Conn Appliances v. Williams: You Can't Drag a Consumer to Your Home State to Undo His Calling Law Arbitration Win

How We Got Here

Conn Appliances is a Texas corporation. The consumer lives in Tennessee and signed a retail installment contract at Conn's Tennessee store. Conn later called him from one of its call centers about his account. He had originally consented to the calls but withdrew that consent, and the calls kept coming.

He sued in federal court in the Western District of Tennessee under the TCPA, then voluntarily dismissed after realizing the contract had an arbitration clause. The clause said the hearing "will take place near [the buyer's] residence," so the arbitration happened in Tennessee. On September 4, 2018, the arbitrator ruled for the consumer.

That same day, both sides moved. Conn sued in the Southern District of Texas to vacate the award. The consumer asked the Tennessee court to enforce it, then moved to dismiss the Texas case for lack of personal jurisdiction. The Texas court agreed, and Conn appealed.

The Fifth Circuit's Analysis

The Texas long-arm statute reaches as far as federal due process allows, so the question was simple: did the consumer have "minimum contacts" with Texas, meaning he purposely availed himself of the state's benefits and protections? Only specific jurisdiction was at issue.

Conn's case came up short:

• The contract was signed in Tennessee, at a Tennessee store.
• The contract chose Tennessee and federal law, with the Federal Arbitration Act governing the arbitration clause.
• The arbitration was held in Tennessee.

The only Texas connection was that Conn itself is a Texas company. The court explained that a contract with an out-of-state party, on its own, can't establish minimum contacts with that party's home forum. Conn pointed to no evidence that the consumer purposely availed himself of Texas.

Conn's Backup Arguments

"Then no court can hear this!" Conn argued it isn't subject to personal jurisdiction in the Western District of Tennessee, so no court could review the award. The Fifth Circuit expressed no opinion on Tennessee's jurisdiction over Conn. Even if Tennessee was the wrong forum, that wouldn't create jurisdiction over the consumer in Texas.

Shaffer v. Heitner. Conn argued that this Supreme Court case required the case to be heard in Texas. The court called that argument meritless. Shaffer extended minimum contacts analysis to all assertions of state court jurisdiction. It doesn't say that enforcing a judgment against a Texas citizen elsewhere confers personal jurisdiction over the other litigant in Texas. Conn cited no convincing authority, and the court knew of none.

Affirmed.

Why It Matters

• Arbitration fights follow ordinary jurisdiction rules. A company can't pick its home court to attack an award just because it's headquartered there.
• Local contracts mean local forums. When the contract, governing law, and hearing all point to the consumer's state, that's where the action is.
• The race to the courthouse has limits. Filing first in your home state doesn't help if the court can't reach the other side.

Read the full Fifth Circuit opinion.