Products Liability Law Reporter

A Texas appellate court held that LG Chem may be liable in a Texas lawsuit alleging that a consumer suffered injuries when an 18650 lithium-ion battery manufactured by the company exploded in his pocket.

Christopher Tullis was injured when a lithium-ion 18650 battery in an e-cigarette device exploded in his pocket. He sued LG Chem, Ltd., alleging that it had marketed, manufactured, designed, and sold defective 18650 lithium-ion batteries. The plaintiff asserted that the defendant had placed its products, including these batteries, into the stream of commerce with the expectation and intent that they would be sold in Texas. The batteries were sold in Texas, the plaintiff said, arguing that LG Chem thus had purposefully availed itself of the privileges and benefits of doing business in the state.

LG Chem filed a special appearance supported by an affidavit from company representative Joon Young Shin, a senior manager. Shin averred that LG Chem is a Korean company that is not incorporated or headquartered in Texas. Shin also averred that LG Chem had never had any physical presence in Texas; was not registered to do business there; did not own or lease any real property in the state; and had no registered agent, telephone number, post office box, mailing address, or bank account in Texas. Instead, Shin averred, LG Chem manufactured lithium-ion power cells for use in specific applications by sophisticated companies and did not distribute or sell these as standalone batteries to individual consumers. Shin denied that the battery that allegedly injured Tullis was designed or manufactured in Texas.

After LG Chem filed its special appearance, Tullis sought and the trial court permitted jurisdictional discovery. In its discovery responses, LG Chem acknowledged that if the cell that harmed Tullis was an 18650 cell, it would have been manufactured by LG Chem in Korea and China. When asked to identify every purchaser, distributor, and reseller to which it or its American subsidiaries sold the LG MG1 or LG HG2 or 18650 batteries in Texas since January 2012, the company responded with a list of 10 companies, including Green Battery Technologies and Black and Decker, Inc., which has multiple manufacturing plants in Texas. The plaintiff presented invoices showing that LG Chem had shipped 18650 batteries to Green Battery Technologies in Texas and also provided revenue numbers for LG Chem and its American subsidiaries related to Texas 18650 lithium-ion battery sales since 2012. The trial court denied LG Chem’s special appearance.

Affirming, the appellate court noted that to establish personal jurisdiction over a nonresident, federal due process requires that the nonresident have certain minimum contacts with the forum state such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. A defendant establishes minimum contacts with a state when it purposefully avails itself of the privilege of conducting activities there and invokes the benefits and protections of its laws. Citing case law, the court said the three factors to be considered are whether the defendant’s contacts are relevant, whether the contacts are purposeful, and whether the defendant sought some benefit or advantage by availing itself of the jurisdiction. Texas courts require more than stream of commerce awareness, the court found, noting that there must be an intent or purpose to serve the market either directly or indirectly as evidenced by, for example, advertising, business solicitation, or a distribution system.

The court said that the documents produced in jurisdictional discovery confirm that LG Chem shipped its 18650 batteries to Texas, sold them to at least 10 Texas customers, and received several million dollars in revenue. The evidence therefore shows that LG Chem sold batteries of the type that allegedly injured the plaintiff to Texas customers and did so for many years, the court found. Although LG Chem did not sell the 18650 battery that allegedly injured Tullis directly to him and did not intend to serve a consumer market in Texas, the court said that when a foreign manufacturer specifically targets Texas as a market for its products, the manufacturer is subject to a products liability suit there.

Because LG Chem had deliberately engaged in significant activities in Texas and purposefully availed itself of the privileges of conducting business there, the court concluded that the company had clear notice it would be subject to suit in the state. The court added that LG Chem had fostered a market for its lithium-ion batteries in Texas. The plaintiff’s claim that the defendant’s batteries are defective, which caused his vaping device to explode and injure him, is thus related to the defendant’s contacts with Texas.

Consequently, the court affirmed the trial court’s order.

Citation: LG Chem, Ltd. v. Tullis, 2022 WL 16959264 (Tex. App. Nov. 16, 2022).

Plaintiff counsel: AAJ member Robert E. Wolf Jr., AAJ member Lawrence R. Lassiter, and Charles C. Miller, all of Dallas.

Comment: For a contrary holding, see Grizzard v. LG Chem Ltd., 2022 WL 17076706 (E.D. Va. Nov. 18, 2022). There, the plaintiff sued LG Chem Ltd., alleging that lithium-ion 18650 batteries manufactured by the company, which were purchased in Virginia and used for his e-cigarette device, exploded in his pocket and caused him severe leg burns. The defendant moved to dismiss for lack of personal jurisdiction. Granting the motion, the court noted that a federal district court may exercise personal jurisdiction over a foreign corporation only where such jurisdiction is authorized by the long-arm statute of the state in which the district court sits and application of the statute is consistent with due process. For specific jurisdiction, the court added that a court must focus on the relationship among the defendant, the forum, and the litigation. Three factors guide this inquiry under Fourth Circuit case law, the court said, including the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the forum state, whether the plaintiff’s claims arose out of those activities, and whether the exercise of personal jurisdiction is constitutionally reasonable. The court found that the defendant’s actions in supplying its products to companies having operations in Virginia, operating a global business and website, and sending cease-and-
desist letters to e-cigarette and vape retailers in Virginia did not prove that the defendant had purposefully availed itself of the privilege of conducting activities in Virginia. Moreover, the court found that based on the evidence presented, the only foreseeable way that the 18650 lithium-ion standalone batteries or cells made their way to consumers is from the unilateral activities of third parties, not the defendant’s deliberate activities directed at Virginia residents. Citing case law, the court concluded that at most, the plaintiff has demonstrated that the defendant placed its lithium-ion 18650 batteries into the stream of commerce in Virginia, which is an insufficient basis for personal jurisdiction.