Opinion
No. 05-18-00576-CV
06-19-2019
SNP SCHNEIDER-NEUREITHER & PARTNER AG, Appellant v. SAMUEL WOOD AND JAMES D. SPIELMAN, Appellees
On Appeal from the 192nd Judicial District Court Dallas County, Texas
Trial Court Cause No. Dc-17-14118
MEMORANDUM OPINION
Before Justices Brown, Schenck, and Pedersen, III
Opinion by Justice Pedersen, III
SNP Schneider-Neureither & Partner AG (SNP Germany) appeals an interlocutory order denying its special appearance. We affirm in part and reverse and render in part.
I.
Background
SNP Germany is a corporation whose shares are publicly traded on the German stock market. Its headquarters are located in Heidelberg, Germany. It has no employees in Texas, nor does it have any place of business, property, or registered agent for service of process in Texas. However, SNP Germany is the sole owner of a U.S. subsidiary, SNP Transformations, Inc. (SNP U.S.), which is incorporated in Virginia and has offices in Irving, Texas.
In the spring of 2017, SNP U.S. employed appellees Samuel Wood and James Spielman to work in its Irving office. Spielman was employed beginning April 13 as the company's Vice President of Finance, and Wood was employed beginning May 10 as its President. Shortly thereafter, on May 22, 2017, SNP U.S. fired Wood and Spielman after they allegedly violated company directives and conspired to commit fraud against the company.
On October 12, 2017, Wood and Spielman (plaintiffs) filed suit against SNP U.S. and SNP Germany. Plaintiffs allege that they were fraudulently induced to become employees of SNP U.S. based on misrepresentations made by (i) Dr. Andreas Schneider-Neurither, who they allege was SNP Germany's largest single shareholder, as well as SNP Germany's and SNP U.S.'s Chairman of the Board and Chief Executive Officer, and (ii) Bernd Maciejewski, who they claim was SNP Germany's Global Human Resources Director.
We refer to plaintiffs' allegations in their second amended petition, which is their live pleading in the suit below.
Plaintiffs also allege that, after accepting employment at SNP U.S., they were directed to recognize an account receivable from DuPont, SNP U.S.'s largest customer, as income on SNP U.S.'s financial statements. The petition states that the directive was given by (i) Henry Gottler, who plaintiffs allege was SNP Germany's President, (ii) Jorg Vierfuβ, who they claim was SNP Germany's Chief Financial Officer, and (iii) Udo Winkler, who the petition states was SNP Germany's controller. SNP Germany allegedly intended to consolidate the foregoing information into its own financial statements, which it would send to its shareholders and lenders.
Plaintiffs allege that they refused to follow SNP Germany's directive because generally accepted accounting principles (GAAP) in the United States prohibited them from recognizing the subject receivable as income. In plaintiffs' view, they potentially would have been subject to criminal liability had they booked the DuPont receivable as income. The petition alleges that plaintiffs' employment was terminated "at the instruction of SNP Germany for the sole reason that plaintiffs refused to follow the foregoing directive. Plaintiffs cite Sabine Pilot Service, Inc. v. Hauck as the basis for their wrongful termination claim. See 687 S.W.2d 733, 735 (Tex. 1985) (holding that "public policy . . . requires a very narrow exception to the employment-at-will doctrine" and that this "exception covers only the discharge of an employee for the sole reason that the employee refused to perform an illegal act").
Pertinent to the jurisdictional issues in this appeal, the petition contains three references to Texas: (i) "all of the acts and omissions [on] which Plaintiffs' cause of action is based occurred in Dallas, County, Texas"; (ii) SNP U.S. maintains its principal place of business in Irving, Texas; and (iii) SNP U.S. may be served through its registered agent for the State of Texas, who is located in Dallas, Texas.
SNP U.S. filed an answer and a counterclaim, thereby generally appearing in the lawsuit. SNP Germany, however, filed a special appearance that contested the district court's jurisdiction. See TEX. R. CIV. P. 120a. The special appearance argued that plaintiffs failed to satisfy their burden of pleading factual allegations to establish a Texas connection between SNP Germany and each of the claims asserted against it. SNP Germany also urged that, even if plaintiffs' jurisdictional allegations were true, they were insufficient as a matter of law to support the exercise of personal jurisdiction over it.
On February 27, 2018, after SNP Germany's answer deadline had expired, plaintiffs filed a motion for default judgment against it. SNP Germany filed its special appearance later that same day. Plaintiffs urge that the district court erred by ruling on SNP Germany's special appearance before the court determined plaintiffs' motion for default judgment. We disagree with plaintiffs because "[Rule 120a] does not preclude a special appearance being made after judgment nor does the rule preclude the trial judge from setting aside the default judgment on his own motion." Myers v. Emery, 697 S.W.2d 26, 29 (Tex. App.—Dallas 1985, no writ).
On April 30, 2018, the district court conducted a hearing on SNP Germany's special appearance. A little over a week later, on May 8, the court signed an interlocutory order denying the special appearance. This appeal followed. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014 (a)(7) (permitting appeal of interlocutory order that grants or denies a defendant's special appearance).
II.
