Exxon Mobil Corporation v. Schutte & Koerting Acquisition Company et al

Filing 55

RULING granting 9 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction.. Signed by Judge James J. Brady on 5/6/2011. (CMM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
EXXON MOBIL CORPORATION
CIVIL ACTION
VERSUS
NO. 3:10-CV-310-JJB-SCR
SCHUTTE & KOERTING ACQUISITION
COMPANY; ET AL

RULING ON DEFENDANT’S 12(B)(2) MOTION TO DISMISS
This matter is before the Court on Defendant Reparex Fabricated
Systems, Inc.’s (“Reparex”) 12(b)(2) Motion (doc. 9) to Dismiss. Plaintiff Exxon
Mobil Corp. (“Exxon”) and Defendant Saint-Gobain Ceramic and Plastics, Inc.
(“Saint-Gobain”) have filed oppositions (docs. 38 & 39, respectively) to which
Reparex has filed a reply (doc. 53). There is no need for oral argument. This
Court’s jurisdiction exists pursuant to 28 U.S.C. § 1332. For the reasons stated
herein, the Court GRANTS Reparex’s motion (doc. 9).
Background
This case arises out of the failure of a set of allegedly defective nozzles
purchased by Exxon from Defendant Schutte & Koerting Acquisition Company
(“S&K”). In 1999, Exxon contracted with S&K to manufacture a set of nozzles for
Exxon’s Baton Rouge refinery. The nozzles were to serve an integral function in
removing unwanted agents from Exxon’s final product. On May 7, 2009, one of
the nozzles failed causing damage to Exxon’s facility, disruption of its operations,

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and resulting in emissions for which Exxon was fined by federal and state
agencies.
Prior to the incident, in 2009, S&K—a Pennsylvania corporation—
contracted with Saint-Gobain—also a Pennsylvania corporation—to manufacture
the nozzles’ ceramic liners and to install the liners into steel casings
manufactured by a non-party. Saint-Gobain then subcontracted the installation
to Reparex—a Pennsylvania corporation. Saint-Gobain and Reparex performed
all facets of the subcontracted job—negotiating and signing the contract;
assembling the parts; shipping the parts to and from one another—in
Pennsylvania.

Saint-Gobain subsequently shipped the casings to S&K who

completed assembling the nozzles. S&K then shipped the nozzles to Exxon’s
Baton Rouge refinery.
Reparex does not maintain a business presence or directly advertise in
Louisiana (doc. 38, ex. 2). However, Reparex is referred business opportunities
by three independent sales representatives (“Reps”) (doc. 38, ex. 2). The Reps
refer potential clients to Reparex and receive commissions for their referrals
(doc. 38, ex. 2). None of these representatives work exclusively for or have
written contracts with Reparex, and Reparex does not direct the Reps to pursue
business in any particular state (doc. 38, ex. 2). For example, one of the Reps,
George Fishler (“Fishler”), primarily pursues customers for Saint-Gobain but will
channel customers to Reparex if St. Gobain is unlikely to meet a given
customer’s needs (doc. 30, ex. 3). Fishler visits Louisiana roughly one to two
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times annually to recruit customers for Saint-Gobain, and his efforts have
resulted in a contract between Reparex and a Louisiana company only once
(doc. 38, ex. 3). 1 In addition, Saint-Gobain subcontracted or directed work to
Reparex on at least three other occasions, and in each case, Reparex sent the
finished product directly to a Louisiana resident (doc. 39, ex. 1).
On April 30, 2010, Exxon filed suit against S&K, Reparex and SaintGobain (doc. 1). Exxon asserts claims against S&K for (1) redhibition; (2) breach
of contract; (3) violation of the Louisiana Products Liability Act; and (4)
negligence.

Exxon asserts claims against Reparex and Saint-Gobain for (1)

redhibition and (2) negligence.
On August 6, 2010, Reparex filed its 12(b)(2) Motion (doc. 9) to Dismiss for
Lack of Personal Jurisdiction. Reparex asserts that it does not have sufficient
contacts with Louisiana for the Court to exercise personal jurisdiction over it. On
February 28, 2011, Exxon and Saint-Gobain (collectively “Opposers”) filed
oppositions (docs. 38 & 39, respectively) asserting that Reparex, in fact, has
sufficient contacts with Louisiana.
Standard of Review
When a nonresident defendant moves to dismiss for lack of personal
jurisdiction, the plaintiff bears the burden of establishing that the court has

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At Fishler’s suggestion, Sasco, Inc. (“Sasco”) of Kenner, Louisiana contacted Reparex in 2008. Since
that time, Reparex has performed approximately seven projects for Sasco. Each time, Sasco shipped its
product from Louisiana to Reparex in Pennsylvania, and Reparex coated the product and shipped the
finished product back to Sasco.

