The Fifth Circuit Court of Appeals has opened the door to a broad interpretation of the Texas Fair Practices of Equipment Manufacturing, Distributors, Wholesalers, and Dealers Act (the “Dealers Act”), finding “equipment” under the statute was expansive enough to cover life rafts. The holding in Fire Protection Service, Inc. v. Survitec Survival Products, Inc., No. 24-20405, 2025 WL 2416451 (5th Cir. Aug. 21, 2025) underscores the Texas Legislature’s “unmistakable intent to craft a broad statute” designed to counteract suppliers’ superior bargaining power.
Achtergrond van de zaak
Fire Protection Service, Inc. (“FPS”) served as a non-exclusive dealer of life rafts manufactured by Survitec Survival Products, Inc. (“Survitec”). These specialized life rafts are the type legally required by federal law and international treaties to be installed on marine vessels across the offshore oil and gas, commercial fishing, global shipping, and related industries.
In August 2017, Survitec terminated the parties’ dealership agreement without cause and refused to purchase FPS’s unsold inventory. FPS filed suit under the Dealers Act, specifically:
- Section 57.153 which prohibits suppliers from terminating dealer agreements without good cause; and
- Section 57.353 which requires suppliers repurchase unsold inventory upon termination.
In relevant part, the Dealers Act applies to “equipment,” including “equipment . . . used for, or in connection with, . . . industrial, construction, maintenance, mining, or utility activities . . .” Following a bench trial, the district court found the Dealers Act did not apply because Survitec’s life rafts did not qualify as “equipment.”
Fifth Circuit Broadly Defines Commercial Activities Under the Act
The Fifth Circuit rejected attempts to construe “equipment’ so narrowly, holding Survitec’s life rafts fit squarely within the commercial contexts—specifically mining and industrial activities—enumerated in the Dealers Act.
The Court emphasized the Texas Legislature’s overlapping and sometimes redundant categories underscored the statute’s broad reach, and—when read alongside the ordinary definitions of mining and industrial activities—compelled an equally expansive interpretation covering Survitec’s life rafts. Because Survitec admitted that its rafts were used on offshore oil platforms, in commercial fishing, and in global shipping, the court concluded they qualified as equipment present in construction, maintenance, mining, and industrial activities.
Broad Interpretation of “In Connection With” Expands Statute’s Reach
Finally, the Court found a similarly expansive interpretation of the phrase “in connection with” those commercial activities. Under Texas precedent, this phrase required merely a tangential relationship, a low bar not limited by other text in the Dealers Act. The court further rejected Survitec’s argument that “used” required a functional connection to the commercial activity. Because the life rafts at issue were required in construction, maintenance, mining and industrial activities, they easily satisfied the tangential relationship required to be “equipment” under the Dealers Act.
Belangrijkste opmerkingen
- Suppliers of specialized tools or machinery used for wide commercial purposes may need to consider Dealers Act requirements, such as its termination provisions and repurchase obligations.
- Even products not typically viewed as “equipment” may fall under the statute’s purview, as a broad interpretation of the meaning of “in connection with” could encompass even a tangential link to a covered industry.
- Given the Texas Legislature’s goal to counter manufacturers’ greater bargaining power, courts may be willing to read other sections of the statute broadly as well.
For additional information on this ruling or other Distribution and Franchise regulations across the country, please contact Peter Loh, Jonathan Estuart, or another member of Foley’s Distribution and Franchise Team.
