eOn Corp. v. AT & T Mobility, LLC

• Citation: 879 F.Supp.2d 194
• Decision Date: 24 July 2012
• Docket Number: Civil No. 11–1555 (FAB).
• Court: U.S. District Court — District of Puerto Rico
• Parties: EON CORP., IP Holdings, LLC, Plaintiff, v. AT & T MOBILITY, LLC; AT & T Mobility Puerto Rico, Inc.; AT & T, Inc.; Puerto Rico Telephone Company, Inc.; Telecomunicaciones De Puerto Rico, Inc.; Telefonica De Puerto Rico, Inc., Defendants.

879 F.Supp.2d 194

EON CORP., IP Holdings, LLC, Plaintiff,
v.
AT & T MOBILITY, LLC; AT & T Mobility Puerto Rico, Inc.; AT & T, Inc.; Puerto Rico Telephone Company, Inc.; Telecomunicaciones De Puerto Rico, Inc.; Telefonica De Puerto Rico, Inc., Defendants.

Civil No. 11–1555 (FAB).

United States District Court,
D. Puerto Rico.

July 24, 2012.

[879 F.Supp.2d 198]

Eugenio J. Torres–Oyola, Cristina Arenas–Solis, Ferraiuoli–Torres, Marchand & Rovira PSC, Rafael Escalera–Rodriguez, Pedro Santiago–Rivera, Reichard & Escalera, San Juan, PR, Daniel Scardino, Dominique G. Stafford, Jeffrey R. Johnson, Steven P. Tepera, Reed & Scardino LLP, Austin, TX, for Plaintiff.

Diana M. Sangalli, Joseph A. Powers, Thomas W. Sankey, Duane Morris LLP, Houston, TX, Herman G. Colberg–Guerra, Maria Dolores Trelles–Hernandez, Pietrantoni Mendez & Alvarez, Maritere Perez–Pascual, Puerto Rico Telephone Company, Inc., San Juan, PR, Eduardo R. Guzman–Casas, Jeffrey J. Lopez, Nick Colic, Ronald L. Grudziecki, Drinker Biddle & Reath LLP, Washington, DC, for Defendants.

OPINION AND ORDER¹ BESOSA, District Judge.

Before the Court is the Report and Recommendation (“R & R”), (Docket No. 120), regarding defendants' motions to dismiss: one filed by defendant AT & T Mobility, Inc. (“ATT–M”), (Docket No. 39), and the other, filed by AT & T, Inc. (“ATT–I”), (Docket No. 77). Having considered the magistrate judge's recommendations, as well as defendants' objections to the R & R, (Docket Nos. 127 & 128), plaintiff Eon Corp.'s (“Eon”) opposition to defendants' objections, (Docket Nos. 130 & 131), and defendants' replies in support of their objections, (Docket Nos. 138 & 139), the Court ADOPTS IN PART and REJECTS IN PART the findings and recommendations of the magistrate judge.

I. Procedural and Factual Background

On June 14, 2011, plaintiff Eon, a Texas-based limited liability company, brought a patent suit against defendants. (Docket Nos. 1 & 49.) Eon alleges that it holds several patents to mobile technologies used or sold by defendant ATT–I and its subsidiaries, ATT–M and AT & T Mobility Puerto Rico, Inc. (“ATT–MPR”). (Docket No. 49 at ¶¶ 18–44.) In short, plaintiff

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alleges that by knowingly infringing upon these patents, defendants illegally enhance the wireless communication and entertainment services they provide to their subscribers in Puerto Rico. Id.

The merits of plaintiff's claim, however, are not at issue. Rather, defendants ATT–M and ATT–I contest this Court's exercise of personal jurisdiction.² On November 28, 2011, ATT–M filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) (“ Rule 12(b)(2)”). (Docket No. 39 at p. 3.) ATT–M maintains that it is a limited liability corporation owned by various subsidiaries of ATT–I, that it is incorporated in Delaware, and maintains its principal place of business in Atlanta, Georgia. Id. at p. 2. Moreover, ATT–M contends that ATT–MPR, and not ATT–M, is the sole authorized provider of AT & T-branded wireless service within Puerto Rico, that ATT–M is merely a remote corporate cousin of ATT–MPR and, moreover, that ATT–M itself maintains no contacts whatsoever within the Commonwealth. Id. at p. 13.

Like ATT–M, defendant ATT–I filed a motion to dismiss on January 12, 2012, contending that ATT–I is a holding company incorporated in Delaware with its principal place of business in Dallas, Texas. (Docket No. 77 at p. 3.) ATT–I also maintains that it does not make or market any goods or services, that the named AT & T-related defendants are separate and distinct corporate entities, and that ATT–I itself has no presence in Puerto Rico. Id. at pp. 2–3. In essence, both ATT–M and ATT–I disclaim substantial relation to ATT–MPR and deny any connection whatsoever to the Commonwealth.

On December 12, 2011, plaintiff submitted a response to ATT–M's motion to dismiss, along with a variety of evidence demonstrating the latter's business contacts with Puerto Rico. (Docket No. 54.) On January 9, 2012, ATT–M submitted a reply in support of its motion to dismiss, again averring that only ATT–MPR provides service to AT & T's wireless customers in Puerto Rico. (Docket No. 73 at p. 3.) Plaintiff also submitted a memorandum in opposition to ATT–I's motion to dismiss on January 30, 2012. (Docket No. 83.)

