Motorola Mobility, Inc. v. Myriad France SAS
| Decision Date | 02 February 2012 |
| Docket Number | Case No. 11 C 7373. |
| Citation | 850 F.Supp.2d 878 |
| Parties | MOTOROLA MOBILITY, INC., Plaintiff, v. MYRIAD FRANCE SAS and Myriad Group AG, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
OPINION TEXT STARTS HERE
Mark L. Durbin, Matthew J. Caccamo, Edwards Wildman Palmer LLP, Chicago, IL, for Plaintiff.
James A. Fletcher, Elizabeth O. Bryant, Fletcher & Sippel, LLC, Chicago, IL, Andrew Patrick Holm, Oppenheimer Wolff and Donnelly LLP, Samuel R. Hellfeld, Samuel R. Hellfeld, Minneapolis, MN, for Defendants.
Motorola Mobility, Inc. has sued Myriad France SAS and Myriad Group AG for breach of contract, alleging that they failed to comply with their contractual obligations to indemnify Motorola Mobility for damages it sustained as a result of defective software they produced. Myriad France has moved to dismiss the claims against it under Federal Rule of Civil Procedure 12(b)(6). Myriad Group has moved to dismiss the claims against it for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). For the reasons stated below, the Court grants Myriad France's motion in part and denies Myriad Group's motion.
The Court draws the following facts from the allegations in plaintiff's complaint, which it accepts as true for purposes of the motions to dismiss. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir.2009). On a Rule 12(b)(2) motion, the Court may also consider facts set forth in affidavits, resolving any factual disputes in favor of the plaintiff. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir.2010).
In October 1999, Motorola, Inc., and Phone.com, Inc. entered into a Master License and Services Agreement (MSA) under which Phone.com agreed to license messaging and browser software for use in Motorola phones. The MSA has been amended multiple times since it was signed, including amendments substituting Motorola Mobility (“Motorola”) for Motorola, Inc. and Openwave Systems for Phone.com. Myriad France was later substituted for Openwave. Myriad France does not dispute that it is bound to Phone.com's or Openwave's obligations under the MSA and amendments. Rather, it disputes only what those obligations entail. Myriad Group, which is Myriad France's parent corporation, disputes that it has any obligations under the MSA.
The MSA contains two provisions that are particularly relevant to the allegations made by the parties in this case. Section 14.1, which appears in an amendment to the original MSA, states:
[Myriad France] agrees to defend, indemnify, and hold harmless Motorola from and against any claim, suit, or proceeding and any damages, liability, or other expenses (including, but not limited to, reasonable attorneys' fees and court costs) which arise out of or result from: (i) gross negligence or wrongful acts of employees of [Myriad France] while performing [Myriad France's] obligations hereunder....
Myriad France Ex. 2 at 3. Section 16.2, which is entitled “Licensed Software Warranties,” states:
[Myriad France] warrants to Motorola, and solely for the benefit of Motorola, that for a period of ninety (90) days after delivery of each commercially released version of the ... Software to Motorola, such version ... will perform in accordance with the applicable ... Software Specification .... During the above noted warranty period, [Myriad France's] obligation for any breach of the warranty shall be to remedy the breach without additional charge to Motorola.
Motorola alleges that defendants have breached several terms of the MSA. In count one of its complaint, Motorola claims that Openwave designed, developed, and delivered a defective mobile phone browser that Motorola included in a mobile phone it sold to Verizon. The software failed to promptly terminate browser sessions. This resulted in the overcharging of Verizon customers, who later sued Verizon in a class action. Motorola was contractually obligated to defend and indemnify Verizon for the damages arising out of this action, and Motorola in turn sought defense and indemnification from Openwave, which refused Motorola's request. Motorola ultimately paid a portion of the costs of settling the Verizon class action and alleges that it was thereby damaged “in excess of $500,000.” Id. ¶ 27. Motorola now seeks indemnification from defendants for this amount.
In counts two and three, Motorola alleges that Openwave delivered two additional defective software products, the first in late 2008 and early 2009 and the second in 2010. Both of these products were included in phones that Motorola was developing for Tracfone, which discovered both defects during pre-release testing. Motorola alleges that the first piece of defective software caused Tracfone to cancel its purchase, damaging Motorola “in an amount exceeding $5 million.” Id. ¶ 34. Motorola alleges that the second piece of defective software delayed release of the product, damaging Motorola “in an amount exceeding $1.7 million.” Id. ¶ 42. Motorola claims that its requests for indemnification for both amounts were rejected. It argues that defendants breached the MSA in two ways: via their gross negligence in design and development of the defective software, and by refusing to indemnify Motorola for the consequences.
