Petition — Walker v. Newgent

Supreme Court Uy] |

FILED :

JAN 30 1979

Supreme Court of the United States

OcTOBER TERM, 1978

RANDALL O. WALKER,

Petitioner

Vv.

DALE S. NEWGENT AND GENERAL MOTORS

CORPORATION AND ITS OPEL DIVISION,

ITS SUBSIDIARY, ADAM OPEL AG,

Respondent

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JAMAIL AND KOLIuS

RICHARD WARREN MITHOFF

Liz NEUMANN

3300 One Allen Center

Houston, Texas 77002

Attorneys for Petitioner

Aipas Low Brej Co., Une Main fase, No. 1 Main St., Houston, 1 exas 77002

INDEX

Page

Re OE I ch isingin o <ilk Gh0 Ob 00 4644 e wens og une i

Opinions of the Courts Below .............+.++06. cvtr 2

Bemttnant Of FORMA 2.0.» 0 0 0.0.0 vsinsio ccddscescevedeces 2

Question Presented for Review ............+..eeeeeeees 2

Constitutional Provisions, Statutes and Rules Involved .... 2

IE Ae ED gan BS PUT EE ob Cede Nes coe ceesscceness 4

Reasons for Granting the Writ ...............02eeeeee: 5

FTE og « dicing ein 60 oA 6 nc 50.054 ces rggbcasneroeces 6

tr Date ese g's's «ose whens dsb obec bee 13

ee ns he eh aaa ens odatesaeiusdensé 14

Appendix A (Opinion of Court of Appeals; November 2,

EST cp 2 ORT PRD AO he OS Se 15

ix B (Opinion of District Court; December 6,

SOU ob cn Se taka eeu ecapne sdb’ Pade es o0ksi 26

TABLE OF AUTHORITIES

CASES Page

Atwood Hatcheries v. Heisdorf and Nelson Farms, 357 F.2d

G47, BSE (Stik Cle. 1966) 2 ..siccccccccssccvvccccess 7

Boryk v. de Havilland Aircraft Co., 351 F.2d 666 (2d Cir.

etait vibes > ancln rene ueerns deeded st + « 12

Call Carl, Inc. v. B. P. Oil Co., 391 F.Supp. 367 (D.C.

ET Wennt aWhdedeadhds <6o8 6666 cto cos snesses 12

Cannon Mfg. Co. v. Cudahy Co., 267 U.S. 333, 45 S.Ct.

eR Ee eer 6, 10, 11, 12

Crucible, Inc. v. Stora Kopparbergs AB, 403 F.Supp.9.... 11, 13

Flack Oil Co. v. Continental Oil Co., 277 F.Supp. 357

CEP CS ADGEY casccasr ccc ccccesccsapecpeeseses 12

Frito-Lay, Inc. v. Proctor & Gable Co. 364 F.Supp. 243,

250. (IND. Tex. 1973) .ccccccsscccccceccccccccveces 11,12

Great Western United Corp. v. Kidwell, 577 F.2d 1256,

BZOR-SV COUR GE. 1978) oc oi icc c cess cc ccc cccccces 7,13

Gurley v. Lindsley, 459 F.2d 268 (Sth Cir. 1972); 466

PE ME Noche sde wees Sede ksvssnccsncdesecoecesers 7

II

CASES

Hitt v. Nissan Motor Co., 399 F.Supp. 838, 849 (S.D: Fla.

DER DEL shee chbca WHRENAe Samad 6 em be de ce ebebcsbsns

Hoppenfeld v. Crook, 498 S.W.2d 52, 56 (Tex. Civ. App.—

eg ES ere

International Shoe Co. v. Washington, 326 U.S. 310, 66

Ses ee Mas FO CLOSE). ccc cciecedecuiccccccs

Jetco Electronic Indus., Inc. v. Gardiner, 473 F.2d 1228,

i a EE oo CECE ah’ t 6s @hblea vaebewbe be és

Lone Star Motor Import, Inc. v. Citroen Cars Corp., 185

F.Supp. 48 (S.D. Tex. 1960); 288 F.2d 69 (Sth Cir.

re ae rh he) sehik sis 5 ous picdwida's

O.S.C. Corp. v. Toshiba American, Inc., 491 F.2d 1064

(9th Cir. 1972) ..... UPR aah eee Khan hehe ane

Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 489,

MN I I UO sac Dalene va bie can ocuiece

Reul v. Sahara Hotel, 372 F.Supp. 995, 997 (S.D. Tex.

Ue Ne cach iuailckca caus aoas

Tokyo Boeki (U.S.A.), Inc. v. S. S. Navarino, 324 F.Supp.

TEED sa tiwnasnadedekivhsederd Checks’

U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760 (Tex.

PET TE. 2 VAG NAd a Vai ost hes ewes b004s chweadervecrs

United States v. Scophony Corp. of America, 333 U.S. 795,

68 S.Ct. 855, 92 L.Ed. 1091 (1948) ........cccccceees

Walker v. Newgent, 442 F.Supp. 38 (S.D. Tex. 1977); 583

ML Che UN s Seth cee eho sba ca eNebswacewebeeseces

Zenith Radio Corp. v. Matsushita Electronics, 402 F.Supp.

262 (E.D. Pa. 1975)........ hebieabuadnescuseadet< be

STATUTES

IE I Sd a i dis ee a De els ee weal

Nt PR es eee Ce awe u owe

Tex. Rev. Civ. Stat. ANN; art. 2031(b) ............ & fi

TEXTS

Comment, Jurisdiction Over Parent Corporations, 51 Calif.

ED a Site EEL ae ca wies, naa week cane

Wellborn, Subsidiary Corporations in New York. When is

Mere Ownership Enough to Establish Jurisdiction Over

the Parent, 22 Buff. L. Rev. 681 (1973) .............

Bem, THACE. Beri: 102 CIDER) on ook cckceecccccccccs

Pee SUN. Wi Oe CEUUEE SccccicnnsespeOedvecse

11

11

NO.

Supreme Court of the Hnited Dtates

OcTOBER TERM, 1978

RANDALL O. WALKER,

Petitioner

Vv

DALE S. NEWGENT AND GENERAL MOTORS

CORPORATION AND ITS OPEL DIVISION,

ITS SUBSIDIARY, ADAM OPEL AG,

Respondent

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

The petitioner, Randall O. Walker, prays that a writ of

certiorari issue to review the Judgment of the United

States Court of Appeals for the Fifth Circuit entered

in the above case on November 2, 1978.

2

I.