Applicable Law
A. Standard of Review
The existence, or lack thereof, of personal jurisdiction over a nonresident defendant is a question of law. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex. 2010). Accordingly, we review de novo the trial court's determination of a special appearance. Id. "'When [as here] a trial court does not issue findings of fact and conclusions of law with its special appearance ruling, all facts necessary to support the judgment and supported by the evidence are implied.'" Id. (quoting BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002)). When, as in this case, the appellate record includes both the reporter's and clerk's records, these implied findings may be challenged on legal and factual sufficiency grounds. BMC Software, 83 S.W.3d at 795. "For legal sufficiency points, if there is more than a scintilla of evidence to support the finding, the no evidence challenge fails." Id.
B. Personal Jurisdiction
A nonresident defendant is subject to the personal jurisdiction of Texas courts if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction does not violate federal and state constitutional due process guarantees. Kelly, 301 S.W.3d at 657. "Personal jurisdiction is proper when the nonresident defendant has established minimum contacts with the forum state, and the exercise of jurisdiction comports with 'traditional notions of fair play and substantial justice.'" Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); see also Walden v. Fiore, 571 U.S. 277, 284 (2014) ("Due process limits on the State's adjudicative authority principally protect the liberty of the nonresident defendant—not the convenience of plaintiffs or third parties."). In analyzing minimum contacts, we "focus[ ] on the 'quality and nature of the defendant's contacts, rather than their number.'" Searcy v. Parex Res., Inc., 496 S.W.3d 58, 67 (Tex. 2016) (quoting Retamco Oper., Inc. v. Republic Drilling Co., 278 S.W.3d 333, 339 (Tex. 2009)).
See TEX. CIV. PRAC. & REM. CODE ANN §§ 17.041-.045.
III.
Analysis
SNP Germany raises four issues. We begin by examining its first three issues, which contend that plaintiffs failed to allege the jurisdictional facts necessary to establish either specific or general jurisdiction over it in Texas. These same issues also urge that the "undisputed" facts required the court to grant SNP Germany's special appearance and that "no evidence" supported the court's ruling denying same.
In a challenge to personal jurisdiction, "the plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident defendant within the reach of Texas's long-arm statute." Kelly, 301 S.W.3d at 658. If the plaintiff fails to plead such facts, then "the defendant need only prove that it does not live in Texas to negate jurisdiction." Id. at 658-59. However, if the plaintiff meets its burden, the burden then shifts to the defendant who filed the special appearance "to negate all bases of personal jurisdiction alleged by the plaintiff." Id. at 658. Since the plaintiff determines the scope of the lawsuit, "the defendant's corresponding burden to negate jurisdiction is tied to the allegations in the plaintiff's pleading." Id.
As described below, an exception to this rule "arises when the plaintiff asserts the alter ego theory as the basis for personal jurisdiction over the nonresident." Nichols v. Tseng Hsiang Lin, 282 S.W.3d 743, 749-50 (Tex. App.—Dallas 2009, no pet.) (citing, inter alia, BMC Software, 83 S.W.3d at 798). In this scenario, "[t]he plaintiff must prove that the nonresident is actually the alter ego of the resident corporation." Id. at 750.
The defendant can meet its burden on either a factual or a legal basis. Id. at 659. "Factually, the defendant can present evidence that it has no contacts with Texas, effectively disproving the plaintiff's allegations." Id. The plaintiff must then respond with its own evidence that affirms its allegations. Id. Legally, the defendant can show (i) "that even if the plaintiff's alleged facts are true, the evidence is legally insufficient to establish jurisdiction," or (ii) "the defendant's contacts with Texas fall short of purposeful availment," or (iii) "for specific jurisdiction, that the claims do not arise from the contacts," or (iv) "that traditional notions of fair play and substantial justice are offended by the exercise of jurisdiction." Id.
With these standards in mind, we must analyze whether plaintiffs met their burden of pleading allegations sufficient to bring SNP Germany within the reach of the Texas long-arm statute. See id. at 658. Under the statute, "a nonresident does business," "[i]n addition to other acts," "if the nonresident . . . (2) commits a tort in whole or in part in this state; or (3) recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside this state." TEX. CIV. PRAC. & REM. CODE ANN. § 17.042(2)-(3). Allegations that a tort was committed in Texas satisfy the statute but "do not necessarily satisfy the U.S. Constitution." Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex. 2013). In addition, the statute's requirements "are satisfied if an assertion of jurisdiction accords with federal due process limitations." Moki Mac, 221 S.W.3d at 575. Thus, in deciding whether plaintiffs met their pleading burden, we must determine whether the allegations in the petition, if true, satisfy one of the grounds enumerated in the long-arm statute, see TEX. CIV. PRAC. & REM. CODE ANN. § 17.042(1)-(3), or, alternatively, whether these allegations, if true, justify the exercise of personal jurisdiction over SNP Germany under due process principles. If so, we must then determine whether SNP Germany met its burden of negating all bases of personal jurisdiction alleged by plaintiffs. See Kelly, 301 S.W.3d at 658-59.
A. General Jurisdiction
A defendant's contacts with Texas may give rise to either general or specific jurisdiction. Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 71 (Tex. 2016). General jurisdiction is "dispute blind,'" meaning that it is "an exercise of the court's jurisdiction made without regard to the nature of the claim presented." PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 168 (Tex. 2007); see also Bristol-Myers Squibb Co. v. Superior Court of Cal., 137 S. Ct. 1773, 1780 (2017) ("A court with general jurisdiction may hear any claim against that defendant, even if all the incidents underlying the claim occurred in a different State.") (emphasis in original). "But 'only a limited set of affiliations with a forum will render a defendant amenable to' general jurisdiction in that State." Bristol-Myers, 137 S. Ct. at 1780 (quoting Daimler AG v. Bauman, 571 U.S. 117, 137 (2014)). With respect to foreign corporations, general jurisdiction requires "affiliations with the State [that] are so 'continuous and systematic' as to render them essentially at home in the forum State." Daimler, 571 U.S. at 127 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)); Cornerstone Healthcare, 493 S.W.3d at 71.
