Case 4:20-cv-00127-ALM Document 68 Filed 07/06/21 Page 1 of 40 PageID #: 2090
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`IN RE: TOYOTA HYBRID BRAKE
`LITIGATION
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`Consolidated Case No. 4:20-CV-127
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`Judge Mazzant
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`MEMORANDUM OPINION & ORDER
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`Pending before the Court is Defendant Toyota Motor Corporation’s Motion to Dismiss
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`Pursuant to F.R.C.P. Rule 12(b)(2) (Dkt. #39). Having considered the Motion, the relevant
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`pleadings, and the arguments of counsel, the Court concludes that the Motion should be granted in
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`part and denied in part.
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`BACKGROUND
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`A more thorough background of the case can be found in the Court’s October 21, 2020
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`Memorandum Opinion and Order. In re Toyota Hybrid Brake Litig., 2020 WL 6161495, at *1–4
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`(E.D. Tex. Oct. 21, 2020). In brief, this action arises out of Plaintiffs’ allegations that, along with
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`Toyota Motor Sales, U.S.A., Inc. (“TMS”), Toyota Motor North America, Inc. (“TMNA”), Toyota
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`Engineering & Manufacturing North America, Inc. (“TEMA”), Toyota Motor Corporation
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`(“TMC”) did not properly design or manufacture “break booster pump assemblies” for the Class
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`Vehicles, leading the braking systems of these vehicles to fail (Dkt. #28 at p. 8). Defendants
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`contest these allegations.
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`On July 20, 2020, TMC filed its Motion to Dismiss Pursuant to F.R.C.P. Rule 12(b)(2)
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`(Dkt. #39), currently before the Court. On August 17, 2020, Plaintiffs filed their response (Dkt.
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`#45). On August 31, 2020, TMC filed its reply (Dkt. #49). On September 7, 2020, Plaintiffs filed
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`their sur-reply (Dkt. #53). And on October 30, 2020, the Court held a hearing on the Motion (see
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`Dkt. #59).
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`LEGAL STANDARD
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`“[P]ersonal jurisdiction ‘is an essential element of the jurisdiction of a district court,
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`without which . . . court[s are] powerless to proceed to an adjudication.’” First Inv. Corp. of
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`Marsh. Is. v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742, 749 (5th Cir. 2012) (original
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`alteration omitted) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999)). On
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`motion of a nonresident defendant, a case must be dismissed if the court does not have personal
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`jurisdiction over the moving defendant. FED. R. CIV. P. 12(b)(2). When such a motion is filed,
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`the party invoking jurisdiction must “present sufficient facts as to make out only a prima facie case
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`supporting jurisdiction.” Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 215 (5th Cir. 2000).
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`“In determining whether that prima facie case exists, [courts] ‘must accept as true the plaintiff’s
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`uncontroverted allegations and resolve in his favor all conflicts between the jurisdictional facts
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`contained in the parties’ affidavits and other documentation.’”1 Adams v. Unione Mediterranea
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`Di Sicurta, 364 F.3d 646, 650 (5th Cir. 2004) (original alterations omitted) (quoting Nuovo
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`Pignone, SpA v. STORMAN ASIA M/V, 310 F.3d 374, 378 (5th Cir. 2002), abrogated on other
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`grounds by Water Splash, Inc. v. Menon, 137 S. Ct. 1504 (2017)).
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`A federal court sitting in diversity may exercise personal jurisdiction “where the forum
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`state’s long-arm statute extends to the nonresident defendant and the exercise of jurisdiction
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`1 While Plaintiffs must only make out “a prima facie case at the Rule 12(b)(2) stage, [their] burden escalates to
`‘preponderance of the evidence’ ‘by the end of trial.’” In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod.
`Liab. Litig., 888 F.3d 753, 778 (5th Cir. 2018) (quoting Travelers Indem. Co. v. Calvert Fire Ins. Co., 798 F.2d 826,
`831 (5th Cir. 1986)). Even though this burden subsequently intensifies, determining whether personal jurisdiction
`exists depends on the facts as they were at the outset of the proceedings. Harvest Nat. Res., Inc. v. Ramirez Carreno,
`No. CV H-18-483, 2020 WL 3063940, at *10 (S.D. Tex. June 9, 2020); see Mich. Tr. Co. v. Ferry, 228 U.S. 346, 353
`(1913) (“[I]f a judicial proceeding is begun with jurisdiction over the person of the party concerned, it is within the
`power of a state to bind him by every subsequent order in the cause.”).
