The Tyler Court of Appeals has affirmed a Gregg County district court’s denial of a Chinese tire manufacturer’s special appearance in a product liability action arising from a fatality rollover accident.
Sailun Group Co., Ltd. v. Jessica Spradley, et al. (No. 12-25-00102; January 30, 2026) arose from a 2023 rollover accident that killed a passenger and seriously injured several others. The vehicle’s left rear tire, a Terrmax HLT manufactured by the Chinese manufacturer Sailun, separated, causing the driver to lose control. Plaintiffs sued Sailun, Sailun Tire Americas, a Canadian company that markets Sailun’s tires and a wholly-owned subsidiary of Sailun, TBC, a Florida company that distributed and sold the tire under an agreement with Sailun Tire, TBC Brands, an importer and distributor of tires, and the van’s driver. Plaintiffs asserted product liability, breach of warranty, negligence, gross negligent, wrongful death, and survival theories. Sailun filed a special appearance, challenging general and specific jurisdiction. The trial court denied the special appearance. Sailun sought interlocutory relief.
In an opinion by Chief Justice Worthen, the court of appeals affirmed. Sailun argued that it did not purposefully avail itself of the privilege of doing business in Texas and that Plaintiffs failed to demonstrate the required “plus factor” under the stream-of-commerce-plus theory. Instead, it claimed that a third-party distributor “accepts possession of [Sailun’s] products outside Texas and has sole discretion regarding where the products will be shipped.” It further contended that the distributor’s activities were “aimed at the entire United States,” not just Texas. The court rejected these arguments. First, Sailun’s wholly-owned subsidiary (STA) was the importer of record of Sailun tires in the US. STA entered into a distribution with TBC, to which Sailun “sometimes provided tires.” The distribution agreement required STA to extend to TBC all Sailun warranties and use commercially reasonable efforts to require that Sailun’s factory had an adequate in-house surveillance program for quality control purposes. It also obligated Sailun to limit use of TBC’s intellectural property. “In short,” the court concluded, “these requirements presuppose Sailun’s involvement and cooperation, and the fact that Sailun can sometimes ship tires directly to TBC both demonstrates such involvement and cooperation and shows that Sailum employs the distribution system that brought the subject tire to Texas.”
Sailun further received tire registration information from Texas, provided registration forms to distributors and dealers in Texas, and had a website on which TBC markets Sailun products, including a feature enabling the user to locate Sailun tire dealers in Texas. STA also employed a regional sales manager whose territory included Texas, and STA conducted a ride-and-drive event in Horseshoe Bay. The court distinguished this case from BRP-Rotax, which held that an Austrian aircraft engine manufacturer didn’t purposefully avail itself of the privilege of doing business in Texas by participating in a distribution system with “an indisputably independent Bahamian company in which it held no ownership interest.” Since Sailun wholly owned STA and created the distribution system that brought the tire to Texas, it purposefully availed itself of Texas, as well as other states. Although it found that Sailun’s purposeful availment was “indirect” (i.e., through affiliates), that didn’t change the fact that Sailun established the distribution system, its contacts were purposeful rather than “random, fortuitous, or attenuated,” and it sought to profit by availing itself of Texas.
Further, the court determined that the trial court correctly “impliedly” found that Plaintiffs had carried their burden to establish specific jurisdiction under the stream-of-commerce-plus test. There was also no question that Plaintiffs’ claim arose out of or related to Sailun’s contact with Texas (through its distribution system) and that a “substantial connection” between Sailun’s contacts with Texas and the operative facts of the litigation existed. As SCOTX has held, the “relatedness requirement is satisfied when a company ‘serves a market for a product in the forum state and the product malfunctions there” (citations omitted). That happened in this case, so the court of appeals affirmed.
This is an interesting decision, coming as it does in the wake of BRP-Rotax. Here the court made much of the fact that the manufacturer not only set up its “own” distribution system in the US, but that it maintained a not insignificant amount of control over where it directed its products. Had Sailun simply manufactured its products in another country and shipped them to an independent distributor in the states, the answer to the question might have been different. But that just shows how close these questions about how far foreign manufacturers can go to avoid state courts can be. It looks like the court of appeals got this one right.