Plaintiffs do not assert that SNP Germany was itself doing business in Texas. Instead, they seek to impute SNP U.S.'s Texas contacts to SNP Germany based on a theory that SNP Germany controlled SNP U.S. See M & F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 886-87 (Tex. 2017) ("[T]he contacts of distinct legal entities, including parents and subsidiaries, must be assessed separately for jurisdictional purposes unless the corporate veil is pierced." (emphasis added) (citing PHC-Minden, 235 S.W.3d at 172-73)).
The shifting burdens referenced above do not apply when a plaintiff asserts jurisdiction on an alter ego or veil-piercing theory. Instead, "[t]he plaintiff must prove that the nonresident is actually the alter ego of the resident corporation." Nichols, 282 S.W.3d at 750 (citing, inter alia, BMC Software, 83 S.W.3d at 798). To "fuse" SNP Germany to SNP U.S. for jurisdictional purposes, plaintiffs must establish that SNP Germany controls the internal business operations and affairs of SNP U.S. BMC Software, 838 S.W.3d 799. The degree of control exercised "'must be greater than that normally associated with common ownership and directorship.'" PHC-Minden, 235 S.W.3d at 172-73 (quoting Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1160 (5th Cir. 1983)); see also BMC Software, 83 S.W.3d at 799 ("[T]he evidence must show that the two entities cease to be separate so that the corporate fiction should be disregarded to prevent fraud or injustice."); Wilmington Trust, Nat'l Ass'n v. Hsin-Chi-Su, No. 14-17-00382-CV, 2018 WL 6722339, at *5 (Tex. App.—Houston [14th Dist.] Dec. 21, 2018, no pet.) (mem. op.) (stating that, to fuse an owner, director, or shareholder to its corporation for jurisdictional purposes, "a plaintiff must prove the individual exercises atypical control over the internal business operations and affairs of the corporation that is inconsistent with the individual's role as owner, director, or shareholder" (citing PHC-Minden, 235 S.W.3d at 175-76)).
By way of example, "'[a]ppropriate parental involvement,'" which "'includes monitoring the subsidiary's performance, supervision of the subsidiary's finance and capital budget decisions, and articulation of general policies,'" is an insufficient level of control. PHC-Minden, 235 S.W.3d at 176 (quoting 16 MOORE'S FEDERAL PRACTICE § 108.421[3][b]); see also N. Frac Proppants, II, LLC v. 2011 NF Holdings, LLC, No. 05-16-00319-CV, 2017 WL 3275896, at *6 (Tex. App.—Dallas July 27, 2017, no pet.) (mem. op.) (stating same). Rather, "the 'plus'" factor"—i.e., "'something beyond the subsidiary's mere presence within the bosom of the corporate family'"—must be present. PHC-Minden, 235 S.W.3d at 176 (quoting Dickson Marine, Inc. v. Panalpina, Inc., 179 F.3d 331, 338 (5th Cir. 1999)).
Here, plaintiffs allege that SNP Germany "exercised total and exclusive control" over SNP U.S. Their own declarations, which they submitted in support of their opposition to SNP Germany's special appearance, restate this allegation. The foregoing allegation and averment are insufficient to establish the requisite level of control. See Booth v. Kontomitras, 485 S.W.3d 461, 483 (Tex. App.—Beaumont 2016, no pet.) (holding that plaintiff's alter ego claim did not allege facts sufficient to support an inference of fraud or injustice); Wolf v. Summers-Wood, L.P., 214 S.W.3d 783, 790 (Tex. App.—Dallas 2007, no pet.) (concluding that, while plaintiffs alleged generally that individual defendants used defendant LLC as a sham to perpetrate a fraud, plaintiffs did not plead or offer evidence of facts establishing how individual defendants purportedly used corporate form of LLC to perpetrate a fraud or how corporate form was a sham or fiction).
Plaintiffs aver in their declarations that SNP U.S. "exercises total and exclusive control" over SNP Germany, which is the converse of their allegation that SNP Germany "exercised total and exclusive control" over SNP U.S. We assume that the foregoing averment in plaintiffs' declarations is a typographical error. Accordingly, we will construe the averment in conformity with plaintiffs' allegation.
The petition and plaintiffs' declarations also state that (i) SNP Germany is the parent of SNP U.S., (ii) Dr. Schneider-Neurither is the Chairman and CEO of both entities, (iii) Wood reported to the CEO and COO of SNP Germany, and (iv) Spielman reported to the CEO and CFO of SNP Germany. Also, attached to each declaration is an organizational chart that (i) lists Dr. Schneider-Neurither as SNP Germany's Chairman of the Board and CEO and (ii) sets forth SNP Germany's worldwide subsidiaries, including SNP U.S. The foregoing allegations and evidence, even if true, do not establish the level of control necessary to justify imputing SNP U.S.'s contacts to SNP Germany. See Ball Up, LLC v. Strategic Partners Corp., Nos. 02-17-00197-CV, 02-17-00198-CV, 2018 WL 3673044, at *17 (Tex. App.—Fort Worth Aug. 2, 2018, no pet.) (mem. op.) (concluding that evidence of common ownership and some common and overlapping boards of directors did not establish alter ego for jurisdictional purposes); TMX Fin. Holdings, Inc. v. Wellshire Fin. Servs., LLC, 515 S.W.3d 1, 8-9 (Tex. App.—Houston [1st Dist.] 2016, pet. abated) (recognizing that "common ownership[,] even when combined with common corporate officers, does not demonstrate that a parent and subsidiary are alter egos").
