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Boltex Manufacturing Company, LP v. Galperti, Inc.

United States District Court, S.D. Texas, Houston Division

January 23, 2018

Boltex Manufacturing Company, LP, et al., Plaintiff's,
v.
Galperti, Inc., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Gray H. Miller United States District Judge

         Pending before the court is defendant Officine Nicola Galperti e Figlio S.p.A.'s (“ONG”) motion to dismiss for lack of personal jurisdiction. Dkt. 19 at 1-21. Plaintiffs Boltex Manufacturing Company, L.P. (“Boltex”) and Weldbend Corporation (“Weldbend”) (collectively, “Plaintiffs”) responded. Dkt. 26. ONG replied. Dkt. 28. The parties filed supplemental briefing after conducting jurisdictional discovery. Dkts. 54, 59. Having considered the motion, response, reply, supplemental briefing, and applicable law, the court is of the opinion that ONG's motion should be DENIED.

         I. Background

         In this false advertising case, all parties manufacture carbon steel flanges.[1] Dkt. 1 at 1-3. Boltex is a Texas limited partnership with its principal place of business in Houston, Texas. Id. at 2. Weldbend is a Delaware corporation with its principal place of business in Argo, Illinois. Id. ONG's principal place of business is in Italy. Id. at 3.

         This dispute centers on normalization, a heat treatment process that changes the physical composition of carbon steel to increase its machinability and toughness. Id. at 1, 8. Because the process involves additional time and resources, it costs manufacturers more to produce normalized flanges than non-normalized (or forged) ones. Id.

         The American Society of Testing and Materials (“ASTM”) sets out standards requiring manufacturers to apply heat treatment to certain types of flanges.[2] Id. at 8-9. Manufacturers can choose from several processes including normalization. Id. However, many customers will only purchase certain flanges if they are normalized. Id. Additionally, customers “generally select and purchase flanges based upon price alone.” Id. at 17.

         Plaintiffs manufacture, market, and sell normalized flanges. Id. at 9. Plaintiffs' normalization processes comply with ASTM standards. Id. at 8-9. Plaintiffs indicate that compliance by: (1) stamping normalized flanges and (2) noting normalization in an industry-standard report. Id. at 10. Further, Plaintiffs charge more for normalized flanges than they do for forged ones. Id.

         ONG advertised some of its flanges as normalized and as compliant with ASTM standards.[3] Id. at 11, 16. Customers believed those flanges were “of the same quality and meet the same standards as Plaintiffs' flanges . . . .” Id. at 16. But, ONG's flanges were not normalized. Id. Thus, they did not comply with ASTM standards. Id. at 18.

         Texas-based ONG customers interested in buying normalized, ASTM-compliant flanges emailed ONG for price quotes. Dkt. 54 at 5. ONG's emailed responses indicated that its flanges met those criteria. Id. at 5-6. Then, ONG sold those flanges to multiple customers in Texas. Id. at 5-7. And, ONG sold those flanges for less than the cost of Plaintiffs' normalized flanges, charging “about the same price at which [Plaintiffs] sell their ‘as forged' (non-normalized) flanges.” Dkt. 1 at 16. As a result, customers who wanted to buy normalized, ASTM-compliant flanges purchased those flanges from ONG, and not from Plaintiffs. Id.

         Plaintiffs sued Defendants for false advertising and unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a), as well as common law unfair competition. Id. at 23. In the instant motion, ONG moves to dismiss for lack of personal jurisdiction. Dkt. 19.

         II. Legal Standard

         A court must dismiss an action when it lacks personal jurisdiction over the defendant. Fed.R.Civ.P. 12(b)(2). When a non-resident defendant moves to dismiss for lack of personal jurisdiction, the resident plaintiff has the burden of establishing a prima facie showing that the defendant is subject to personal jurisdiction. Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001); see also Bullion v. Gillespie, 895 F.2d 213, 216-17 (5th Cir. 1990). “Proof by a preponderance of the evidence is not required.” D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 545-46 (5th Cir. 1985).

         In a diversity action, a federal court may exercise personal jurisdiction over a non-resident defendant if: (1) the long-arm statute of the forum state allows the exercise of personal jurisdiction over that defendant, and (2) the exercise of personal jurisdiction over that defendant is consistent with due process under the U.S. Constitution. Clemens v. McNamee, 615 F.3d 374, 378 (5th Cir. 2010). This two-step personal jurisdiction inquiry collapses into one federal due process analysis because the Texas long-arm statute extends to the limits of federal due process. Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14, 104 S.Ct. 1868 (1984)).

         To satisfy due process, the plaintiff must show: “(1) that the non-resident purposely availed himself of the benefits and protections of the forum state by establishing ‘minimum contacts' with the state; and (2) that the exercise of jurisdiction does not offend ‘traditional notions of fair play and substantial justice.'” Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008) (quoting Wilson v. Belin, 20 F.3d 644, 647 (5th Cir.1994)). Minimum contacts are established through the assertion of either general or specific jurisdiction. Panda Brandywine Corp. v. ...


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