Germano v. Taishan Gypsum Co.
2014 U.S. App. LEXIS 1728
| 5th Cir. | 2014Background
- Taishan Gypsum Co. Ltd. (TG), a Chinese drywall manufacturer, contracted directly with Venture Supply Inc. (Virginia) in 2005–2006 for two large shipments of made‑to‑order drywall; the products bore Venture’s name, Virginia phone number, and were cut to Venture’s specs.
- Virginia homeowners (Original Plaintiffs and later Plaintiff‑Intervenors) sued TG in the Eastern District of Virginia alleging property damage and health risks from defective drywall; TG was served properly with the First Amended Complaint via the Hague Convention.
- The MDL in Louisiana centralised many Chinese‑drywall suits; this case was transferred into that MDL, and the court there (transferee) held extensive jurisdictional discovery and an evidentiary hearing.
- The district court found specific personal jurisdiction over TG based on TG’s purposeful contacts with Virginia (sales to a Virginia distributor, product designed/marked for Venture, ongoing negotiations and shipping directed to Virginia) and applied a stream‑of‑commerce-plus analysis consistent with Fourth Circuit precedent.
- The district court denied TG’s motion to vacate a default judgment against it because TG had been properly served with the First Amended Complaint, the Second Amended Complaint added no new claims affecting intervenors, TG failed to show excusable neglect or other grounds under Rule 60(b), and TG had not rebutted the factors warranting denial of vacatur.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction: whether Virginia courts have specific jurisdiction over TG | TG purposefully availed itself via direct sales to a Virginia distributor, product design/marking for Venture, and continued contacts — claims arise from those contacts | TG argued insufficient forum‑specific contacts; urged transferee court to apply Fourth Circuit’s stricter test and that mere stream‑of‑commerce is insufficient | Court held specific jurisdiction exists: TG’s direct contracts, product design/marking for Venture, repeated sales and negotiations satisfy purposeful availment and the claims arise from those contacts; exercise of jurisdiction is reasonable |
| Choice of law for minimum‑contacts analysis in MDL transfer | Plaintiffs: transferee should apply Fifth Circuit law (forum of transferee); outcome not altered by which circuit rule applied | TG: transferee should apply transferor court’s (Fourth Circuit) approach per In re Ford Motor | Court declined to resolve choice definitively because outcome is the same under either circuit; analyzed under Fourth Circuit test and upheld jurisdiction |
| Vacatur of default judgment under Rule 60(b) | Plaintiffs: default and subsequent default judgment were proper; Second Amended Complaint added no new claims affecting intervenors; TG had proper notice earlier | TG: default judgment void for lack of service of Second Amended Complaint/motion to intervene and its default was excusable due to unfamiliarity with U.S. litigation | Court held default judgment not void: TG was properly served with First Amended Complaint, amendments added no new claims for intervenors; TG failed to show excusable neglect or other exceptional grounds — denial of vacatur not an abuse of discretion |
Key Cases Cited
- Int’l Shoe Co. v. Washington, 326 U.S. 310 (framework for minimum contacts and due process)
- Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (stream‑of‑commerce and stream‑of‑commerce‑plus formulations)
- J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873 (plurality/concurring guidance on forum‑specific purposeful availment)
- Daimler AG v. Bauman, 571 U.S. 117 (distinction between general and specific jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (purposeful availment and fair play analysis)
- World‑Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (foreseeability and relatedness in product cases)