventh Circuit
endorses.”). But, even assuming that the Eleventh Circuit would conclusively
embrace the stream of commerce plus test after McIntyre (or had done so prior
to McIntyre), Taishan’s contacts with Florida suffice.
The evidence demonstrates that Taishan engaged in “additional conduct
such that it could be said to have ‘purposefully availed’ itself of the privilege of
conducting business in” Florida. Vermeulen v. Renault, U.S.A., Inc., 985 F.2d
1534, 1549 (11th Cir. 1993). Among other availments, Taishan entered into a
sole agency agreement with a Florida company to sell its products and
arranged the shipping of its drywall to Florida. See Vermeulen, 985 F.2d at
1548 (noting that defendant “created and controlled the distribution network
that brought its products into the United States”). TTP agreed to sell OTC
TG’s exclusive brand of drywall and make OTC—a Florida company—the sole
sales agent of TG’s drywall, which reflects TG’s purposeful availment of Florida
through its agency relationship with TTP. See Daimler, 134 S. Ct. at 759 n.13
(recognizing that “a corporation can purposefully avail itself of a forum by
directing its agents or distributors to take action there”); id. (noting
approvingly that “‘marketing [a] product through a distributor who has agreed
to serve as the sales agent in the forum State’ may amount to purposeful
availment.” (quoting Asahi, 480 U.S. at 112 (opinion of O’Connor, J.)).
Moreover, Taishan specifically altered its products to suit the forum
state by marking its packaging “Tampa,” stamping a Florida phone number on
the packaging, and marking its drywall with a certification that it met or
exceeded American standards. See Asahi, 480 U.S. at 112 (noting that
“[a]dditional conduct of the defendant may indicate an intent or purpose to
serve the market in the forum State, for example, designing the product for the
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market in the forum State”); Germano, 742 F.3d at 589 (holding the stream-of-
commerce-plus test satisfied because “TG not only included the name of a
Virginia company on its product, it also included a phone number with a
Virginia area code. Through its own acts, TG connected its product to Virginia,
and ensured that the product’s end-users would identify its product with a
Virginia resident.”). Similarly here, Wenlong Peng testified: “We would stamp
it for the customer.” These actions go beyond merely placing a product in the
stream of commerce and demonstrate purposeful availment. 18
TG relies on Banton Indus., Inc v. Dimatic Die & Tool Co., 801 F.2d 1283,
1284–85 (11th Cir. 1986), which addressed whether “the due process clause
prohibits the exercise of personal jurisdiction over a defendant whose sole
contact with the forum state was an out-of-state sale of goods to a resident of
the forum state.” Id. at 1284. Jurisdiction did not lie, the court held, because
Dimatic is not an Alabama corporation and has no contacts with
that state other than its sale of goods to an Alabama resident. Nor
does Dimatic actively seek business in Alabama. In fact, the
contract and sale upon which Banton bases its claim arose out of
Banton’s unsolicited order of goods from Dimatic. Furthermore,
Dimatic tendered the goods to Banton in Omaha, Nebraska. At no
time did any representative of Dimatic enter Alabama.
Id. at 1284.
Here, Taishan made more than a single sale to a Florida company and
did actively seek business in Florida—it entered a sole sales agreement with a
Florida company to sell TG drywall, arranged shipping to Florida ports on
18 As our court in Germano recognized, these facts do not present a traditional
“stream-of-commerce” case: “most cases address contacts when a product only reaches the
forum state after an out-of-state distributor sells the out-of-state defendant's product into the
forum.” Germano, 742 F.3d 576. As in Germano, that Taishan “knowingly sold its products
directly to” Florida residents “is, on its own, a significant contact with the forum.” Id. But we
also “need not decide whether this contact alone would suffice to meet the first prong of the
minimum contacts test because [Taishan] also designed its product for market in [Florida],
and because it was not an isolated sale.” Id.
