Jurisdiction – Employee Training, Alone, May Subject You to a Foreign State’s Jurisdiction

Turner Specialty Servs., LLC v. Horn, 2022 Tex. App. LEXIS 8139 (Tex. App.—Houston Nov. 3, 2022). 

Counsel have to analyze jurisdictional possibilities and understand that clients may be subject to jurisdiction in states not initially contemplated. Likewise, contractors need to understand that the location of certain activities, such as employee training, can lead to claims in the locale of those activities. Under certain circumstances, such training may subject contractors to foreign state jurisdiction that the contractor did not initially anticipate.

On November 3, 2022, the Court of Appeals for the First District of Texas ruled that the 55th District Court for Harris County, Texas has jurisdiction over a Louisiana-based limited liability company where the company’s employee, a Texas resident, passed away while working in Alabama. Turner Specialty Servs., LLC v. Horn, 2022 Tex. App. LEXIS 8139 (Tex. App.—Houston Nov. 3, 2022).

Turner Specialty Services, LLC (“Turner Specialty”) is a Louisiana limited liability company headquartered in Baton Rouge, Louisiana. The company provides turnaround maintenance services at refineries and petrochemical facilities, including catalyst work. Catalyst work is highly specialized and “involves working in enclosed spaces, such as large tanks and reactors, in an inert atmosphere lacking oxygen.” Id. at 3.

In March of 2019, one of Turner Specialty’s employees reached out to Justin Horn, a Texas resident, seeking his catalyst services for one of their refineries in Alabama. After accepting the job offer, Turner Specialty directed Justin to a Beaumont personnel office; wherein, Justin filled out pre-employment paperwork, underwent drug testing, conducted a physical examination, and received basic online safety training with an accompanying eight-module safety test. Id. at 4. Importantly, nine other catalyst crew members also received training at the Beaumont personnel facility. Thereafter, Justin was transported to Alabama and received additional, more specific catalyst training covering confined spaces, air supply equipment, and emergency rescue procedures.

On March 26, 2019, Justin died while performing catalyst work at the Alabama facility. As a result, Justin’s wife and mother filed a wrongful death suit, asserting, among other things, gross negligence. Specifically, the Plaintiffs asserted that the Defendants “negligently trained, hired, and/or retained Texas residents. . .” and the “negligent training, hiring, and/or retention of Texas resident workers contributed to Justin Horn’s death.” Id. at 7. In response, Turner Specialty argued that the Texas district court lacked general and specific personal jurisdiction because Turner Specialty was not “doing business” or “essentially at home” in Texas. Particularly, Turner Specialty argued, among other things, that (1) the Texas safety training was fortuitous because all Turner Specialty employees received the generalized safety training at a location most convenient for the employee, (2) the Texas safety training does not have a “substantial connection” to the events that transpired in Alabama, and (3) the actionable conduct that is substantially related to the operative facts of the litigation concerns the training and supervision provided in Alabama, not Texas.

Addressing the fortuitous argument, the Court held that the training was not fortuitous. Turner Specialty representatives reached out to Justin and directed him to the Beaumont office for onboarding procedures, including safety training. There was no evidence to suggest that Justin decided where to receive the initial safety training.  Additionally, “sending Justin to the Beaumont office was not an anomaly” as two-thirds of the catalyst crewmates working in Alabama received safety training at the Beaumont facility. Finally, the court recognized that Turner Specialty benefited from training employees in Beaumont, as it “incentivized Texas residents to work for Turner Specialty. And, by doing so, Turner Specialty acquired workers, like Justin, who had skills that were in limited supply.” Id. at 19.

Next, the Court looked at whether alleged negligent training in Texas was substantially connected to Justin’s death, that is, whether the “relationship among the defendant, the forum, and the litigation – are sufficiently close to support specific jurisdiction.” Id. at 22. The Court, noting that the “relatedness inquiry does not require a strict causal relationship between the defendant’s in-state activity and the litigation” relying on the Plaintiff’s Complaint, stated that “the [Plaintiffs] allege that the improper training, at least in part, caused or contributed to Justin’s death. Thus, Turner Specialty’s liability, if any, arises directly from and relates to the Texas safety training.” Id. at 23.  

Finally, the Court disagreed with Turner Specialty that the more specific training in Alabama was the “actionable conduct.” The court, relying on Texas Supreme Court jurisprudence, stated that “just because Turner Specialty could be subject to personal jurisdiction in Alabama does not mean that it cannot be subject to jurisdiction in Texas.” Id. at 26.  Whether the training that occurred in Texas contributed to Justin’s death presented merit-based questions for the trial court to determine.

As a result, the Texas Court of Appeal concluded that “Turner Specialty purposely availed itself of conducting activities in Texas and that the [Plaintiff’s] gross negligence claim arises from or relates to those activities. . . . the allegations and the evidence establish that Turner Specialty had sufficient minimum contracts with Texas to be subject to specific personal jurisdiction.” Id. at 27.

The Texas Court of Appeals demonstrates why contractors need to be vigilant in where they conduct basic employee training. Under certain circumstances, a foreign state court may have jurisdiction over a corporation, even when the accident in question occurs outside that foreign state’s jurisdiction.

