Justice Brett Busby
Rule 120a, TRCP, the procedure under which a nonresident defendant may appear in a Texas court for the sole purpose of contesting personal jurisdiction, authorizes a trial court to order a continuance to allow an opposing party to obtain jurisdictional discovery if it does not appear that the party has insufficient facts essential to its opposition. This practice can result in a kind of “mini-trial” to determine whether the court may exercise personal jurisdiction over the nonresident defendant. The scope of jurisdictional discovery can thus be a highly contested issue in Rule 120a practice. So contested, in fact, that SCOTX has seen fit to weigh in to give trial and appellate courts additional guidance on tailoring discovery under Rule 120a.
The case, In re Christianson Air Conditioning & Plumbing, LLC and Continental Homes of Texas, LP (No. 20-0384), arose from a product liability suit filed by Christianson and Continental against an Indiana plastic pipe manufacturer (NIBCO) and Jana, a Canadian engineering firm hired by NIBCO to reformulate defective pipe and maintain certification in the Texas market. The plaintiffs alleged that NIBCO’s pipe, which was installed in thousands of Central Texas homes, leaked and had to be replaced. They alleged strict product liability, negligence, and fraud. Jana filed a special appearance under Rule 120a on the basis that it had no minimum contacts with Texas sufficient to confer personal jurisdiction. Christianson moved for a continuance and Rule 120a jurisdictional discovery. The parties meanwhile reached a Rule 11 agreement under which Jana agreed to make two of its executives available for deposition, but they did not fully agree on the scope of the depositions. Jana objected to a list of 30 deposition topics proposed by Christianson. The trial court issued an order to compel on all 30 topics. Jana sought mandamus in the Austin Court of Appeals on nine of the topics. The court of appeals found that the trial court abused its discretion with respect to eight of the nine topics because they did not “relate exclusively to the jurisdictional question,” but asked for a lot of general information about Jana’s work for NIBCO. Christianson appealed to SCOTX.
In an opinion by Justice Busby, the Court reversed the court of appeals’ decision and conditionally issued a writ of mandamus. The Court held that the court of appeals’ restriction of Rule120a discovery only to matters related exclusively to the jurisdictional question was too narrow and unsupported by the Court’s precedent. Recognizing that jurisdictional and merits discovery can and do overlap, Justice Busby formulated a standard that would require the trial court to permit discovery of information “essential to prove at least one part of the plaintiff’s theory of personal jurisdiction.” Additionally, the trial court must ensure that discovery requests are tailored so as to limit discovery of unreasonably duplicative, cumulative, or irrelevant information, information obtainable from another more convenient source, or where the burden of producing the information outweighs its likely benefit. Information “essential” to a theory of personal jurisdiction tends to show the required connection between the defendant, the forum, and the litigation demanded by due process.
Turning to product liability claims involving nonresident parties, Justice Busby notes that alleging that the nonresident party introduced a product into the stream of commerce is insufficient to establish jurisdiction unless accompanied by evidence of a “plus” factor. As he puts it, this “stream-of-commerce-plus” theory goes both to jurisdiction and the merits, so there will be overlap in Rule 120a discovery. In order to establish minimum contacts, the plaintiff must show that the defendant purposefully availed itself of the privilege of conducting activities in Texas and the defendant’s potential liability arose from or is directly related to those contacts. Here Christianson’s deposition request, Justice Busby opined, encompassed some matters “essential to prove purposeful availment or relatedness under Christianson’s stream-of-commerce-plus theory of personal jurisdiction.” But, he added, they also include inessential, overbroad, and duplicative matters as well. Rather than going through the six topics Christianson appealed, SCOTX sent the case back to the trial court for reformulation with some advice about tailoring the requests appropriately. Specifically, Justice Busby approved of discovery targeted to Jana’s specific knowledge of Texas conditions and activities it undertook to reformulate the pipe to function specifically in Texas.
This is an important decision, particularly for nonresident product manufacturers that do not maintain a significant presence in Texas and generally place products in the stream of commerce with an idea that some of them will end up here. To the extent that manufacturers design, manufacture, or market products with specific attention to the Texas market, however, they should study this opinion closely. Simply invoking Rule120a will not easily allow them to avoid fairly extensive discovery or get them out of a Texas court.
