SFC Global Supply Chain, Inc. v. DNO, Inc.
4:21-cv-03195
S.D. Tex.Jul 27, 2022Background
- SFC Global (Minnesota) bought a shipment of cabbage used in frozen-food production; the cabbage allegedly arrived contaminated with shredded plastic tags.
- SFC sued its supplier DNO, Inc. (Ohio) in the Southern District of Texas for breach of contract, revocation of acceptance, promissory estoppel, and breach of warranties.
- DNO filed a third-party complaint against Butch’s Best, LLC and Iott Ranch & Orchards, Inc. (Iott) — both Michigan entities — alleging Iott supplied the contaminated cabbage.
- Iott was served March 18, 2022; it filed an answer and a Rule 12(b)(2)/(3) motion to dismiss on June 14, 2022. DNO argued Iott had waived jurisdiction and venue defenses by answering late.
- The court held Iott did not waive its defenses, found that Iott lacked sufficient contacts with Texas for specific or general jurisdiction, granted dismissal for lack of personal jurisdiction, and declined to reach venue; Butch’s Best had not been served.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of 12(b)(2)/(3) defenses | DNO: Iott waived defenses by failing to answer by the Rule 12(a) deadline. | Iott: Timely raised defenses in its first defensive filing (answer + motion). | No waiver — defenses timely when made in first defensive move. |
| Personal jurisdiction over Iott | SFC (via DNO) posited Iott supplied contaminated cabbage that ended up in Texas, supporting jurisdiction. | Iott: Contacts with Texas were indirect (sold to DNO in Ohio); no purposeful availment of Texas. | Dismissal for lack of personal jurisdiction — no general or specific jurisdiction. |
| Venue challenge | DNO argued venue was proper by virtue of suit location and connections. | Iott sought dismissal for improper venue. | Court did not reach venue after dismissal for lack of personal jurisdiction. |
Key Cases Cited
- Frank v. PNK (Lake Charles) L.L.C., 947 F.3d 331 (5th Cir. 2020) (Texas long-arm interpreted to reach federal due-process limits)
- Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602 (5th Cir. 2008) (minimum contacts / due process standard)
- Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522 (5th Cir. 2019) (specific jurisdiction requires purposeful direction and relation to the claim)
- Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865 (5th Cir. 2001) (purposeful availment / specific jurisdiction analysis)
- Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415 (5th Cir. 1993) (defendant should reasonably anticipate being haled into court)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (general jurisdiction requires affiliations so continuous and systematic as to render defendant at home)
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (corporate ‘home’ is typically state of incorporation or principal place of business)
- BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549 (2017) (clarifies paradigm for general jurisdiction)
- Golden v. Cox Furniture Mfg. Co., 683 F.2d 115 (5th Cir. 1982) (first defensive move controls timing for raising jurisdictional defenses)
- Danziger & De Llano, L.L.P. v. Morgan Verkamp, L.L.C., 24 F.4th 491 (5th Cir. 2022) (prima facie burden on plaintiff when no evidentiary hearing on jurisdiction)
- Herman v. Cataphora, Inc., 730 F.3d 460 (5th Cir. 2013) (court discretion to dismiss or transfer when lacking personal jurisdiction)
- Command-Aire Corp. v. Ontario Mech. Sales & Serv. Inc., 963 F.2d 90 (5th Cir. 1992) (types of evidence a court may consider on jurisdictional motion)