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multiple occasions, expressed a willingness to expand shipping to Florida, and
expressed a desire to expand its sales in the United States with OTC, a Florida
company. 19 Accordingly, even assuming that TG would benefit from the most
stringent minimum-contacts test, jurisdiction would still be proper.
3. “Arise out of or relate to” requirement
The second prong of the Due Process specific-jurisdiction test asks if “the
litigation results from alleged injuries that ‘arise out of or relate to’ those
activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). The
Supreme Court has yet to distinguish between the “arise out of” and “relate to”
requirements. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408,
415 n.10 (1984) (“Absent any briefing on the issue, we decline to reach the
questions (1) whether the terms ‘arising out of’ and ‘related to’ describe
different connections between a cause of action and a defendant's contacts with
a forum, and (2) what sort of tie between a cause of action and a defendant’s
contacts with a forum is necessary to a determination that either connection
exists.”).
The Eleventh Circuit has held that “the defendant’s contacts with the
forum must relate to the plaintiff’s cause of action or have given rise to it,” and
explained “[n]ecessarily, the contact must be a ‘but-for’ cause of the tort, yet
the causal nexus between the tortious conduct and the purposeful contact must
be such that the out-of-state resident will have fair warning that a particular
19 Moreover, that some of Taishan’s shipments were marked “FOB” does not vitiate
its other contacts with Florida because Taishan arranged the shipping to Florida despite the
FOB notation. Even if Taishan faithfully followed the FOB notation, Taishan’s other contacts
with Florida would outweigh its shipping mark. OTC’s representative explained:
[T]hey were in charge of finding the shipping company, they were in charge of making
the deal with the shipping company, and we were to pay, because they said that they
could get a better price through their connections in China . . . So, yes, it was free on
board, the price they were giving us was free on board, but they were the ones hiring
or making the arrangements for the shipping.
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activity will subject [it] to the jurisdiction of a foreign sovereign.” Oldfield v.
Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220–21, 1223 (11th Cir. 2009)
(internal citations and quotation marks omitted); see also id. at 1224 (“While
we do not suggest that our decision today establishes a definitive relatedness
standard—as flexibility is essential to the jurisdictional inquiry—we do find
that the fact-sensitive inquiry must hew closely to the foreseeability and
fundamental fairness principles forming the foundation upon which the
specific jurisdiction doctrine rests.”).
TG asks us to read the Mitchell complaint narrowly to require the
plaintiffs to prove that the drywall it installed can be traced directly to
Taishan’s Florida related activities. Even assuming that this is required by the
“arise from and relate to” test, a chain of transactions traces the Mitchell
plaintiffs’ drywall to Taishan’s contact with Florida. Devon purchased drywall
to be sent to Pensacola, Florida, and there is evidence showing a series of
transactions placing the drywall with Mitchell. At this stage, Mitchell must
only establish personal jurisdiction by a preponderance of the evidence, and in
light of the evidence in the record, Mitchell has established that it is more
likely than not that Taishan drywall connected from the Devon transaction
ended up in Mitchell’s hands and forms the basis of this action.
But Mitchell’s complaint is not as narrow as Appellants represent. As
the district court noted, Mitchell sues on behalf of homebuilders and alleges
that Taishan has “continuously and systematically distributed and sold
drywall to numerous purchasers in the State of Florida and Taishan’s drywall
is installed in numerous homes in Florida.” These claims therefore, arise out
of and relate to Taishan’s extensive Florida contacts. In Oldfield, the Eleventh
Circuit focused on whether the defendant could foresee being haled into this
forum to answer plaintiffs’ claims. 558 F.3d at 1220–21. Here, Taishan sold
allegedly faulty drywall to Florida companies, shipped drywall to Florida,
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entered into a sole agency agreement with a Florida company, and even
marked some drywall boards with Florida phone numbers. It should come as
no surprise to Taishan that it is defending suit in Florida. Accordingly, this
test is also satisfied.