OPINIONS OF THE COURTS BELOW

The opinion of the Court of Appeals is reported in

583 F.2d 163 and is hereto appended in Appendix A.

The district court’s opinion in this same case is reported

at 442 F.Supp. 38 (S.D. Tex. 1977); see Appendix B.

II.

STATEMENT OF JURISDICTION

The judgment of the court below was entered on No-

vember 2, 1978 (Appendix A).

This Court has jurisdiction of this application for the

writ of certiorari pursuant to 28 U.S.C. § 1254(1).

Til.

QUESTION PRESENTED FOR REVIEW

Is Adam Opel AG (“Opel”) amenable to suit in the

State of Texas under Tex. Rev. Civ. Stat. ANN. art.

2031(b) and the U. S. Constitution.

IV.

CONSTITUTIONAL PROVISIONS, STATUTES,

AND RULES INVOLVED

| Tex. Rev. Civ. Stat. ANN. art. 2031(b) provides in

pertinent part as follows:

Article 2031(b). Service of process upon foreign

corporations and nonresidents.

3

Failure to appoint agent; designation of Secretary

of State as lawful attorney.

Sec. 1. When any foreign corporation . . . subject

to Section 3 of this Act, has not appointed or main-

tained a designated agent, upon whom service of

process can be made . . . such corporation . . . shall

be conclusively presumed to have designated the

Secretary of State of Texas as their true and lawful

attorney upon whom service of process or com-

plaint may be made.

* * *

Act of engaging in business in state as equivalent

to appointment of Secretary of State as agent.

Sec. 3 Any foreign corporation . . . that engages

in business in this State . . . and does not maintain

a place of regular business in this State or a desig-

nated agent upon whom service may be made upon

causes of action arising out of such business done

in this State, the act or acts of engaging in such

business within this State shall be deemed equivalent

to an appointment by such foreign corporation . . .

of the Secretary of State of Texas as agent upon

whom service of process may be made in any action,

suit, or proceeding arising out of such business

done in this State, wherein such corporation . . . is

a party or is to be made a party.

Doing Business in state; definition.

Sec. 4. For the purpose of this Act, and without

including other acts that may constitute business,

any foreign corporation . . . shall be deemed doing

business in this State by entering into contract by

mail or otherwise with a resident of Texas to be

performed in whole or in part by either party in

this State, or the committing of any tort in whole

or in part in this State.

V.

‘ STATEMENT OF CASE

The basis for federal jurisdiction in the court of first

instance is diversity of citizenship pursuant to 28 U.S.C.

§ 1332. Service is sought under the Texas long-arm

Sstatuie, Tex. Rev. Civ. Stat. ANN. art. 2031(b).

While riding as a passenger in a 1963 Opel Rekord

which was involved in an automobile collision in Ger-

many, Petitioner Walker, who was in Germany serving

as a member of the United States Armed Forces, was

totally disabled and blinded. He sued Newgent, the driver

of the car, for negligence and subsequently settled with

him. He also sued General Motors and Adam Opel AG

(“Opel”) on the basis of negligence, strict liability in

tort for the defective design and manufacture of the

windshield glass in the 1963 Opel Rekord, and breach

of express and implied warranties. The automobile in

question was designed, manufactured, and marketed by

the defendants, General Motors Corporation and Adam

Opel AG. Adam Opel AG is a German corporation con-

stituting a wholly-owned subsidiary of General Motors

Corporation, a United States corporation doing business

throughout the United States, including Houston, Harris

County, Texas.

This action was filed on April 12, 1973. Process was

served through a single citation in April, 1973, on Gen-

eral Motors corporation and its subsidiary, Adam Opel

AG, through General Motor’s agent for service of pro-

cess, C. T. Corporation Systems in Dallas, Texas. Attor-

neys for General Motors filed an answer purportedly on

behalf of General Motors and Adam Opel AG. Following

5

discovery, these same attorneys filed a motion to with-

draw the answer filed for Opel on the basis that Opel

was a separate corporate entity organized under German

law having no agent for service in Texas and that the

answer filed on its behalf was without its authorization

or knowledge. On August 12, 1974, the district court

ordered that separate citations be issued and served on

Opel. In response to that order, plaintiff served (1) C. T.

Corporation, (2) Mr. T. M. Wetzel, Secretary-Treasurer

of Al Parker Buick Company, a local automobile dealer,

(3) Mrs. A. R. Varela, Secretary to the zone service

manager of the Buick Motor Division of G.M., and (4)

the Secretary to State of Texas, pursuant to TEx. REV.

Crv. Stat. ANN. art. 2031(b). Opel moved the court to

vacate and set aside service of process and to dismiss for

lack of personal jurisdiction, submitting affidavits from

the first three persons listed above reflecting that they

were not authorized to receive service for Opel. The

district court granted Opel’s motion. See Walker v.

Newgent, 442 F.Supp. 38 (S.D. Tex. 1977).

Subsequently, General Motors moved for summary

judgment on the grounds that (1) it did not design,

manufacture, or sell the automobile in question and (2)

there was no ground for disregarding the separate cor-

porate existence of Opel, as the trial court had already

held when it granted Opel’s motion to dismiss. The district

court granted G.M.’s motion on February 6, 1978.

VI.

REASONS FOR GRANTING THE WRIT

A. This case merits review by this Court on certiorari

because the Court of Appeals has misinterpreted the de-

6

gree of control required by one corporation over another

so as to permit imputing to the controlling corporation

the business done within the forum state by the other

corporation.

B. This case merits review by this Court on certiorari

to reconsider the applicability of Cannon Mfg. Co. v.

Cudahy Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 635

(1925) in light of the decision in International Shoe Co.

v. Washirgton, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed.

95 (1945) to a situation where “doing business” is

complicated by the presence of a parent-subsidiary rela-

tionship between corporations.

C. This case merits review by this Court on certiorari

to clarify the fact that corporate law liability principles

and constitutional due process provisions for jurisdiction

are not coextensive.

D. This case merits review by this Court on certiorari

to settle the issue that foreseeable effects within the forum

of a defendant’s activities outside the forum can be

sufficient to maintain in personam jurisdiction when pur-

poseful and substantial advantage, though indirect, has

been taken of the forum market.

VII.

ARGUMENT

THE DEGREE OF CONTROL BY GM OVER OPEL

IS SUFFICIENT TO ESTABLISH JURISDICTION

OVER OPEL

The power of a federal court to acquire in personam

jurisdiction over a nonresident defendant in a diversity of

citizenship case turns on two independent considerations.