`2
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`comports with due process.” Def. Distrib. v. Grewal, 971 F.3d 485, 490 (5th Cir. 2020); see
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`Douglass v. Nippon Yusen Kabushiki Kaisha, 996 F.3d 289, 301 (5th Cir. 2021) (Elrod, J.,
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`specially concurring) (“The Supreme Court [has] emphasized that ‘principles of interstate
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`federalism’ are central to its analysis of Fourteenth Amendment due process limitations on
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`personal jurisdiction.” (quoting Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017,
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`1030 (2021))), reh’g granted en banc, 2021 WL 2766866 (5th Cir. July 2, 2021) (mem.). “Service
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`of process” is how federal courts “get[] jurisdiction over [a] person,” Lisak v. Mercantile Bancorp,
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`Inc., 834 F.2d 668, 671 (7th Cir. 1987), and courts may exert this power over any nondefendant
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`resident “subject to the jurisdiction of a court of general jurisdiction in the state where the district
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`court is located,” FED. R. CIV. P. 4(k)(1)(A).2 Because “Texas gives its courts of general
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`jurisdiction all of the power allowed by the Due Process Clause,” Texas courts need only determine
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`“‘whether the exercise of jurisdiction comports with the limits imposed by federal due process on
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`the State of’ Texas.” Sayers Constr., L.L.C. v. Timberline Constr., Inc., 976 F.3d 570, 573 (5th
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`Cir. 2020) (quoting Walden v. Fiore, 571 U.S. 277, 283 (2014)); see TEX. CIV. PRAC. & REM. CODE
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`ANN. § 17.042 (Texas long-arm statute).
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`In the personal-jurisdiction context, “[t]he Due Process Clause protects an individual’s
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`liberty interest in not being subject to the binding judgment of a forum with which he has
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`established no meaningful ‘contacts, ties, or relations.’” ITL Int’l, Inc. v. Constenla, S.A., 669 F.3d
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`493, 498 (5th Cir. 2012) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)); see
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`Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702–03 (1982). “Federal
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`court jurisdiction satisfies Due Process if two conditions are met: ‘(1) the nonresident must have
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`2 Here, the laws of Texas govern the analysis. Bulkley & Assocs., L.L.C. v. Div. of Occupational Safety & Health of
`Cal., ___ F.4th ___, ___, No. 20-40020, 2021 WL 2374295, at *3 (5th Cir. June 10, 2021) (“Personal jurisdiction in
`federal court is governed by the law of the state in which the federal court sits.”).
`3
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`minimum contacts with the forum state, and (2) subjecting the nonresident to jurisdiction must be
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`consistent with traditional notions of fair play and substantial justice.’” E. Concrete Materials,
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`Inc. v. ACE Am. Ins. Co., 948 F.3d 289, 296 (5th Cir. 2020) (quoting Freudensprung v. Offshore
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`Tech. Servs., Inc., 379 F.3d 327, 343 (5th Cir. 2004)). There are “two kinds of personal
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`jurisdiction: general (sometimes called all-purpose) jurisdiction and specific (sometimes called
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`case-linked jurisdiction) jurisdiction.” Ford Motor Co., 141 S. Ct. at 1024; see Steinberg v. Int’l
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`Crim. Police Org., 672 F.2d 927, 928 (D.C. Cir. 1981) (Ginsburg, J.). Because general jurisdiction
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`is not at issue, the Court only addresses specific jurisdiction.3
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`Specific jurisdiction exists “when a non-resident defendant ‘has purposefully directed its
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`activities at the forum state and the litigation results from alleged injuries that arise out of or relate
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`to those activities.’” Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522,
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`539 (5th Cir. 2019) (quoting Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865,
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`868 (5th Cir. 2001) (per curiam)); see Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.
