Thursday, July 27, 2006

Fifth Circuit Rejects Stream-of-Commerce Argument as Basis for Establishing Jurisdiction over Defendant Insurance Policy Issuer

Per Meadows v. Hartford Life Ins. Co., 429 F. Supp. 2d 853 (S.D. Tex. Apr 27, 2006) :

Plaintiff argues…that the McCamish Defendants "designed the COLI [corporate-owned life insurance] policies specifically for national corporations, [and] knew that the policies would be used to insure the lives of [Texas] employees," which was akin to delivering products into the "stream of commerce" with the knowledge that the products would be used in Texas. See Document No. 37 (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (holding that jurisdiction may be asserted over a nonresident defendant when the defendant actually "delivers its products into the stream of commerce with the expectation they will be purchased by consumers in the forum state.")). However, the stream of commerce theory does not apply here, where the only "product" at issue was an insurance policy delivered to Camelot in Ohio, and where there is no allegation that any product was delivered to Plaintiff in Texas. Moreover, it is uncontroverted that the McCamish Defendants did not sell the insurance policy at issue, but instead provided administrative and policy design services in Georgia. [Citation omitted] The mere fact that Plaintiff, one of the covered employees under the Ohio-purchased Camelot policy, happens to be a Texas resident is insufficient to confer specific jurisdiction under a stream-of-commerce theory. See, e.g., Ham v. La Cienega Music Co., 4 F.3d 413, 416 n. 10 (5th Cir.1993) (even where defendants' activities connected them to Texas within the meaning of the stream-of-commerce cases, the contacts were insufficient to support jurisdiction given "at best a highly attenuated relationship" between the litigation and those activities).


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