4. Fairness
The specific jurisdiction inquiry next asks whether jurisdiction “would
comport with ‘fair play and substantial justice.’” Licciardello v. Lovelady, 544
F.3d 1280, 1284 (11th Cir. 2008) (quoting World-Wide Volkswagen, 444 U.S. at
292). In assessing fair play, courts balance (1) the defendant’s burden; (2) the
forum state’s interests; (3) the plaintiff’s interest in convenient and effective
relief; (4) the judicial system’s interest in efficient resolution of controversies;
and (5) the state’s shared interest in furthering fundamental social policies.
Burger King, 471 U.S. at 476–77.
The district court found that TG would face burdens if subjected to
jurisdiction, and that this factor cut strongest in TG’s favor. Balanced,
however, against TG’s sophistication, Florida’s interest in litigating against
defendants that harmed its residents, the plaintiffs’ interest in litigating in the
United States as opposed to China, the judicial system’s interest in resolving
these cases (and TG’s failure to appear), and the interests of comity, the district
court nonetheless found jurisdiction proper. See Asahi, 480 U.S. at 114 (“When
minimum contacts have been established, often the interests of the plaintiff
and the forum in the exercise of jurisdiction will justify even the serious
burdens placed on the alien defendant.”). The district court’s balancing of these
factors is consistent with cases upholding jurisdiction over foreign
manufacturer defendants. Mitchell is distinguishable from Asahi, where the
claim was for “indemnification asserted by Cheng Shin, a Taiwanese
corporation, against Asahi,” and “[t]he transaction on which the
indemnification claim is based took place in Taiwan.” Asahi, 480 U.S. at 114–
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15. In contrast, Mitchell includes Florida-based plaintiffs alleging causes of
action arising in Florida. Accordingly, the district court did not err in finding
that notions of fair play and substantial justice were not offended by exercising
jurisdiction over TG. See Germano, 742 F.3d at 593 (“For essentially the same
reasons as given by the district court, we hold that this third and final prong
of the Due Process analysis is met here.”).
Personal jurisdiction is therefore proper over TG in Florida.
IV.
TG next argues that the district court abused its discretion when it
denied TG’s motion to set aside the entry of preliminary default under Rule
55(c).
A. Standard
Rule 55(c) provides: “The court may set aside an entry of default for good
cause, and it may set aside a default judgment under Rule 60(b).” Fed. R. Civ.
P. 55(c). 20 “In determining whether to set aside a default decree, the district
court should consider whether the default was willful, whether setting it aside
would prejudice the adversary, and whether a meritorious defense is
presented.” One Parcel of Real Prop., 763 F.2d at 183. Because the same factors
identified in Rule 60(b) are “typically relevant,” Johnson v. Dayton Elec. Mfg.
Co., 140 F.3d 781, 783 (5th Cir. 1988), courts may also consider:
whether the public interest was implicated, whether there was
significant financial loss to the defendant, and whether the
This circuit has “interpreted Rule 60(b)(1) as incorporating the Rule 55 ‘good-cause’
20
standard applicable to entries of default.” In re OCA, Inc., 551 F.3d 359, 369 (5th Cir. 2008).
“This inquiry follows a recognition in our previous holdings that courts apply essentially the
same standard to motions to set aside a default and a judgment by default.” Id. (citations and
quotations omitted). This court has also held that “[a]lthough a motion to set aside a default
decree under Fed. R. Civ. P. 55(c) is somewhat analogous to a motion to set aside a judgment
under Fed. R. Civ. P. 60(b), the standard for setting aside a default decree is less rigorous
than setting aside a judgment for excusable neglect.” United States v. One Parcel of Real
Prop., 763 F.2d 181, 183 (5th Cir. 1985).
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defendant acted expeditiously to correct the default. The district
court need not consider all of the above factors in ruling on a
defendant’s 60(b)(1) motion; the imperative is that they be
regarded simply as a means of identifying circumstances which
warrant the finding of “good cause.”
