Petition for Writ of Certiorari — Jugometal Enterprise for Import & Export of Ores & Metals v. Irving

Supreme Court brief1989

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What actually matters in this document.

Text

88-2099

No.

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JOSEPH F. SPANI

~= Says

CTERK

Supreme Court, U.S.

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JR.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

JUGOMETAL ENTERPRISE FOR IMPORT & EXPORT

OF ORES & METALS,

Pe titione he

MARCUS IRVING, JR. & FRANKIE IRVING,

Re sponde nts

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Of Counsel

BRANKO SPAHIC

Deligradska 28

Beograd, Yugoslavia

GEORGE COCHRAN *

Law Center

University, MS 38677

(601) 232-7361

BERNARD JAFFE

One Madison Avenue

New York, N.Y. 10010

Counsel for Jugometal

* Counsel of Record

WILSON - EPES PRINTING Co.

Inc. - 789-0096 -

se casi. ae

WASHINGTON, D.C. 20001

QUESTIONS PRESENTED

I. In products liability litigation, after this Court’s

four-four division in Asahi Metal Indus. Co. v. Superior

Court, 480 U.S. 102 (1987), is a conclusion that it is

“merely foreseeable” that a product will be used in the

forum state a constitutionally-sufficient basis upon which

to justify a finding of jurisdiction?

II. If “mere foreseeability” is the appropriate test to

be employed, may the “awareness” component be prop-

erly applied to assert jurisdiction over a foreign entity

only having knowledge of activities occurring at a port

of entry in the United States and that the product al-

leged to have caused injury, asbestos, was to be used by

one manufacturer whose location was not known and

could not be ascertained?

Ill. If, as Asahi requires, sovereignty concerns create

a higher jurisdiction barrier, what international factors

are to be balanced against the interests of the forum in

determining whether an exercise ot jurisdiction is reason-

able?

IV. Is the “stream of commerce” approach to personal

jurisdiction applicable to a foreign entity which did not

produce the product, never had title or physical possession

and whose only role in cennection with its entry into

commerce was arranging for shipment to the United

States and assuring compliance with the law of a foreign

country?

(i)

PARTIES TO THE PROCEEDING

Marcus Irving, Jr. and Frankie Irving

Alex Aguilar

Roosevelt Alley and Ethel Mae Alley

Garvin Auston

Chester Batts

Lonnie Bogany and Lula Bogany

Frank Braden

Otis Braden

Johnny Martin Branch and Lila Branch

James H. Bell and Lois Bell

Arthur Bibbs and Eva Bibbs

Joe Burnett and Florence Burnett

Willie Burr and Alvin Edwards

Clarence Bush and Ruth Bush

Grover Bush and Betty Bush

John Henry Carter Branch

Eddie Mae Cooks

Levonia Clark, Safronia Evans, Ophelia Ransburg,

and Tim Jackson

Nehemiah Cooper and Carey Lee Cooper

Murphy Cormier

Willie Crockett

Richard Dill and Clara Dill

Jimmy M. Delaney

Herman Eckford and Marie Nell Eckford

John Wesley Fenley and Vera C. Fenley

Willie Flowers and Mercy Flowers

Percy Foster

Daniel Jose Gonzales and Lidia Gonzales

Charlie Grant and Oretha Gray

David Hill

Floyd Hal! and Bertha Mae Hall

Cyrus Hope Holiday

Eula Holley

Doe Harden and Erma Lee Harden

Ezra Harrell and Annie M. Harrell

Freeman Jardon

iil

Lamar Johnson

Mary Braxton Johnson and Ervin Johnson

Mellanie Johnson

Odie Huff Johnson

Shedrick Johnson, Jr. and Eddie M. Johnson

Eugene Julius Jones and Elnora Jones

Joe Etta Jones

Tommie Jones and Minnie Jones

Wiulie David Jones and Ernestine Jones

Antoine Joseph, Sr. and Lillian Joseph

Edward J. Lewis

S. D. Livingston and Alice Livingston

Lonnie B. Lott

Thurman Mallory

Charles Willie McCray and Della McCray

Leroy MeWright and Thelma MeWright

Hurpe Miles and Georgia Miles

Clyde Nelms and Emma Nelms

Ike Nunn and Maggie Nunn

James Nunn and Edna Nunn

Roy Nunn and Azelia Nunn

William Parker and Gladys Parker

Leroy C. Pennie and Berneice Pennie

Alvin Pruitt and Oren L. Pruitt

Joe Lee Reed

Herman A. Rice and Ernestine Rice

Alfred Rodriguez and Lidia Rodriguez

Alex Marshall Saddler and Annie May Saddler

Doris Jean Sams

Robert L. Shepard

Melvin S. Smith

Wilford St. Julian and Cadile St. Julian

Carl St. Julian and Marjorie St. Julian

Sidney Stewart and Vivan Stewart

Lawrence Tatum and Bessie Mae Tatum

Amos Telsede and Marie Telsede

Wardell Thompson and Lillie Thompson

Jack Thornton and Ellen Thornton

Arvine Waddle

David Waldrup and Ella Waldrup

Leo King Walker and Elsie Walker

Jerry Lee Williams and Laura Mae Williams

Willie Williams

Porter Willis and Darlene Willis

Alex Young

Inovia Young

James Anderson and Dorothy Jean Anderson

Matthew Barnes, Jr.

Benjamine Brooks

Earnest Carrathus and Rachel Carrathus

Oliver Chambers

Willie C. Dixon and Maxine Dixon

J. B. Gatlin

Alvaro R. Garcia and Aminta Garcia

Charlie Graves, Sr.

Ethel Lucille Harris

Herbert Hawthorne and Nola M. Hawthorne

Louis Edward Irving

Charlie Doe Jackson, Jr.

Matthew Jones and Edna Moody Jones

Carlton Lee Joseph and Lillie M. Joseph

Steve Levi and Cleotha Levi

Mark Lusk and Ora Lusk

Willie McGowan and Ernestine McGowan

Delmer Nelms

L. H. Nelms

Huddell Soloman and Dorothy Mae Solomon

Livie Thompson, Individually and as Personal

Representative of the Heirs and Estate of

Sam Thompson, Deceased

Andrew Waldrup

Carey Can:.dian Mines

Combustion Eng.

Crown Cork & Seal

Raybestos-Manhattan /Raymark

Nicolet, Inc.

Owens-Corning Fiberglas Corp.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ............... iu cosccaienetariosaaa dee i

PARTIES TO THE PROCEEDING ...........0000...0.0.0.....-4 ii

CR Pe TORT siciies tipsabntianensrinccatncenincgemmaapaniain 1

RU ar IIIT oot cack hina eecaseths cornice meget scienabaaaeersonns 1

CONSTITUTIONAL PROVISION INVOLVED ........... 2

ST ATR CO TRIM SA TIEe occas cccivenccesessiccccsscscesnsesens 2

REASONS FOR GRANTING THE WRIT ................... 7

I. THE DECISION BELOW RAISES THE

ISSUE LEFT UNRESOLVED BY THIS

COURT’S FOUR-FOUR DIVISION IN ASAHI

METAL INDUS. CO., LTD. v. SUPERIOR

COURT AND WITH RESPECT TO WHICH

THERE CONTINUES TO BE A CONFLICT

BETWEEN CIRCUITS AS WELL AS STATE

COURTS OF LAST RESORT ..........005...00:.-0000.. 7

Il. THE LOWER COURT’S FAILURE TO BAL-

ANCE THE INTERESTS OF THE FORUM

AGAINST INTERNATIONAL CONCERNS IS

DIRECTLY IN CONFLICT WITH ASAHI:

WHAT THESE CONCERNS ARE PRESENTS

AN IMPORTANT FEDERAL QUESTION

WHICH HAS NOT HERETOFORE BEEN

DESC EIIIDD ERY TERE COUR E onic ncncvcsencsisnccnenenss- 10

Ill. BY APPLYING THE “STREAM OF COM-

MERCE” APPROACH TO AN ENTITY HAV-

ING NO DIRECT FINANCIAL INTEREST

IN A PRODUCT CAUSING INJURY, THE

LOWER COURT'S OPINION PRESENTS AN

IMPORTANT FEDERAL QUESTION WHICH

HAS NOT BEEN, BUT SHOULD BE, SET-

REGGE SEE CRORE SAPUUEE seis secsceccasaaipnccctsos 14

CAPR ALARMED iS Sctodacdn aioe cnvercenciieneaealeanantsaacemstmentnaaanadle 17

TABLE OF AUTHORITIES

CASES Page

Ag-Chem. Equip. Co. v. Avco Corp., 666 F. Supp.

1010, 1014 (1987), vacated, 701 F. Supp. 103

Cy ees | RL “PII cca sahirnsnlseckasspacoccteennenencnanat 9

Andrews University v. Robert Bell Indus., Ltd.,

685 F. Supp. 1015, 1019 (W.D.Mich. 1988) ........ 9

Asahi Metal Indus. Co., Ltd. v. Superior Court,

ee Reds Se CEE Sirccsicecccsnatans 7, 8,10, 11,12

Batton v. Tennessee Farmers Mut. Ins. Co., 736

ee Wa CBOE DP sdenntcasctccnseerecacn axe 8

Bean Dredging Corp. v. Dredge Technology, 744

a SO CIN WAI ROUND Sessa cchtsatcccademctotetenecacees 7

Donnely v. Copeland Intra Lenses, Inc., 87 F.R.D.