Plaintiffs additionally urge that they have established atypical control by SNP Germany based on their allegations and evidence of SNP Germany's conduct. According to the petition and plaintiffs' declarations, Dr. Schneider-Neurither and Maciejewski made misrepresentations that induced plaintiffs to accept employment with SNP U.S. Spielman also avers that Vierfuβ and Winkler directed Spielman to recognize the DuPont receivable as income on SNP U.S.'s financial statements. According to Spielman, this receivable was uncollectible under U.S. GAAP because the receivable was "outside contract terms" and was generated "without necessary authority from the customer." In addition, Wood avers that he learned from Gottler of SNP Germany's intent to recognize the receivable as income. Wood's declaration states that, around this same time, both Spielman and Chris Di'Iliana, SNP U.S.'s COO, informed Wood that Spielman and Di'Iliana had refused to participate in the decision to recognize the receivable as income. According to plaintiffs' declarations, their employment was terminated at the instruction of SNP Germany shortly thereafter.
We conclude that Dr. Schneider-Neurither's and Maciejewski's alleged misrepresentations to plaintiffs, which were made before plaintiffs had accepted employment at SNP U.S., do not establish atypical control by SNP Germany. In addition, SNP Germany's purported instructions to recognize the DuPont receivable as income, while allegedly contrary to U.S. GAAP, do not establish atypical control over SNP U.S. See PHC-Minden, 235 S.W.3d at 176; N. Frac Proppants, 2017 WL 3275896, at *6. Absent such proof, plaintiffs have not met their burden of establishing that SNP Germany is actually the alter ego of SNP U.S. See BMC Software, 83 S.W.3d at 798; Nichols, 282 S.W.3d at 750. Accordingly, SNP U.S.'s Texas contacts may not be imputed to SNP Germany. On these bases, we conclude that the district court lacked general jurisdiction over SNP Germany. We sustain SNP Germany's first three issues insofar as they contend that it is not subject to general jurisdiction in Texas.
B. Specific Jurisdiction
We next apply the burden-shifting paradigm referenced above to determine whether SNP Germany is subject to specific jurisdiction in Texas. See Kelly, 301 S.W.3d at 658-59. Such jurisdiction exists when (1) the defendant purposefully avails itself of the privilege of conducting activities in the forum state, thus invoking the benefits and protections of its laws, and (2) the cause of action arises from or is related to those contacts or activities. Id. at 657-58. "[W]hen analyzing specific jurisdiction, we focus on the relationship between the forum, the defendant, and the litigation." Old Republic Nat'l Title Ins. Co. v. Bell, 549 S.W.3d 550, 559 (Tex. 2018). We must consider several factors.
"First, it is only the defendant's contacts with the forum that count," as opposed to "the 'unilateral activity of another party or a third person.'" Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)); see also Searcy, 496 S.W.3d at 67 (noting "that the defendant's relationship, not the plaintiff's relationship, with the forum state is the proper focus of the specific jurisdiction analysis" (emphases in original)). "Second, the acts relied on must be 'purposeful' rather than fortuitous." Michiana, 168 S.W.3d at 785 (quoting Burger King, 471 U.S. at 475). In other words, "the defendant must reasonably anticipate being sued in the forum because of actions the defendant 'purposefully directed toward the forum state,'" TV Azteca v. Ruiz, 490 S.W.3d 29, 46 (Tex. 2016) (quoting CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex.1996) (emphasis in original)), or "into the forum state," Searcy, 496 S.W.3d at 67; see also Moncrief Oil, 414 S.W.3d at 152 ("At its core, the purposeful availment analysis seeks to determine whether a nonresident's conduct and connection to a forum are such that it could reasonably anticipate being haled into court there."). "Third, a defendant must seek some benefit, advantage, or profit by 'availing' itself of the jurisdiction," i.e., "by invoking the benefits and protections of [the] forum's laws." Michiana, 168 S.W.3d at 785 (quoting MERRIAM WEBSTER'S COLLEGIATE DICTIONARY 79 (10th ed. 1993)).
Moreover, specific jurisdiction turns on the defendants' contacts themselves rather than whether such contacts were tortious. Michiana, 168 S.W.3d at 791-92; see also Kelly, 301 S.W.3d at 660 (noting that the jurisdictional analysis centers not on "the mere existence of a cause of action," but rather, "on the defendant's actions and choices to enter the forum state and conduct business." (emphasis in original)).
In addition, "for a nonresident defendant's forum contacts to support an exercise of specific jurisdiction, there must be a substantial connection between those contacts and the operative facts of the litigation." Moki Mac, 221 S.W.3d at 585 (emphasis added); see also Bristol-Myers, 137 S. Ct. at 1780 ("[T]here must be 'an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation.'" (quoting Goodyear, 5564 U.S. at 919)). Such operative facts are those "on which the trial will focus to prove the liability of the defendant who is challenging jurisdiction." Kaye/Bassman Int'l Corp. v. Dhanuka, 418 S.W.3d 352, 357 (Tex. App.—Dallas 2013, no pet.).