In re OCA, 551 F.3d 359, 369 (5th Cir. 2008) (quotations omitted).
B. Application 21
The district court did not find that TG’s failure to appear was willful.
Nevertheless, it declined to set aside the entry of default because (1) TG was
served with the complaint in its native language, (2) TG was aware that it sold
drywall to several Florida companies, (3) the plaintiffs had invested a
significant amount of time and money to serve TG, (4) TG’s defense is
speculative, and (5) the public has an interest in seeing that plaintiffs harmed
by defective foreign products be accorded relief for their damages. The district
court also doubted whether TG acted expeditiously because TG did not appear
in the MDL until it was notified of the default judgment in Germano, and even
then TG only appeared on the last day possible to challenge that default
judgment. The district court acknowledged, however, that TG would suffer
significant financial losses.
“The decision to set aside a default decree lies within the sound
discretion of the district court,” One Parcel of Real Prop., 763 F.2d at 183, and
the district court accounted for the relevant interests. Consistent with
Germano, which held that the district court did not abuse its discretion by
refusing to vacate the default judgment, 22 and Lennar Homes, which declined
to vacate a default judgment against TG because “Taishan waited an
inexplicably long time before moving to set aside the default, and has not put
21 TG argues that the district court did not have jurisdiction to enter the default. This
issue is resolved above.
22 See Germano, 742 F.3d at 595.
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forth any evidence of exceptional circumstances justifying the delay,” 23 the
district court did not abuse its discretion when it determined that TG did not
show good cause to vacate the preliminary entry of default in Mitchell. Fed. R.
Civ. P. 55(c).
V.
TG and TTP challenge the district court’s finding of personal jurisdiction
in Gross and Wiltz. Although the forum is different, the outcome is the same—
specific jurisdiction is proper over TG and TTP in Louisiana.
A. TTP’s contacts may be imputed to TG
1. Choice of Law
Though it argues that the district court should have applied Chinese law
rather than Louisiana law to test the appropriateness of imputation, Taishan,
however, concedes that that “the outcome would be the same under the
application” of either Chinese or Louisiana law. Accordingly, there is no
conflict and we apply Louisiana law. See Shutts, 472 U.S. at 839 n.20.
2. Imputation under Louisiana Law
In Louisiana, courts may impute contacts between two entities under
either an alter-ego or agency theory. See, e.g., Admins. of Tulane, 450 F. App’x
at 330–33 (noting that imputation may stem from both theories); La. Rev. Stat.
Ann. § 13:3201(A) (“A court may exercise personal jurisdiction over a
nonresident, who acts directly or by an agent . . . .”). Because Taishan’s
corporate relationship establishes alter-ego imputation under Louisiana law,
we need not address the district court’s alternate finding of an agency
relationship. See Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 586 (5th
Cir. 2010) (recognizing that contacts can be imputed to alter-egos for the
purpose of specific jurisdiction).
23 No. 09-07901 CA 42, at 13–15.
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This court has noted that “the alter ego test for attribution of contacts,
i.e., personal jurisdiction, is less stringent than that for liability.” Stuart v.
Spademan, 772 F.2d 1185, 1198 n.2 (5th Cir. 1985). Under Louisiana law,
courts consider a number of factors when determining whether an entity
should be considered an alter ego:
1. corporations with identity or substantial identity of ownership,
that is, ownership of sufficient stock to give actual working control;
2. common directors or officers; 3. unified administrative control of
corporations whose business functions are similar or
supplementary; 4. directors and officers of one corporation act
independently in the interest of that corporation; 5. corporation
financing another corporation; 6. inadequate capitalization (“thin
incorporation”); 7. corporation causing the incorporation of another
affiliated corporation; 8. corporation paying the salaries and other
expenses or losses of another corporation; 9. receiving no business
other than that given to it by its affiliated corporations; 10.
corporation using the property of another corporation as its own;
11. noncompliance with corporate formalities; 12. common
employees; 13. services rendered by the employees of one
corporation on behalf of another corporation; 14. common offices;
15. centralized accounting; 16. undocumented transfers of funds
between corporations; 17. unclear allocation of profits and losses
between corporations; and 18. excessive fragmentation of a single
enterprise into separate corporations.