Bei 5 See. |: WeReRRea teeter actemny emer PLOT Uae a 15

Grange Ins. Ass’n v. Washington, 757 P.2d 933,

938 (Wash. 1988), pet. for cert. denied, 57

U.S.L.W. 3653 (U.S. April 4, 1989) .........0.00000..... 8

Heins v. Wilhelm Loh Wetzlar Optical, 522 N.E.2d

665, 006 (Manas. App. Ct. 1968) ............................. 8

Hutson v. Fehr Bros., 584 F.2d 833 (8th Cir.),

cert. denied, 439 U.S. 983 (1978)... 15

International Shoe Co. v. Washington, 326 U.S.

eG Mee 8 SB stedi Stonenc skeen oes eee eee 10

Loos v. American Energy Savers, Inc., 522 N.E.2d

B41, O66 (i. Ane. ¢€ Dist: 19668) 02.506... 9

Shute v. Carnival Cruise Lines, 863 F.2d 1487,

ORE TRA Genk EE Sis iicertac come 11

Sinatra v. National Enquirer, Inc., 854 F.2d 1191,

Bae Ck Met BES ccscdcniecc eee 11

Ward v. Baltimore Stev. Co., 4837 F. Supp. 941, 944

ORE |, sf pe RO OIE, Baeien eT Si Ae 15

Weber v. Johns-Manville Corp., 630 F. Supp. 285,

BS | Renn Meat tne ear a8. 2 16

Wessinger v. Vetter Corp., 685 F. Supp. 769, 777

ERMA: III viccssinackenicaoeecceeeiceatthiseshaaraniidateealeaaniean ak 9

Wiles v. Morita Iron Works Co., Ltd., 580 N.E.2d

Ee, Be Ree Ces BE ks oe ea eee 8,11

Witbeck v. Bill Cody’s Ranch Inn, 411 N.W.2d 439,

GAB (BIC. 1OBT) ....ccccnccesscse:. IEW AIA BERS 5 8

Vii

TABLE OF AUTHORITIES—Continued

STATUTES Page

OS TSC. 6 TGR) CIGD citiciiicteiccncennna 2

SECONDARY AUTHORITY

Comment, In Personam Jurisdiction Over Non-

Resident Manufacturers in Product Liability

Actions, 63 MICH.L. REV. 1028 (1965) ................. 14

Comment, Supreme Court—Leading Cases, 101

aa Ta. LG. Bee CiPet Dd vests ineunuin. 12

Comment, The Long-Arm Reach of the Courts Un-

der the Effect Test After Kulko v. Superior

. Court, 65 Va.L.REV. 175, 179 (1979)................... 14

Currie, The Growth of the Eong Arm: Eight Years

of Extending Jurisdiction in Illinois, 1963 U.ILL.

si. SUI. ccocacewasisanedsessiaceuehis chdeatisi/axioridin anniek abanabaeant 14

R. Degnan & M.K. Kane, The Exercise of Jurisdic-

tion Over & Enforcement of Judgments Against

Alien Defendants, 39 Hast. LJ. 799, 811

(1988) . la 13

Von Mehren & ‘Trautman, Jurisdiction to Adju di-

cate: A Suggested Analysis, 79 HARV.L.REV.

1121 (1966) thes adeno 14

IN THE

Supreme Court of the United States

OCTORER TERM, 1988

JUGOMETAL ENTERPRISE FOR IMPORT & EXPORT

OF ORES & METALS,

Pe titioner

MARCUS IRVING, JR. & FRANKIE IRVING,

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioner, Jugometal Enterprise For Import & Export

of Ores & Metals, requests that a writ of certiorari issue

to review the judgment and opinion of the United States

of Appeals for the Fifth Circuit in the above-entitled

case.

OPINIONS BELOW

The opinion of the Court of Appeals for the Fifth Cir-

cuit is reported at 864 F.2d 383 and may be found at

App. la. The decision of the United States District Court

is not reported and may be found at App. 46a. The Spe-

cial Master’s opinion is not reported and may be found

at App. 14a.

JURISDICTION

The judgment of the United States Court of Appeals

was entered on February 2, 1989. A timely petition for

rehearing or rehearing en banc was denied on March 29,

1989. App. 12a. This Court has jurisdiction pursuant to

28 U.S.C. § 1254(1) (1982).

CONSTITUTIONAL PROVISION INVOLVED

Section 1 of the Fourteenth Amendment provides “nor

shall any State deprive any person of life, liberty, or

property, without due process of law... .”

STATEMENT OF THE CASE

Petitioner, Jugometal is located in Belgrade, Yugo-

slavia. A significant portion of its business is providing

for and arranging technical and logistical services in

connection with that country’s imports and exports. Dur-

ing the relevant time frame, it was also licensed by

Yugoslavia to assist in the export of goods manufactured

or produced by that nation’s businesses. Plaintiffs (Re-

spondents) were employees of a Houston, Texas company,

Uvalde Rock Asphalt Company (Uvalde) engaged in the

manufacture of tile. They brought a diversity suit seek-

ing damages for injuries allegedly received from handling

asbestos supplied to Uvalde between 1955 and 1970.

Jugometal was one of twenty-one alleged suppliers of

asbestos named as defendant in one hundred and six

diversity cases now pending in the United States District

Court for the Southern District of Texas. The company

which mined the asbestos and placed it in containers for

shipment on vessels bound for Houston, Stragari Mines

of Yugoslavia, was not named as a defendant.

Due to the inordinate number of years which have

elapsed, development of a complete record of events and

the roles and responsibilities of those involved proved

difficult.! It is not disputed that sometime in 1953 or

1TIt is not contested that Jugometal’s business records relating

to this transaction were destroyed pursuant to Yugoslavian regula-

tions bearing on documents having an age in excess of ten years.

The major portion of the instant record, therefore, is based on

1954, the president of Huxley Development Company

(Huxley)? visited Jugometal’s one-person office in New

York City.* At that time he was informed that Stragari

asbestos was available for the United States’ market.

After locating Uvalde as a potential purchaser, he went

to Yugoslavia to negotiate a contract. Since Yugoslavian

law prohibited the export of products by companies, like

Stragari, that were not registered for foreign trade busi-

ness transactions, Stragari retained Jugometal.

Negotations resulted in the drafting of two contracts.

The first was entered into by Jugometal, on behalf of

Stragari, with Huxley. It specified the price, quality and

quantity of asbestos to be sold and that the asbestos was

to be shipped to the port of Houston in jute bags marked

“Huxley/Houston.” Under that contract, Huxley took

legal possession once the material was placed on board

ships in Yugoslavia. Testing of asbestos was to be per-

formed by a company located in Houston and expenses

incurred for this equally shared. The seller was responsi-

ble for expenses related to the return of bags.

The contract between Huxley and Jugometal was de-

signed to meet the technical requirements of Yugoslavian

law. For that reason, it denominated Jugometal, not

Stragari, as the “seller.” * The second contract, entered

depositions taken in Yugoslavia of individuals still familiar with

the transaction.

2 The company is a brokerage business in New York City now

in bankruptcy.

3 This person, during all times relevant to the instant case, was

the only representative of Jugometal present in the United States.

Other than this isolated conversation, there is no evidence in the

record that he, or Jugometal, actively solicited sales for Stragari

asbestos, or any other product, anywhere in the United States.

*It remains undisputed that Yugoslavian iaw prohibited inserting

terminology into contracts reflecting agency on behalf of non-

registered entities exporting goods. Testimony elicited in deposi-

into by Jugometal and Stragari, was substantive in na-

ture.” In this document, Stragari guaranteed quality,

quantity, delivery time, price and all other terms and

conditions found in the Jugometal/Huxley contract. It

also provided that monies paid by Huxley for the asbestos

were to be credited to Jugometal’s account with the Yugo-

slavian Bank For Foreign Trade. After deduction of

export fees and expenses (including those incurred for

the return of bags and testing), Jugometal directed that

dollars paid by Huxley be transferred in dinars (Yugo-

slavian currency) to a Stragari account.

It was Jugometal’s responsibility to make shipping ar-

rangements from Yugoslavian ports to Houston.’ After

Stragari packaged the asbestos (in bags marked “Hux-

ley /Houston’’), Stragari shipped the material by rail to

be placed on board vessels bound for Houston. At that

point, Huxley took title. It received the asbestos at the

port of Houston, had the material tested, and sold it to

Uvalde. During the period between 1955 and 1970, the

sale of Stragari asbestos by Huxley to Uvalde resulted

in a five dollar per ton profit to Huxley on sales of ap-

proximately five thousand metric tons a year. In con-

trast, Jugometal received somewhere between $2,500 and

$3,750 annually from Stragari for the logistical and tech-

nical services provided.

tions taken of corporate officials in Yugoslavia revealed that it was

then common practice for registered exporters to employ the word

“seller” when they were acting in the capacity of agent.

° Pursuant to Yugoslavian regulations, note 1, supra, this docu-

ment is no longer in existence. Evidence concerning the intent

and scope of the agreement was procured through deposition testi-

mony taken in Yugoslavia.

® Commensurate with this responsibility, when a shipment was

mistakenly delivered to New Orleans, it became Jugometal’s, not

Stragari’s, responsibility to deal with the problem.

Huxley’s president was the only person who had contact

with Uvalde. When questioned during visits to Yugo-

slavia, his responses to queries concerning the ultimate

purchaser were such that those dealing with him con-

cluded that it was his “business secret” not to be shared

with officials of Jugometal. Thus, other than knowing

that Stragari asbestos was shipped to the Port of Hous-

ton, and that asbestos testing as well as “bag cleaning”

also occurred in that city, Jugometal had no information

concerning either the final destination of the product or

its ultimate user.

On the basis of these facts, Jugometal filed a motion to

dismiss contending that the district court lacked per-

sonal jurisdiction. The Special Master found that mere

knowledge that asbestos was to be tested in Houston and

bags cleaned there was an insufficient predicate on which

to base an exercise of personal jurisdiction.’ App. at 44a.

In addition, he alluded to additional factors which sup-

ported the conclusion that an exercise of jurisdiction was

unreasonable. The “unique burden” of defending itself

in a “foreign legal system’’; the “amount of commissions

Jugometal realized . . . when compared to the exposure

to significant damages”; and the “fact that no transac-

tions have occurred between the parties since at least

1970 .. . [all made] it unreasonable to require” defense

of the suit. Jd. at 44a-45a.

The district judge adopted the Special Master’s rec-

ommendation and affirmed. The court determined that

“Jugometal did not have a purpose, commercial or other-

wise, in Texas.” Id. at 48a. The fact that testing and

cleaning of bags occurred at the port of Houston was

deemed insufficient to impute knowledge of the ultimate

user: “That the asbestos’s commercial stream stopped

temporarily in Houston was entirely fortuitous.” Jd. As

*The Special Master was also careful to point out that the

president of Huxley had taken all steps necessary to insure that

Jugometal did not learn the ideniity of the ultimate purchaser,

Uvalde. App. at 41a.

such, “a Yugoslavian broker having no direct contacts

with Texas should not be subject to the judicial power of

this state merely because his customer’s product ended up

in Texas.” Jd. at 49a. Finally, and in keeping with the

approach of the Special Master, international concerns

coupled with the inequity of requiring Jugometal to re-

spond to claims of such magnitude “more than fifteen

years after it had stopped sending asbestos out of Yugo-

slavia under a contract with a New York buyer” war-

ranted the conclusion that a jurisdictional exercise was

unreasonable. Jd. at 50a. The court certified the inter-

locutory order as appealable and stayed all one hundred

and six eases pending a determination of the jurisdic-

tional issue.