7

First, the law of the state in which the federal court

sits must confer jurisdiction over the person of the de-

fendant; and secondly, if it does, the exercise of juris-

diction under state law must comport with basic due

process requirements of the United States Constitution.’

The burden is on the plaintiff to make a prima facie show-

ing of the facts on which jurisdiction is predicated.’

In Texas, the applicable statutory authority concerning

service of process and personal jurisdiction is Article

2031(b) of Vernon’s Texas Revised Civil Statutes An-

notated. The Fifth Circuit has recognized that Article

2031(b) represents an effort by Texas to reach as far

as federal constitutional requirements of due process will

permit in exercising in personam jurisdiction over non-

resident defendants.’ In view of this approach by the

Fifth Circuit, most challenges to personal jurisdiction of

non-resident defendants arising under the Texas Long-

Arm Statute, whether in federal or state court, should

be and have been determined in accordance with consti-

tutional considerations.*

1. Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 489 (Sth

Cir. 1974); Jetco Electronic Indus., Inc. v. Gardiner, 473 F.2d

1228, 1232 (Sth Cir. 1973); Atwood Hatcheries v. Heisdorf and

Nelson Farms, 357 F.2d 847, 852 (Sth Cir. 1966).

2. Product Promotions. Inc. v. Cousteau, 495 F.2d at 491.

3. Great Western United Corp. v. Kidwell, 577 F.2d 1256 (Sth

Cir. 1978), citing Product Promotions, Inc. v. Cousteau, 495 F.2d

483; Jetco Electronic Indus., Inc. v. Gardiner, 473 F.2d 1228; and

U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760 (Tex. 1977);

Gurley v. Lindsley, 459 F.2d 268 (Sth Cir. 1972), mandate amended

466 F.2d 498.

4. See Atwood Hatcheries v. Heisdorf and Nelson Farms, 357

F.2d 847; Lone Star Motor Import, Inc. v. Citroen Cars Corp. 185

F.Supp. 48 (S.D. Tex. 1960), rev’d on other grounds, 288 F.2d 69

(Sth Cir, 1961); Hoppenfeld v. Crook, 498 S.W.2d 52, 56 (Tex. Civ.

App.—Austin 1973, writ ref’d. n.r.e.).

8 .

One way to establish a prima facie case under Article

2031(b) is to have the plaintiff show that the defendant

was doing business in the state and that the present action

arises out of such business.°

Both the Texas courts and the Fifth Circuit have em-

ployed alter-ego and agency theories to justify a finding

that the parent is doing business in Texas through its

subsidiary.° The appellate panel in the instant case has

stated that these theories are equally applicable to the

present situation where jurisdiction is sought over the

subsidiary through its parent’s local activities.’

The Court of Appeals has ruled that petitioner has not

presented evidence establishing such a degree of control

by General Motors over Opel as to permit imputing the

business done in Texas by GM to its subsidiary Opel.

Petitioner submits that the record reflects otherwise as is

shown in the following:

1) Adam Opel AG was a wholly owned subsidiary

of General Motors Corporation.

2) GM is presently doing business in Texas and

was doing business in the 1960’s and the 1970’s

in the State of Texas.

3) Adam Opel AG was designing, manufacturing,

and marketing Opels, including the Opel Re-

kord in 1963 both for export to the United

States and for sale in the United States as well

as for sale abroad.

5. Product Promotions, Inc. v. Cousteau, 495 F.2d at 491.

6. Reul v. Sahara Hotel, 372 F.Supp. 995, 997 (S.D. Tex. 1974)

Product Promotions, Inc. v. Cousteau, 495 F.2d at 492-93; Hitt v.

Nissan Motor Co., 399 F.Supp. 838 (S.D. Fla. 1975).

7. Walker v. Newgent, 583 F.2d 619.

4)

5)

6)

7)

8)

9)

9

Mr. Bill Morey, the zone manager of the Buick

Division of General Motors, testifed by depo-

sition that it was his function to act as liaison

in the sale and service of the Buick products

to the 109 dealers in the Houston zone, and that

the sale and service of the Buick parts included

the sale and service of the Opel.

Mr. Morey testified that his chief function with

respect to Opels was to see that they were prop-

erly distributed to the dealers, and he confirmed

that the Opel automobiles were being shipped

from Germany to the Port of Houston during

the time in question in the 1960's and the 1970’s.

There were at least four or five dealers in Hous-

ton during the time in question who were selling,

servicing, and advertising Opel automobiles.

It was clearly the intention of Adam Opel AG

during the time in question that Opel auto-

mobiles be exported to this country, including

Texas, on the orders of the parent, General

Motors Corporation.

Mr. Shea testified that in his position as Director

of Marketing Staff Operations of the Overseas

Division of General Motors he was the liaison

man for importing the Opel from Germany to

the United States from 1963 until 1975.

Several hundred persons in the Overseas Divi-

sion of General Motors worked abroad in Ger-

many and several thousand worked here in the

United States. '

Mr. Shea testified that he discussed with Adam

Opel, at least several times a week during the

period in question, the home delivery program

which was concerned with the placing of indivi-

dual orders from United States customers.

10

10) Mr. Scheskat, manager of the export division of

Adam Opel during the period in question, visited

this country on at least one or two occasions

to discuss business matters with GM.

CANNON IS INAPPLICABLE IN A

PARENT-SUBSIDIARY SETTING AFTER

INTERNATIONAL SHOE

As a general test, Texas has adopted the rationale of

Cannon Mfg. Co. v. Cudahy Co.* to determine whether

the parent and subsidiary are one and the same cor-

porate entity for purposes of jurisdiction.’ Cannon was

decided under the older “doing business” standard rather

than the more liberal “minimum contacts” test of Jnter-

national Shoe;"® therefore, petitioner asserts that the

‘Cannon test is not mandated by the due process clause.

Moreover, Mr. Justice Brandeis stated expressly that

Cannon does not raise directly any “question of the con-

stitutional powers of the State, or of the federal govern-

ment.”"* In Hitt v. Nissan Motor Co.,"* the court dis-

tinguished Cannon, in part on the ground that; “.. .

Cannon involved no question of the constitutional powers

of the state or of the federal government but it was

merely the Supreme Court’s interpretation of what activi-

ties constituted “doing business” within a forum and thus

involved the concept of “presence” and not the less rigid

8. 276 U.S. 333 (1925).

9. E.g. Murdock v. Volvo of America Corp., 403 F.Supp. 55

(N.D. Tex. 1975).

10. International Shoe Co. v. Washington, 326 U.S. 310 (1945).

11. 267 US. at 336.

