Conn Appliances, Inc. v. Williams presents an interesting opinion out of the Fifth Circuit Court of Appeals involving a retail installment contract. The case was decided on September 4, 2019. The case arose out of Conn Appliances, Inc.’s (“Conn”), attempts to compel Johnnie F. Williams, Jr., to comply with the terms of Conn’s retail installment contract. When the contract was executed, Williams was a resident of Tennessee, and he entered into the contract with Conn, a Texas corporation, at Conn’s Tennessee store.
Although Williams timely paid on the contract at first, he soon began to miss payments. At that point, Conn started to call him about his delinquent account from one of its call centers. Williams originally consented to receiving calls from Conns, but then he later withdrew that consent. However, despite the withdrawal of his consent, Conn continued to call Williams. Williams sued Conn in the U.S. District Court for the Western District of Tennessee (the “Tennessee case”), alleging that Conn violated the Telephone Consumer Protection Act. He later voluntarily dismissed the case after realizing that the retail installment contract included an arbitration agreement. Because the parties’ arbitration agreement provided that the arbitration hearing “will take place near [the buyer’s] residence,” the arbitration took place in Tennessee. The arbitrator entered an award in favor of Williams.
This is where the fun starts. The parties’ arbitration agreement provides that “[j]udgment on the award may be entered in any court with jurisdiction.” So, on the day the arbitrator entered his award, Conn and Williams both took judicial action. Conn brought suit in the U.S. District Court for the Southern District of Texas (the “Texas case”), asking the court to vacate the award. Meanwhile, Williams filed a motion in the Tennessee case seeking to enforce the award.
Williams then moved to dismiss the Texas case for lack of personal jurisdiction. He argued that he was not subject to personal jurisdiction in Texas because he was not within reach of the state’s long-arm statute and did not have sufficient contacts within the state to give rise to jurisdiction. After a hearing, the U.S. District Court for the Southern District of Texas dismissed the Texas case for lack of personal jurisdiction. Conn challenged the dismissal on appeal.
On appeal, the Fifth Circuit Court of Appeals found that generally, a federal court may assert personal jurisdiction if the state long-arm statute permits jurisdiction and the exercise of such jurisdiction would not violate due process. Thus, to establish a prima facie case of personal jurisdiction, Conn needed to show that Williams had “minimum contacts” with Texas—meaning that he “purposely availed himself of [Texas’s] benefits and protections”—and that exercising jurisdiction would not “offend traditional notions of fair play and substantial justice.”
On appeal, the appellate court agreed with the district court’s decision that Conn had failed to establish a prima facie case that the district court had personal jurisdiction over Williams. Williams entered into the retail installment contract with Conn at its Tennessee store. The contract provided that it would be governed by Tennessee and federal law, and the arbitration clause would be governed by the Federal Arbitration Act. Finally, the arbitration was held in Tennessee.
Specifically, other than the fact that Williams entered into a contract with a Texas entity, there was no evidence in the record that Williams engaged with the Texas forum. Additionally, Conn was not able to point to any evidence that Williams “purposely availed himself” of the Texas forum. As such, because Conn failed to meet its prima facie burden, the district court properly dismissed the suit for lack of personal jurisdiction over Williams. The Fifth Circuit agreed that Williams was not subject to personal jurisdiction in Texas and affirmed the dismissal of that action.
Conn protested that it was not subject to jurisdiction in Tennessee, and, making probably the most interesting line in the decision, the Court observed: “[E]ven if the Western District of Tennessee is not the proper forum, the lack of jurisdiction over Conn in another forum does not mean that the Southern District of Texas has personal jurisdiction over Williams.”
About Harrison Oldham
Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.
Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://