Green v. Champion Ins. Co., 577 So. 2d 249, 257–58 (La. Ct. App. 1991).
As discussed and considered above, the district court found facts
implicating many of these factors. For instance, TG authorized TTP to use TG’s
trademark in producing drywall but did not charge TTP for this authorization,
TG and TTP did not accurately report their dealings with each other in their
financial reports, and some of TTP’s board members did not receive
compensation from TTP. See e.g., Green, 577 So. 2d at 258–259. Appellants rely
on Jackson, which found imputation improper because “there [was] no
evidence of undocumented transfers of funds between various entities,” “no
evidence of unclear allocation of profits and losses between corporations,” and
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no evidence that the entities paid another entities’ employees. Jackson, 615
F.3d at 587. Jackson is inapposite because of the undocumented transfers
between TG and TTP, as well as the evidence that TG paid TTP’s employees;
additionally, many of the factors that Jackson recognized as favoring
imputation are present here:
For instance, the Tanfoglio entities appear to have been operated
in a way that their brands and products appear identical and their
business relationships are deeply intertwined. The Tanfoglio
entities shared office space, phone numbers, and the Tanfoglio
siblings were officers and directors of each of the Tanfoglio entities.
. . . As well, the Tanfoglio entities were indebted to one another
through a variety of business transactions.
Id. at 587. Accordingly, TG and TTP are alter egos under Louisiana law, and
imputation is proper. Treated as one, each entity’s Louisiana contacts reflect
its collective availment of the forum.
B. Due Process
The Louisiana Supreme Court has held that “[t]he limits of the Louisiana
Long-arm Statute and the limits of constitutional due process are now
coextensive,” accordingly, “the sole inquiry into jurisdiction over a nonresident
is a one-step analysis of the constitutional due process requirements.”
Petroleum Helicopters, Inc. v. Avco Corp., 513 So. 2d 1188, 1192 (La. 1987). All
parties agree that Gross and Wiltz are governed by Fifth Circuit law.
1. Taishan’s Louisiana Contacts
The district court recognized that Taishan lacked direct physical
contacts with Louisiana. Taishan has never manufactured drywall, advertised,
or performed services in Louisiana. Taishan is not registered to do business,
does not have an office, bank account, or an agent appointed to accept service
of process in Louisiana. Taishan has never paid taxes nor had a mailing
address or telephone in Louisiana.
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Nevertheless, Taishan’s Louisiana contacts are substantial. Taishan
sold at least 45,756 sheets of drywall that ended up in Louisiana and earned
Taishan $195,915.29. A potential customer emailed Taishan and informed it:
“After Hurricane Katrina, the Great New Orleans area need rebuild[sic], and
housing market in USA is very hot in these days. The both effects, we hope you
and us can both take advantage from it.” Taishan told its customers it was able
and willing to sell its drywall to Louisiana. OTC’s representative explained
that Taishan was “very familiar with what port to use depending on what areas
in the United States we were trying to sell to” and Taishan provided shipping
information and rates for sending drywall to New Orleans.
