Today’s message is a reminder that specific personal jurisdiction is just that – both specific and personal. That means plaintiffs can’t group plead their way around personal jurisdiction lumping parents and subsidiaries together. Plaintiffs must identify each defendant’s individual role in causing the alleged harm. If plaintiffs seek to impute the jurisdictional contacts of one corporate defendant to another, they must first plead sufficient facts to raise a colorable claim that the companies are alter egos and the corporate veil should be pierced. And in Texas, common use of a trade name by affiliated companies doesn’t meet that threshold.
In LaRocca v. Invasix, Inc., 2023 WL 2391012 (S.D. Tex. Mar. 7, 2023), plaintiff sued the manufacturer of a body contouring product that was used during a medical procedure alleging it caused her injury. Plaintiff filed the suit against both the parent, an Israeli corporation, and its US subsidiary. The foreign parent moved to dismiss asserting a lack of personal jurisdiction. For specific jurisdiction to exist, a defendant must “purposefully avail itself of the privilege of conducting activities within the forum” and plaintiff’s claims must “arise out of or relate to” the defendant’s forum contacts. Id. at *2-3.
To start, the court quickly rejected plaintiff’s alter ego argument. All of the proffered evidence supported that the defendants observed separate corporate formalities such as maintaining separate bank accounts and business records, separate offices, and separate employees. Id. at *1 & *3. So, to establish personal jurisdiction over the foreign defendant, plaintiff had to demonstrate that specific defendant “purposely directed its activities toward the forum state.” Id. But, it had no property, employees, or office in Texas; no agent for service in Texas; never marketed in Texas; had no contracts with anyone in Texas; and derived no revenue from Texas. Id.
That left plaintiff to focus on the trade name. The foreign defendant was InMode Ltd. The US defendant was Invasix, Inc. The trade name by which the companies’ products are known is InMode. Plaintiff pointed to two Invasix Texas employees who used InMode on their LinkedIn profiles and a LinkedIn position announcement that refers to InMode and a position in Texas. Plaintiff also argued that a purchase agreement that used the name InMode was evidence that InMode Ltd entered into contracts in Texas. But use of the common trade name, absent any evidence that corporate formalities were disregarded, is not sufficient to impute jurisdictional contacts. Id. While this decision reached the right conclusion given the circumstances, this case warrants a reminder of our prior warning to our readers to make sure that their employees’ LinkedIn profiles are accurate and do not overstate potentially jurisdictionally relevant connections. This is not the first plaintiff to make use of LinkedIn to try to establish jurisdiction.
With the court unwilling to find that InMode the trade name meant InMode Ltd the company, plaintiff’s final effort was to argue that InMode Ltd.’s website established jurisdiction because it has a function that allows users to search for healthcare providers who use the company’s products. But that too was an insufficient jurisdictional contact because it was not “directed to Texas in particular.” Id. at *4. As this is a common feature on product websites, this ruling establishes good precedent for an argument we expect we will see again. With no purposeful contacts to support specific personal jurisdiction, the claims against the foreign defendant were dismissed.
This article was written by Michelle Yeary of Dechert LLP