Applying the recent SCOTX decision in BRP-Rotax, the Dallas Court of Appeals has reversed a trial court order denying the special appearance of an Iowa manufacturer who sold feed to an Illinois company that shipped the product to Texas.
K.R.U., Ltd. d/b/a Feed Energy Company v. Gustavo Rodriguez (No. 05-24-01121-CV; July 11, 2025) arose from a serious accident involving a tanker railway car used to transport feed products. In October 2023, Rodriguez filed suit against Feed Energy, Trinity Industries, Inc., and Eagle Railcar Services, alleging that Trinity owned a leased railcar used by Feed Energy to transport their products. While working for Link Feed Ingredients in Hereford Texas, Rodriguez was severely burned after being instructed to open the tanker, which exploded. Rodriguez asserted claims against Feed Energy for negligent maintenance, inspection, and handling of the railcar, as well as failure to disclose its contents and promulgate a safety policy.
Feed Energy, an Iowa entity with a principal place of business in Iowa, filed a special appearance. It argued that it had no employees or property in Texas and was not registered to conduct business in Texas. Feed Energy further asserted that it had no control over their products once they had left its property. As to the feed products involved in this case, the company asserted that Plain States Commodities LLC, an Illinois entity that owned the Hereford, Texas facility at which the accident occurred, purchased the products from Feed Energy for delivery in Iowa.
In the hearing on Feed’s special appearance, Plaintiff challenged Feed’s contention that it did not control the product after it had been loaded onto the railcar at its Iowa facility. Feed argued that Trinity, a Texas company, owned the railcar and the transaction in question was limited to Iowa and Illinois. Plaintiff asserted that Feed had purposefully availed itself of the privilege of conducting business in Texas by applying for a feed license in Texas, three percent of Feed’s products ended up in Texas between 2018 and 2023, and Feed knew that the shipment in question was destined for Texas.
Initially, Feed Energy’s special appearance was sustained, but upon Rodriguez’s motions for rehearing and reconsideration, the trial court reversed course. Plaintiff filed an amended petition adding jurisdictional facts, including a bill of lading designating the destination of the product as Hereford. Plaintiff relied heavily on the stream of commerce theory and a ‘plus factor’ (intent to go to market in the forum state) to establish jurisdiction. Feed Energy sought interlocutory relief.
In an opinion by Justice Goldstein, the court of appeals reversed and granted Feed’s special appearance. Feed that there was no “plus factor” because the Texas feed license had no connection to the litigation because Feed had no Texas customers, only customers who bought products from the company at its Des Moines location and then sold those products to Texas purchasers. In this case, nonparty Plains States bought the feed and by its unilateral act had it shipped to Hereford. Pointing to SCOTX’s recent ruling in BRP-Rotax GmbH & Co. KG v. Shaik, No. 23-0756m 2925 WL 1727903 (Tex. June 20, 2025), the court of appeals observed that Feed must have “an intent or purpose to serve the Texas market,” that is, to “specifically target Texas; it is not enough that a defendant may foresee some of its products’ eventually arriving here.”
Looking to the facts, the court rejected Plaintiff’s argument that Feed’s procurement of a feed license, payment of inspection fees, and the bill of lading established specific jurisdiction. While there was no dispute that Feed applied for and received a license in 2001 and paid fees based on bills of lading indicating Texas as the products’ destination, Feed neither used the railcar (which was leased by somebody else) nor targeted Texas as the railcar’s destination. Only after Plains States bought the feed and notified Feed to send it to Texas did Feed know where it was going. At most, this demonstrated that Feed could foresee some of its product going to Texas after being purchased by third parties, not that Feed had specific intent to market to Texas purchasers. And, according to federal law, Feed has to have a license in any state where the labeled product might end up. Consequently, the mere fact that it paid a licensing fee in Texas doesn’t indicate anything other than a foreseeable possibility that Feed products would end up in Texas. Additionally, Plains States, not Feed, unilaterally determined to send the product to Texas. The unilateral action of third parties cannot be used to support jurisdiction against a nonresident defendant. And the fact that Feed has a website doesn’t mean anything in particular, either, unless the website specifically targets Texas customers.
This opinion is a straightforward application of the stream-of-commerce-plus test most recently reaffirmed by SCOTX in BRP-Rotax. We should note, however, that Justice Goldstein included a footnote in which she expressed the court of appeals’ “empathy” with Justice Busby’s concurring opinion in that case. As you recall from our report on the BRP-Rotax opinions, Justice Busby urged SCOTUS to revisit the “fair play” and “reasonableness” aspects of its personal jurisdiction jurisprudence and to adopt a pure “stream-of-commerce” test. Under the less stringent standard, cases involving nonresident manufacturers would probably come out differently, significantly expanding the jurisdictional reach of Texas state courts. If that was indeed the case, we would certainly resist it.
TCJL Research Intern Satchel Williams researched and assisted in drafting this article.