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`915, 919 (2011). While this precept “can be ‘more aspirational than self-defining’ in practice,” a
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`few principles guide this inquiry. Power Invs., LLC v. SL EC, LLC, 927 F.3d 914, 917–18 (6th
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`Cir. 2019) (citation omitted) (quoting Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d
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`1063, 1071 (10th Cir. 2008) (Gorsuch, J.)). For instance, specific jurisdiction may exist over a
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`nonresident defendant “whose contacts with the forum state are singular or sporadic[—but] only
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`3 While TMC addresses general jurisdiction in the Motion (Dkt. #39 at pp. 13–17), in neither the response nor the
`sur-reply do Plaintiffs contend TMC is subject to the Court’s general jurisdiction (see Dkts. #45, 53). Since Plaintiffs
`effectively concede the absence of general jurisdiction, the Court does not examine it (see Dkt. #45 at p. 6).
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`if the cause of action asserted arises out of or is related to those contacts.” Int’l Energy Ventures
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`Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 212 (5th Cir. 2016) (emphasis omitted).
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`To determine whether specific jurisdiction exists, courts engage three separate lines of
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`inquiry:
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`(1) whether the defendant has minimum contacts with the forum state, i.e., whether
`it purposely directed its activities toward the forum state or purposefully availed
`itself of the privileges of conducting activities there; (2) whether the plaintiff’s
`cause of action arises out of or results from the defendant’s forum-related contacts;
`and (3) whether the exercise of personal jurisdiction is fair and reasonable.
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`Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006) (citation omitted). The
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`12(b)(2) inquiry is “fact intensive and no one element is decisive; rather the touchstone is whether
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`the defendant’s conduct shows that it ‘reasonably anticipates being haled into court.’” McFadin
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`v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009) (quoting Luv N’ Care v. Insta–Mix, Inc., 438 F.3d
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`465, 470 (5th Cir. 2006)); see Tichenor v. Roman Cath. Church of Archdiocese of New Orleans,
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`32 F.3d 953, 958 (5th Cir. 1994) (“This test is the aegis that protects a non-resident defendant’s
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`due process rights as guaranteed by the Fourteenth Amendment.”). When considering a motion to
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`dismiss for lack of personal jurisdiction, courts consider “the entire record, including the affidavits
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`and documentary evidence filed by the parties.” Stuart v. Spademan, 772 F.2d 1185, 1192 (5th
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`Cir. 1985).
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`If the party invoking jurisdiction “establishes the first two prongs, the burden shifts to the
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`[movant] to make a ‘compelling case’ that the assertion of jurisdiction is not fair or reasonable.”
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`Carmona v. Leo Ship Mgmt., Inc., 924 F.3d 190, 193 (5th Cir. 2019). Seldom is an assertion of
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`jurisdiction unfair or unreasonable after a plaintiff demonstrates minimum contacts. Wien Air
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`Alaska, Inc. v. Brandt, 195 F.3d 208, 215 (5th Cir. 1999). To evaluate and weigh the “traditional
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`notions of fair play and substantial justice,” courts examine: “(1) the burden on the nonresident
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`defendant; (2) the forum state’s interests; (3) the plaintiff’s interest in securing relief; (4) the
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`interest of the interstate judicial system in the efficient administration of justice; and (5) the shared
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`interest of the several states in furthering fundamental social policies.” Sangha v. Navig8
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`ShipManagement Priv. Ltd., 882 F.3d 96, 102 (5th Cir. 2018).
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`ANALYSIS
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`Plaintiffs contend that TMC has established sufficient minimum contacts with Texas in
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`three ways: by (1) conducting business activities through its subsidiaries as its alter egos, (2)
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`conducting business activities in conjunction with its subsidiaries as its agents, and (3) casting
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`itself into the stream of commerce through distribution of Toyota vehicles in the United States
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`(Dkt. #45 at p. 13). The Court addresses each in turn.
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`I. Minimum Contacts – Alter Ego and Agency
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`Plaintiffs begin their effort to show personal jurisdiction by focusing on TMC’s
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`relationships with its subsidiaries, arguing that the Court has personal jurisdiction over TMC.