Taishan’s dealings with American companies also show relevant
contacts with Louisiana. Taishan sold drywall to Advanced Products
International Corp. (“API”) and GD Distributors, LLC (“GD Distributors”). GD
Distributors, a Louisiana company, emailed Taishan about shipping drywall
to the United States. They discussed “sizes of the sheetrock, how to get
transported over,” and the history of the company. GD Distributors’ owner
traveled to China to visit Taishan’s factory. At the visit, the parties discussed
the product, price, and ASTM certification. Taishan provided GD Distributors
with test reports asserting that its drywall met ASTM standards. Taishan
provided a sample to GD Distributors. GD Distributors agreed to purchase
1,320 sheets of drywall in exchange for $11,601.22. The invoice for the
purchase was “CIF NEW ORLEANS.” Taishan arranged the shipment of the
drywall to New Orleans. GD Distributors’s owner testified that he “told them
that I lived in New Orleans . . . [and] I’m assuming that’s why . . . they set it
up to come to the Port of New Orleans.” According to GD Distributors, Taishan
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“absolutely” knew that the drywall was going to New Orleans. 24 GD
Distributors sold the drywall it purchased from Taishan to Helton
Construction, another Louisiana company.
TTP also sold 5,676 sheets of drywall for $24,123.00 to API, which is
based in California. The invoices marked the sale as FOB China with a final
destination of New Orleans, Louisiana. API made a second purchase of 5,760
sheets of drywall for $24,998.40 from TTP. The invoice provided that shipment
was FOB China with final destination New Orleans, Louisiana. TTP did not
ship this drywall. API handled the shipping arrangements from China to New
Orleans. Another Louisiana company, Interior Exterior Building Supply, LP,
purchased TTP drywall from Metro Resources Corporation. Taishan also sent
samples of drywall to TP Construction, a Louisiana corporation. Finally,
Taishan shipped 100,000 boards to New Orleans for an entity named Phoenix.
2. Minimum Contacts
In Ainsworth, we interpreted our law as unchanged after McIntyre. As
such, in order to satisfy the minimum contacts requirements, plaintiffs must
show 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.” Ainsworth, 716 F.3d at 177. “Under that test, 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, but [t]he defendant’s contacts must be more
than random, fortuitous, or attenuated, or of the unilateral activity of another
party or third person.” Id. (internal quotations and citations omitted).
24 When asked if his understanding was “that they 100 percent knew the product was
coming into New Orleans,” Darrin Steber, owner of GD Distributors, testified “Oh,
absolutely.”
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This test is more than satisfied in Gross and Wiltz because, again, there
is evidence showing that Taishan “absolutely” knew that the drywall was going
to New Orleans. 25 Taishan sold drywall to Louisiana customers, facilitated the
shipment of drywall to New Orleans, and received an email explaining that
after Hurricane Katrina, there was an increased demand for construction
materials in the New Orleans area. Moreover, Taishan did not conduct an
isolated sale. Rather, Taishan sold at least 45,756 sheets of drywall, which
ended up in Louisiana and earned Taishan $195,915.29. See McIntyre, 131 S.
Ct. at 2791; Ainsworth, 716 F.3d at 179 (“This is not a case of a single, or even
a few, isolated sales in Mississippi. The facts in the record establish that
Moffett could have ‘reasonably anticipated’ being haled into court in
Mississippi.”). 26 Accordingly, Taishan has the requisite minimum contacts
with Louisiana.
3. “Arise out of or relate to” requirement
This court has framed the second prong of the due-process test as
requiring that “the plaintiff’s cause of action . . . arise[ ] out of or result[ ] from
the defendant’s forum-related contacts.” ITL, 669 F.3d at 500 (quoting Luv N’
Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006)); see also
Clemens v. McNamee, 615 F.3d 374, 378–79 (5th Cir. 2010).
In Gross, the plaintiffs are asserting a market-share liability claim,
which rests on the theory that Taishan drywall, among other defective drywall,
was shipped to Louisiana and injured them. The plaintiffs’ market-share
25 “Q: It’s your understanding that they 100 percent knew the product was coming into
New Orleans, correct? A: Oh, absolutely.”
26 As Ainsworth recognized, “Our stream-of-commerce test, in not requiring that the
defendant target the forum, is in tension with [McIntyre’s] plurality opinion.” Ainsworth, 716
F.3d at 178. Nevertheless, the record evidences Taishan’s purposeful availment of the
Louisiana forum. Taishan sold to Louisiana customers and arranged shipments to Louisiana.