SNP Germany urges that (i) plaintiffs did not allege facts establishing that the subject torts were committed by representatives of SNP Germany, as opposed to representatives of SNP U.S., and (ii) plaintiffs did not allege that the subject torts occurred in Texas. As support for this position, SNP Germany relies on Kelly. See 301 S.W.3d at 655-60. In that case, a Texas subcontractor asserted third-party claims, including violations of the Texas Trust Fund Act and fraud, against the nonresident officers of the general contractor. Id. at 655-56. The issue before the Texas Supreme Court was whether the subcontractor had alleged facts establishing that the nonresident officers "'committ[ed] a tort in whole or in part in this state.'" Id. at 659 (quoting TEX. CIV. PRAC. & REM. CODE ANN § 17.042(2)). The Court held that the subcontractor "failed to plead facts within the reach of the long-arm statute because it did not allege that the [o]fficers committed any tortious acts in Texas." Id. Because the subcontractor "failed to plead jurisdictional facts, the [o]fficers could, and did, meet their burden to negate all bases of jurisdiction by proving that they do not live in Texas." Id. at 660.
Here, plaintiffs' fraud and wrongful termination claims arose from different jurisdictional facts. We will therefore analyze separately the contacts pertinent to each claim. See Moncrief Oil, 414 S.W.3d at150 ("[S]pecific jurisdiction requires us to analyze jurisdictional contacts on a claim-by-claim basis.").
1. Fraud Claim
Plaintiffs allege several misrepresentations that purportedly induced them to become employees of SNP U.S. These representations include that: (i) SNP U.S. "was a profitable entity on an ongoing basis" and "would be a profitable entity in accordance with [GAAP] within a fiscal quarter"; (ii) "Wood would be given autonomy in managing the affairs" of SNP U.S., and his "signing bonus" would "take the form of a vehicle to be titled to him"; (iii) Spielman would maintain SNP U.S.'s financial records in accordance with U.S. GAAP and "would receive all necessary information" from SNP Germany in managing SNP U.S.'s financial affairs "during a transition period to last at least several months"; and (iv) Spielman would receive training from SNP U.S.'s outgoing controller.
a. Plaintiffs' pleading burden
As noted previously, plaintiffs allege that the subject representations were made by Dr. Schneider-Neurither, who they allege is an officer of both SNP U.S. and SNP Germany, and by Maciejewski, who they allege is an officer of only SNP Germany. SNP Germany contends that these allegations are deficient because plaintiffs did not allege that Dr. Schneider-Neurither or Maciejewski acted in their capacity as officers of SNP Germany, as opposed to SNP U.S, when they made the subject representations. We agree with this contention with respect to Dr. Schneider-Neurither. Absent allegations showing in which capacity he was acting, we assume that he acted only on behalf of SNP U.S., the entity for whom plaintiffs were recruited to work. However, in light of the allegation that Maciejewski served as an officer of only SNP Germany, we interpret the petition as alleging that he acted on behalf of SNP Germany. Therefore, plaintiffs have alleged that the subject representations by Maciejewski were made on behalf of SNP Germany.
In support of its special appearance, SNP Germany submitted evidence that, effective April 1, 2017, Maciejewski was the Vice President of Global Human Resources at SNP U.S. We will not consider this evidence in determining whether plaintiffs met their pleading burden.
We next consider SNP Germany's assertion that plaintiffs have not alleged facts establishing that the purported fraud occurred in Texas. Plaintiffs do not allege that SNP Germany was present in Texas when it made the subject representations, nor do they allege that, at that time, they were present in Texas. However, plaintiffs' response to SNP Germany's special appearance alleges that the subject representations were "made to persons situated within Texas . . . to induce the employment of individuals in Texas." As noted previously, the response also refers to, and attaches, declarations by Wood and Spielman. Wood's declaration states that his address is in Frisco, Texas, while Spielman's states that his address is in Fargo, North Dakota. Assuming that we may consider plaintiffs' response as part of their allegations, we interpret plaintiffs' pleadings as alleging that at least Wood was in Texas when the alleged misrepresentations were made to him. Accordingly, plaintiffs have alleged facts that, if true, establish SNP Germany "commit[ed] a tort in whole or in part in this state." TEX. CIV. PRAC. & REM. CODE ANN. § 17.042(2). Thus, they have pled sufficient allegations to bring SNP Germany within the reach of Texas's long-arm statute. See Kelly, 301 S.W.3d at 658.
See Wright v. Sage Engineering, Inc., 137 S.W.3d 238, 249 n.7 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) (assuming, without deciding, that allegations in plaintiffs' original petition that defendant committed torts in Texas, either alone or coupled with plaintiffs' later assertions, offered in support of their response to defendant's special appearance, met plaintiffs' initial burden to plead sufficient jurisdictional facts), abrogated on other grounds by Michiana, 168 S.W.3d at 788-92, as recognized in Julian v. Cadence McShane Constr. Co., No. 01-15-00465-CV, 2015 WL 6755616, at *7 (Tex. App.—Houston [1st Dist.] Nov. 5, 2015, no pet.) (mem. op.).