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`Specifically, Plaintiffs allege that TMC’s subsidiaries are either alter egos or agents of TMC, the
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`parent company (Dkt. #45 at pp. 24–25; Dkt. #53 at pp. 12–13). By contrast, TMC maintains its
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`distinctiveness from these entities, claiming that neither the alter-ego nor agency theories allow
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`imputation of the subsidiaries’ forum contacts to TMC (Dkt. #49 at pp. 15–17).
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`a. Alter Ego
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`“It is a general principle of corporate law . . . that a parent corporation . . . is not liable for
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`the acts of its subsidiaries.” United States v. Bestfoods, 524 U.S. 51, 61 (1998). Nevertheless, in
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`the personal-jurisdiction context, a subsidiary’s forum contacts may be imputed to its parent
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`corporation under certain circumstances. Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579,
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`586 (5th Cir. 2010); see Minn. Mining & Mfg. Co. v. Eco Chem, Inc., 757 F.2d 1256, 1265 (Fed.
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`Cir. 1985) (“[A] court which has jurisdiction over a corporation has jurisdiction over its alter
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`egos.”). Such is the case when companies are considered to be one and the same, at which point
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`“the jurisdictional contacts of one are the jurisdictional contacts of the other for the purposes
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`of . . . due process analysis.” Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 653 (5th
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`Cir. 2002).
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`To determine whether an alter-ego relationship exists, courts examine whether:
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`(1) distinct and adequately capitalized financial units are incorporated and
`maintained; (2) daily operations of the two corporations are separate; (3) formal
`barriers between management of the two entities are erected, with each functioning
`in its own best interests; and (4) those with whom the corporations come in contact
`are apprised of their separate identity. Other factors deemed important . . . are: (1)
`common stock ownership; (2) the method and degree of financing of the subsidiary
`by the parent; (3) common directors or officers; (4) separate books and accounts;
`(5) common business departments; (6) extent to which contracts between parent
`and subsidiary favor one over the other; and (7) connection of parent’s employee,
`officer or director to subsidiary’s tort or contract giving rise to suit.
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`Miles v. Am. Tel. & Tel. Co., 703 F.2d 193, 195 (5th Cir. 1983). No single factor in this analysis
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`is dispositive. Fundamental Innovation Sys. Int’l, LLC v. ZTE Corp., No. 3:17-CV-01827-N, 2018
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`WL 3330022, at *3 (N.D. Tex. Mar. 16, 2018). “Alter ego determinations are highly fact-based,
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`and require considering the totality of the circumstances in which the instrumentality functions.”
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`Bridas S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d 347, 359 (5th Cir. 2003). Courts do, however,
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`apply a less demanding standard when analyzing alter-ego status in a 12(b)(2) motion than when
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`evaluating liability.4 Spademan, 772 F.2d at 1198 n.12. And while the party asserting jurisdiction
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`need only make a prima facie showing at this stage, Garcia v. Peterson, 319 F. Supp. 3d 863, 882
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`(S.D. Tex. 2018), it must still demonstrate that “a parent corporation exercised control and
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`dominion over a subsidiary to such a degree that . . . it would be inequitable to continue to
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`4 Plaintiffs noted that TMC appears to invert this standard throughout its arguments. Motion Hearing, 10:30:43–31:15,
`Oct. 30, 2020 [hereinafter Hearing].
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`recognize the fiction of separate corporate identities,” Jaffer v. Standard Chartered Bank, 301
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`F.R.D. 256, 262 (N.D. Tex. 2014).
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`TMC argues that Plaintiffs have not proven that TMNA, TMS, or TEMA function as an
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`alter ego of TMC. Specifically, TMC offers that the four companies are “separate corporations,”
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`“each observ[ing] all corporate formalities necessary for [their] separate legal existence[s]” (Dkt.
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`#39 at p. 10). These entities maintain their own respective “employees, facilities, accounting
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`systems, records, and further maintain separate operations and departments” (Dkt. #39 at p. 10).
