A plaintiff who sued a South Korean parts manufacturer for a defective fuel pump that alleged caused a serious personal injury accident in Nueces County can, at least for the moment, press ahead with the claim.
Hyundam Industrial Company, Ltd. v. Paul Swacina, as Successor Guardian of the Person and Estate of Johari Kibibi Powell, an Incapacitated Person, and Paul Swacina as Next Friend of D.A.P., D.A.C., and D.A.C., Minor Children (No. 13-22-00176-CV; filed November 30, 2023) arose from a rear-end collision allegedly caused when a defective fuel pump failed and the vehicle, a 2009 Hyundai Elantra, stalled in the middle lane. Plaintiff, who suffered incapacitating injuries in the accident, sued the South Korean manufacturer of the fuel pump for negligence, gross negligence, misrepresentation, product liability, and other claims. Hyundam filed a special appearance on the basis that it did no business in Texas, its pumps were designed and manufactured in South Korea, it sold 99% of its pumps to another South Korean company that manufactures fuel tanks for Hyndai vehicles, and that it sold less than 1% of its pumps to a subsidiary of Hyundai that sold and distributed service parts to Hyndai dealers across the world. The trial court denied the special appearance. Hyundam appealed.
In an opinion by Justice Longoria, the Corpus Christi Court of Appeals affirmed. The court’s analysis focused on SCOTX’s recent holding in LG Chem Am., Inc. v. Morgan, 670 S.W.3d 341 (Tex. 2023), which articulated the so-called “stream-of-commerce-plus” standard for product liability cases to establish whether a foreign defendant “purposely avails itself of the privilege of conducting activities in the forum state” (citation omitted). This standard requires more than “mere foreseeability that a product might ultimately end up in a particular forum,” but some indication of “the manufacturer’s intent to serve that market.” Examples of the “plus factors” may include “marketing the product through a distributor who has agreed to serve as the sales agent in the forum state or creating, controlling, or employing the distribution system that brought the product into the forum state” (citing State v. Volkswagen Aktiengesellschaft, 669 S.W.3d 399 (Tex. 2023)). Other examples include: “(1) designing the product for the market in the forum state, (2) advertising in the forum state, and (3) establishing channels for providing regular advice to customers in the foreign state” (citing Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex. 2010).
Here the court of appeals concluded that Hyundam satisfied the purposeful availment standard and, consequently, was doing in business in Texas for purposes of personal jurisdiction. The court reasoned that because Hyundam designed fuel pumps specifically for the US market, including Texas Hyundai buyers, Hyundam knew that some of its products would end up in Texas. As SCOTX held in Volkswagen, “[t]o hold that a nonresident who has directed activity to every state is not amenable to jurisdiction in any state would unduly constrain the authority of state courts to hold nonresidents accountable for their in-state conduct and would convert specific-personal-jurisdiction analysis into a wholly subjective inquiry into the defendants’ state of mind. 369 S.W.3d at 420.
Turning to the question of whether plaintiff’s claims arose from or were related to Hyundam’s contacts in Texas, the court of appeals rejected Hyundam’s argument that the claims were unrelated because plaintiff could not establish that the vehicle involved in the accident was sold in Texas (it had originally been sold in Louisiana). Noting that SCOTUS has rejected this “causation-only-approach,” the court held that because “the fuel pump which Hyundam designed for use in Texas was the very same type of fuel pump that [plaintiff] alleged failed and proximately caused [her] injuries in Texas,” a “strong relationship” existed “among the defendant, the forum, and the litigation–the ‘essential foundation’ of specific jurisdiction” (citing Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. ___, 141 S. Ct. 1017, 1028 (2021)). Finally, the court held that exercising jurisdiction in this case would not offend “traditional notions of fair play and substantial justice.” Here the court concluded that requiring the burden imposed upon a South Korean entity to defend itself in a Texas court was outweighed by the state’s “especial interest in exercising judicial jurisdiction over those who commit torts within its territory” (citation omitted) and that it would promote judicial economy to litigate in Texas because the two other defendants in the case are both Texas residents.
It will be interesting to see whether Hyundam takes this case up to SCOTX. Justice Longoria’s analysis appears solid on the case law, and the question of whether a foreign parts manufacturer for any foreign automaker should get off the hook in every state just because it had no specific knowledge of a vehicle with its part ending up in a particular place at a particular time is a difficult one. In any event, we shall see.
