Class Action Contacts Insufficient to Trigger Personal Jurisdiction

In an interesting case on the scope of “minimum contacts,” the Court of Appeals held that serving as the representative plaintiff in a nationwide class action (with members from Texas) against a Texas company was not sufficient to create minimum contacts for purposes of personal jurisdiction.

The case arose out of a nationwide class action that the Appellees, as class representatives, filed in Illinois against King Supply Company, LLC alleging violations of the Telephone Consumer Protection Act (TCPA).  King settled the class action for $20 million, but as part of the settlement the Appellees covenanted that, except for $200,000 paid by King, their only source of payment would be King’s insurance policies.  King’s Texas-based insurance companies (Appellants) then filed a declaratory action in Dallas against Appellees seeking a declaration that they had no duty to defend or indemnify King.

Appellees filed a special appearance contesting personal jurisdiction, which the trial court granted.  Appellants appealed, arguing that by representing a nationwide class (12% of which were Texas residents) against a Texas company and seeking to recover funds from Texas insurance policies, Appellees’ contacts with Texas were sufficient to warrant personal jurisdiction over them.  The Court of Appeals disagreed, concluding that the evidence failed to show that Appellees “purposefully availed themselves of the privilege of conducting activities in Texas, thus invoking the benefits and protections of Texas law.”

Nat’l Fire Ins. Co. v. CE Design, Ltd., No. 05-13-00720-CV