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`And even though TMC owns stock in TMNA, “TMNA, as well as TMS and TEMA, maintain their
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`own board of directors[] and manage their own employees” (Dkt. #39 at p. 16). As such, TMC
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`argues that Plaintiffs have “fallen far short” of meeting the standard necessary to impute
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`jurisdictional contacts under the alter-ego theory (Dkt. #49 at p. 16). Plaintiffs see things
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`differently, highlighting three facts they believe evince the Court’s power to exercise personal
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`jurisdiction under this theory: (1) TMC is responsible for the “overall design, development, and
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`distribution” of the vehicles at issue in this litigation; (2) TMC owns all of TMNA’s stock; and (3)
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`TMC, TMNA, TMS, and TEMA “share common marketing images, trademarks, and logos, with
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`each entity often simply presenting itself as ‘Toyota’”5 (Dkt. #53 at p. 12).
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`Plaintiffs have not offered sufficient evidence that TMNA, TMS, or TEMA is an alter ego
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`of TMC. To satisfy this standard, Plaintiffs needed to prove that the relationship between TMC
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`and any one of these other entities is so all-consuming as to constitute complete domination by
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`TMC. Hanson Pipe & Prods., Inc. v. Bridge Techs., LLC, 351 F. Supp. 2d 603, 612 (E.D. Tex.
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`2004), aff’d, 160 F. App’x 380 (5th Cir. 2005); see, e.g., Graduate Med. Educ. Dev., LLC v. St.
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`George’s Univ., Ltd., No. CV H-15-2641, 2016 WL 5844707, at *6–8 (S.D. Tex. Oct. 6, 2016).
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`5 In their response, Plaintiffs purport to advance the alter-ego theory, but the substance in that section only concerns
`agency theory (see Dkt. #45 at pp. 24–26).
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`When considering the facts Plaintiffs present, the evidence is inadequate to show that TMC
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`dominates TMNA, TMS, or TEMA to the extent that these companies have, “for practical
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`purposes, surrendered [their] corporate identit[ies].” Gardemal v. Westin Hotel Co., 186 F.3d 588,
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`594 (5th Cir. 1999); see Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1160 (5th Cir. 1983)
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`(“[1]00% stock ownership and commonality of officers and directors are not alone sufficient to
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`establish an alter ego relationship between two corporations. Generally, our cases demand proof
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`of control by the parent over the internal business operations and affairs of the subsidiary in order
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`to fuse the two for jurisdictional purposes. The degree of control exercised by the parent must be
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`greater than that normally associated with common ownership and directorship.” (citations
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`omitted)). The reality is “just the opposite”—TMNA, TMS, and TEMA “function[] as
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`autonomous business entit[ies].” Gardemal, 186 F.3d at 594. This being the case, none of these
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`companies can be considered an alter ego of TMC.
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`b. Agency
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`Minimum contacts can also be imputed from one entity to another if an agency relationship
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`exists between them. Maxum Enters., LLC v. Auto. Fleet Enters., Inc., No. 3:18-CV-0687-B, 2018
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`WL 3417234, at *3 (N.D. Tex. July 13, 2018). For an agency relationship to allow for imputation
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`of contacts, “the ‘evidence must establish that the principal has both the right: (1) to assign the
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`agent’s task; and (2) to control the means and details of the process by which the agent will
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`accomplish that task.’” Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d 485, 490 (5th Cir. 2018)
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`(emphasis omitted) (quoting Indian Harbor Ins. Co. v. Valley Forge Ins. Grp., 535 F.3d 359, 364
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`(5th Cir. 2008)). To succeed under this theory, the party invoking jurisdiction must show that the
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`entity acted as the principal’s agent “at the time of the relevant conduct.” Embarcadero Techs.,
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`Inc. v. Redgate Software, Inc., No. 1:17-CV-444-RP, 2018 WL 315753, at *7 (W.D. Tex. Jan. 5,
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`2018). “An agency relationship must be affirmatively established and not presumed.” Horton v.
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`Sunpath, Ltd., No. 3:20-CV-1884-B-BH, 2021 WL 982344, at *4 (N.D. Tex. Feb. 16, 2021), report
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`and recommendation adopted, 2021 WL 977065 (N.D. Tex. Mar. 15, 2021).
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`To demonstrate an agency relationship among TMC and the other companies, Plaintiffs
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`advance Toyota’s distribution network and the downstream positions of TMNA, TMS, and TEMA
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`as proof that necessitates the imputation of the subsidiaries’ jurisdictional contacts (Dkt. # 45 at
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`pp. 24–25). Plaintiffs also stress TMC’s “direction and supervision” over TMNA, TMS, and
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`TEMA as evidence of agency relationships (Dkt. #45 at pp. 8, 10). Additionally, Plaintiffs request
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`the Court consider the extent to which “TMC’s domestic subsidiaries perform functions in the U.S.