On December 21, 2010, Motorola filed suit in Cook County Circuit Court against Myriad France, Myriad Group, and Openwave. Motorola later agreed to dismiss Openwave from the case, and the circuit judge entered an order to that effect on October 6, 2011. On October 18, 2011, defendants removed the case to federal court.
)
Myriad France argues that the Court should dismiss count one under Illinois Supreme Court Rule 103(b), which states,
If the plaintiff fails to exercise reasonable diligence to obtain service on a defendant prior to the expiration of the applicable statute of limitations, the action as to that defendant may be dismissed without prejudice. If the failure to exercise reasonable diligence to obtain service on a defendant occurs after the expiration of the applicable statute of limitations, the dismissal shall be with prejudice as to that defendant only and shall not bar any claim against any other party based on vicarious liability for that dismissed defendant's conduct.
Ill. S.Ct. R. 103(b). Although Rule 103(b) is a state procedural rule, “federal courts may apply state procedural rules to pre-removal conduct.” Romo v. Gulf Stream Coach, Inc., 250 F.3d 1119, 1122 (7th Cir.2001).
Motorola first asserted count one in its state court complaint on December 21, 2010. Motorola concedes that it did not serve Myriad France until August 29, 2011. Myriad France contends that this delay amounts to a failure of reasonable diligence. It contends that Motorola knew Myriad France's address, amended its complaint without attempting service on Myriad France, and demonstrated the ease with which it could have served Myriad France at any time by completing service three weeks after filing the second amended complaint.
The standard for dismissal under Rule 103(b) involves “a fact-intensive inquiry suited to balancing, not bright lines.” Hinkle v. Henderson, 135 F.3d 521, 524 (7th Cir.1998). The Court may consider factors including the “length of time used to obtain service; activities of plaintiff; plaintiff's knowledge of defendant's location; ease with which defendant's whereabouts could have been ascertained; defendant's actual knowledge of the pendency of the action; and special circumstances which would affect plaintiffs efforts.” Cannon v. Dini, 226 Ill.App.3d 82, 86, 168 Ill.Dec. 253, 589 N.E.2d 653, 656 (1992).
Motorola does not dispute that it knew Myriad France's location or could easily have determined it. In fact, Motorola has provided no explanation for its delay (prior to mid-July 2011) in serving Myriad France. It argues, however, that “special circumstances” rendered its delay in service reasonable. In particular, Motorola asserts that Myriad France “was aware of the software defects at issue ... no later than December 2006, the likelihood of a lawsuit on those issues no later than October 2010, and the filing of the lawsuit by January 2011.” Pl.'s Resp. at 11.1 It also argues that both Myriad France and Myriad Group moved to quash service of the first amended complaint on “two affiliates of Myriad France,” indicating that “Myriad France was aware of this lawsuit no later than July 11, 2011.” Id. at 12.
Although Motorola refers to these factors as “special circumstances,” there is no indication that they are “special circumstances which would affect plaintiff's efforts.” See Cannon, 226 Ill.App.3d at 86, 168 Ill.Dec. 253, 589 N.E.2d at 656 (emphasis added). They are therefore more properly analyzed as indicating “defendant's actual knowledge of the pendency of the action.” Id. Myriad France does not dispute the allegations regarding what it knew when, but it contends that Motorola's delay in service was nonetheless “unreasonable as a matter of law.” Def.'s Reply at 3. Myriad France argues that its knowledge of a potential claim is not the same thing as knowledge of the pendency of an action, and the earliest it could have known that an actual lawsuit was in place was July 11, 2011. The Court agrees. Thus, the length of time that passed between filing of the complaint and Myriad France's knowledge of the lawsuit was about six-and-one-half months.
Illinois courts have dismissed cases under Rule 103(b) for similar delays. See, e.g., Hinkle, 135 F.3d at 524 (); Long v. Elborno, 376 Ill.App.3d 970, 980, 314 Ill.Dec. 840, 875 N.E.2d 1127, 1134 (2007) (); Tischer v. Jordan, 269 Ill.App.3d 301, 308, 206 Ill.Dec. 739, 645 N.E.2d 991, 996 (1995) (...
To continue reading
Request your trial
-
Monroe ex rel. C.B.D. v. McNairy Cnty., Tenn.
... ... v. Elder Pharms., Inc., 862 F.2d 597, 601 (6th Cir.1988). 9. Matsushita Elec ... ...
-
Motorola Mobility, Inc. v. Myriad France SAS
...software they produced. Both defendants filed motions to dismiss, one of which the Court granted in part. Motorola Mobility, Inc. v. Myriad France SAS, 850 F.Supp.2d 878 (N.D.Ill.2012). Motorola Mobility has since filed a third amended complaint. Both defendants have moved to dismiss the th......