Taishan Gypsum Co. v. Gross
753 F.3d 521
| 5th Cir. | 2014Background
- Chinese manufacturers Taishan Gypsum Co., Ltd. (TG) and subsidiary Tai'an Taishan Plasterboard Co., Ltd. (TTP) sold large quantities of drywall to U.S. buyers (2005–2008); some drywall allegedly emitted sulfide gases and damaged homes.
- Multiple related class actions were centralized in an MDL in the Eastern District of Louisiana; four reached the Fifth Circuit: Germano, Mitchell, Gross, and Wiltz.
- Mitchell: Florida-based homebuilders sued TG (served in 2009); TG failed to appear, the clerk entered a preliminary default, TG later moved to vacate and to dismiss for lack of personal jurisdiction.
- Gross and Wiltz: Louisiana-filed class actions sued TG and TTP; plaintiffs rely in part on market-share liability because many plaintiffs could not identify the exact manufacturer.
- District court held (Sept. 4, 2012 omnibus order) that: (1) TTP’s contacts could be imputed to TG (agency/alter-ego), (2) TG/TTP had sufficient forum contacts with Florida and Louisiana for specific personal jurisdiction, and (3) the court would not set aside the Mitchell preliminary default.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TTP’s contacts with Florida may be imputed to TG | TTP acted as TG’s agent/alter ego; its Florida contacts should count for TG | TG: Florida law (and due process) preclude imputing TTP’s contacts to TG | Imputation allowed — district factual findings support a control/agency and alter-ego relationship, so TTP contacts imputed to TG. |
| Whether TG is subject to specific jurisdiction in Florida | TG (via TTP) marketed, customized, shipped, and sold drywall to Florida entities; plaintiffs’ injuries traceable to those sales | TG: contacts are isolated/insufficient; mere placement into stream of commerce (or FOB terms) is not sufficient | Specific jurisdiction in Florida upheld: long-arm and due-process tests satisfied (purposeful availment, nexus, and fairness). |
| Whether TG/TTP are subject to specific jurisdiction in Louisiana (Gross, Wiltz) | Taishan sold, shipped, and arranged deliveries to Louisiana; drywall ended up in Louisiana homes; market-share theory arises from those contacts | Taishan: no offices/agents in LA; contacts too attenuated | Specific jurisdiction in Louisiana upheld: imputation (alter-ego/agency) plus purposeful availment and nexus to plaintiffs’ claims. |
| Validity of market-share liability as basis for jurisdiction-related nexus | Market-share theory links defective drywall in plaintiffs’ homes to Taishan’s shipments into forum markets | Taishan: plaintiffs cannot directly trace product to Taishan; nexus is too attenuated | Court finds sufficient factual chain and evidence that Taishan drywall reached the forums; market-share theory suffices at the jurisdictional preponderance stage. |
| Whether district court abused discretion in refusing to set aside Mitchell preliminary default under Rule 55(c) | Plaintiffs: TG was served in native language, plaintiffs expended effort and resources, TG delayed and offer speculative defenses; prejudice and public interest favor denying vacatur | TG: default should be set aside; significant financial loss and non-willful omission justify relief | Denial affirmed: district court did not abuse discretion considering willfulness, prejudice, timeliness, and meritorious-defense factors. |
Key Cases Cited
- Germano v. Taishan Gypsum Co. Ltd., 742 F.3d 576 (5th Cir. 2014) (prior Fifth Circuit decision addressing TG personal jurisdiction and default issues)
- Daimler AG v. Bauman, 134 S. Ct. 746 (U.S. 2014) (limits of general jurisdiction; agency relationships relevant to specific-jurisdiction analysis)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (defendant must reasonably anticipate being haled into forum; foreseeability/minimum contacts principle)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (specific-jurisdiction framework: purposeful availment, nexus, and fairness)
- Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (U.S. 1987) (stream-of-commerce opinions and the “stream-of-commerce plus” discussion)
- J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780 (U.S. 2011) (plurality/concurring splits informing stream-of-commerce analysis)
- Ainsworth v. Moffett Eng’g, Ltd., 716 F.3d 174 (5th Cir. 2013) (Fifth Circuit’s stream-of-commerce/minimum-contacts interpretation post-McIntyre)