Fifth Circuit affirms dismissal of lawsuit by Panamanian cancer patients injured by faulty radiation treatment in Panama because Texas federal court lacked personal jurisdiction over Missouri and Canadian defendants involved in manufacture of allegedly defective radiation equipment
Most of the Plaintiffs are Panamanian cancer patients who sought treatment at the Instituto Oncologico Nacional (ION) in Panama City, Panama in 2000. This is the third lawsuit they have brought in the U.S. See also 2005 International Law Update 68. The ION treated the Plaintiffs using a Theratron 780C Teletherapy Unit (TU ) in conjunction with a Treatment Planning System (TPS). The TU is a radiation device for treating cancer patients, and the TPS is a computer software system used to calculate appropriate dosages. Due to the alleged negligence of ION physicians, they had applied incorrect calculations in treating Plaintiffs; these errors caused many serious injuries and several deaths from radiation over exposure.
When the Panamanian government found out about the incidents, it asked the International Atomic Energy Agency (IAEA) to investigate along with a group of doctors from the MDA Cancer Center in Houston, Texas. Their reports attributed the injuries and deaths to misuse of the TPS. As a result, the Panamanian authorities stripped a number of physicians of their Panamanian medical licenses and convicted two of negligent homicide.
In 2001, Plaintiffs sued Defendants for wrongful death and negligence in a Missouri state Court. Multidata (Def. 1) of Missouri manufactured the TPS, while MDS (Def. 2) , which made the Theratron Unit, is a Canadian Corporation. Defendants moved to dismiss for forum non conveniens, arguing that because the Plaintiffs and evidence are located in Panama that is the appropriate forum. Plaintiffs countered that Panama was not in fact an available alternative forum; the Panamanian court system is allegedly corrupt and would not accept a suit which a foreign court had dismissed.
Before the Missouri trial court reached a decision, however, one Plaintiff filed a petition in a Panamanian court against Defendants, which court dismissed the case for want of jurisdiction. On January 8, 2004, the Missouri court dismissed the action without prejudice on forum non conveniens grounds. The court ruled that Plaintiffs could re file in Missouri if Panama declined jurisdiction upon a re filing. Plaintiffs appealed, and the higher court affirmed. When the Panamanian appeals court likewise affirmed its prior dismissal, Plaintiffs filed four new suits in Missouri. The state court dismissed once again.
Instead of refiling in Panama, Plaintiffs sued in Texas federal court under claims similar to those made to the previous Missouri suits. Defendants moved to dismiss on two relevant grounds: (1) that the court lacked personal jurisdiction over Defendants, and (2) that Texas was forum non conveniens. In response, Plaintiffs argued: (1) that the Texas court could exercise general jurisdiction over Defendants; and (3) that Panama was not an available alternative forum for Plaintiffs.
The district court denied the motion to dismiss and this interlocutory appeal ensued. The U.S. Court of Appeals for the Fifth Circuit reverses for a dismissal based on lack of personal jurisdiction over the Defendants.
The Texas long arm statute extends to the limits of U.S. constitutional jurisdiction over nonresidents under the Fourteenth Amendment's Due Process Clause. This required Plaintiffs to prove: (1) that the non resident defendant(s) purposely availed himself of the benefits and protections of Texas by establishing "minimum contacts" with the state; and (2) that the exercise of jurisdiction would not offend "traditional notions of fair play and substantial justice."
"Plaintiffs put forward three bases for jurisdiction over Def. 1. First, over a period of five years, Def. 1 sold about $140,000 worth of goods and related service contracts to ten different customers located in Texas. Those sales represented roughly 3% of Def. 1's business during that time span, and led to periodic trips to Texas by Def. 1 employees to service the equipment. Second, Def. 1 had been advertising in national trade journals that circulated in Texas. Third, Def. 1 employees periodically attended trade conventions in Texas."
In response, Def. 1 stressed that it neither maintains a place of business in Texas nor has a registered agent for service of process in Texas. It argues that the contacts identified by Plaintiffs are too limited and sporadic to give rise to general personal jurisdiction. We agree." [Slip. Op. 10].
"Similarly, MDS's contacts with Texas are lacking the substance or regularity necessary to establish general jurisdiction. Plaintiffs identify four different contacts that MDS has with Texas: (1) it purchased over $5.2 million worth of goods from Texas vendors during the five year period prior to the lawsuit; (2) it is party to a Hosting Services Agreement and a Software Licensing Agreement with a Texas corporation governed by Texas law; (3) it employs two Texas residents who perform work from their homes; and (4) a former corporate director lived in Texas."
"In response, MDS notes that it: (1) has not manufactured or sold any products in Texas; (2) owns no real property in Texas; (3) does not have a registered agent for service of process in Texas; and (4) does not maintain any offices in Texas. Moreover, it argues that the contacts identified by Plaintiffs are insufficient to establish a systematic and continuous contact with Texas. Once again, we agree." [Slip. Op. 10].
The Court points out that MDS' status as a foreign defendant implicated other jurisdictional concerns. "In the instant case, we find that exercising jurisdiction over MDS Canada would offend traditional notions of fair play and substantial justice. First, like the defendant in [Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987)], a severe burden would be placed on MDS Canada if it is forced to defend itself in Texas."
"In addition to the regular burdens of defending oneself in a foreign legal system, MDS Canada would not have compulsory access to many of the necessary witnesses and evidence.. Second, the "the procedural and substantive policies' of two other nations Canada and Panama would be affected by the assertion of jurisdiction over MDS Canada. Third, the judicial system's interest in an efficient resolution of the case favors litigating the case in Panama because MDS Canada has a potential third party claim for indemnification against the [Panamanian] doctors and physicists." [Slip. Op. 16 17].
"We do not believe that MDS Canada has sufficient substantial, continuous, and systematic contacts with Texas to justify the exertion of general jurisdiction. MDS Canada does not maintain any office or other permanent presence in Texas. And the volume of MDS Canada's business in Texas is not so substantial that it should have reasonably expected to be haled into Texas court on any matter whatsoever."
"But even if MDS Canada's contacts were sufficient, it would offend traditional notions of fair play and substantial justice to exercise jurisdiction over MDS Canada in this case. In light of the international context of the case, [and] the slight interests of both Plaintiffs and Texas, it is unreasonable to impose the heavy burden of defending this case in Texas on MDS Canada." [Slip. Op. 17 18].
Citation: Johnston v. Multidata Systems International Corp., 523 F.3d 602 (5th Cir. 2008).
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