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`that TMC would otherwise have conducted itself, namely, the marketing and promotion of all
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`Toyota vehicles” (Dkt. #53 at p. 13). TMC responds that Plaintiffs’ arguments are not enough
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`(Dkt. #39 at pp. 7, 14, 20; Dkt. #49 at pp. 16–17). In particular, TMC argues that, “in the absence
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`of evidence that TMC itself engaged in relevant acts in Texas . . . , Plaintiffs cannot establish
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`specific jurisdiction over TMC through its relationship with the other Toyota Defendants” (Dkt.
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`#39 at p. 17).
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`Plaintiffs have offered insufficient evidence to prove that TMNA, TMS, or TEMA is
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`TMC’s agent. TMC assuredly has a close business relationship with the other defendants, but an
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`agency relationship is not evident from the record. Plaintiffs offer no proof that TMC “assign[s]
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`tasks and control[s] the means and details of the process by which [TMNA, TMS, or TEMA]
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`conducts [their] business.” Horton, 2021 WL 982344, at *4. Absent affirmative proof of an
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`agency relationship between TMC and these other three companies, no such connection exists,
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`which means the contacts of TMNA, TMS, and TEMA cannot be imputed to TMC for
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`jurisdictional purposes under the agency theory. See, e.g., Doe v. Compact Info. Sys., Inc., No.
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`3:13-CV-5013-M, 2015 WL 5437702, at *6 (N.D. Tex. Aug. 25, 2015), report and
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`recommendation adopted, 2015 WL 5439037 (N.D. Tex. Sept. 15, 2015); Havel v. Honda Motor
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`Europe Ltd., No. H-1291, 2014 WL 4967229, at *15 (S.D. Tex. Sept. 30, 2014).
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`II. Minimum Contacts – Stream of Commerce
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`Without the alter-ego or agency theories, Plaintiffs must demonstrate the Court’s
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`jurisdiction over TMC through the stream-of-commerce theory of specific jurisdiction. This
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`approach typically involves “a nonresident defendant, acting outside the forum, plac[ing] in the
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`stream of commerce a product that ultimately causes harm inside the forum.” Goodyear, 564 U.S.
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`at 926; see Williams v. Romarm, SA, 756 F.3d 777, 784 (D.C. Cir. 2014) (“Personal jurisdiction
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`can also be premised on a defendant’s participation in the ‘stream of commerce,’ which ‘refers to
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`the movement of goods from manufacturers through distributors to consumers.’” (quoting J.
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`McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 881 (2011) (plurality opinion))).
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`Plaintiffs assert that, through its corporate structure, TMC “design[s], manufacture[s],
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`assemble[s], and developmentally test[s]” the Class Vehicles and then, “[r]egardless of where the
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`vehicle is manufactured,” places these vehicles into the stream of commerce “through TMS’s
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`network of dealers” (Dkt. #45 at p. 10). Because “TMC expected the Class Vehicles to be
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`purchased by or used by consumers” in Texas, Plaintiffs assert that TMC has established sufficient
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`minimum contacts under the stream-of-commerce theory (Dkt. #53 at p. 9). TMC disagrees,
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`arguing that Plaintiffs’ allegations are insufficient under the stream-of-commerce principle
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`because “Plaintiffs have not alleged facts or presented proof demonstrating TMC designed its
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`vehicles for uses specific to the state of Texas, that the market for automobiles in Texas is unique,
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`or that TMC had specific knowledge of sales in Texas” (Dkt. #49 at p. 11).
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`When courts
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`in
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`the Fifth Circuit apply
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`the stream-of-commerce
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`theory,
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`the
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`minimum-contacts prong is satisfied “so long as the court ‘finds that the defendant delivered the
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`product into the stream of commerce with the expectation that it would be purchased by or used
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`by consumers in the forum state.’” Ainsworth v. Moffett Eng’g, Ltd., 716 F.3d 174, 177 (5th Cir.