On appeal, the Fifth Circuit reversed. While agreeing

that Yugoslavian law prohibited Stragari from exporting

its own asbestos, obligations found in Jugometal’s con-

tract with Huxley, and not the facts of the actual trans-

action itself, were deemed important. The fact that Jug-

ometal held itself out as a seller in the contract with

Huxley; incurred responsibility for charges with respect

to testing and bag cleaning; and accepted payments from

Huxley, were noted as meaningful criteria for purposes

of minimum contacts and purposeful availment of the

Texas forum. 7d. at 7a. Turning to somewhat cloudy

secondary matters, the court alluded to the proposition

that Jugometal “‘itself’’ conveyed asbestos to freight for-

warders * and “‘stored” the material.® Jd. In this context,

8 The record is clear that Jugometal never had legal title or

physical possession of the asbestos. It was therefore impossible

for the company, ‘“‘itself,” to convey anything. Since there are no

records available and Jugometal concedes that it was responsible

for making arrangements for shipment, there could have been

instances in which business demands were such that the company

used a freight forwarder to insure that its obligations to Stragari

were met.

® The only “storage” that occurred within Yugoslavia may have

been in warehouses owned by the port facilities during periods

the court determined that a sufficient nexus existed be-

tween the asbestos, Jugometal and Houston to warrant

an exercise of jurisdiction under the “stream of com-

merce” /“foreseeability” test for personal jurisdiction. /d.

at 6a, Ta-9a. The analysis pertaining to reasonableness

was limited to noting that the “heavy burden” placed on

Jugometal in defending was outweighed by the fact that

the case involved Texas plaintiffs allegedly receiving in-

juries in the state. Jd. at 10a. No mention was made of

the intervening number of years. Jugometal’s small com-

mission, or the international consequences of a finding

that Petitioner was subject to the district court’s juris-

diction.

REASONS FOR GRANTING THE WRIT

I. THE DECISION BELOW RAISES THE ISSUE

LEFT UNRESOLVED BY THIS COURT’S FOUR-

FOUR DIVISION IN ASAHI METAL INDUS. CO.,

LTD. v. SUPERIOR COURT AND WITH RESPECT

TO WHICH THERE CONTINUES TO BE A CON-

FLICT BETWEEN CIRCUITS AS WELL AS STATE

COURTS OF LAST RESORT

In Asahi Metal Indus. Co., Ltd. v. Superior Court, 480

U.S. 102 (1988), Justice O’Connor wrote for four Jus-

tices and specifically rejected the Fifth Circuit’s “mere

foreseeability” test in favor of an “additional conduct”

approach to personal jurisdiction. In her view, for juris-

diction to attach, a defendant must have engaged in ac-

when the asbestos (owned by and under the control of Stragari)

was awaiting placement on board vessels. See app. at 4la (Special

Master noting that Jugometal “arranged to store” the asbestos).

10 The opinion cites Bean Dredging Corp. v. Dredge Technology,

744 F.2d 1081 (5th Cir. 1984), 480 U.S. at 111-112, the decision

relied upon by the panel below. See app. at 6a, 7a-9a.

tivity indicating an intent or purpose to derive economic

benefits from the market of the forum state:

[F Jor example, designing the product for the market

in the forum State, advertising in the forum State,

establishing channels for providing regular advice to

customers in the forum State, or marketing the

product through a distributor who has agreed to

serve as a sales agent in the forum State.

[480 U.S. at 112.]

Justice Brennan, writing for another bloc of four Jus-

tices, argued that Justice O’Connor’s position reflected a

“marked retreat,” 480 U.S. at 118 (Brennan, J., concur-

ring in part and concurring in judgment), and contended

that the ‘mere foreseeability’” approach adopted by the

Fifth Circuit was in accord with traditional concepts of

Due Process. Jd. at 117-20. The lower court, after not-

ing the division, concluded that “|b]ecause [this Court’s]

splintered view of minimum contacts in Asahi provides

no clear guidance ... we [will] continue to guage Jugo-

metal’s contacts with Texas’ under the foreseeability

standard. App. at 6a.

The lower court’s reaction to Asahi reflects the confu-

sion which has followed the decision.'' Although there is

11 Wiles v. Morita Iron Works Co., Ltd., 530 N.E.2d 1382, 1388,

1389 (Ill. 1988) (‘extremely balkanized opinion ... [and] it is not

possible to determine . . . whether the broad or narrow version of

the stream of commerce theory is correct.” ) ; Grange Ins. Ass’n v.

Washington, 757 P.2d 933, 938 (Wash. 1988), pet. for cert. denied,

57 U.S.L.W. 3653 (U.S. April 4, 1989) (issue of ‘‘purposefulness”’

described as one this Court “has been unable to resolve.”) ; Batton

v. Tennessee Farmers Mut. Ins. Co., 736 P.2d 2, 5 (Ariz. 1987)

(“Asahi ... may represent a slight retreat from the ‘purposeful

availment’ test” previously enunciated); Witbeck v. Bill Cody’s

Ranch Inn, 411 N.W.2d 439, 448 (Mich. 1987) (noting that “[a]l-

though the debate continues” Justice O’Connor’s position is cor-

rect) ; Heins v. Wilhelm Loh Wetzlar Optical, 522 N.E.2d 989, 996

a serious issue as to whether the court properly applied

the “mere foreseeability” test as perceived by Justice

Brennan " (the basis for the second question presented),

there is no question that the instant case squarely pre-

sents for decision that which was left unresolved in

Asahi: is foreseeability or the “additional conduct”

standard to be employed when jurisdiction is sought on

the basis of a product having been placed in the stream of

commerce? The compelling need to resolve the issue

clearly warrants the grant of certiorari.

(Mass. App. Ct. 1988) (opinions in Asahi concern “subtleties of

elusive definitions of . .. minimum contacts ... .”); Loos v.

American Energy Savers, Inc., 522 N.E.2d 841, 844 (Ill. App. 4

Dist. 1988) (Asahi holds that “mere awareness” cannot be equated

with an “act purposefully directed toward the forum State.”) ;

Wessinger v. Vetter Corp., 685 F. Supp. 769, 777 (D. Kan. 1987)

(although Court evenly divided, “courts and commentators” sup-

port Brennan approach), Compare Ag-Chem. Equip. Co. v. Avco

Corp., 666 F. Supp. 1010, 1014 (1987), vacated, 701 F. Supp. 108

(W.D. Mich. 1988) (concluding that until Asahi split is resolved

“it is incumbent upon this court to follow the lead of Justice

Brennan and the Sixth Circuit.’’) with Andrews University v.

Robert Bell Indus., Ltd., 685 F. Supp. 1015, 1019 (W.D. Mich.

1988) (noting that Sixth Circuit now appears to follow the O’Con-

nor approach).

12 The “foreseeability” test requires a threshold showing that the

defendant “is aware that the final product is being marketed in the

forum state... .” 480 U.S. at 117 (Brennan, J., concurring in

part and concurring in judgment). The only evidence in the

present record of “awareness” relates to testing of asbestos and

cleaning of bags in Houston and the fact that knowledge of the

location of the one company using Stragari asbestos was inten-

tionally withheld from Jugometal officials. As noted, the district

judge viewed testing and cleaning activities at the port of entry as

“entirely fortuitous,” and therefore insufficient to impute knowl-

edge of the location of the ultimate user.

II. THE LOWER COURT’S FAILURE TO BALANCE

THE INTERESTS OF THE FORUM AGAINST

INTERNATIONAL CONCERNS IS DIRECTLY IN

CONFLICT WITH ASAHI; WHAT THESE CON-

CERNS ARE PRESENTS AN IMPORTANT FED-

ERAL QUESTION WHICH HAS NOT HERETO-

FORE BEEN DECIDED BY THIS COURT

Distinct from the question of placement of goods into

commerce is the issue of the reasonableness of an asser-

tion of jurisdiction. 480 U.S. at 113-4. Eight members

of this Court in Asahi joined with that portion of Jus-

tice O’Connor’s opinion finding that even if Asahi “pur-

posefully availed” itself of the forum state, concepts of

“fair play and substantial justice” defeated the “reason-

ableness of jurisdiction.” Jd. at 116 (Brennan, J., con-

curring in pert and concurring in judgment). Specifi-

cally, as an alien defendant, Asahi warranted a more

Sensitive approach to minimum contacts since it was

“other nations whose interests are affected by the asser-

tion of jurisdiction.” Jd. at 115. In addition, “the unique

burdens placed upon one who must defend oneself in a

foreign legal system should have significant weight in

assessing the reasonableness of stretching the long arm

of personal jurisdiction over national borders.”’ 480 U.S.

at 114.

The “fair play and substantial justice’ command of

International Shoe Co. v. Washington, 326 U.S. 310, 316

(1945), is the constitutional touchstone of due process.

In keeping with this propositicn, factors bearing on rea-

sonableness were considered at an early stage when the

Special Master noted the small commission earned by

Jugometal (1% to 1.5%) and the significant number of

years which had elapsed since the transaction. In addi-

tion, and pursuant to Asahi, he noted that the “unique

burden placed upon a party who must defend oneself in

a foreign legal system should be given significant weight

...» App. at 44a,

In his affirmance, the district judge also noted the un-

reasonableness of subjecting Jugometal to claims arising

out of shipments which occurred fifteen years earlier. In

keeping with Asahi’s requirement that the forum court

be mindful of the federal interest in maintaining foreign

relations policies and to consider procedural and substan-

tive policies of other nations whose interests might be af-

fected by an assertion of jurisdiction, 480 U.S. at 115, he

concluded :

This parochial self-interest promoting the erosion of

standards for jurisdiction will be counterproductive,

even in the short term, because reciprocal relaxations

by other jurisdictions could subject any locality’s

citizens to conflicting, simultaneous adjudications in

other states. These American workers should not be

subject to a Yugoslavian court’s processes because of

their use of Yugoslavia’s products. Similarly, a

Yugoslavian broker having no direct contacts with

Texas should not be subject to the judicial power of

this state merely because his customer’s product

ended up in Texas.

[App. at 49a. ]

On appeal, the lower court chose to ignore concerns of

fairness deemed important at the district court level; a

minimal commission coupled with the significant length

of time which has transpired since the transaction. More-

over, it limited Asahi to only require recognition of the

“ “significant weight’ placed on parties who face litiga-

tion in a foreign legal system.” App. at 10a. Accepting

the fact that defense of the suit in the Houston forum

would be burdensome, the court concluded that whatever

difficulties were presented for Jugometal, they were out-

weighed by the fact that the case involved Texas plain-

tiffs seeking compensation for injuries allegedly incurred

in the state. Jd at 10a-1la.

The court’s opinion is silent with respect to the proposi-

tion that Asahi creates a higher jurisdictional barrier

for alien defendants.'* No reference was made to the

issue of the international ramifications of an exercise of

jurisdiction as discussed by the district judge. Nor were

such matters as language barriers, distance, differences

in legal systems, the unique role of Jugometa! as a regis-

tered exporter for Yugoslavia, or the fact that destruction

of business records pursuant to government regulations '

placed Jugometal at a disadvantage in defending the suit

considered of significant moment. The fact that no con-

sideration was given these factors obviously disregards

the mandate of Asahi. Beyond this, however, is that

while Asahi requires consideration of international cri-

teria, the opinion leaves unclear what these considera-

tions are as well as the manner in which they are to be

weighed.