12. 399 F.Supp. at 849,

11

“minimum contacts” test of International Shoe.”** Thus

rejecting the Cannon standard and notions of “piercing

the corporate veil,” the court decided the jurisdiction

question on the basis of minimum contacts and the state

long-arm statute.** The thrust of petitioner’s application

is to shut the door the Fifth Circuit panel has left open

with its holding in the present case. There is potential

for unfairness under Cannon, and this has become a re-

ality through Opel’s taking advantage of doing business

within Texas through GM while remaining immune from

suit.”*

Cannon should not apply to cases such as the present

one where the nonresident corporation is a foreign na-

tional since in such a case a finding that the foreign

corporation is not amenable to service of process ef-

fectively precludes the claimant any remedy or relief in

courts of this country. The court in Frito-Lay, Inc. v.

13. Jd. at 849.

14. A number of commentators argue that Cannon should be dis-

carded as the jurisdictional test. See Note, N.C.L. Rev. 181 (1958)

(argues Cannon’s application inappropriate since Erie-Tompkins) ;

Wellborn, Subsidiary Corporations in New York. When is Mere

Ownership Enough to Establish Jurisdiction Over the Parent, 22

Burr. L. Rev. 681 (1973) (Cannon rationale should be abolished

and replaced with “single economic entity” test); Comment, Juris-

diction Over Parent Corporations, 51 Catrr. L. Rev. 574 (1963)

(Identifies the exceptions to the Cannon rule). See also O.S.C. Corp.

v. Toshiba America, Inc., 491 F.2d 1064 (9th Cir. 1974) noted 8

Vanp. J. Trans. L. 249 (1974). .

15. See Crucible, Inc. v. Stora Kopparbergs Bergslags AB, 403

F.Supp. 9, 13 (W.D. Pa. 1975). Cf Harris v. Deere & Co., 223 F.2d

161, 162 (4th Cir. 1955) (following majority rule although “[mJuch

can be said in support of the view that a manufacturer which dis-

tributes its product by selling it to a wholly owned and completely

controlled subsidiary, should, for purposes of jurisdiction in the

courts, be held to be doing business where the subsidiary sells the

product”).

12

Proctor & Gamble Co."* suggests that Cannon should

be less strictly applied in the case of a foreign national.

CORPORATE LIABILITY AND JURISDICTIONAL

TESTS ARE NOT IDENTICAL

It is petitioner’s position that the Texas long-arm

Statute authorizes jurisdiction over a foreign based cor-

poration solely because of the sufficiently appropriate

activities of its parent within the forum.’’ Such authori-

zation is well within the minimum contacts required by

due process. Where courts have held that a parent-sub-

sidiary relationship is insufficient to support jurisdiction

over the parent when the subsidiary maintains clearly

established minimum contacts with the forum, the lack

of jurisdiction has been adjudicated by applying principles

of corporate law historically used to establish ultimate

liability. However, the petitioner urges that these prin-

ciples are not required, nor even warranted, to establish

jurisdiction under minimum contacts requirements. Thus,

there is no constitutional impediment to a long-arm

statute authorizing jurisdiction over a corporation on the

16. 364 F.Supp. 243, 250 (N.D. Tex. 1973) citing Boryk v. de-

Havilland Aircraft Co., 341 F.2d 666 (2d Cir. 1965); Tokyo Boeki

(U.S.A.), Inc. v. S. S. Navarino, 324 F.Supp. (S.D. N.Y. 1971).

Compare United States v. Scophony Corp. of America, 333 U.S. 795

(1948). There is a split of opinion as to whether Scophony overruled

Cannon by implication in the context of antitrust litigation. See Frito-

Lay, Inc. v. Proctor & Gamble Co. 364 F.Supp. 243 (Cannon still

good law); Call Carl, Inc. v. B. P. Oil Co., 391 F.Supp. 367 (D.C.

Md. 1975) (Cannon no longer applicable to antitrust cases). See

also Zenith Radio Corp. v. Matsushita Electronics, 402 F.Supp. 262

(E.D. Pa. 1975); Flack Oil Co. v. Continental Oil Co., 277 F.Supp.

357 (D.C. Colo. 1967).

17. See Hitt v. Nissan Motor Co., 399 F.Supp. 838.

13

basis of its subsidiaries’ or parent’s activities in the

state.**

IN CERTAIN SITUATIONS, FORESEEABLE

EFFECTS OF DEFENDANT’S ACTIVITIES ARE

SUFFICIENT TO MAINTAIN JURISDICTION

The appellate panel erred in holding that plaintiff did

not meet the “minimum contacts” requirements set out

most recently by the Fifth Circuit in Great Western

United Corp. v. Kidwell.’® Reading the “minimum con-

tacts” requirement as broadly as due process permits,

the Kidwell court declared that these contacts “need not

arise from actual physical activity in the forum state;

activities in other forums with foreseeable effects in the

forum state will suffice.”*° Petitioner maintains that

Opel’s activities in Germany, especially considering its

substantial dealings with GM, have such foreseeable

effects in Texas. Opel was well aware that its cars would

reach the United States and Texas and that the end

disposition would be American consumers. A paper trans-

action in Germany should not be allowed to be raised

as an “immunity from suit” shield while Opel was taking

purposeful, though indirect, advantage of Texas markets.

For the foregoing reasons it is submitted that the

Petition for Certiorari should be granted to review the

18. Jd.; Crucible, Inc. v. Stora Kopparbergs AB, 403 F.Supp. 9.

19. 577 F.2d 1256.

20. Jd. at 1266-67.

14

judgment of the United States Court of Appeals for the

Fifth Circuit.

Respectfully submitted,

JAMAIL AND KOLIuS

3300 One Allen Center

Houston, Texas 77002

RICHARD WARREN MITHOFF

Attorney-in-charge

Liz NEUMANN, Of Counsel

CERTIFICATE OF SERVICE

I hereby certify that three true and correct copies of

the foregoing instrument were forwarded to John T.

Golden and John E. Kennedy, VINSON & ELKINS,

2100 First City National Bank Building, Houston, Texas

77002 on this ___ day of January, 1979, by certified

mail, return receipt requested.

15

APPENDIX A

RANDALL O. WALKER, Plaintiff-Appellant,

Vv.

GALE S. NEWGENT and General Motors

Corporation and its Opel Division, it subsidiary,

Adam Opel, AG, Defendants-Appellees.

No. 78-1371

Summary Calendar.*

UNITED STATES COURT OF APPEALS,

FIFTH CIRCUIT

Nov. 2, 1978.