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`2013) (quoting Bearry v. Beech Aircraft Corp., 818 F.2d 370, 374 (5th Cir. 1987)).
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`Under th[is] test, “mere foreseeability or awareness is a constitutionally sufficient
`basis for personal jurisdiction if the defendant’s product made its way into the
`forum state while still in the stream of commerce,” but “the defendant’s contacts
`must be more than random, fortuitous, or attenuated, or of the unilateral activity of
`another party or third person.”
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`Id. (original alterations and footnote omitted) (first quoting Luv N’ Care, 438 F.3d at 470; and then
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`quoting ITL Int’l, 669 F.3d at 498).6
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`The Court begins by considering the two facets of minimum contacts, purposeful availment
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`and relatedness, addressing each in turn.
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`a. Purposeful Availment
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`Looking first at purposeful availment, the Court views the facts underlying the Motion to
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`be essentially uncontested. Accordingly, after examining the record, the Court finds TMC to have
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`6 Despite multiple attempts to clarify stream-of-commerce precedent, the Supreme Court has not provided a majority
`view on the subject since World-Wide Volkswagen. See Cincinatti Ins. Co. v. Samsung SDI Co. Ltd., No. 5:17-CV-
`1688-LCB, 2020 WL 1536592, at *7 (N.D. Ala. Mar. 31, 2020). Following the Supreme Court’s decisions in both
`Asahi and McIntyre, the Fifth Circuit held that its stream-of-commerce framework remained unchanged. See Irving
`v. Owens-Corning Fiberglas Corp., 864 F.2d 383, 386 (5th Cir. 1989) (“Because the Court’s splintered view of
`minimum contacts in Asahi provides no clear guidance on this issue, we continue to gauge [a defendant]’s contacts
`with [the forum state] by the stream of commerce standard as described in World-Wide Volkswagen and embraced in
`this circuit.”); In re Chinese-Manufactured Drywall Prods. Liab. Litig., 753 F.3d 521, 541 (5th Cir. 2014) (“[T]he law
`remains the same after McIntyre . . . .”). As such, the standard announced in World-Wide Volkswagen controls here.
`The Court further notes that, contrary to TMC’s contention, the Supreme Court’s decision in Bristol-Myers Squibb
`Co. v. Superior Court of California (BMS), 137 S. Ct. 1773 (2017), did not alter the current stream-of-commerce
`framework, as the opinion “makes absolutely no mention of either Justice Brennan or Justice O’Connor’s theories
`under the stream of commerce doctrine.” Lindsley v. Am. Honda Motor Co., Inc., No. CV 16-941, 2017 WL 3217140,
`at *2 (E.D. Pa. July 28, 2017); see DePuy, 888 F.3d at 777–81 (applying the same stream-of-commerce principle after
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`Case 4:20-cv-00127-ALM Document 68 Filed 07/06/21 Page 13 of 40 PageID #: 2102
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`purposefully availed itself of Texas as a forum.7 TMC manufactures vehicles, including the Class
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`Vehicles (Dkt. #45 at p. 8). TMC is also responsible for “the overall design and development
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`testing of certain U.S. bound vehicles”8 (Dkt. #45 at p. 9). In other words, through its corporate
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`structure, TMC “design[s], manufacture[s], assemble[s], and developmentally test[s]” the Class
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`Vehicles (Dkt. #45 at p. 10). Then TMC, acting in concert with its network of distributors, either
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`moves these already-assembled vehicles to the United States or has them assembled stateside, after
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`which this network propels the vehicles downstream for sale across the United States, including
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`Texas (Dkt. #39 at p. 9 n.2; Dkt. #45 at p. 10). Furthermore, the interconnected corporate structure
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`of the four defendants—with TMC at the head—bases its domestic operations in Texas (see Dkt.
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`#45 at pp. 10–11; Hearing, supra, 10:02:48–10:03:28). Under personal-jurisdiction precedent,
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`these connections to Texas as the forum state are readily apparent and, taken on the whole, are
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`certainly sufficient to satisfy the purposeful-availment requirement under the stream-of-commerce
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`theory. See Frito-Lay N. Am., Inc. v. Medallion Foods, Inc., 867 F. Supp. 2d 859, 867–68 (E.D.