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jurisdiction over the defendant. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th
Cir. 1985). In deciding a motion to dismiss for lack of personal jurisdiction, courts
within the United States Court of Appeals for the Fifth Circuit accept the plaintiff’s
allegations as true, other than those which are conclusory or controverted, and
conflicts between the parties’ facts are resolved in the plaintiff’s favor. Panda
Brandywine v. Potomac, 253 F.3d 865, 868 (5th Cir. 2001).
Discussion
Reparex asserts that its contacts with Louisiana are insufficient for the
Court to exercise personal jurisdiction over it (doc. 9). Reparex asserts that it (1)
does not maintain a business presence in Louisiana; (2) did not directly advertise
to Louisiana companies; (3) directly did business with only one Louisiana
company, and even then, only sparingly; and (4) was not aware that the nozzles
it helped assemble were to be used by Exxon in its Baton Rouge refinery.
Reparex also asserts that even if these contacts were sufficient, the Court’s
exercise of personal jurisdiction would not be fair and reasonable because (1)
Reparex will incur great expense litigating in Louisiana; (2) none of the parties
are Louisiana citizens; and (3) none of the complained-of activities took place in
Louisiana.
Opposers assert that this Court has general jurisdiction over Reparex
because it (1) pursued Louisiana customers through Fishler; (2) repeatedly
performed work for Sasco; and (3) delivered products, the work for which had
been subcontracted by Saint-Gobain, to customers in Louisiana (docs. 38 & 39).
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Opposers also assert that this Court has specific jurisdiction over Reparex
because it could reasonably foresee that its product would end up in Louisiana
because (1) the nozzles, of which the casings were a part, were specifically
designed for Exxon’s Baton Rouge refinery; and (2) there are only one-hundredthirty refineries in the United States of which, seventeen (13%) are in Louisiana.
In a diversity action, a federal court may exercise personal jurisdiction over
a defendant to the extent permitted by the applicable state law. Fed. R. Civ. P.
4(e)(1). Louisiana’s long-arm statute authorizes a court’s exercise of personal
jurisdiction to the extent allowed by the Due Process Clause of the Fourteenth
Amendment.

Panda Brandywine, 253 F.3d at 868.

A court’s exercise of

personal jurisdiction over a nonresident defendant comports with the Due
Process Clause when (1) the defendant has purposefully availed himself of the
benefits and protections of the forum state by establishing minimum contacts with
that state and (2) the court’s exercise of jurisdiction over that defendant does not
offend traditional notions of fair play and substantial justice. Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945).
The “minimum contacts” inquiry is fact intensive and no one element is
decisive; rather, the touchstone is whether the defendant purposely directed his
activities towards the forum state, such that he could reasonably foresee being
haled into court there. Luv N' Care Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 470 (5th
Cir. 2006), quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
297 (1980). A party may establish minimum contacts sufficient for the state to
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assert specific jurisdiction or general jurisdiction.

Alpine View Co. v. Atlas

Copco, A.B., 205 F.3d 208, 215 (5th Cir. 2000).
For a forum state to exercise general jurisdiction over a nonresident
defendant, the defendant's contacts with the forum state must be continuous,
systematic and substantial,. Helicopteros Nacionales de Colom., S.A. v. Hall,
466 U.S. 408, 414-19 (1984). The defendant must have a business presence in
the state; simply making isolated visits or shipping its product, even in substantial
volume, into the forum will not suffice. Johnston v. Multidata Sys. Int'l Corp., 523
F.3d 602, 609 (5th Cir. 2008); Access Telecom, Inc. v. MCI Telecomm. Corp.,
197 F.3d 694, 717 (5th Cir. 1999); Bearry v. Beech Aircraft Corp., 818 F.2d 370,
375 (5th Cir. 1987). Simply put, the “continuous and systematic contacts test is a
difficult one to meet.” Johnston, 523 F.3d at 612. 2
For a court to exercise specific jurisdiction over a nonresident defendant
(1) the defendant must have purposely availed itself of the privileges of
conducting activities in the forum state; (2) the cause of action must arise out of
the defendant’s forum-related contacts; and (3) the court’s exercise of jurisdiction
must be fair and reasonable. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d
266, 271 (5th Cir. 2006). A nonresident does not purposely avail itself of the