The Harvard Law Review," after noting that Asahi

clearly requires that “cases involving defendants from

foreign countries [be treated] differently from those in-

volving domestic out-of-state defendants,” points out that

the decision “failed to specify exactly what policies it con-

13In Wiles v. Morita Iron Works Co., Ltd., 530 N.E.2d 1882,

1386 (Ill, 1988), the Illinois Supreme Court concluded that even

if “minimum contacts” had been established, they were not suffi-

cient with respect to an alien defendant. Citing Asai, the court

pointed out that “{g]reat care and reserve should be exercised when

extending our notions of personal jurisdiction into the interna-

tional field.” Similarly, the Ninth Circuit, citing Asahi, concludes

that “litigation against an alien defendant creates a higher juris-

dictional barrier due to additional sovereignty concerns.” Shute v.

Carnival Cruise Lines, 863 F.2d 1437, 1446 (9th Cir. 1988). Ae-

cord, Sinatra v. National Enquirer, Inc., 854 F.2d 1191, 1199 (9th

Cir. 1988) (“litigation against an alien defendant creates a higher

jurisdictional barrier than litigation against a citizen from a sister

state....’")

14 See notes 1, 5, supra.

15 Comment, Supreme Court—Leading Cases, 101 Harv. L. REv.

119, 260 (1987).

sidered to be at stake... .”'® The conclusion: Asahi

leaves ‘‘the impact of foreign policy concerns on jurisdic-

tional issues uncertain,’ '’ and must be more “fully

analyzed” in future cases.’

Similarly, in a major article on the issue of foreign

defendants and exercises of jurisdiction, the authors have

this to say concerning the reasonableness /alien defendant

discussion in Asahi:

So what does all this mean? First, we clearly are

told that some specialized treatment of jurisdiction

is appropriate when a nonresident alien is defending.

No longer should the international character of the

defendant simply be ignored. Second, the Court sug-

gests that this special consideration is pertinent when

determining fairness . . . But exactly what these

speciai fairness concerns are, or how they operate,

remain somewhat in question. In fact, the case does

little to clarify existing law, other than to underscore

that the problem of how to treat alien defendants is

a real one.’®

The failure by the lower court to consider international

criteria in the context of determining if special circum-

stances exist which would make an assertion of jurisdic-

tion unreasonable, conflicts with Asahi. In addition, the

decision below presents an issue of law which must be,

but has not heretofore been decided by this Court: what

are the “special fairness concerns” that are applicable to

suits involving aliens and how and in what manner are

they to be applied in order to determine if an exercise of

jurisdiction is proper? The lower court’s conflict with

16 Jd, at 268.

17 Jd,

18 Jd. at 269.

19R. Degnan & M.K. Kane, The Exercise of Jurisdiction Over &

Enforcement of Judgments Against Alien Defendants, 39 HAST.L.J.

799, 811 (1988).

Asahi coupled with the questions which remain unan-

swered after that decision, warrant the grant of

certiorari.

Il. BY APPLYING THE “STREAM OF COMMERCE”

APPROACH TO AN ENTITY HAVING NO DIRECT

FINANCIAL INTEREST IN A PRODUCT CAUS-

ING INJURY, THE LOWER COURT’S OPINION

PRESENTS AND IMPORTANT FEDERAL QUES-

TION WHICH HAS NOT BEEN, BUT SHOULD BE,

SETTLED BY THIS COURT

The panel decision is the first reported instance of any

court concluding that in personam jurisdiction is proper

over a defendant who is not the manufacturer, distribu-

tor, wholesaler or resaler of a product allegedly causing

injury. There is no reported decision holding that an en-

tity not having a direct, substantial financial or legal

interest in a product, or its marketing, may be brought

before a distant forum to be held accountable in a

products-liability action. If not reversed, Jugometal, as

well as companies similarly situated in Yugoslavia and

other foreign countries, will be placed at a jurisdictional

risk which far exceeds the economic benefits they receive.

The stream of commerce doctrine is premised on the

belief that those who have a direct, financial interest in

the ultimate sale of a product should not be able to in-

sulate themselves by acting through intermediaries when

generating profits in the forum state.*” The doctrine thus

20 The factual background for development of the “stream of

commerce” doctrine is fully documented. See, e.g., Comment, The

Long-Arm Reach of the Courts Under the Effect Test After Kulko

v. Superior Court, 65 VA.L.REV. 175, 179 (1979), citing, Currie,

The Growth of the Long Arm: Fight Years of Extending Jurisdic-

tion in Illinois, 1963 U.ILL.L.F. 533; Von Mehren & Trautman,

Jurisdiction to Adjudicate: A Suggested Analysis, 79 HARV.L.REV.

1121 (1966); Comment, Jn Personam Jurisdiction Over Non-

Resident Manufacturers in Product Liability Actions, 63 MICH.

L.REvV. 1028 (1965).

permits states to bring before their courts nonresidents

who have legal responsibilities for the product, derive sig-

nificant economic benefit from its sale and who, therefore,

reasonably should anticipate being hauled into court in a

state where injury occurs. It is this situation to which

Asahi and all other decisions of this and the lower courts

are addressed.

‘he yeal distribution chain in the instant case, i.e.,

those who had a continuing direct financial and legal in-

terest in the asbestos, went from Stragari (the producer

of asbestos) to Huxley (the importer/purchaser) to

Uvalde (the customer of Huxley which used the product).

In exchange for a de minimis compensation and because

of requirements imposed by Yugoslavian law, Jugometal

only acted as an intermediary necessary for securing

transportation and delivery of the product from Yugo-

slavia to the United States. This service, like those per-

formed by freight forwarders or owners of commercial

carriers (boats, trucks, trains, ete.) is not one designed

to be caught up in the “stream of commerce” when suit

is brought for injuries alleged to have been incurred from

or by a serviced product.

The unique attempt to bring Jugometal into the Hous-

ton forum presents a fact situation never analyzed by

this Court or a court of appeals.** Two district court

decisions, however, lay the analytical framework. In

Ward v. Baltimore Stev. Co., 4837 F. Supp. 941, 944

(I2.D.Pa. 1977), the court reached the following conclu-

sion with respect to asserted in personam jurisdiction

over a freight forwarder sued for damages for injuries

allegedly resulting from highly-toxic cargo:

21 Cf., Hutson v. Fehr Bros., 584 F.2d 833 (8th Cir.), cert. de-

nied. 439 U.S. 983 (1978) (injury from chain; company responsible

for packaging not subject to in personam jurisdittion in forum

where injury occurred); Donnely v. Copeland Intra Lenses, Inc.,

87 F.R.D. 80 (E.D.N.Y. 1980) (eye injury; company sterilizing and

packaging product not subject to forum-court’s jurisdiction in

impleader action).

[While it is quite reasonable from ...a due process

standpoint to subject a non-resident manufacturer,

importer or distributor to jurisdiction wherever its

products may cause harm, since to do so encourages

those with a substantial interest in a product to be

responsible for its safety, nevertheless, this justifica-

tion is absent in the case of a freight forwarder who

has no interest in the product other than to perform

the purely ministeria! task of arranging for its move-

ment from one location to another. (Emphasis

added )

The analysis in Ward, i.e., those with “no interest” in

a product other than its “movement from 2ne location to

another” cannot he hauled into court is contrasted with

Weber v. Johns-Manville Corp., 630 F. Supp. 285, 288

(D.N.J. 1986). In that case an alleged “broker” made

arguments somewhat similar to those now presented by

Jugometal. Finding the exertion of jurisdiction to be

proper, the court detailed with exactness the defendant’s

responsibilities:

Pacor [the “broker”’] was intimately involved in the

asbestos industry for a number of years as contrac-

tor, distributor, and fabricator. Its familiarity with

the hazards and norms of the industry is evidenced

by its practice of requiring employees working in

areas of excessive dust and concentration to wear

protective devices and respirators. Pacor was not

an unsophisticated plyer of the trade... . [T]he

mere broker labe! does not apply.

As a entity merely assigned the responsibility of fa-

cilitating the export of asbestos and a myriad of other

Yugoslavian products, Jugometal was not “intimately in-

volved in the asbestos industry.” It was never a member

of the direct, profit-motivated distribution chain estab-

lished for the sale and distribution of Stragari asbestos.

The cases designed to deal with manufacturers, distribu-

tors, wholesalers and retailers for purpose of a minimum

contacts/due process analysis are therefore inapplicable.

As previously pointed out, taken to its logical conclusion,

the lower court opinion can and will place Jugometal and

companies similarly situated in a position of being held

accountable by American courts for alleged injuries from

innumerable products with respect to which there is no

direct, continuing business interest. What is required, is

factual recognition of the role which Jugometal played in

the transporting of asbestos from Yugoslavia to the

United States. Once done, Due Process criteria must be

put in place which clearly set forth at what point export

activities fall within the scope of jurisdictional risk. The

issue is important, and not having heretofore been decided

by this Court, warrants the grant of certiorari.

CONCLUSION

For the foregoing reasons, Petitioner requests that a

writ of certiorari issue to review the decision by the

United States Court of Appeals for the Fifth Circuit.

Respectfully submitted,

Of Counsel GEORGE COCHRAN *

BRANKO SPAHIC Law Center

Deligradska 28 University, MS 38677

3eograd, Yugoslavia (601) 232-7361

BERNARD JAFFE

One Madison Avenue

New York, N.Y. 10010

Counsel for Jugometal

* Counsel of Record

APPENDICES

APPENDIX A

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 87-6272

MARCUS IRVING, JR. and FRANKIE IRVING,

Plaintiffs-A ppellants,

OWENS-CORNING FIBERGLAS CorpP., et al.,

Defendants,

JUGOMETAL ENTERPRISE FOR IMPORT and

EXPORT OF ORES AND METALS,

Defendant-A ppellee.

Feb. 2, 1989

Appeal from the United States District Court

for the Southern District of Texas

Brent M. Rosenthal, Dallas, Tex., for plaintiffs-

appellants.

John H. Boswell, A. David Carlson, Holly H. William-

son, Houston, Tex., for defendant-appellee.

George C. Cochran, Professor of Law, University of

Mississippi, University, Miss., Bernard Jaffe, New York

City, for Jugometal Enterprises.

Before JOHNSON, DAVIS and JONES, Circuit

Judges.

W. EUGENE DAVIS, Circuit Judge:

Appellants Marcus Irving, Jr. and Frankie Irving ap-

peal the district court’s order dismissing their products

liability suit against Jugometal Enterprise for Import

and Export of Ores and Metals (Jugometal) for lack

of personal jurisdiction. Because we conclude that the

district court did have personal jurisdiction over Jugo-

metal, we reverse and remand.

