Dell Marketing, L.P. v. Incompass It, Inc.
771 F. Supp. 2d 648
W.D. Tex.2011Background
- This case involves a Dell Marketing debt action against Incompass IT in the Western District of Texas (Austin).
- Dell originally filed in Texas state court seeking ~75,000 for Dell products purchased but unpaid and for unjust enrichment.
- Incompass removed the matter to federal court on diversity grounds and answered with counterclaims.
- Dell moved to dismiss Incompass' counterclaims; Incompass moved to dismiss for lack of personal jurisdiction or improper venue (or transfer).
- The court held a hearing and allowed supplemental briefing; after consideration, it dismissed the case for lack of personal jurisdiction.
- The court found the Dell–Incompass Reseller Agreement arbitration clause illusory, thus no implied consent to Texas jurisdiction, leading to dismissal without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over Incompass. | Dell argues Incompass had minimum contacts with Texas. | Incompass contends contacts are insufficient and not purposeful availment. | No; insufficient minimum contacts; arbitral clause illusory prevents jurisdiction. |
| Whether the arbitration clause renders consent to Texas jurisdiction. | Arbitration clause in the Dell Reseller Agreement would place proceedings in Austin. | Arbitration clause is illusory and can be unilaterally amended without notice. | Arbitration clause illusory; does not create implied consent to Texas jurisdiction. |
Key Cases Cited
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (due process limits on personal jurisdiction; minimum contacts)
- International Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (minimum contacts standard)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (purposeful availment and traditional notions of fair play)
- PaineWebber Inc. v. Chase Manhattan Private Bank (Switzerland), 260 F.3d 453 (5th Cir. 2001) (counterclaims do not automatically waive jurisdictional challenge)
- Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773 (5th Cir. 1986) (mere contracting with a resident not enough for jurisdiction)
- Morrison v. Amway Corp., 517 F.3d 248 (5th Cir. 2008) (illusory arbitration clause matters for implied consent)
- Ins. Co. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (U.S. 1982) (waiver of jurisdictional defenses and arbitration as consent)
- Guidry v. U.S. Tobacco Co., 188 F.3d 619 (5th Cir. 1999) (factual/resolution implications in jurisdictional disputes)