AUSTIN - On Friday, the Texas Supreme court allowed the state’s lawsuit against Volkswagen and Audi to proceed, reversing an appellate court and agreeing with a trial court that found the German vehicle manufacturers are amenable to specific personal jurisdiction in Texas.
According to the high court’s opinion, Texas and several local governments brought civil actions to enforce state environmental laws against German automobile manufacturers that intentionally evaded compliance with federal emissions standards by embedding illegal, emissions-beating technology in branded vehicles.
The issue in the “highly unusual personal-jurisdiction dispute” is whether Texas courts have specific jurisdiction over the manufacturers based on their intentional post-sale tampering with affected vehicles that were owned, operated, and serviced in Texas, the opinion states.
“Unlike many personal-jurisdiction disputes in which a nonresident manufacturer has merely placed a product in a stream of commerce that fortuitously carried the product to the forum state, the German manufacturers effectively—and knowingly—dropped the tampering software down a chute that guaranteed it would land in Texas,” the opinion states. “The manufacturers developed the product, controlled the distribution stream that brought the product to Texas, and called all the shots.
“Because the trial court properly denied the special appearances, we reverse the court of appeals’ judgment and remand to the trial court.”
Justice Rebeca Huddle, joined by Chief Justice Nathan Hecht and Justice Jane Bland, issued a dissenting opinion.
“This Court has long held that a nonresident manufacturer’s placement of goods into the stream of commerce with awareness those goods will eventually enter Texas is, alone, insufficient to justify the exercise of personal jurisdiction over it,” the dissenting opinion states.
“Today the Court departs from these precedents by permitting the exercise of jurisdiction over two German manufacturers without any evidence of their … Texas-specific contacts satisfying the plus-factor requirement.”
Case Nos. 21-0130 and 21-0133