This is one of 106 products liability actions pending

in the Southern District of Texas that stem from

employment-related exposure to asbestos at the Uvalde

Rock Asphalt Company (Uvalde) in Houston. The var-

ious plaintiffs have sued twenty-one companies, includ-

ing Jugometal, alleged to have supplied raw asbestos to

Uvalde from the 1950’s through the early 1970’s.

Marcus Irving, a former Uvalde employee, sued Jugo-

metal under strict liability, negligence and breach of war-

ranty theories for respiratory injuries allegedly linked to

his asbestos exposure at Uvalde. Jugometal, a Yugoslav-

jan company, participated in supplying about 5,000

metric tons of Yugoslavian asbestos to Uvalde each year

between 1956 and 1970. These purchases represented all

of Uvalde’s asbestos supply during this time. The supply

chain involved four players: (1) Stragari Mine in Yugo-

slavia, which mined the raw asbestos; (2) Jugometal, a

licensed trading company that introduced the asbestos

to America; (8) Huxley Development Company, an Amer-

ican broker that bought the asbestos from Jugometal;

and (4) Uvalde, who bought the asbestos from Huxley.

Yugoslavian trade laws prohibited Stragari from sell-

ing the asbestos to foreign countries; Jugometal, which

had the necessary export licenses, sold the asbestos to

38a

Huxley. This important fact is established by the only

surviving contract from this supply chain, a contract be-

tween Huxley and Jugometal dated November 24, 1959;

it identifies Jugometal as the “seller”? and Huxley as the

“buyer” of the asbestos. No evidence indicates that Jugo-

metal, which was not qualified to do business in Texas

and solicited no asbestos sales directly in Texas, knew

Uvalde was the ultimate purchaser. Jugometal kept no

offices, employees or property in Texas.

Jugometal shipped asbestos to the Port of Houston

roughly every two months during this fifteen-year rela-

tionship. The Jugometal-Huxley contract required Jugo-

metal to ship the asbestos C.I.F. in jute bags labelled

“Houston-Huxley.” Huxley and Jugometal agreed to split

the cost of testing asbestos samples from each shipment

at a Houston laboratory. The bags themselves were

cleaned in Houston before being returned to Jugometal;

Huxley paid the cleaning fee and then deducted the

charges from its payments to Jugometal using “debit

notes” that identified Houston Bag and Burlap as the

cleaning company. According to deposition testimony,

Jugometal and Stragari agreed that Jugometal would

store the asbestos, ship it, prepare invoices for Huxley,

collect on Huxley’s letters of credit and transfer the pay-

ments to Stragari after deducting a one percent com-

mission.

Jugometal filed a motion to dismiss for lack of subject

matter jurisdiction under Fed.R.Civ.P. 12(b) (2), after

which the parties conducted additional discovery on the

issue. A special master appointed by the district court

recommended that the court grant Jugometal’s motion to

dismiss; the court adopted the special master’s recom-

mendation and dismissed each of the 106 actions against

Jugometal for lack of personal jurisdiction. The district

court entered judgment under Rule 54(b) in this case and

stayed the rest pending this appeal by the Irvings.

Il.

The Irvings bear the burden of establishing personal

jurisdiction over Jugometal. But they need only present a

prima facie case for personal jurisdiction at this point

because Jugometal predicated its motion to the district

court solely on affidavits and depositions; the court did

not hold an evidentiary hearing. DeMelo v. Toche Marine,

Inc., 711 F.2d 1260, 1270-71 (5th Cir. 1983); see also

Data Disc, Ine. v. Systems Technology Assoc., 557 F.2d

1280, 1284-86 (9th Cir.1977). We conclude that the Irv-

ings have established the prima facie case for personal

jurisdiction over Jugometal in the Southern District of

Texas.

To establish jurisdiction in a diversity case such as

this the plaintiff must satisfy both (1) the forum state’s

long-arm statute; and (2) the fourteenth amendment’s

due process requirements. DeMelo, 711 F.2d at 1264.

These two steps collapse into one for our purposes be-

cause the Texas Supreme Court has established that the

Texas long-arm statute, Tex.Civ.Prac. & Rem. Code

§ 17.042 (Vernon 1986), “reaches as far as the federal

constitutional requirements of due process will permit.”

Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 200

(Tex.1985).

The due process clause permits a district court to ex-

ercise personal jurisdiction over nonresident defendants

when (1) they have sufficient “minimum contacts” with

the forum; and (2) the exercise of jurisdiction does not

offend “ ‘traditional notions of fair play and substantial

justice.’”’ International Shoe Co. v. Washington, 326 U.S.

310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citation

omitted). The minimum contacts must arise from actions

by which the nonresident defendant “purposefully avails

itself of the privilege of conducting activities within the

forum state, thus invoking the benefits and protections

of its laws.” Burger King Corp. v. Rudzewicz, 471 U.S.

462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985) ;

see Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228,

1240, 2 L.Ed.2d 12838 (1958). The district court exer-

cises specific jurisdiction over actions related to the de-

fendant’s contacts, provided the contact sprang from the

defendant’s purposeful conduct rather than the plain-

tiff’s unilateral activities. World-Wide Volkswagen Corp.

v. Woodson, 444 U.S. 286, 297-98, 100 S.Ct. 559, 566-67,

62 L.Ed.2d 490 (1980); Bearry v. Beech Aircraft Corp.,

818 F.2d 370, 374 (5th Cir.1987).

In describing the degree of purposeful conduct neces-

sary to satisfy the due process clause’s minimum contacts

prong, the Supreme Court has determined that “[t]he

forum State does not exceed its powers under the Due

Process Clause if it asserts personal jurisdiction over a

corporation that delivers its products into the stream of

commerce with the expectation that they will be pur-

chased by consumers in the forum state.” World-Wide

Volkswagen, 444 U.S. at 298, 100 S.Ct. at 567. The Court

in that case rejected an argument that the plaintiffs’

unilateral—and arguably foreseeable—action in driving

their car into Oklahoma established personal jurisdiction

there over the New York car dealer and the east coast

wholesaler who sold it. Jd. at 295-96, 100 S.Ct. at 566-

67. The Court stressed that foreseeability for personal

jurisdiction purposes turns on whether “the defendant’s

conduct and connection with the forum State are such

that [it] should reasonably anticipate being haled into

court there.” Jd. at 297, 100 S.Ct. at 567.

In Asahi Metal Indus. Co. v. Superior Court, 480 U.S.

102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1988), the Supreme

Court’s most recent statement on personal jurisdiction,

four justices favored a narrow interpretation of the

stream of commerce doctrine in a case ultimately decided

under the “fair play and substantial justice” prong of

the due process test. Justice O’Connor’s plurality opin-

ion disagreed with one approach to stream of commerce,

which she associated with this court’s opinion in Bean

Dredging Corp. v. Dredge Technology, 744 F.2d 1081

(5th Cir.1984), in which “mere foreseeability . .. [es-

tablishes] personal jurisdiction if the defendant’s product

made its way into the forum State while siill in the

stream of commerce.” Asahi, 480 U.S. at 110, 107 S.Ct.

at 1032, 94 L.Ed.2d at 103. In contrast, Justice O’Con-

nor advocated a requirement of “additional conduct” by

the defendant to support personal jurisdiction under the

stream of commerce theory. Jd. 480 U.S. at 112, 107 S.Ct.

at 1038, 94 L.Ed.2d at 104.

Nonetheless an equal number of justices, while concur-

ring with the plurality’s analysis under the due process

test’s second prong, refused to require a showing of “ad-

ditional conduct” under the stream of commerce doctrine.

Id. at 116-121, 107 S.Ct. at 1035-1088, 94 L.Ed.2d at

107-110. Because the Court’s splintered view of mini-

mum contacts in Asahi provides no clear guidance on this

issue, we continue to gauge Jugometal’s contacts with

Texas by the stream of commerce standard as described

in World-Wide Volkswagen and embraced in this circuit.

See Bean Dredging, 744 F.2d at 1088-84; Oswalt ».

Seripto, Inc., 616 F.2d 191, 198-99 (5th Cir. 1980) ; Coul-

ter v. Sears, Roebuck & Co., 426 F.2d 1315, 1318 (5th

Cir.1970). But cf. Jetco Elec. Indus. v. Gardiner, 473

F.2d 1228, 1234 (5th Cir.1973) (dictum suggests that

“sufficient other contracts” necessary to support personal

jurisdiction). To borrow World-Wide Volkswagen’s

phrase, Jugometal reasonably should have anticipated be-

ing haled into a Texas court given its contacts with that

forum.

The parties here argue at length about whether Jugo-

metal is more properly characterized as an asbestos seller,

wholesaler, broker, agent or some other variety of mid-

dleman in this distribution chain. The label attached to

Jugometal’s role in the distribution scheme is not the

critical question. We look instead to Jugometal’s essen-

tial contention that its role in this chain was too minor

to vest the district court with personal jurisdiction under

the stream of commerce doctrine.

Jugometal’s effort to downplay its role does not per-

suade us. Jugometal argues in effect that it is an ex-

porter for purposes of Yugoslavian law but not United

States law. Given the Yugoslavian trade restrictions.

Stragari could not export the asbestos. Jugometal took

on that task, and in doing so held itself out as the seller

in the Jugometal-Huxley contract. Deposition testimony

from Huxley’s former vice president established that

Jugometal itself conveyed the asbestos to a freight for-

warder for shipment to Houston. Jugometal shared the

cost of quality-control testing by a Houston lab and re-

ceived Huxley’s debits for the bag-cleaning charges of

another Houston company: moreover, Jugometal accepted

payments for the asbestos and stored it. Without imply-

ing any conclusions about the importance of Jugometal’s

role for the merits of this product liability action, we

conclude that these actions satisfy the due process test’s

minimum contacts prong.

Jugometal’s ignorance of Uvalde’s identity does not

defeat the exercise of jurisdiction in Texas. Personal ju-

risdiction does not require certain knowledge of the user’s

identity. We have noted that even a non-resident defend-

ant’s out-of-state activities can establish the necessary

minimum contacts if those activities nave “ ‘reasonably

foreseeable consequences’ ” within the forum state. Bean

Dredging, 744 F.2d at 1083 (quoting Quasha v. Shale

Devel. Corp., 667 F.2d 483, 488 (5th Cir.1982) ).

In Bean Dredging, this court held that a component

manufacturer who was based in Washington state and

injected its steel testing into the stream of commerce—

including two castings used in construction of a defective

dredge in Louisiana—had established sufficient contacts

With Louisiana to permit personal jurisdiction there. The

component manufacturer sold the steel castings to a Cali-

fornia manufacturer, which incorporated the eastings in

cylinders that it ultimately sold to a Louisiana shipyard.

