Product Promotions, Inc. v. Jacques Y. Cousteau
18 Fed. R. Serv. 2d 1102, 495 F.2d 483, 1974 U.S. App. LEXIS 8285 (1974)
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Rule of Law:
For a court to exercise personal jurisdiction over a nonresident defendant, the state's long-arm statute must authorize it, and the exercise of jurisdiction must not violate the Due Process Clause, which requires that the defendant have sufficient minimum contacts with the forum state such that maintaining the suit does not offend traditional notions of fair play and substantial justice.
Facts:
- Product Promotions, Inc., a Texas corporation, marketed a device called the 'TR-VII Fish Call.'
- Seeking to use Jacques Y. Cousteau's name for advertising, its president, Elwood Ross, contacted a representative who connected him with Centre d’Etude Marines Advancees (CEMA), one of the Cousteau Group Companies based in France.
- In January 1972, Ross traveled to France to negotiate a contract with CEMA for testing the device.
- After Ross returned to Texas, CEMA mailed a written contract offer to him in Dallas.
- Ross accepted the offer by mailing a letter and the first payment from Dallas to CEMA in France.
- CEMA performed the tests in the Mediterranean and mailed the resulting reports and films to Product Promotions in Dallas.
- After Product Promotions began a national advertising campaign using the Cousteau name, attorneys for Jacques Cousteau and Cousteau Group, Inc. threatened a TV station and Sears, Roebuck and Co. with legal action.
- As a result of the threats, the TV station refused to air the commercials and Sears stopped distributing the product, causing Product Promotions to repurchase inventory and create new packaging.
Procedural Posture:
- Product Promotions, Inc. filed suit against Jacques Y. Cousteau and the Cousteau Group Companies in the U.S. District Court for the Northern District of Texas.
- The nonresident defendants were served with process through the Secretary of State of Texas.
- The defendants filed a motion to dismiss for lack of personal jurisdiction.
- The district court (trial court) held a hearing and granted the defendants' motion to dismiss the case.
- Product Promotions, Inc., as appellant, appealed the dismissal to the U.S. Court of Appeals for the Fifth Circuit.
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Issue:
Does a federal district court in Texas have personal jurisdiction over nonresident foreign defendants when one defendant entered into a contract with a Texas resident that was consummated in and required partial performance in Texas, while the plaintiff alleges the other defendants are liable under an agency theory?
Opinions:
Majority - Goldberg, J.
Yes, as to defendant CEMA, but no, as to Jacques Cousteau and the other corporate defendants. A nonresident defendant is subject to jurisdiction under the Texas long-arm statute and constitutional due process if it purposefully avails itself of the privilege of conducting activities within the forum state, but the plaintiff bears the burden of making a prima facie showing of jurisdictional facts for each defendant. The court found that CEMA purposefully availed itself of conducting business in Texas because the contract was consummated when Product Promotions mailed its acceptance from Texas, and the contract required CEMA to perform in part in Texas by delivering reports and film there. This created sufficient 'minimum contacts' to make jurisdiction fair and reasonable. However, Product Promotions failed to carry its burden of making a prima facie showing that CEMA was acting as an agent for Jacques Cousteau or the other Cousteau Group companies. The plaintiff provided no evidence of control or manifestations of authority from the alleged principals that would bind them to CEMA's contract, so jurisdiction over them was improper.
Analysis:
This case provides a clear application of the two-part test for specific personal jurisdiction in a contract dispute involving a foreign defendant. It reinforces that a single contract can establish minimum contacts if it creates a substantial connection with the forum state through its formation and required performance. The decision is also significant for clarifying that in multi-defendant cases based on agency or alter-ego theories, the plaintiff must establish a prima facie case for jurisdiction over each defendant individually, as jurisdiction over a subsidiary or agent does not automatically extend to the parent or principal.
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