SNP U.S.'s counterclaim alleges that Wood "was only truly 'working' in the office" on one of the nine days that he was employed by SNP U.S. We will not consider this allegation by SNP U.S. in determining whether plaintiffs met their pleading burden.
b. SNP Germany's burden to negate jurisdiction
Since plaintiffs met their pleading burden, the burden shifted to SNP Germany to negate all bases of personal jurisdiction alleged by plaintiffs with respect to their fraud claim. See Kelly, 301 S.W.3d at 658-59. To meet this burden, SNP Germany offered Vierfuβ's affidavit. The affidavit states, in pertinent part, that (i) SNP Germany does not maintain any registered or branch office in Texas, (ii) it did not maintain any business activities in Texas when plaintiffs were employed or terminated by SNP U.S., (iii) it "has no managers or other employers . . . whose permanent place of residence is in . . . Texas," and (iv) it does not possess any property or have any process agents in Texas. SNP Germany also submitted copies of plaintiffs' employment agreements with SNP U.S. and a declaration signed by Roger Elwell, SNP U.S.'s Vice President of Sales and Partner Management. Elwell's declaration states, in pertinent part, that SNP U.S. and SNP Germany are distinct legal entities and that plaintiffs were not employees of SNP Germany. The declaration also attached an SNP U.S. corporate document—specifically, a Consent of Directors in Lieu of Annual Meeting of Sole Director—which was executed April 3, 2017, and effective April 1, 2017. This document identifies Dr. Schneider-Neurither as Chairman of the Board, and Maciejewski as Vice President, Global Human Resources, of SNP U.S.
The foregoing evidence establishes that Dr. Schneider-Neurither and Maciejewski are officers of SNP U.S. While plaintiffs allege that these individuals are also officers SNP Germany, it is undisputed that SNP U.S, a distinct legal entity, hired plaintiffs. Thus, only SNP U.S.'s representations in recruiting plaintiffs are relevant to our jurisdictional analysis. Stated conversely, SNP Germany's purported representations are irrelevant absent proof, which is not present here, of an alter ego relationship.
Our sister court's decision in McDaniel v. BP Amoco Exploration (In Amenas) Ltd. is instructive in this regard. No. 01-17-00475-CV, 2018 WL 614392 (Tex. App.—Houston [1st Dist.] Jan. 30, 2018, no pet.) (mem. op.). That case arose out of a terrorist attack at an Algerian gas plant jointly operated by three entities, one of which was BP Amoco Amenas (BP Amenas). Id. at *1. The plaintiff, McDaniel, was hired by another BP-affiliated company, BP American Production Company (BP American), to work at a rig near the plant. Id. McDaniel's suit pled, among other allegations, that BP Amenas "recruited Texans, including McDaniel, to work at the Algerian gas venture and fraudulently induced them to do so by misrepresenting its security." Id. at 4. BP Amenas filed a special appearance, which the trial court granted. Id. at *1. Our sister court affirmed on appeal. Id. The court noted that the existence of personal jurisdiction over BP Amenas turned on its contacts with Texas, but it did not hire employees in Texas. Id. at *4. BP Amenas's recruitment of the Texans hired by BP American was irrelevant to the jurisdictional analysis unless BP Amenas were BP American's alter ego, which McDAniel had not shown. See id.
In light of the foregoing evidence that SNP Germany is a distinct entity from SNP U.S., and given the absence of an alter ego relationship between the two entities, we conclude that SNP Germany has proved that it has no contacts with Texas with respect to plaintiffs' fraud claim. Accordingly, SNP Germany has negated plaintiffs' jurisdictional allegations with respect to this claim. See Kelly, 301 S.W.3d at 659. We sustain SNP Germany's first three issues insofar as they argue that it is not amenable to specific jurisdiction in Texas as to the fraud claim.
2. Wrongful Termination Claim
a. Plaintiffs' pleading burden
Plaintiffs' wrongful termination claim arises from events that occurred during their brief employment at SNP U.S. According to the petition, representatives of SNP Germany "directed" plaintiffs to recognize the DuPont receivable as income on SNP U.S.'s financial statements, contrary to U.S. GAAP, and allegedly in violation of criminal law. Gottler purportedly gave this directive to Wood, and Vierfuβ and Winkler purportedly gave the directive to Spielman.
Plaintiffs additionally allege that they were terminated "at the instruction" of SNP Germany for the sole reason that they refused to follow its directive to fraudulently book the DuPont receivable. According to the petition, (i) the decision to terminate plaintiffs was made "jointly" by SNP U.S. and SNP Germany as "co-tortfeasors, as joint principals, co-conspirators[,] or aiders and abettors, in that [SNP U.S.]. and [SNP Germany] . . . acted in concert to decide upon and effect [p]laintiffs' termination," or (ii) SNP Germany "made the decision and dictated it to [SNP U.S.]."
In response to these allegations, SNP Germany makes arguments similar to those that it asserted against plaintiffs' fraud claim. It urges that plaintiffs have not alleged facts demonstrating that Vierfuβ acted on behalf of SNP Germany, nor have they shown that the individuals who purportedly directed plaintiffs' terminations were authorized by SNP Germany to give such orders. However, plaintiffs' petition refers to Gottler, Vierfuβ, and Winkler as officers of SNP Germany, which we construe as an allegation that they acted on behalf of SNP Germany in giving the instructions at issue.