Bean Dredging, 744 F.2d at 1085. The component manu-

facturer never (1) knew where these two castings were

used; (2) knew the end product into which the castings

were incorporated; (3) sold directly to any Louisiana

company; (4) solicited business in Louisiana; or (5)

owned property in Louisiana. /d. at 1082. The compo-

nent manufacturer’s president did acknowledge, however,

that his company’s products could wind up anywhere in

the United States once they entered the stream of com-

merce. Id.

In concluding that use of the components in Louisiana

established sufficient minimum contacts for personal ju-

risdiction there, we noted that the Washington component

manufacturer sought to reach at broad a market as pos-

sible. Id. at 1085. We also stressed that the component

manufacturer placed no limit on the states in which its

castings could be sold and used. Id. See also Hedrick v.

Daiko Shoji Co., Ltd., Osaka, 715 F.2d 1355, 1358 (9th

Cir.1983), opinion withdrawn in part on other grounds

sub nom. Hedrick v. Pine Oak Shipping, S.A., 733 F.2d

1335 (9th Cir.1984) (defendant manufacturer performed

an act related to the forum, Oregon, “when it produced a

splice that it knew was destined for ocean-going vessels

serving United States ports, including those of Oregon.”’) ;

Stabilisierungsfonds Fur Wein v. Kaiser, Stuhl Wine

Distributors Pty. Ltd., 647 F.2d 200, 203 (D.C.Cir.1981 )

(personal jurisdiction existed in Washington D.C. over

Australian defendants who “arrangec for introduction

of their wine into the United States stream of commerce

with the expectation . . . that their products will be

shelved and sold at numerous local outlets in diverse parts

of the country.”) 2 Moore’s Federal Practice 4.41-1 [4.1]

(1987).

Similarly, Jugometal authorized Huxley to drum up

American buyers for Yugoslavian asbestos throughout the

United States. Although this effort produced only one

buyer, Houston-basted Uvalde, Jugometal nonetheless de-

rived economic benefits from it and placed no geographic

limits on Huxley’s efforts. Moreover, Judgometal’s con-

tacts with Houston gave Jugometal more reason to foresee

that its product was being sold in the forum state than

the component manufacturer in Bean Dredging.

The Bean Dredging manufacturer knew only that its

product could end up anywhere in the United States.

Jugometal’s fifteen-year history of bulk asbestos ship-

ments to Houston, ties to the Houston testing laboratory,

and knowledge that the shipping bags were cleaned in

Houston all pointed to a user in Texas or its vicinity.

Huxley underscored the importance of shipping to Hous-

ton when it billed Jugometal for the cost of forwarding

a shipment mistakenly delivered to New Orleans. The

scope of Judgometal’s and Huxley’s marketing effort,

combined with Judgometal’s explicit ties to Houston, con-

stitute delivery of the asbestos into the stream of com-

merce such that Judgometal reasonably should have an-

ticipated use of its product in Texas, which could have

resulted in its being haled into court there.

Turning to the due process test’s second prong, we

conclude that the exercise of personal jurisdiction here

does not offend traditional notions of fair play and sub-

stantial justice. In determining this fundamental fair-

ness issue we must examine the (1) defendant’s burden;

(2) forum state’s interests; (3) plaintiff’s interest in

convenient and effective relief; (4) judicial system’s in-

terest in efficient resolution of controversies; and (5)

states’ shared interest in furthering fundamental social

policies. Asahi, 480 U.S. at 112, 107 S.Ct. at 1033, 94

L.Ed.2d at 104; World-Wide Volkswagen, 444 U.S. at

292, 100 S.Ct. at 564.

10a

The latter four factors all point to the exercise of per-

sonal jurisdiction over Jugometal, given that this litiga-

tion involves 106 consolidated asbestos suits against

tweny-one defendants for alleged injuries arising in

Texas and linked to the asbestos Jugometal distributed.

Thus, Texas constitutes the most convenient and efficient

forum in which to try these cases. Nor has Jugometal

indentified any conflict between the interests of Texas and

other states that would flow from the exercise of personal

jurisdiction here.

Jugometal understandably stresses that it would carry

a heavy burden as a Yugoslavian company defending

these lawsuits in Texas. It also points to the Supreme

Court’s admonishment to give “significant weight” to the

unique burdens placed on parties who face litigation in a

foreign legal system. Asali, 480 U.S. at 114, 107 8.Ct.

at 1034, 94 L.d.2d at 105. But the Court also stated

that “[wlhen minimum contacts have been established,

often the intersets of the plaintiff and the forum will

justify even the serious burdens placed on the alien de-

fendant.” Jd. at 114-15, 107 S.Ct. at 1033-34, 94 L.Ed.2d

at 105-06. We conclude that this is such a case.

The plaintiff in Asahi, a Taiwanese corporation that

manufactured tire tubes, sought indemnity from its valve

supplier, a Japanese corporation, in a California court.

Id. at 105, 107 S.Ct. at 1027, 94 L.Ed 201 at 100. The

tube manufacturer already had settled products liability

claims filed against it in a California court by a California

resident; only the indemnity action between one Japanese

corporation and one Taiwanese corporation remained. /d.

With this posture in mind, the Court noted that neither

the forum nor the parties had a strong interest in resolv-

ing this dispute in California. /d. at 114, 107 8.Ct. at

1034, 94 L.Ed.2d at 106. This asbestos litigation, in con-

trast, involves Texas plaintiffs using a local forum to

pursue compensation for alleged injuries that occurred in

Texas. Under these facts we cannot say that the exercise

lla

of personal jurisdiction in the Southern District of Texas

would offend traditional notions of fair play and sub-

stantial justice.

The district court’s order is reversed and the case

remanded for further proceedings.

REVERSED AND REMANDED.

j2a

APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 87-6272

MARCUS IRVING, Yr. and FRANKIE IRVING,

Plaintiffs-Appellants,

versus

OWENS-CORNING FIBERGLAS CORPORATION, et al.,

Defendants,

JUGOMETAL ENTERPRISE FOR IMPORT AND

EXPORT OF ORES AND METALS,

Defendant-A ppellee.

Appeal! from the United States District Court

for the Southern District of Texas

ON SUGGESTION FOR REHEARING EN BANC

(Opinion 2/02/89, 5 Cir., 198-, —— F.2d )

(March 29, 1989)

Before JOHNSON, DAVIS and JONES, Circuit Judges.

PER CURIAM:

(4) Treating the suggestion for rehearing en bane as a

petition for panel rehearing, it is ordered that the petition

13a

for panel rehearing is DENIED. No member of the

panel nor Judge in regular active service of this Court

having requested that the Court be polled on rehearing en

bane (Federal Rules of Appellate Procedure and Local

Rule 35), the suggestion for Rehearing En Banc is

DENIED.

ENTERED FOR THE COURT:

/s/ W. Eugene Davis

United States Circuit Judge

l4a

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

C.A. No. H-84-1719

MARCUS IRVING, et ux,

Plaintiffs,

vs.

JUGOMETAL, et al.,

Defendants.

C.A. No. H-85-1597

ALEX AGUILAR, --

Plaintiff,

VS.

JUGOMETAL, et al.,

Defendants.

C.A. No. H-85-17365

ROOSEVELT ALLEY, et ux,

Plaintiffs,

vs.

JUGOMETAL, et al.,

Defendants.

15a

C.A. No. H-85-1599

GARVIN AUSTON,

Plaintiff,

VS.

JUGOMETAL, et al.,

Defendants.

C.A. No. H-85-1738

CHESTER BATTS,

Plaintiff,

VS.

JUGOMETAL, et al.,

Defendants.

C.A. No. H-85-1565

LONNIE BOGANY, et ua,

Plaintiffs,

VS.

JUGOMETAL, et al.,

Defendants.

C.A. No. H-83-6684

FRANK BRADEN,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

erent

16a

C.A. No. H-83-6787

OTIS BRADEN,

Plaintiff,

VS.

CAREY CANADIAN MINES, ef al.,

Defendants.

C.A. No. H-85-1629

JOHNNY MARTIN BRANCH, et ua,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2645

JAMES H. BELL, ex ux,

Plaintiffs,

Vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1595

ARTHUR BIBBS, ¢t ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

lia

C.A. No. H-85-1740

JOE BURNETT, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-83-7104

WILLIE BURR AND ALVIN EDWARDS,

Plaintiffs,

vs.

JUGOMPTAL, et al.,

Defendants.

C.A. No. H-85-1799

CLARENCE BUSH, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al,

Defendants.

C.A. No. H-85-1591

GROVER D. BUSH, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

18a

C.A. No. H-84-2157

JOHN HENRY CARTER BRANCH,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1680

EDDIE MAE COOKS,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-82-2363

LEVONIA CLARK, SAFRONIA EVANS,

OPHELIA RANSBURG AND TIM JACKSON,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1969

NEHEMIAH COOPER, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et ai.,

Defendants.

19a

C.A. No. H-85-1578

MURPHY CORMIER,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-3080

WILLIE CROCKETT,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1596

RICHARD DILL, et ua,

Plaintiffs,

VS.

CAREY CANADIAN MINES, ét al.,

Defendants.

C.A. No. H-85-2032

JIMMY M. DELANEY,

Plaintiff,

VS.

CAREY CANADIAN MINEs, et al.,

Defendants.

20a

C.A. No. H-85-1800

HERMAN ECKFORD, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1968

JOHN WESLEY FENLEY, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1731

WILLIE FLOWERS, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-3117

PERCY FOSTER,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

2la

C.A. No. H-85-1967

DANIEL JOSE GONZALES, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1590

CHARLIE GRANT, JR., et ua,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1587

HEWITT GRAY, et uz,

Plaintiffs,

VS.

CAREY CANADIAN MINEs, et al.,

Defendants.

C.A. No. H-84-3260

DAvip HILL,

Plaintiff,

Vs.

CAREY CANADIAN MINEs, et al.,

_ Defendants,

22a

C.A. No. H-85-2646

FLOYD HALL, et uz,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1745

Cyrus HOPE HOLIDAY,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2643

EULA HOLLEY,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2649

Doc HARDEN, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

28a

C.A. No. H-85-2650

EZRA HARRELL, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

™

Defendants.

C.A. No, H-85-1581

FREEMAN JARDON,

Plaintiffs,

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-83-5152

LAMAR JOHNSON,

Plaintiff,

CAREY CANADIAN MINEs, et al.,

Defendants.

C.A. No. H-85-1708

MARY BRAXTON JOHNSON and ERVIN JOHNSON,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

24a

C.A. No. H-85-1434

MELLANIE JOHNSON,

Plaintiff,

Vs,

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2698

OpDIE HUFF JOHNSON,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1588

SHEDRICK JOHNSON, JR., and EDDIE M. JOHNSON,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2096

KUGENE JULIUS JONES, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants,

25a

C.A. No. H-85-2644

JOE ETTA JONES,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1612

TOMMIE JONES, et uz,

Plaintiffs,

VS.

