Texas SC sends case against a Pepsi subsidiary to appeals court

By Melissa Busch | Apr 3, 2017

AUSTIN – The Texas Supreme Court recently ruled in favor of M&F Worldwide Corp. and others in their jurisdictional claim against a subsidiary of Pepsi-Cola Metropolitan Bottling Co. Inc., which relates to a previously settled covert asbestos case in New York.

AUSTIN – The Texas Supreme Court recently ruled in favor of M&F Worldwide Corp. and others in their jurisdictional claim against a subsidiary of Pepsi-Cola Metropolitan Bottling Co. Inc., which relates to a previously settled covert asbestos case in New York.

This overturns a trial and appeals court decision that determined Texas did not have jurisdiction over the case, according to the court opinion.

Since the Supreme Court found no specific personal jurisdiction, it remanded the case to the court of appeals to consider whether the non-resident defendants are subject to general jurisdiction in Texas, according to the court opinion.

In October, M&F Worldwide and other entities controlled by Mafco Holdings told the high court that the claim should be thrown out because the dispute has no ties to Texas. The companies involved are not residents of Texas, attorneys representing M&F Worldwide claimed.

The suit originated from a settlement agreement that resolved a New York lawsuit. Pepsi claimed that by signing the settlement agreement, the defendants interfered with indemnity obligations owed to the soda company by a different non-resident company. This triggered the non-Texas resident defendants to file special appearances, claiming that they were not subject to personal jurisdiction in Texas.

The plaintiff argued that they were subject to jurisdiction because they traveled to Texas twice to negotiate the allegedly tortious settlement agreement and that some of the agreements related to the settlement agreement were done in Texas. The Supreme Court rejected these arguments that non-resident defendants are not bound to specific personal jurisdiction in Texas.

According to the court, "in negotiating, executing, and carrying out the settlement agreement, the [non-resident] defendants did not seek to do business in Texas, commit a tort in Texas, or allegedly cause injury to [plaintiff] in Texas. Further, to the extent the [non-resident] defendants purposefully directed activities toward Texas, Pepsi’s causes of action do not arise from those contacts."

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