A passenger injured in an automobile collision in Ger-

many brought an action, inter alia, against manufacturer

of automobile, alleging that vehicle was defectively manu-

factured and unsafe and that such defects were proximate

cause of the injuries. The United States District Court

for the Southern District of Texas, John V. Singleton, Jr.,

J., 442 F.Supp. 38, dismissed case and passenger ap-

pealed. The Court of Appeals, Gee, Circuit Judge, held

that the manufacturer, which was a wholly owned Ger-

man subsidiary of an American automobile manufacturer

doing business in the district, was not amenable to service

of process under the Texas long-arm statute.

Affirmed.

* Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Cas.

Co. of New York et al., Sth Cir., 1970, 431 F.2d 409, Part I.

16

Richard W. Mithoff, Houston, Tex., for plaintiff-

appellant.

John T. Golden, John E. Kennedy, Houston, Tex., for

General Motors Corp. and Adam Opel AG, Vinson &

Elkins,

Appeal from the United States District Court for the

Southern District of Texas.

Before RONEY, GEE and FAY, Circuit Judges.

GEE, Circuit Judge:

Plaintiff-appellant, Randall Walker, while a member

of the United States Armed Forces in Germany, was a

passenger in a 1963 Opel Rekord when it was involved

in an automobile collision on December 7, 1970, in

Germany. He suffered permanent injuries and sued New-

gent, the driver of the car, for negligence, subsequently

settling with him. He also sued General Motors and

Adam Opel AG (Opel) in Texas on the basis of negli-

gence, strict liability in tort for the defective and dan-

gerous design and manufacture of the windshield glass in

the 1963 Opel Rekord, and breach of express and implied

warranties. Plaintiff has based jurisdiction on diversity

of citizenship, seeking service under the Texas long-arm

statute.

- The automobile in question was designed, manufac-

tured and sold by Opel, a wholly owned subsidiary of

General Motors located in Germany. Opel is a German

corporation with its principal place of business in Russel-

sheim and is primarily engaged in the manufacture of

automobiles. Opel has never maintained an office or place

of business within the State of Texas, or, indeed, within

bd

17

the United States. Opel has no agents, servants, or em-

ployees of the company assigned sales responsibility

operating within the State of Texas or the United States.

Opel has never entered into any contract which requires

performance by it in whole or in part within the State

of Texas, nor has it any assets located there. In the past

years no automobile sales were made to importers (i.e.,

auto dealers) in the State of Texas. All sales made to

the United States importer or distributor are FOB at a

point outside the United States. Title to the automobiles,

which become property of the importer, passes to the

importer prior to their entry into the United States. The

sole importer to which Opel sells automobiles for resale

in the United States is Buick Motor Division of General

Motors Corporation. Indeed, the relationship between

GM and Adam Opel AG has been characterized as one

of customer and seller.

Opel, which has its own engineering and design staff

and its own sources of supply, manufactures automobiles

primarily for the German and other European markets.

The automobile involved in the accident at issue in this

case, a 1963 Opel Rekord, was not one of those sold

to Buick for export to the United States. It was purchased

secondhand by Newgent in Germany, and the model in

question was not at that time being exported to the

United States.

This action was filed on April 12, 1973. Process was

served through a single citation in April 1973 on General

Motors Corporation and its subsidiary, Opel, through

General Motors’ agent for service of process, C. T. Cor-

poration Systems in Dallas, Texas. On August 12, 1974,

the district court ordered that separate citations be issued

18

and served on Opel. In response to that order, plaintiff

served (1) C. T. Corpration, (2) Mr. T. M. Wetzel,

Secretary-Treasurer of Al Parker Buick Company, a local

automobile dealer, (3) Mrs. A. R. Varela, Secretary to

the zone service manager of the Buick Motor Division of

GM, and (4) the Secretary to State of Texas, pursuant

to Tex. Rev. Civ. STAT. ANN, art. 2031b. Opel moved

the court to vacate and set aside service of process and to

dismiss for lack of personal jurisdiction, submitting affi-

davits from the first three persons listed above reflecting

that they were not authorized to receive service for Opel.

The district court granted Opel’s motion. Walker v. New-

gent, 442 F.Supp. 38 (S.D. Tex. 1977).

Subsequently, General Motors moved for summary

judgment on grounds that (1) it did not design, manu-

facture or sell the automobile in question, and (2) there

was no ground for disregarding the separate corporate

existence of Opel, as the district court had already held

when it granted Opel’s motion to dismiss. On February

6, 1978, the district court granted GM’s motion.

Plaintiff has appealed this judgment, asserting that the

district court does have personal jurisdiction of Opel.

Plaintiff contends that he has made out a prima facie

case that the defendant Opel is doing business in the

State of Texas through the activities of and based on the

relationship with its parent corporation, the defendant

GM, and that this cause of action arises out of and is

connected with the marketing and selling of Opel auto-

mobiles, both in this country and abroad. Plaintiff further

maintains that the degree of ownership and control of

GM over Opel clearly rises to the level necessary to im-

pute business in Texas by GM Corporation to its wholly

owned subsidiary, Opel.

19

Furthermore, plaintiff argues, since the court has in

personam jurisdiction over Opel and since the business

of Opel is clearly imputed to GM, the granting of the

motion for summary judgment filed by the defendant

GM should be reversed.

[1, 2] Plaintiff has predicated the existence of in per-

sonam jurisdiction over Opel on the Texas long-arm

statute, Tex. Rev. Civ. Stat. Ann. art. 2031b. In deciding

whether the state jurisdictional statute confers jurisdic-

tion over a nonresident defendant in a diversity suit, it

must be determined that (1) the defendant is in fact

amenable to service under the statute (state law of the

forum controls this question), and (2) if the state statute

has been complied with, then federal law must be ap-

plied to determine whether assertion of jurisdiction over

the defendant comports with due process. Jetco Electronic

Industries, Inc. v. Gardiner, 473 F.2d 1228 (5th Cir.

1973); Product Promotions, Inc. v. Cousteau, 495 F.2d

483 (Sth Cir. 1974); Wilkerson v. Fortuna Corp., 554

F.2d 745 (Sth Cir. 1977). Plaintiff, the party seeking

to invoke the court’s jurisdiction, has the burden of es-

tablishing that jurisdiction by making a prima facie show-

ing of facts on which it may be predicated. Product

Promotions, Inc. v. Cousteau, 495 F.2d at 490-91.