CAREY CANADIAN M INES, et al.,

Defendants.

C.A. No. H-85-1594

WILLIE DAvip JONES, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-1588

ANTOINE JOSEPH, SR., et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants,

26a

C.A. No. H-84-3352

EDWARD J. LEWIS,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1564

S.D. LIVINGSTON, et ua,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2695

LONNIE B. LOTT,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1710

THURMAN MALLORY,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

27a

C.A. No. H-85-1709

CHARLES WILLIE McCray, et uz,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1577

LEROY MCWRIGHT, et ux,

Plaintiffs, —

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1743

HURPE MILES, et uz,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-3713

CLYDE NELMS, et uz,

Plaintiffs,

VS.

CAREY CANADIAN MINEs, et al.,

Defendants.

| OE

28a

C.A. No. H-85-1563

IKE NUNN, et ua,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2647

JAMES NUNN, et ua,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-3417

Roy NUNN, et ua,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1734

WILLIAM PARKER, et ua,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

29a

C.A. No. H-84-3475

LEROY C. PENNIE, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1598

ALVIN PRUITT, et uz,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1711

JOE LEE REED,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-3476

HERMAN A. RICE, et ua,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

30a

C.A. No. H-85-2045

ALFRED RODRIGUEZ, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-3469

ALEX MARSHALL SADDLER, et ux,

Plaintiffs,

vg.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-1984

Doris JEAN SAMS,

Plaintiff,

Vs. .

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1613

RoBERT L. SHEPARD,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

sla

C.A. No. H-85-2098

MELVIN S. SMITH,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2648

WILFORD ST. JULIAN, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-3714

CARL ST. JULIAN, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1567

SIDNEY STEWART, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

32a

C.A. No. H-85-1679

LAWRENCE TATUM, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1747

AMOS TELSEDE, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1566

WARDELL THOMPSON, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1579

JACK THORNTON, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

33a

C.A. No. 85-1966

ARVINE WADDLE,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1580

DAVID WALDRUP, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1624

LEO KING WALKER, et uz,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-1583

JERRY LEE WILLIAMS, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

34a

C.A. No. H-85-1712

WILLIE WILLIAMS,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-84-1830

PORTER WILLIS, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

_ Defendants.

C.A. No. H-84-2037

ALEX YOUNG,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-85-2036

INOVIA YOUNG,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

35a

C.A. No. H-86-2972

JAMES ANDERSON, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2849

MATTHEW BARNES, JR.,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2855

BENJAMIN BROOKS,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2872

EARNEST CARRATHUS, et ux,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

36a

C.A. No. H-86-2973

OLIVER CHAMBERS,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2853

WILLIE C. DIXON, et uz,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2579

J.B. GATLIN,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

“ Defendants.

C.A. No. H-86-3549

ALVARO R. GARCIA, et uz,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

37a

C.A. No. H-86-2856

ETHEL LUCILLE HARRIS,

Plaintiff,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2846

HERBERT HAWTHORNE, et wz,

Plaintiffs,

vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2854

LOUIS EDWARD IRVING,

Plaintiff,

Vs.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2578

CHARLIE DOE JACKSON, JR.,

Plaintiff,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

38a

C.A. No. H-86-2576

Lovie THOMPSON, Individually and as Personal

Representative of the Heirs and Estate of

Sam Thompson, Deceased,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

C.A. No. H-86-2581

ANDREW WALDRUP,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

—_—

C.A. No. H-86-2457

CHARLES WESTMORELAND, et ux,

Plaintiffs,

VS.

CAREY CANADIAN MINES, et al.,

Defendants.

MEMORANDUM AND RECOMMENDATION

[Filed July 6, 1987]

Now pending before the Court is the Motion of Jugo-

metal to Dismiss on the grounds that the Court lacks

personal jurisdiction over it.

‘

Procedural History

Marcus Irving and his wife sued Jugometal and the

other named Defendants for damages alleging that he

sustained injuries as a result of his having been exposed

to asbestos fibers manufactured and supplied by the De-

fendants to his employers, Uvalde Rock Asphalt a/k/a

Azrock (“Uvalde”) located in Houston, Texas. During

all material times, Uvalde was a manufacturer of floor

tiles that contained asbestos fibers.

When Jugometal filed its Motion to Dismiss it was sup-

ported by the affidavits of two of its corporate officers

who stated that Jugometal as an enterprise organized

and existing under the laws of Yugoslavia and, that it

did not have the “minimum contacts” within the State of

Texas upon which jurisdiction could be maintained.

Because the resolution of the jurisdictional issue would

affect those pending cases listed above as well as others

in which Judgometal has been named as a Defendant in

Houston Division asbestos cases, the parties requested and

were granted additional time to more fully develop the

factual and legal aspects of the issue. After completing

testimonial discovery in New York and Yugoslavia, Jugo-

metal has supplemented its original brief in support of

its Motion, and the Plaintiffs have filed their response

thereto with authorities.

II.

Relevant Facts

Jugometal is a Yugoslavian entity whose principal busi-

ness is the sale of ferrious and non-ferrous metals, chemi-

cals and mining equipment in foreign markets. It does

not maintain a place of business in Texas, has no assets

or designated agent for service in Texas and has never

had an officer, agent, employee or representative come to

this State on business.

40a

In approximately 1953, Mr. Adam Novak, an employee

of the Huxley-Development Corporation (“Huxley”), a

New York corporation, met with a Mr. Djurovie of Jugo-

metal Enterprise for Import and Export of Pres and

Minerals to discuss business opportunities in Yugoslavia.

(Novak deposition at pp. 14 and 15.) During those dis-

cussions, Mr. Djurovie suggested that asbestos from the

Stragari Mines (“Stragari’”) might constitute a market-

able item. (Novak deposition at pp. 8 and 9.) Mr. Novak

began to search for customers who would purchase the

Stragari asbestos and in 1955 made such a contact with

the Uvalde Asphalt Company in Houston, Texas. In

1956, Uvalde agreed to purchase approximately 5,000

metric tons per year of Stragari asbestos from Huxley for

use in its floor tile manufacturing process and continued

to do so for the next fifteen (15) years.

There is some factual dispute between the parties as to

whether the negotiations concerning the price, quantity,

quality and delivery of the asbestos were between Huxley

and Stragari or Huxley and Jugometal. In any event,

there exists a written agreement between Huxley and

Jugometal dated November 24, 1959 wherein Huxley is

designated as the “buyer” and Jugometal is designated

as the “seller” of the asbestos. This agreement provides

in pertinent part that Huxley would purchase a given

quantity of asbestos per year of a certain grade and

quality and at a designated price c.i.f. the Port of Hous-

ton. The agreement provided further that the asbestos

would be shipped in jute bags labeled “Asbestos 7R(c),_

Products of Yugoslavia, Huxley, Houston”) ; that a letter

of credit would be opened in favor of Jugometal thirty

(30) days before each shipment for the full value of the

material shipped; that a sample of the asbestos would be

analyzed by a Houston laboratory for quality, and that

the bags in which the asbestos was shipped would be

cleaned and returned to Yugoslavia.

Judgometal contends that its role in all of these trans-

actions was simply that of a traditional broker or freight

4la

forwarder and that the seller of the asbestos in reality

was Stragari. Jugometal explained that under the laws

of Yugoslavia, Stragari was precluded from exporting the

asbestos it mined for its own account even though it could

and did negotiate the price, terms and conditions of the

sales transactions involved herein. In its agreement with

Stragari, Judgometal arranged to store the asbestos de-

livered to it by Stragari, made arrangements for the ship-

ment of the asbestos to the Port of Houston from Yugo-

slavia, was responsible for invoicing Huxley, collecting on

the posted letters of credit and crediting the receipt of

such funds to the account of Stragari. For these services

Jugometal received a commission of approximately one to

one and a half percent of the sales price for each ship-

ment.

This relationship continued until approximately 1969

or 1970. In almost every instance the asbestos was ship-

ped to the Port of Houston and a sample analyzed for

quality and content at the Shilstone Laboratory in Hous-

ton as required under the contract. The bags in which the

raw asbestos were shipped were cleaned in Houston and

returned to Yugoslavia. There is no evidence that Jugo-

metal ever knew that the purchaser of the asbestos was

a Houston based company. In fact, Huxley was careful

not to identify its customer to Jugometal, presumably

for fear that Jugometal might establish a direct relation-

ship to its customer contrary to the interests of Huxley.

On the basis of these facts Jugometal argues that there

has not been established the necessary “minimum con-

tacts” with this State for the Court to exercise in per-

sonam jurisdiction over it. It argues further that to do

so would be contrary to the traditional notions of fairness

and justice in requiring a foreign entity to defend itself

in a forum thousands of miles from its home.

The Plaintiffs, on the other hand, argue that these

facts demonstrate that Judgometal’s contacts with Texas

are sufficient for this Court to exercise jurisdiction con-

42a

sistent with federal due process. In particular, the Plain-

itffs stress the years of shipping tons of asbestos to the

Port of Houston, Jugometal’s knowledge that the asbestos

would be laboratory tested in Houston, that the shipping

bags were cleaned in Houston before return to Yugoslavia

and that Jugometal profited handsomely from these trans-

actions.

Il.

Discussion

The Supreme Court of Texas defined the limits of the

Texas Long Arm Statute in the case of U-Anchor Adver-

tising, Inc. v. N.H. Burt, 553 S.W. 2d 760, 762 (Tex.

1977). The Court set forth the following three elements

that must exist before jurisdiction over a foreign enter-

prise could be maintained:

1. The non-resident Defendant or foreign corpora-

tion must purposefully do some act or consum-

mate some transaction in the forum state;

The cause of action must arise from, or be con-

— nected with such act or transaction; and

3. The assumption of jurisdiction by the forum must

not offend traditional notions of fair play and

substantial justice, consideration being given to

the quality, nature and extent of the activity in

the forum state, the relevant convenience of the

parties, the benefits and protection of the laws of

the forum state afforded the respective parties,

and the basic equities of the situation.

