After first rejecting an appeal sought by two Texas homeowners in a defective products case, the Texas Supreme Court heard oral arguments last week as to whether they can, in fact, claim jurisdiction in the closely watched case against a Connecticut spray foam manufacturer.
The court had denied the petition of Frank and Helene Luciano last March but reversed course in October and agreed to hear their appeal. The high-stakes case featured arguments from amicus parties, with the Texas attorney general siding with the couple and the Chamber of Commerce of the USA arguing for the company.
The Lucianos allege that insulation manufactured by SprayFoamPolymers.com and installed in their Travis County home caused coughing, burning eyes, runny noses and headaches. In 2016, a district court in Travis County denied SprayFoam’s request that the lawsuit be derailed for lack of jurisdiction in Texas.
In 2018, however, the Third Court of Appeals reversed the trial court, finding that SprayFoam had not purposefully established the minimum contacts with Texas needed for jurisdiction.
Before the Supreme Court, Bill Davis, deputy solicitor general for Texas, and Paul Downey of the Dallas firm Smith Clinesmith, argued that the Connecticut company had an independent sales representative to find Texas customers and a contract to store its products in a warehouse in Grand Prairie.
“If the company has taken its own actions to reach out, tap into, target the Texas market, then it should reasonably expect that it can be sued here if it sends in an allegedly defective product,” said Davis.
SprayFoam’s lawyer, Tab Keener of Downs & Stanford, said there is no evidence that the insulation came through the Texas warehouse. He said the company’s contract was with a Colorado entity that happened to have a warehouse in Texas.
Allyson Ho, who represents the Chamber of Commerce, said putting a product into the stream of commerce, contracting with a distributor and maintaining a relationship with a third party are “not enough to satisfy the demands of due process.”
Several justices seemed skeptical that SprayFoam lacked a Texas presence. They questioned the involvement of the Texas sales representative, whose mission was to find customers, and statements on the company’s website about its “Grand Prairie TX Distribution Center.”
In its amicus brief, the Chamber of Commerce said there must be additional conduct demonstrating a substantial connection between SprayFoam’s contacts in Texas and the Luciano’s allegations.
“Under a stream-of-commerce approach without the ‘plus’ component, manufacturers that enter into agreements with distributors could be sued anywhere those distributors happen to sell products – drastically reducing manufacturers’ ability to predict where they are subject to specific jurisdiction, and to tailor their conduct accordingly,” the brief states.
Watch the oral arguments in 18-0530 Luciano v. SprayFoamPolymers here.