Author, Peter-Raymond Graffeo, is an attorney with D'Arcy Vicknair, LLC in New Orleans, Louisiana. As a former civil engineer, Peter-Raymond focuses his practice in construction and surety law, commercial litigation and business law. 

Don’t Mess with Texas: 5th Circuit takes Litigators Back to Law School

 In the recent decision of Sayers Construction, L.L.C.v. Timberline Construction, Inc. and High Voltage, Inc., the Fifth Circuit affirmed a federal district court’s determination that it did not have jurisdiction to vacate an arbitration award in Florida. 976 F.3d 570 (5^th Cir. 2020). The court reminded us that jurisdiction really is power, just like lawyers everywhere learned in their very first civil procedure class in law school. After walking us through the trodden legal framework of Pennoyer, International Shoe, World-Wide Volkswagen, and Burger King, and hinting at the liberal policy of promoting arbitration, the court concluded, “this is Florida’s problem. Not Texas’s.” Sayers Construction, 976 F.3d at 574.

The case serves a friendly reminder of the importance of jurisdiction, especially in the context of arbitration. In this case, the Texas-based general contractor sought to vacate a Florida court’s enforcement of a Florida-based arbitration award. See id. at 572. Step one of the court’s analysis highlighted the most well-known limitation of the Due Process Clause when it comes to jurisdiction of out-of-state defendants: that of “minimum contacts.” See id. at 573. The court pressed that we must always ask whether our counterparts “purposefully avail[ed] [themselves] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” See id. (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980)). Here, the general contractor defendant pressed that this was a standard breach of contract dispute where “minimum contacts” existed because (1) subcontractors solicited a business relationship with the general contractor in Texas, (2) the subcontractors contracted with the general contractor, which has an office in Texas, (3) subcontractors mailed invoices to general contractor’s office in Texas, and (4) the parties’ contract has a Texas choice-of-law clause. Id. The court found that none of these facts established “minimum contacts.” Importantly, in response to facts (3) and (4), the Fifth Circuit held that, mailing payments, especially when all of the work is performed outside the state, is insufficient to establish “minimum contacts” and choice-of-law clauses are probative, but not dispositive, of purposeful availment. See id. at 574.

With its terse ‘this is not our problem’ ending, the court emphasized that any doubts as to the legitimacy of arbitration should be put to bed. Case law, in conjunction with the Federal Arbitration Act (“FAA”), makes clear that there exists a liberal policy of promoting arbitration, thus making arbitration agreements “valid, irrevocable, and enforceable.” 9 USC § 2. As we all know, arbitration is favored amongst many construction clients due to its privacy, speed, and finality. But with every decision comes a cost. In agreeing to arbitrate, the cost to parties is the relinquishment of much of their right to a court’s decision. Parties may still seek court review of an arbitrator’s decision, but the courts will set that decision aside only in very unusual circumstances. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995). In fact, grounds for vacating arbitral awards are few and far between[1] – and if you’re still not convinced of just how rigorously courts enforce arbitral awards, consider the fact that the Manifest Disregard of Law Doctrine remains one of the few proper grounds of vacatur of an arbitral award and there exists a circuit split as to whether even that is proper. See Philip D. O’Neill, Jr., International Commercial Arbitration 459 (2012).

In conclusion, the case of Sayers Construction, 976 F.3d at 574, is a reminder to experienced lawyers not to lose sight of either the legal frameworks of personal jurisdiction or the FAA. And, of course, litigators everywhere beware: don’t mess with Texas.

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[1] Per the New York Convention on the Enforcement of Foreign Arbitral Awards of 1958 (the “New York Convention”) and the Federal Arbitration Act (“FAA”), courts are directed to confirm arbitral awards unless it is found that there exist grounds for refusal or deferral of recognition. Those grounds include 1(a): incapacity of a party; invalidity under the law to which the parties subjected their agreement, or invalid under the law of the country where the agreement was made; (b) lack of proper notice; an inability by a party to present their case; (c) exceeding the scope of the arbitral agreement; (d) composition of the arbitral authority or process was not as the parties agreed; (e) set aside by a competent authority or in accordance with the law of the arbitral seat; (2)(a) the subject matter may not be lawfully resolved under the law of the place of enforcement; or (b) contrary to the public policy of that jurisdiction. In short, the legal framework and the New York Convention (Article V) provides that the decision to decline to enforce an award is a matter of stringent discretion, for “recognition and enforcement of the award may be refused,” but only very limited circumstances. See Philip D. O’Neill, Jr., International Commercial Arbitration 405-06 (2012).

Author Lexie R. Pereira is a third year J.D./M.B.A. candidate at Boston College Law School and Carroll School of Management, studying to become a litigator, with a specialty in construction law. Currently, she works as a Law Clerk at Consigli Construction Co., Inc., serves on the Editorial Team of the ABA’s Forum on Construction Law’s Dispute Resolver blog, and acts as the 2020 Student Liaison of the ABA's Forum on Construction Law. At school, Lexie is the President of the Real Estate Law Society and the President of the Eagle-to-Eagle Mentoring Program. Lexie grew up in the construction industry and has spent time working as an estimator, field engineer, laborer, and, of course, in the legal capacity at Consigli and formerly Hinckley Allen as a Summer Associate. 

Contact Lexie: pereirle@bc.edu | https://www.linkedin.com/in/lexie-pereira/