Even under the McIntyre plurality’s more demanding test, Taishan’s contacts demonstrate
that it “target[ed]” Louisiana. McIntyre, 131 S. Ct. at 2788 (Kennedy, J.).
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theory arises from Taishan’s Louisiana contacts—Taishan marketed, sold, and
shipped drywall to Louisiana customers. For instance, Taishan sold drywall to
GD Distributors, which in turn sold the drywall to another Louisiana company,
Helton Construction. As the district court held,
The profile forms, TIP inspections, and photographic catalog, all Court-
ordered and providing information on the type of drywall in homes, also
demonstrate the presence of Taishan’s drywall in the homes of Louisiana
plaintiffs. The Court finds no law which supports Taishan’s narrow
reading of the “arise from” and “relate to” requirement for specific
personal jurisdiction.
Moreover, this record contrasts sharply with that in Irvin v. S. Snow Mfg., Inc.,
517 F. App’x 229 (5th Cir. 2013). In Irvin, there was not an adequate nexus
between the defendant’s contacts and the plaintiff’s claim based on an “arose-
out-of” theory because “Southern Snow sold the machine to a Louisiana
customer and had no knowledge that, years later, Irvin unilaterally
transported it into Mississippi.” Id. at 232. Additionally, we recognized:
Irvin’s claims [do not] sufficiently “relate to” Southern Snow’s
Mississippi contacts. Although Irvin points to the allegedly large figure
of sales by Southern Snow to various Mississippi-based customers, this
number includes sales of syrup and other snowball-making accessories—
which did not cause Irvin’s injuries—and no evidence in the record allows
a comparison of the amount of sales attributable to these types of
accessories versus the sales attributable to actual snowball machines.
Indeed, on this record, we have no basis to determine how many snowball
machines Southern Snow sends outside of Louisiana in general, or to
Mississippi in particular.
Id. Conversely, a close nexus exists between Taishan’s marketing and selling
drywall to Louisiana customers and arranging shipping to Louisiana and
plaintiffs’ claims that Taishan’s drywall was installed in their homes and
injured them. While Taishan challenges the validity of the Gross plaintiffs’
market-share theory, our inquiry is whether “the plaintiff’s cause of action . . .
arise[s] out of or result[s] from the defendant’s forum-related contacts,” ITL,
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669 F.3d at 500 (emphasis added), whatever the claims’ ultimate merits.
Accordingly, plaintiffs’ claims—that Taishan sold drywall to the Louisiana
market and injured them—arise out of or relate to Taishan’s Louisiana
contacts of marketing, selling, and shipping drywall to Louisiana customers.
The Wiltz plaintiffs’ claims also rest on the allegedly faulty Taishan
drywall installed in their homes. These claims too arise from Taishan’s
manufacturing allegedly faulty drywall, marketing it to Louisiana customers,
and shipping it to Louisiana. We need not express any view of the merits of
plaintiffs’ claims because at this preliminary jurisdictional inquiry the
plaintiffs’ burden is to prove the appropriateness of jurisdiction by a
preponderance of the evidence. They have satisfied their burden here as their
claims arise from or relate to Taishan’s Louisiana contacts.
4. Fairness
The same reasons that jurisdiction is fair and reasonable over TG in
Florida are applicable to TG and TTP in Louisiana. Accordingly, personal
jurisdiction lies over TG and TTP in Gross and Wiltz.
VI.
The record in this case reflects an intimate relationship between TG and
TTP. By virtue of this relationship, they capitalized on a spike in demand for
drywall in the Gulf South. As their dealings demonstrate, TG and TTP availed
themselves of Florida and Louisiana—two of the market’s focal points. We
perceive no statutory or constitutional impediment to their now defending suit
there. We therefore AFFIRM the district court in Mitchell, Gross, and Wiltz.
42