The Texas long-arm statute provides that one who “does

business” in the state is amenable to. process in suits

arising from such business. Since Opel, a German corpo-

ration, has neither assets, office, agents, nor employees

in Texas, the traditional manifestations of “doing busi-

ness” are not present. Also significant is the fact that

even though Opel sold cars to Buick Motor Division of

GM, the car in question was a model which was not

20

manufactured for export and in fact was sold second-

hand in Germany; further, regarding those cars which

were sold for export, title passed in Germany, and no

contracts for sale were entered into or to be performed

in the State of Texas.

[3] “Doing business” also includes entering into a

contract to be performed in whole or in part within the

state and the commission of a tort in whole or in part

within the state. See Jetco Electronic Industries, Inc. v.

Gardiner, supra; Product Promotions, Inc. v. Cousteau,

supra; Wilkerson v. Fortuna Corp., supra. Jetco provides

a gloss for the tort aspect of “doing business”:

It is immaterial that the tortious act occurred out-

side the state, for it is well established that the

statute extends to injury occurring within the state

as a result of a wrongful act committed outside the

state. [citations omitted]

473 F.2d at 1232 n. 5. In the instant case, Opel did not

commit a tort in whole or in part within the State of

Texas. First, the automobile in question was designed

and manufactured in Germany. Furthermore, the acci-

dent which is the basis of this suit also occurred in

Germany. Thus, the activity here does not satisfy the

tort provision of the Texas long-arm statute.

[4] As for the contract portion of the Texas long-

arm statute, for jurisdiction to lie appellant must make

a prima facie showing that “(1) a contract to be per-

formed in whole or in part within Texas existed between

itself and appellees and (2) the present suit arose out |

of that contractual arrangement.” Product Promotions,

Inc. v. Cousteau, 495 F.2d at 491. Since the record con-

21

tains no evidence of any contract between plaintiff and

either defendant, this provision of the statute is likewise

inapplicable.

Nor can it be said that Opel, because of its admitted

sales of Opel automobiles to GM for resale in the United

States, is doing business in Texas. Article 2031b does

expressly state that there are “other acts that may con-

stitute doing business,” and it is true that this circuit

has upheld the exercise of jurisdiction on the basis of a

manufacturer’s placing a defective product in the “stream

of commerce”; but these cases have involved an injury

that occurred in the forum state, and the court was con-

struing the tort clause of the statute. See Coulter v. Sears,

Roebuck & Co., 426 F.2d 1315 (5th Cir. 1970); Eyerly

Aircraft Co. v. Killian, 414 F.2d 591 (Sth Cir. 1969).

A further factual distinction is that the Opel Rekord at

issue was introduced into international commerce and

was never put into service in the United States. See

Reich v. Signal Oil & Gas Co., 409 F.Supp. 846 (S.D.

Tex. 1974), aff'd, 530 F.2d 974 (Sth Cir. 1976).

[5] Notwithstanding all of the above, personal juris-

diction can still be found to exist over Opel if the rela-

tionship between the parent corporation, GM, which does

business in the State of Texas, and the subsidiary German

corporation, Opel, is one which would allow the court

to find that the doing of business of the parent corpora-

tion can be imputed to the subsidiary. Reul v. Sahara

Hotel, 372 F.Supp. 995 (S.D. Tex. 1974). Plaintiff con-

tends that such a relationship exists. Since the alleged

agency is one of the facts upon which appellant predicates

his argument for jurisdiction, he has the “burden of mak-

ing a prima facie showing of [its] existence.” Product

22

Promotions, Inc. v. Cousteau, 495 F.2d at 492. Plaintiff

has not met his burden.

Our cases dealing with the agency relationship with

regard to in personam jurisdiction and the requirement

of doing business address the situation where jurisdiction

is sought over the parent corporation through its sub-

sidiary’s local activities. See Product Promotions, Inc.

v. Cousteau, 495 F.2d at 492 and cases cited therein.

The issue in the instant case is the reverse of that situa-

tion, but the same legal principles apply.

Plaintiff asserts that “[t]he degree of ownership and

control of General Motors Corporation over Adam Opel

AG clearly rises to the level necessary to impute business

in Texas by General Motors Corporation to its wholly-

owned subsidiary, Adam Opel AG.” However, the evi-

dence does not support this claim. As the record shows

and the district court determined, the two corporations

“do not have the same corporate offices or the same regis-

tered agent, nor are there any mutual officers or direc-

tors. There are no facts to support a prima facie case of

actual control.” Furthermore, the record establishes that

Opel maintains its own engineering and design staff and

its own sources of supply and that at most only eleven

percent of its total production output was ever sold to

Buick in any one year. As noted earlier, deposition

testimony characterizes the relationship between GM and

Opel as one of customer-manufacturer.

[6] Although GM does own 100% of Opel’s stock,

this fact alone is not sufficient to fuse the subsidiary into

the parent corporation for the purpose of establishing an

agency relationship. See Cannon Manufacturing Co. v.

23

Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69

L.Ed. 634 (1925); Turner v. Jack Tar Grand Bahama,

353 F.2d 954 (Sth Cir. 1965); Reul v. Sahara Hotel,

supra. Indeed, in Gentry v. Credit Plan Corp., 528 S.W.

2d 571, 573 (Tex. 1975), the Texas Supreme Court

stated that:

A subsidiary corporation will not be regarded as the

alter ego of its parent because of stock ownership,

a duplication of some or all of the directors or of-

ficers, or an exercise of control that stock owner-

ship gives to stockholders.

Thus plaintiff has not presented evidence establishing

such a degree of control by General Motors over Opel

as to permit imputing the business done in Texas by

GM to its subsidiary Opel.

Finally, it is true that the Texas long-arm statute

“authorizes assertion of personal jurisdiction over non-

residents to the limits of due process.” Great Western

United Corp. v. Kidwell, 577 F.2d 1256 (Sth Cir. 1978),

citing Jetco, supra; Product Promotions, supra; and

U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760

(Tex. 1977). This court’s most recent due process analy-

sis is found in Kidwell:

[T]he governing principle is the fairness of sub-

jecting a defendant to suit in a distant forum. Only

if the nonresident defendant has such “minimum

contacts” with the state “that the maintenance of

the suit does not offend ‘traditional notions of fair

play and justice’,” International Shoe Co. v. Wash-

ington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95

(1945), or if the defendant has performed some act

“by which [it] purposefully avails itself of the privi-

24

lege of conducting activities within the forum State,

thus invoking the benefits and protections of its

laws,” Hanson v. Denckla, 357 U.S. 235, 78 S.Ct.