Magistrate Judge Silvia Carreño–Coll issued an R & R concerning defendants ATT–M and ATT–I's motions to dismiss on April 2, 2012. (Docket No. 120.) Regarding ATT–M, the magistrate judge found sufficient facts to support general jurisdiction. Id. at p. 10. Accordingly, the magistrate judge recommends that ATT–M's motion to dismiss be denied. Id. at p. 12. Regarding ATT–I, the magistrate judge found that the exercise of specific jurisdiction to be constitutionally reasonable. Id. at p. 20. Though ATT–I is a holding company, and ostensibly does “no business directly with the public,” the magistrate judge found substantial evidence showing business contacts between ATT–I and Puerto Rico. Id. at p. 12. For this reason, the magistrate judge recommends that the Court deny ATT–I's motion to dismiss as well. Id. at p. 20.

On April 16, 2012, in response to the R & R, both ATT–M and ATT–I submitted vociferous objections. (Docket Nos. 127 & 128.) First, ATT–M argued that the magistrate judge erred in finding sufficient facts to support general jurisdiction. (Docket No. 128 at pp. 3–9.) For good measure, ATT–M also maintained that it is not subject to specific jurisdiction in Puerto Rico, either. Id. at pp. 9–14. Like ATT–M, defendant ATT–I argued that the magistrate judge erred in recommending

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that the Court exercise specific jurisdiction, because ATT–I is merely a holding company and maintains no business contacts in Puerto Rico. (Docket No. 127 at p. 1.)

On May 2 and 3, 2012, plaintiff submitted responses to defendants ATT–M and ATT–I's objections to the R & R. (Docket Nos. 130 & 131.) With regard to the objections filed by ATT–M, plaintiff maintained that personal jurisdiction is justified. (Docket No. 130 at pp. 6–14.) Plaintiff also introduced new evidence of ATT–M's contacts with Puerto Rico. (Docket Nos. 130–1, 130–2, & 130–3.) Regarding the objections submitted by ATT–I, plaintiff mounted a number of arguments, maintaining that despite its status as a holding company, ATT–I has considerable business contacts within the Commonwealth. (Docket No. 131.)

Finally, on May 31, 2012, ATT–M and ATT–I submitted replies in support of their objections to the R & R. (Docket Nos. 138 & 139.) ATT–M once more contested the appropriateness of general jurisdiction, stalwartly maintaining that it sells no products or services in Puerto Rico. Id. at pp. 5–7. Similarly, ATT–I again reiterated its objections to the Court's exercise of personal jurisdiction, pointing still again to its status as a holding company and declaiming any substantive business contacts within the Commonwealth. (Docket No. 138.)

The Court considers defendants' objections to the R & R in turn. We begin with ATT–M, which objects to the magistrate judge's recommendation that general jurisdiction is reasonable; we then turn to ATT–I, which protests the proposed exercise of specific jurisdiction. In each case, we consider the plethora of supporting documents filed by the parties. For reasons that will be discussed presently, the Court holds that specific jurisdiction is appropriate for both ATT–M and ATT–I.

II. Legal StandardsA. Standard under 28 U.S.C. § 636(b)(1)

A district court may refer a case to a magistrate judge for a report and recommendation. See28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b); Loc. Rule 72(b). Any party adversely affected by the report and recommendation may file written objections within fourteen days of being served with the magistrate judge's report. See28 U.S.C. § 636(b)(1). A party that files a timely objection is entitled to a de novo determination of “those portions of the report or specified proposed findings or recommendations to which specific objection is made.” Sylva v. Culebra Dive Shop, 389 F.Supp.2d 189, 191–92 (D.P.R.2005) (citing United States v. Raddatz, 447 U.S. 667, 673, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980)). Failure to comply with this rule precludes further review. See Davet v. Maccarone, 973 F.2d 22, 30–31 (1st Cir.1992). In conducting its review, the court is free to “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(a)(b)(1). Templeman v. Chris Craft Corp., 770 F.2d 245, 247 (1st Cir.1985); Alamo Rodriguez v. Pfizer Pharmaceuticals, Inc., 286 F.Supp.2d 144, 146 (D.P.R.2003). Furthermore, the Court may accept those parts of the report and recommendation to which the parties do not object. See Hernandez–Mejias v. Gen. Elec., 428 F.Supp.2d 4, 6 (D.P.R.2005) (citing Lacedra v. Donald W. Wyatt Detention Facility, 334 F.Supp.2d 114, 125–126 (D.R.I.2004)).

B. Standard under Rule 12(b)(2)

Pursuant to Rule 12(b)(2), a defendant may move for the dismissal of a claim based on lack of personal jurisdiction. F.R.C.P. 12(b)(2). Once personal

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jurisdiction is challenged, it is the plaintiff who bears the burden of “establishing that jurisdiction exists over the nonresident defendant.” Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir.2002). In a patent case, the jurisdictional inquiry is “intimately involved with the substance of the patent laws” and thus the law of the United States Court of Appeals for the Federal Circuit applies. Elec. For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1348 (Fed.Cir.2003) (quoting Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed.Cir.1995)). Under Federal Circuit law, and in the absence of an evidentiary hearing, a plaintiff need only make a prima facie showing that defendants are subject to personal jurisdiction. Id. at 1349;Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed.Cir.2002)...