The SNP U.S corporate document submitted by SNP Germany lists Vierfuβ as SNP U.S.'s Vice President of Finance. We will not consider this document in determining whether plaintiffs met their pleading burden. Moreover, Vierfuβ's own affidavit states that he is the CFO of SNP Germany.
SNP Germany also contends that plaintiffs have not alleged whether it communicated its directions orally, by e-mail, or by traditional mail, nor do plaintiffs allege that such communications were sent to, or received in, Texas. In addition, SNP Germany asserts that plaintiffs have not alleged they were located in Texas, or that the individual(s) who fired them were located there, when the terminations occurred. Although plaintiffs do not allege from where the foregoing directions were given, or to where they were sent, plaintiffs' response to SNP Germany's special appearance refers to "acts by [SNP Germany's] agents in Texas to bring about [p]laintiffs' termination." Upon construing this statement as an allegation, and upon considering the allegation in light of plaintiffs' petition, we interpret the petition as alleging that the foregoing directions were given by SNP Germany to persons at SNP U.S. located in Texas. Accordingly, plaintiffs have alleged a tort committed by SNP Germany "in whole or in part in this state," TEX. CIV. PRAC. & REM. CODE ANN. § 17.042(2), thereby satisfying their burden to plead sufficient allegations to bring SNP Germany within the reach of Texas's long-arm statute, see Kelly, 301 S.W.3d at 658.
See Wright, 137 S.W.3d at 249 n.7.
b. SNP Germany's burden to negate jurisdiction
Since plaintiffs met their pleading burden, the burden shifted to SNP Germany to negate all bases of personal jurisdiction alleged by plaintiffs with respect to their wrongful termination claim. Id. at 658-59. To accomplish this purpose, SNP Germany offered Vierfuβ's affidavit, plaintiffs' employment agreements with SNP U.S., and the SNP U.S. corporate document, all of which we have described above. While the foregoing evidence shows that Vierfuβ was an officer of both SNP U.S. and SNP Germany, SNP Germany has not disputed plaintiffs' allegations and evidence that Gottler and Winkler, the other individuals who allegedly participated in giving the subject directions, were employed only by SNP Germany. Accordingly, SNP Germany has not shown that it did not give the subject directions. Absent such proof, SNP Germany has failed to establish that it had no contacts with Texas. See Kelly, 301 S.W.3d at 659.
We next consider whether, assuming the truth of plaintiffs' allegations regarding the foregoing contacts with Texas, SNP Germany has shown as a matter of law that these contacts fall short of purposeful availment. See id. As support for this contention, SNP Germany notes that the Texas Supreme Court has "rejected the concept of directed-a-tort jurisdiction." Id. at 661 (citing Michiana, 168 S.W.3d at 788-92). We are not persuaded that Michiana and its progeny preclude the assertion of jurisdiction based on a nonresident defendant's direction of criminal conduct within the forum. Similarly, although "a nonresident's alleged conspiracy with a Texas resident does not confer personal jurisdiction over the nonresident in Texas," M & F Worldwide Corp, 512 S.W.3d at 887 (citing Nat'l Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995) (orig. proceeding)), plaintiffs' wrongful termination claim is based on SNP Germany's purported directive to its Texas-based subsidiary to engage in a criminal act. In giving this directive, SNP Germany purposefully established minimum contacts with Texas such that it could reasonably anticipate being haled into court there. See Gibson, 897 S.W.2d at 773 ("Conspiracy as an independent basis for jurisdiction has been criticized as distracting from the ultimate due process inquiry: whether the out-of-state defendant's contact with the forum was such that it should reasonably anticipate being haled into a court in the forum state."); SITQ E.U., Inc. v. Reata Rests., Inc., 111 S.W.3d 638, 647 & n.7 (Tex. App.—Fort Worth 2003, pet. denied) (holding that appellees alleged sufficient jurisdictional facts to support conspiracy to tortuously interfere claim against appellants, given that "appellees' allegations concerning conspiracy were based on activities that appellants directed towards Texas"). Accordingly, SNP Germany has not met its burden of negating jurisdiction on a legal basis. See Kelly, 301 S.W.3d at 659. We overrule SNP Germany's first three issues insofar as they urge that it is not subject to specific jurisdiction in Texas with respect to plaintiffs' wrongful termination claim.
C. Fair Play and Substantial Justice
Having determined that SNP Germany has minimum contacts with Texas as to plaintiffs' wrongful termination claim, we turn to its fourth issue, which contends that the exercise of jurisdiction over it does not comport with principles of fair play and substantial justice, as due process requires. See Cornerstone Healthcare, 493 S.W.3d at 74. Relevant factors in this analysis include:
(1) the burden on the defendant; (2) the interests of the forum in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the international judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several nations in furthering fundamental substantive social policies. . . . When the defendant is a citizen of a foreign country, and not just another state, we consider more specifically (6) "the unique burdens placed upon the defendant who must defend itself in a foreign legal system;" (7) the state's regulatory interests; and (8) "the
procedural and substantive policies of other nations whose interests are affected as well as the federal government's interest in its foreign relations policies."TV Azteca, 490 S.W.3d at 55 (citing Moncrief Oil, 414 S.W.3d at 155, and quoting Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 229 (Tex. 1991)).