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`Tex. 2012).
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`TMC views things differently, offering two general reasons why the application of these
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`facts to established law does not show purposeful availment. First, TMC argues that its contacts
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`with third parties, i.e., TMS, TMNA, and TEMA, cannot factor into the purposeful-availment
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`calculus as to TMC. Second, TMC asserts that the facts Plaintiffs allege and rely upon are wholly
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`BMS); see also, e.g., Semcon IP Inc. v. TCT Mobile Int’l Ltd., No. 2:18-CV-00194-JRG, 2019 WL 2774362, at *2–3
`(E.D. Tex. July 2, 2019); Slyce Acquisition Inc. v. Syte - Visual Conception Ltd., 422 F. Supp. 3d 1191, 1201 (W.D.
`Tex. 2019); LLOG Expl. Co., L.L.C. v. Fed. Flange, Inc., No. CV 17-2323, 2019 WL 4038599, at *5–6 (E.D. La. Aug.
`27, 2019).
`7 TMC requests that the Court disregard any mention of an aggregated “Toyota” defendant that consists of the four
`separate defendants in the action (see Dkt. #39 at p. 19; Dkt. #49 at p. 12). TMC’s position is a correct statement of
`law, and the Court accordingly analyzes specific jurisdiction through a disaggregated lens. See, e.g., Diece-Lisa
`Indus., Inc. v. Disney Enters., Inc., 943 F.3d 239, 251–52 (5th Cir. 2019).
`8 TMC does not contest that it designs, develops, and manufactures the Class Vehicles. Hearing, supra, 9:48:03–:22.
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`Case 4:20-cv-00127-ALM Document 68 Filed 07/06/21 Page 14 of 40 PageID #: 2103
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`insufficient to demonstrate purposeful availment for the stream-of-commerce analysis. The Court
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`breaks down each argument in turn, ultimately finding them unpersuasive.
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`TMC’s first contention pertains to its commercial relations with its American subsidiaries;
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`TMC argues that merely distributing the vehicles at issue into the stream of commerce “through a
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`distributor located in the forum state is not sufficient to establish specific jurisdiction” (Dkt. #39
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`at p. 20). To start, the proposition TMC offers does not correctly state the law. Writing for the
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`unanimous Walden Court, Justice Thomas made clear that “a defendant’s contacts with the forum
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`State may be intertwined with his transactions or interactions with the plaintiff or other parties.”
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`571 U.S. at 286 (emphasis added).
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`More to the point, TMC’s position is an unduly narrow reading of relevant caselaw. The
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`reality is this: finding specific jurisdiction under the stream-of-commerce theory may very well be
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`appropriate when a third party is involved in, but not directly responsible for, a product’s arrival
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`in a particular forum. Dillard v. Fed. Corp., 321 F. Supp. 3d 752, 758–59 (W.D. Tex. 2018); see
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`J.S.T. Corp. v. Foxconn Interconnect Tech. Ltd., 965 F.3d 571, 576 (7th Cir. 2020) (Barrett, J.)
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`(“The stream of commerce theory contemplates that a defendant’s product may go through
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`middlemen before reaching consumers . . . .”). Utilizing a distribution network involving distinct
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`legal entities does not, by default, immunize TMC from the Court’s reach. See, e.g., Coulter v.
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`Sears, Roebuck & Co., 426 F.2d 1315, 1317–18 (5th Cir. 1970). Fifth Circuit law makes clear that
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`placing one or more degrees of separation from the customer does not foreclose the possibility of
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`purposeful availment under the stream-of-commerce analysis. See ITL Int’l, 669 F.3d at 498.
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`Attempting to circumvent this principle, TMC relies on the formalities of corporate
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`structure and transactions to insist that it has not purposefully availed itself of Texas as a forum
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`(see, e.g., Dkt. #49 at p. 10 (“TMC does not sell its vehicles directly to consumers in Texas”)).
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`Case 4:20-cv-00127-ALM Document 68 Filed 07/06/21 Page 15 of 40 PageID #: 2104
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`TMC primarily argues that “using a subsidiary with ties to Texas to act on its behalf