Thus, the facts in each case must be closely analyzed

to determine whether a particular Defendant purposefully

availed itself of the privilege of conducting business in

the forum state. Hanson v. Denckla, 357 U.S. 235, 253,

78 S.Ct. 1228, 1239, 2 L.Ed. 2d 1283 (1958).

Under the Due Process Clause an individual is pro-

tected from the binding judgments of a forum with which

43a

he has no meaningful contacts, ties, or relations. Inter-

national Shoe Co. v. Washington, 326 U.S. at 319, 66

S.Ct. at 160. In its most recent pronouncement on the

subject of jurisdiction the Supreme Court in Asahi Metal

Inc. v. Superior Court of California, Solano County, 107

S.Ct. 1025 (1987), stated that the substantial connection,

quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462,

476, 105 S.Ct. 2174, 2184, 85 L.Ed. 2d 528 (1985), be-

tween a Defendant and the forum state necessary for a

finding of minimum contacts must arise from action of

the Defendant which is purposefully directed toward the

forum State. The Court went on to hold as follows:

“The placement of a product into the stream of com-

merce, without more, is not an act of the Defendant

purposefully directed toward the forum State. Addi-

tional conduct of the Defendant may indicate an in-

tent or purpose to serve the market in the forum

State, for example, designing the product for the

market in the forum State, advertising in the forum

State, establishing channels for providing regular ad-

vise to customers in the forum State, or marketing

the product through a distributor who has agreed

to serve as the sales agent in the forum State. But

a Defendant’s awareness that the stream of com-

merce may or will sweep the product into the forum

State does not convert the mere act of placing the

product into the stream into an act purposefully di-

rected toward the forum State. (Emphasis added. )

Applying these principals to the case at hand, the

record evidence shows that no physical ties to Texas can

be attributed to Jugometal other than the fact that the

shipments of asbestos over a period of fifteen years were

directed to the Port of Houston in almost every instance.

Jugometal had no office, agents, employees, or property

in Texas. It was not qualified to do business in Texas,

and there is no evidence that it advertised or otherwise

solicited business in Texas or that it ever knew the name

44a

or location of Huxley’s customer. The contract under

which the parties operated was between Huxley, a New

York entity and Jugometal. All communications were

between Huxley and Jugometal and the shipments of

asbsetos to the Port of Houston were at the direction of

Huxley. The only other evidence of any significance bear-

ing upon Jugometal’s contact with Texas is that samples

of the asbestos were tested at the Shilstone Laboratory in

Houston and that the burlap bags in which the asbestos

was shipped, were cleaned in Houston and thereafter re-

turned to Yugoslavia. These facts are, in the opinion of

the undersigned, insufficient to predicate an exercise of

personal jurisdiction by this Court of the Defense Jugo-

metal.

The Due Process Clause prohibits the exercise of per-

sonal jurisdiction under circumstances that would offend

traditional notions of fairness and substantial justice.

International Shoe Co. v. Washington, 326 U.S. 310, 316

(1945). In making the determination of reasonableness

the Court must consider such factors as, the burden on

the Defendant, the interests of the forum state, the

Plaintiff’s interest in obtaining relief, the interest of the

judicial system in reaching resolution of controversies ef-

ficiently and the interest of the several states in further-

ing fundamental social policies. See, World-Wide Volks-

wagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct.

559, 62 L.Ed. 2d 490 (1980).

A consideration of these factors in the instant case

would dictate the unreasonableness of exercising jurisdic-

tion over Jugometal, even apart from the issue of the

placement of goods in the stream of commerce. For ex-

ample, Jugometal would be required to defend itself in

some 128 cases many thousands of miles from its home,

and in a foreign judicial system. As stated by the Su-

preme Court in Asahi at page 1034, the unique burden

placed upon a party who must defend oneself in a foreign

legal system should be given significant weight in 2ssess-

45a

ing the reasonableness of exercising jong-arm jurisdic-

tional over national borders. The amount of commissions

Jugometal realized over the extended period in which

Stragari asbestos was sold to Huxley when compared to

its exposure to significant damages requested by the

Plaintiffs, as well as the fact that no transactions have

occurred between the parties since at least 1970 would,

in the view of the undersigned, make it unreasonable to

require them to defend these multiple law suits in this

jurisdiction.

IV.

Conclusion

After careful review of the pleadings, evidence and

authorities and for the reasons stated above, the under-

signed is of the view that Jugometal has not transacted

any purposeful activity within the State of Texas so as

to justify the exercise of in personam jurisdiction over it.

Moreover, to do so under these facts would offend the

traditional notions of fairness and substantial justice.

It is therefore, RECOMMENDED that the Motion of

Defendant Jugometal to Dismiss for Lack of Personal

Jurisdictional be GRANTED.

The Clerk will file this Memorandum and Recommenda-

tion-and transmit a copy to each party or counsel pursu-

ant to the provisions of Rule 53 of the Federal Rules of

Civil Procedure.

Signed this the 6th day of July, 1977.

Respectfully submitted,

‘s/ Ronald J. Blask

RONALD J. BLASK

Special Master

46a

APPENDIX D

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

Civil Action No. H-84-1719

MARCUS IRVING, et al.,

Vs.

JUGOMETAL, et al.,

and in these cases

Civil Action No. H-85-1597 Civil Action No. H-84-3080

Civil Action No. H-85-1736 Civil Action No. H-85-1596

Civil Action No. H-85-1599 Civil Action No. H-85-2032

Civil Action No. H-85-1738 = Civil Action No. H-85-1800

Civil Action No. H-85-1565 Civil Action No. H-85-1968

Civil Action No. H-83-6684 Civil Action No. H-85-1731

‘Civil Action No. H-83-6787 Civil Action No. H-84-3117

Civil Action No. H-85-1629 Civil Action No. H-85-1967

Civil Action No. H-85-2645 = Civil Action No. H-85-1590

Civil Action No. H-85-1595 — Civil Action No. H-85-1587

Civil Action No. H-85-1740 Civil Action No. H-84-3260

Civil Action No. H-83-7104 Civil Action No. H-85-2646

Civil Action No. H-85-1799 = Civil Action No. H-85-1745

Civil Action No. H-85-1591 ~~ Civil Action No. H-85-2643

Civil Action No. H-84-2157 Civil Action No. H-85-2649

Civil Action No. H-85-1680 Civil Action No. H-85-2650

Civil Action No. H-82-2363 Civil Action No. H-85-1581

Civil Action No. H-85-1969 Civil Action No. H-83-5152

Civil Action No. H-85-1578 Civil Action No. H-85-1708

Civil Action No.

H-85-1434

H-85-2698

H-85-1588

H-85-2096

H-85-2644

H-85-1612

H-85-1594

H-84-1588

H-84-3352

H-85-1564

H-85-2695

H-85-1710

H-85-1709

H-85-1577

H-85-1743

H-85-3713

H-85-1563

H-85-2647

H-84-3417

H-85-1734

H-84-3475

H-85-1598

H-85-1711

H-84-3476

H-85-2045

H-84-3469

H-84-1984

H-85-1613

H-85-2098

H-85-2648

H-85-3714

H-85-1567

H-85-1679

H-85-1747

47a

Civil Action No.

H-85-1566

H-85-1579

H-85-1966

H-85-1580

H-85-1624

H-85-1583

H-85-1712

H-84-1830

H-84-2037

H-85-2036

H-86-2972

H-86-2849

H-86-2855

H-86-2872

H-86-2973

H-86-2853

H-86-2579

H-86-3549

H-86-2856

H-86-2846

H-86-2854

H-86-2578

H-86-2974

H-86-2338

H-86-3235

H-86-2577

H-86-2487

H-86-2580

H-86-2857

H-86-2847

H-86-2576

H-86-2581

H-86-2457

—

48a

MEMORANDUM ON DISMISSAL OF JUGOMETAL

[Filed Nov. 9, 1987]

In 106 cases, workers have sued a Yugoslavian export

broker for injuries that resulted from their exposure to

the exported asbestos while they were working for a

Texas company that processed it in a Houston plant.

Jugometal, the broker, has moved to dismiss for a lack of

personal jurisdiction. The actions against Jugometal will

be dismissed.

To limit the costs, one case will be certified for an in-

terlocutory appeal, and the other cases will be stayed

until that appeal is decided. The master appointed to as-

sist the court in the management of its asbestos cases

has filed his findings, conclusions, and recommendation,

to which the parties have responded. The master’s memo-

randum will be adopted.

There is no occasion to review the master’s factual

findings because the parties disagree only about the legal

significance of the facts.

Stragari Mines mined the asbestos in Yugoslavia;

Jugometal Enterprise and Import Ores and Metals

brokered it to Huxley Development Corporation in New

York; Huxley brokered it to Uvalde Asphalt Company;

and the workers were injured by their contact with as-

bestos at Uvalde in Houston. Jugometal distributed Stra-

gari’s products without any geographic limitations. That

the asbestos’s commercial stream stopped temporarily in

Houston was entirely fortuitous. Jugometal did not have

a purpose, commercial or otherwise, in Texas; when the

asbestos left Yugoslavia, Jugometal’s sole interest was in

getting paid.

The question presented in these cases is: Has Jugo-

metal acted so that it is fairly subject to the judicial

power of Texas? The classical condition for the exercise

49a

of personal jurisdiction is physical power over the per-

son. When the actual presence of the defendant is lack-

ing, juridical power has been recognized if the defendant

either (a) has pervasively been associated physically with

the state in general or (b) has materiaily been associated

with the state in the transaction at suit, if the exercise of

power over the absent defendant in either of those in-

stances under the circumstances is not otherwise unfair

logistically, procedurally, or substantively.

Of course, delivery of a notice of the action to the de-

fendant in a manner that provides a meaningful oppor-

tunity to respond to the suit is also required, but in these

cases that initial step is not the critical issue.

As the American and the world economies have become

increasingly interdependent, there has been a tendency to

ignore the traditional basis of jurisdiction and tc exert

power casually. This parochial self-interest promoting the

erosion of standards for jurisdiction will be counterpro-

ductive, even in the short term, because reciprocal relaxa-

tions by other jurisdictions could subject any locality’s

citizens to conflicting, simultaneous adjudications in other

states. These Americans workers should not be subject

to a Yugoslavian court’s processes because of their use

of Yugoslavia’s products. Similarly, a Yugoslavian broker

having no direct contacts with Texas should not be sub-

ject to the judicial power of this state merely because his

customer’s product ended up in Texas.

An argument is made that the sheer volume of 5,000

metric tons per year from Yugoslavia is such a substan-

tial volume of material that jurisdiction is justified

predicated on that aspect of Jugometal’s conduct; how-

ever, from 1965 to 1979 the United States imported more

than 476,000 metric tons annually,' which would suggest

1 Statistical Abstract of the United States, 1980, 101st ed., U.S.

Department of Commerce, Bureau of Census.

50a

that Jugometal’s business was not a significant portion

of the nation’s asbestos importation trade.

To subject Jugometal to a claim for damages of this

magnitude by plaintiffs in Texas more than fifteen years

after it had stopped sending asbestos out of Yugoslavia

under a contract with a New York buyer under the per-

sonal jurisdiction of a Texas court offends traditional no-

tions of fair play and substantial justice.

~ Signed on November 9, 1987, at Houston, Texas.

/s/ Lynn N. Hughes

LYNN N. HUGHES

United States District Judge

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.