Survival's of a Plane Crash Civil Lawsuit Jurisdiction
In Bearry v. Beech Aircraft Corporation 818 F.2d 370 (5th Cir. 1987), the survivors of two individuals killed in a Beech aircraft in Mississippi sued Beech in Texas on product liability theories. Id. at 372.
Beech engaged in a nationwide marketing campaign, during which nearly $ 250 million of its products flowed to 17 independent Texas dealers. 818 F.2d at 373.
Beech representatives occasionally visited the Texas dealers at the dealers' request. Id.
One of the Texas dealers was a wholly owned subsidiary of another Beech subsidiary. Id.
Regarding this "indirect" Texas subsidiary, the Beech court noted that "because [the indirect subsidiary] is operated as a distinct corporation, the district court properly held that its contacts with Texas could not be imputed to Beech." Id.
However, the district court had also characterized the independent Texas dealers as "Beech retailers, " implicitly attributing their activities to Beech, despite Beech's lack of control over their operations. 818 F.2d at 375 & n.2 ("Although the district court noted that the activities of the independent dealers could not be attributed to Beech, it found the existence of the distribution system in Texas to establish conduct by Beech within that forum.").
The district court had further characterized all aircraft sales to Beech's Texas dealers as occurring in Texas, although all sales were negotiated and completed in Kansas. Bearry, 818 F.2d at 375. the Fifth Circuit Court of Appeals rejected these two characterizations:
But Beech exercised its right to structure its affairs in a manner calculated to shield it from the general jurisdiction of the courts of other states such as Texas, carefully requiring the negotiation, completion, and performance of all contracts in Kansas.
Beech has not afforded itself the benefits and protections of the laws of Texas, but instead has calculatedly avoided them. 818 F.2d at 375-376.
It further held that "distributors selling Beech manufactured products for their own account do not create minimum contacts sufficient to warrant general jurisdiction over Beech. Bearry, 818 F.2d at 376.
Beech has no office in Texas, has no agents in Texas, and has no control over the Texas dealers. Id. at 377. As such, Beech is not 'doing business' in Texas." Bearry, 818 F.2d at 376.