Auto Service Contractor Not Subject to Court’s Jurisdiction in Texas Resident’s TCPA Claim, Holds State’s Federal Northern District

The Northern District of Texas handed down a decision exploring the jurisdictional limitations on TCPA plaintiffs’ ability to hale out-of-state defendants into a plaintiff’s local federal court.

The case, Horton v. Sunpath, Ltd., involved a Texas resident (Lucas Horton) who launched a TCPA suit against a Massachusetts-based corporation (Sunpath).  Horton alleged that Sunpath’s agent, Northcoast Warranty Services, placed several calls to his cell phone using an automatic telephone dialing system and pre-recorded messages, despite the number’s listing on the National Do-Not Call Registry.  No. 3:20-cv-1884-B-BH, 2021 WL 982344, at *1 (N.D. Tex. Feb. 16, 2021).  On the calls, Horton stated, Northcoast encouraged him to purchase an auto service policy administered by Sunpath.  Id.  The calls continued for about three months until Horton purchased a policy from Sunpath in May 2020.  Id.  Horton filed suit against Sunpath about a month later in the Northern District of Texas.  Id.

On motion to dismiss, Sunpath argued that the district court lacked personal jurisdiction over the company due to its lack of minimum contacts with Texas.

In her report and recommendation to the district court, U.S. Magistrate Judge Irma Carrillo Ramirez concluded that Horton could not establish minimum contacts through either general or specific jurisdiction.  See id. at *2 (“There are two types of minimum contacts: those giving rise to general jurisdiction and those giving rise to specific jurisdiction.”) (citing Clemens v. McNamee, 615 F.3d 374, 378 (5th Cir. 2010)).

The Northern District of Texas could not exercise general jurisdiction over Sunpath, Judge Ramirez explained, because the company was a non-Texas entity based in Massachusetts, didn’t own any property in Texas, and hadn’t conducted any substantial business operations in the state.  Id. at *3.  Even though Sunpath serviced auto policies purchased by Texas residents, its activities did not rise to “continuous and systemic” business contacts needed for general jurisdiction.  Id. (quoting Companion Prop. & Cas. Ins. Co. v. Palermo, No. 3:11-cv-03524-F, 2012 WL 12882078, at *6 (N.D. Tex. Jan. 31, 2000)).

The district court also couldn’t assert specific jurisdiction over Sunpath, concluded Judge Ramirez, because the company didn’t direct or control the conduct of Northcoast.  Although a corporation “can purposefully avail itself of a forum by directing its agents or distributors to take action there,” id. at *4 (quoting Daimler AG v. Bauman, 571 U.S. 117, 135 n.13 (2014)), Horton had failed to allege any facts showing that Sunpath had specifically directed Northcoast to direct its call campaign to Texas residents or that it exercised any control over how Northcoast conducted the campaign.  Id.  Judge Ramirez did not credit Horton’s conclusory allegation that Northcoast acted pursuant to an agency relationship with Sunpath to contact people in Texas.  Id.

Having found that Horton couldn’t establish the minimum contacts necessary to summon Sunpath to a court in Texas, Judge Ramirez recommended that the district court grant dismissal of Horton’s TCPA claim pursuant to Rule 12(b)(2).  Judge Ramirez withheld from addressing Sunpath’s substantive arguments for dismissal under Rule 12(b)(6).

As Horton demonstrates, a defendant called to answer a TCPA claim in a far-away court should, when formulating arguments for dismissal, assess its level of contacts with the forum state as well as its level of control over its calling agent.  Dismissal on jurisdictional grounds, when available, is a clean way for a court to dispose of claims without having to render a favorable decision on substantive 12(b)(6) grounds, and courts might therefore be more receptive to arguments brought against TCPA claims pursuant to Rule 12(b)(2).