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Jetco Electronic Industries, Inc. v. Gardiner

United States Court of Appeals for the Fifth Circuit · 1973 · Civil Procedure

Civil ProcedurePersonal JurisdictionFinality and AppealabilityTexas Long-Arm Statutediversity jurisdictionpersonal jurisdictionTexas long-arm statuteminimum contacts

Facts

ETL was an Arizona corporation with no office, regular employees, or qualification to do business in Texas, but it had performed two unrelated soil-testing jobs in Texas in 1970. Gardiner hired ETL in Arizona for $85 to duplicate and authenticate comparative tests of treasure-hunting devices, including plaintiffs' Jetco and Relco products, and ETL issued a report showing plaintiffs' devices performed poorly compared with Gardiner's. Gardiner later distributed a catalog to thousands of persons that incorporated ETL's test results, including a chart naming Jetco and criticizing the devices' performance. Plaintiffs, Texas residents, alleged that publication of those results caused them to lose sales in Texas.

Issue

Whether the court of appeals could review the dismissal order despite the absence of a Rule 54(b) certification, and whether Texas's long-arm statute and the Due Process Clause permitted a Texas federal court to exercise personal jurisdiction over ETL. Also, whether plaintiffs had made a sufficient prima facie showing that ETL committed a tort in whole or in part in Texas.

Rule

In a federal diversity case, personal jurisdiction over a nonresident requires both compliance with the forum state's long-arm statute and consistency with federal due process. To show amenability under a statute like Texas's, the plaintiff need only make a prima facie showing of a cause of action establishing that the defendant committed a tort in whole or in part in the state; injury in the state from an out-of-state wrongful act can satisfy the statute. Due process is satisfied when the defendant has minimum contacts with the forum such that exercising jurisdiction is fair, including where the defendant could reasonably expect its materially unchanged product or materials to enter interstate commerce and its other forum contacts are sufficient to make suit there fair.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Blue Mesa Audio, a New Mexico testing firm, evaluated rival noise-canceling headsets in Albuquerque for a Colorado manufacturer that asked for an 'independent verification' of superiority claims. The manufacturer later mailed brochures into Texas reproducing Blue Mesa's comparison table almost verbatim, and a Dallas competitor sued Blue Mesa in federal court in Texas for business losses allegedly caused by the publication.

At the pretrial stage, what must the Dallas competitor show to satisfy the Texas long-arm statute as to Blue Mesa?

Explanation. In a diversity case, the court first asks whether the defendant is amenable under the forum state's long-arm statute. Under the majority opinion, the plaintiff need not prove the merits by a preponderance at this stage; a prima facie cause of action is enough. Texas treats a tort as committed 'in whole or in part' in Texas when injury occurs there from an out-of-state wrongful act, so a prima facie tort showing tied to Texas injury satisfies the statutory inquiry. (Derived from Jetco Electronic Industries, Inc. v. Gardiner (n.d.).)