"To defeat jurisdiction, [the defendant] must present 'a compelling case that the presence of some consideration would render jurisdiction unreasonable.'" Id. (quoting Spir Star AG v. Kimich, 310 S.W.3d 868, 878-89 (Tex. 2010)). Moreover, "'[i]f 'a nonresident has minimum contacts with the forum, rarely will the exercise of jurisdiction over the nonresident not comport with traditional notions of fair play and substantial justice.'" Id. (quoting Moncrief Oil, 414 S.W.3d at 154-55).
SNP Germany urges that having to defend an action across national borders, in an English-speaking country, would subject it to a severe burden. See Guardian Royal, 815 S.W.2d at 229 ("'The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders.'" (quoting Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 114 (1987))). However, SNP Germany offers no evidence to rebut the averment in plaintiffs' declarations that Dr. Schneider-Neurither, Maciejewski, Gottler, Vierfuβ, and Winkler "all speak English, and, as the need arises, travel to the United States and elsewhere to manage [SNP Germany] and its subsidiaries." Nor does SNP Germany offer evidence to quantify the "considerable expenses" that it claims would be involved in transporting witnesses and documents from Germany to Texas. While a trial in Texas would no doubt burden SNP Germany, it has not shown that the burden would be severe. Cf. Spir Star AG, 310 S.W.3d at 879 (holding that requiring German company to defend plaintiff's product liability claim in Texas would not pose an undue burden on company where, among other circumstances, company's president spent six months of the year in Texas and two of its directors traveled to Houston to establish the distributorship that sold subject product to plaintiff's employer).
Turning to Texas's regulatory interests here, the Texas Supreme Court has recognized that "'[a] state has an especial interest in exercising judicial jurisdiction over those who commit torts within its territory.'" TV Azteca, 490 S.W.3d at 55 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 776 (1984)); cf. Spir Star AG, 310 S.W.3d at 879 ("Texas has a significant interest in exercising jurisdiction over controversies arising from injuries a Texas resident sustains from products that are purposefully brought into the state and purchased by Texas companies."). This rationale applies to the wrongful termination claim given that it is predicated on SNP Germany's alleged direction to plaintiffs, who were officers of its Texas-based subsidiary, to commit a criminal act and its purported termination of their employment with the subsidiary when they refused to do so. Moreover, it would be more efficient for a Texas court to adjudicate plaintiffs' wrongful termination claim against SNP Germany since plaintiffs' claims against SNP U.S. will also be heard in Texas. See Spir Star AG, 310 S.W.3d at 879.
Finally, SNP Germany urges that the German government's procedural and substantive interests, "as well as the Federal interest in Government's foreign relations policies, will be best served by a careful inquiry into the reasonableness of the assertion of jurisdiction" in this case, "and an unwillingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum State." Asahi, 480 U.S. at 115. Based on our own careful inquiry, we conclude that the burden on SNP Germany is outweighed by Texas's interests in adjudicating the dispute here. Cf. Spir Star AG, 310 S.W.3d at 879-80 (holding same with respect to product liability claim against German corporation).
In arguing to the contrary, SNP Germany relies on Guardian Royal, 815 S.W.2d at 232-33, and on Garner v. Furmanite Australia PTY., Ltd., 966 S.W.2d 798, 803 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). Both of these cases are distinguishable from the facts here. First, Guardian Royal involved a dispute between two insurers—Guardian Royal and U.S. Fire as subrogee to the rights of the insureds—neither of whom were Texas consumers or insureds. See 815 S.W.2d at 233 ("[S]ince Guardian Royal and U.S. Fire are neither Texas consumers nor insureds, Texas' interest in adjudicating the dispute . . . is considerably diminished."). In contrast, plaintiffs in this case, one of whom is a Texas resident, allegedly were wrongfully terminated at the direction of SNP Germany for the sole reason that they refused its instruction to engage in criminal conduct on behalf of SNP Germany's Texas-based subsidiary. Second, in Garner, the plaintiffs' cause of action did not arise out of the Australian defendants' contacts with Texas. 966 S.W.2d at 803. In contrast, plaintiffs' wrongful termination claim arises from instructions that SNP Germany sent to Texas.
For the foregoing reasons, we conclude that the district court did not violate principles of "fair play and substantial justice" in denying SNP Germany's special appearance. We overrule SNP Germany's fourth issue.
III.
Conclusion
We affirm the denial of SNP Germany's special appearance with respect to plaintiffs' wrongful termination claim and reverse such denial with respect to plaintiffs' fraud claim. We render judgment dismissing plaintiffs' fraud claim against SNP Germany with prejudice.
/Bill Pedersen, III/
BILL PEDERSEN, III
JUSTICE 180576F.P05
JUDGMENT
On Appeal from the 192nd Judicial District Court, Dallas County, Texas
Trial Court Cause No. Dc-17-14118.
Opinion delivered by Justice Pedersen, III. Justices Brown and Schenck participating.
In accordance with this Court's opinion of this date, the order of the trial court is AFFIRMED in part and REVERSED and RENDERED in part. We REVERSE that portion of the trial court's order that denied appellant SNP Schneider-Neureither & Partner AG's special appearance with respect to the fraud claim asserted against it by appellees Samuel Wood and James D. Spielman. We RENDER judgment dismissing this claim with prejudice. In all other respects, the trial court's order is AFFIRMED.
It is ORDERED that each party bear its own costs of this appeal. Judgment entered this 19th day of June, 2019.