1228, 2 L.Ed.2d 1283 (1958); McGee v. Inter-

national Life Insurance Co., 355 U.S. 220, 78 S.Ct.

199, 2 L.Ed.2d 223 (1957), may the forum, con-

sistently with due process, extend its long arm to

embrace it. Jetco Electronic Industries, 473 F.2d

at 1234; see also Product Promotions, Inc., 495

F.2d at 494. Of necessity, inquiries into whether the

exercise of personal jurisdition is permissible in a

particular case are sensitive to the facts of each

case. 2 L. Moore, § 4.25[5] at 1172.

577 F.2d at 1266. Reading the “minimum contacts” re-

quirement very broadly, the Kidwell court declared that

these contacts “need not arise from actual physical ac-

tivity in the forum state; activities in other forums with

foreseeable effects in the forum state will suffice.” Id.

at 1266-67. In Kidwell the court found that the defend-

ant’s actions in regard to the plaintiff corporation did

have foreseeable effects in Texas, the forum state. In the

instant case, however, Opel’s activities in Germany from

which this cause of action arises did not have foreseeable

effects in Texas, especially since the automobile in ques-

tion was not manufactured for export and was sold only

domestically.

Furthermore, even though the Kidwell decision recog-

nizes that the Texas long-arm statute extends to the

limits of due process, it firmly maintains the proposition

that “unilateral activity by the plaintiff cannot produce

the minimum contacts necessary to satisfy due process”

and unequivocally requires some activity by the defend-

ant. Jd. at 1268. In the instant case, all the activity con-

eo

25

cerning this cause of action occurred in Germany. In-

deed, it appears that only because the plaintiff now re-

sides in Texas was this action brought in that forum.

[7] On all of the above considerations, then, we con-

clude that the trial court correctly determined that the

relationship between the defendant Opel and the forum

state is too attenuated to support in personam jurisdiction.

[8] Defendant GM’s motion for summary judgment

was likewise properly granted. The sole basis of plain-

tiffs argument for reversal of the summary judgment

appears to be the relationship between GM and Opel.

This relationship did not comprise sufficient ownership

and control to establish an agency relationship or to

permit disregarding their separate corporate entities. And

since the record reveals that GM did not design or manu-

facture the automobile in question, and as we have con-

cluded that no agency relationship exists between GM

and Opel, it necessarily follows that GM cannot be held

liable for any alleged failing of Opel in the design and

manufacture of the automobile in question.

AFFIRMED.

26

APPENDIX B

RANDALL O. WALKER

Vv.

GALE S. NEWGENT and General Motors

Corporation and Adam Opel AG.

Civ. A. No. 73-H-469.

UNITED STATES DISTRICT COURT,

S. D. Texas,

Houston Division.

December 6, 1977.

A passenger injured in an automobile collision in

Germany brought an action, inter alia, against the manu-

facturer of the automobile, alleging that the vehicle was

defectively manufactured and unsafe and that such de-

fects were the proximate cause of his injuries. The Dis-

trict Court, Singleton, J., held, inter alia, that the manu-

facturer, which was a wholly-owned Germany subsidiary

of an American automobile manufacturer doing business

in the district, was not amenable to service of process

under the Texas long-arm statute.

Action against manufacturer dismissed for want of

jurisdiction.

Richard W. Mithoff, Jr., Jamail & Gano, Houston,

Tex., for plaintiff.

B. Jeff Crane, Jr., John T. Golden, Vinson & Elkins,

Houston, Tex., for defendants.

at ee ee ee

27

Memorandum and Order:

SINGLETON, District Judge.

Plaintiff Randall O. Walker has brought this suit for

damages arising out of injuries he suffered in an auto-

mobile accident in 1970. Mr. Walker was a passenger in

a 1963 Opel Rekord automobile owned and operated

by Gale S. Newgent, when the car was involved in a

head-on collision in Giessen, Germany. Mr. Walker has

alleged that the car was defectively manufactured and

unsafe and that such defects were the proximate cause of

his injuries. The car was manufactured in Germany by

Adam Opel AG, a German corporation and wholly-

owned subsidiary of General Motors Corporation. Mr.

Newgent purchased the car secondhand in Germany.

Adam Opel AG has challenged the in personam jurisdic-

tion of this court and moved for dismissal of the suit

against it.

Process was served through a single citation in April,

1973, on General Motors Corporation and its subsidiary,

Adam Opel AG, through General Motor’s agent for

service of process, C. T. Corporation Systems in Dallas,

Texas. Attorneys for General Motors filed an answer

purportedly on behalf of General Motors and Adam Opel

AG. Following discovery, these same attorneys filed a

motion to withdraw the answer filed for Opel on the

basis that Opel was a separate corporate entity organized

under German law having no agent for service in Texas

and that the answer filed on its behalf was without its

authorization or knowledge. On August 12, 1974, this

court ordered that separate citation be issued and served

on Adam Opel AG. Consideration of Opel’s motions to

28

withdraw its answer and its motion to dismiss the action

for lack of in personam jurisdiction was deferred to

allow for further discovery of the facts relating to

personal jurisdiction. That discovery has now been com-

pleted.

[1] The threshold issue to be considered by this

court is whether Adam Opel AG has waived its juris-

dictional defense through the answer filed on its behalf

in June, 1973, by the attorneys for General Motors.

The affidavit of R. Pinnekamp, an attorney in the legal

department of Adam Opel AG, states that Adam Opel

AG had no knowledge of this lawsuit until more than a

year after the answer was filed. Mr. Pinnekamp further

stated that any appearance in this lawsuit was without

Adam Opel’s knowledge or authorization. The affidavit

of Jeff Crane, the attorney who filed the answer on behalf

of General Motors Corporation and its subsidiary, Adam

Opel AG, stated he did so on the instructions of General

Motors’ insurer and without authorization from Adam

Opel AG and prior to discovering that Adam Opel AG

was a separate corporation. In recognition of Opel’s

answer being unauthorized by it, this court ordered

separate citation be issued as noted above. Subsequent

discovery has revealed evidence which supports a finding

that Adam Opel AG is indeed a separate corporate

entity as discussed infra. This court finds that Adam

Opel AG’s June, 1973, answer did not operate as a

waiver to its jurisdictional defense since that answer was

without knowledge or consent of Opel.

[2] The burden is on the plaintiff, Mr. Walker, to

establish the existence of in personam jurisdiction over

Adam Opel AG. Product Promotions, Inc. v. Cousteau,

ne ne ee eee

6 DN A a ert as tw eo ae

29

495 F.2d 483 (Sth Cir. 1974). In response to this court’s

August 12, 1977, order, Mr. Walker served (1) C. T.