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See, e.g., Helicopteros Nacionales, 466 U.S. at 414-19 (finding no general jurisdiction over nonresident
which purchased 80% of its fleet from Texas over a six-year period; sent its management, pilots and
maintenance personnel to Texas for training; and received payments from a bank located in Texas);
Johnston, 523 F.3d at 611-14 (5th Cir. 2008) (finding no general jurisdiction over nonresident which, over
a ten-year period, sold $140,000 in goods to ten different customers in the forum, sent personnel to the
forum, and advertised in national publications directed to the forum).

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privileges of conducting activities in the forum state merely by contracting with
one of its residents or by placing into the stream of commerce a product which
ends up there

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985);

Nuovo Pignone, SA v. Storman Asia M/V, 310 F.3d 374, 380 (5th Cir. 2002).
Instead, the nonresident must be able to reasonably foresee that its product will
be purchased or used by consumers in the forum state. Id.
After determining whether a defendant has sufficient minimum contacts,
the court must next determine whether its exercise of jurisdiction would “offend
traditional notions of fair play and substantial justice.” Int’l Shoe, 326 U.S. at 316.
In doing so, the court considers (1) the burden on the defendant; (2) the interest
of the forum state; (3) the plaintiff’s interest in obtaining relief; (4) the interest of
other states in securing the most efficient resolution to the controversy; and (5)
the shared interest of the several states in furthering fundamental social policies.
Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113 (1987).
The Court finds that Reparex’s contacts with Louisiana are insufficient to
confer general jurisdiction. Reparex maintains no business presence in the state
of Louisiana; its offices and facilities are located solely in Pennsylvania (doc. 38,
ex. 2). Reparex has not sent any of its officers or employees to Louisiana for the
purpose of soliciting business or completing projects (doc. 38, ex. 1). At most, it
has made isolated visits to Louisiana through Fishler, whose efforts for Reparex
are derivative of his efforts for Saint-Gobain (doc. 38, ex. 3). Finally, Reparex
has contracted with only one Louisiana company, Sasco (doc. 38, ex. 2).
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Moreover, Reparex has completed only seven projects on Sasco’s behalf, the
work for which was performed entirely at Reparex’s facilities in Pennsylvania
(doc. 38, ex. 2).

Plainly, Reparex’s activities in Louisiana have not been

continuous, systematic or substantial enough to establish this Court’s general
jurisdiction over it.
The Court also finds that the Reparex’s contacts with Louisiana are
insufficient to confer specific jurisdiction. In for order specific jurisdiction to exist,
the cause of action must have arisen as a result of the nonresident’s contacts
with the forum state. Seiferth, 472 F.3d at 271. However, Exxon has failed to
demonstrate that Reparex had any contact with Louisiana as a result of its work
on the nozzles. Exxon contracted with S&K—a Pennsylvania corporation—for
assembly of the nozzles.

S&K then contracted with Saint-Gobain—a

Pennsylvania corporation—to manufacture the nozzles’ ceramic liners and to
install them in steel casings. Saint-Gobain subcontracted this work to Reparex—
a Pennsylvania corporation—who performed all of the work in Pennsylvania and
shipped the finished product to Saint Gobain in Pennsylvania. Opposers have
produced no evidence that Reparex knew the casings were being assembled for
Exxon, much less that they were intended for use in its Baton Rouge refinery.
Moreover, Opposers’ assert that Reparex could reasonably foresee that the
casings would end up in Louisiana because 13% of the refineries in the United
States are located in Louisiana. In doing so, Opposers essentially ask this Court
to find specific jurisdiction solely because Reparex placed its product in the
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stream of commerce, and the product ended up in Louisiana—something this the
Court cannot do. See Asahi, 480 U.S. at 113. Simply put, as it pertains to the
present dispute, Reparex in no way purposely availed itself of the privileges of
conducting activities in Louisiana.
Conclusion
Accordingly, the Court hereby GRANTS Defendant Reparex’s 12(b)(2)
Motion (doc. 9) to Dismiss for Lack of Personal Jurisdiction.
Signed in Baton Rouge, Louisiana this 6th day of May, 2011.

S

JUDGE JAMES J. BRADY
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

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