Corporation, General Motors’ agent for service of pro-

cess, (2) Mr. T. M. Wetzel, secretary-treasurer of a local

Buick dealer, and (3) Mrs. A. R. Varela, secretary to the

zone service manager of the Buick Motor Division of

General Motors, in addition to (4) the Secretary of

State of Texas, pursuant to Tex. Rev. Civ. Stat. Ann.

art. 2031b. In each case Opel moved to vacate and set

aside service of process. In support of such motions,

affidavits were filed from the first three entities listed

above, stating that the persons served were not authorized

to receive service for Opel. Thus the question must be

resolved in light of the Texas long arm statute and the

ample case law as applied to the facts presented through

discovery by both parties.

Personal jurisdiction over a foreign corporation must

comport with the requirements of due process in that

(1) the nonresident defendant must purposefully

do some act or consummate some transaction in

the forum state; (2) the cause of action must arise

from, or be connected with, such act or transaction;

(3) the assumption of jurisdiction by the forum

state must not offend traditional notions of fair play

and substantial justice... .

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

66 S.Ct. 154, 90 L.Ed. 95 (1945).

The evidence presented by both parties in depositions

and affidavits established that Adam Opel AG is a Ger-

man corporation which manufactures automobiles for

domestic sale and for export. It is a wholly-owned sub-

sidiary of General Motors Corporation which undis-

30

putedly does business in this state. Adam Opel AG, how-

ever, has no assets, offices, agents, or employees in Texas.

All Opel automobiles sold to the Buick Motor Division of

General Motors during the time in question were sold

by Opel to Buick f.o.b. Germany. Buick then advertised,

sold, and serviced these cars throughout the United

States, including Texas.

Significantly, the particular automobile involved in this

case was a 1964 Opel Rekord, a model which was never

manufactured for export and was sold only domestically.

This particular model was never sold to or purchased by

Buick. It was placed in commerce directly by Opel into

its domestic market.

Notwithstanding all of the above, personal jurisdiction

can still be found to exist over Adam Opel AG if the

relationship between the parent corporation, General

Motors, which does business in the state of Texas, and

the subsidiary German corporation, Adam Opel AG, is

one which would allow the court to find that the doing of

business of the parent corporation can be imputed to the

subsidiary so that Texas can acquire in personam juris-

diction over the German corporation. Reul v. Sahara

Hotel, 372 F.Supp. 995 (S.D. Tex. 1974). Plaintiffs in

Reul alleged that one defendant, a California subsidiary

of the defendant parent company, did business in Texas

through its parent corporation which was licensed to do

business in Texas. Service of process over this subsidiary

was achieved under the Texas long arm statute as in the

instant case. The California corporation neither sold nor

solicited any sales in Texas; it did not receive income

from sales in Texas; it did not have a license to do

business or own any property in Texas. The question in

ean erent nes

Pe ats TA Son nr

31

Reul of whether or not in personam jurisdiction was

proper against this subsidiary turned on the nature of its

relationship with the parent corporation, which assuredly

did business in Texas. The question in the instant case

is the same. However, the widely differing fact pattern

calls for a different conclusion.

The facts presented to the court in Reul led to the

conclusion “that there is present here more than that

amount of control of one corporation over another which

mere common ownership and directorship would in-

dicate.” Reul, at 998. The evidence presented in that case

showed the close interrelationship of the various corpora-

tions with the parent company. Salesmen’s assignments

and commission payments emanated from the owners of

the parent corporation; the parent and subsidiary shared

common officers; the senior vice president and director

of the parent company was also the manager of the

Western Division, which included the California subsi-

diary. The court found that while on paper the corpora-

tions looked like separate entities, “they are for all opera-

tional purposes one big, albeit well organized, corporation

....” Reul, at 1000 (emphasis in original). All the

business was conducted out of New York, the home office

of the parent corporation; all of the corporations owned

by the parent were covered under one insurance policy;

employees were hired by the parent corporation for its

benefit and for the benefit of the other corporations. In

addition, they advertised under one slogan and trade-

mark.

The instant case is distinguishable from Reul, supra.

The evidence in this case reveals that Adam Opel AG is

not controlled by General Motors. They do not have the

32

same corporate offices or the same registered agent, nor

are there any mutual officers or directors. There are no

facts to support a prima facie case of actual control. The

only significant factor relating to this issue is that General

Motors owns 100 percent of Adam Opel AG’s stock.

According to the deposition of Mr. William F. Shea,

Director, Marketing Staff Operations of General Motors

Overseas Division, General Motors Buick Division and

Adam Opel had a pure manufacturer-customer relation-

ship. The record reveals that Opel had its own engineer-

ing and design staff and its own sources of supply for

component parts. From 1964 to 1975, Buick purchased

no more than 11 per cent of Opel’s total automobile

production in any one year.

Mr. William M. Veselick, a zone manager for Buick

Motor Division, testified in his deposition that suggestions

made for design changes and communicated through

channels to Adam Opel were not followed by Opel.

Furthermore, Mr. Lloyd D. Loggins, another Buick zone

manager, testified on deposition that Adam Opel did not

seek the advice of General Motors’ Buick Division about

changes in the Opel cars.

The Texas Supreme Court has recently stated that

“where management and operations are assimilated to

the extent that the subsidiary is simply a name or conduit

through which the parent conducts its business, the cor-

porate fiction may be disregarded to prevent fraud or

injustice.” Gentry v. Credit Plan Corp., 528 S.W.2d 571

(Tex. 1975). That court further stated that

[a] subsidiary corporation will not be regarded as

the alter ego of its parent because of stock owner-

ship, a duplication of some or all of the directors

33

or officers, or an exercise of control that stock own-

ership gives to stockholders.

Gentry, at 573.

In summary, this court finds that Adam Opel AG

has not waived its jurisdictional defense by an answer

filed on its behalf without its knowledge or consent:

that Adam Opel AG was not doing business in the

state of Texas during the time in question; that the act

complained of did not arise out of any business done

by Adam Opel AG in the state of Texas; that the degree

of ownership and control by General Motors over Adam

Opel AG does not rise to the level necessary to impute

the business done in Texas by General Motors to its

subsidiary Adam Opel AG; and that in personam juris-

diction does not lie as to Adam Opel AG in this lawsuit.

Accordingly, it is hereby ORDERED, ADJUDGED,

and DECREED that defendant Adam Opel AG’s motion

to vacate, set aside service of process, and dismiss for

want of jurisdiction be, and hereby is, GRANTED.