Sprint Commc'ns, L.P. v. Cox Commc'ns, Inc.
| Decision Date | 14 September 2012 |
| Docket Number | Case No. 11–2683–JAR–KMH. |
| Citation | 896 F.Supp.2d 1049 |
| Parties | SPRINT COMMUNICATIONS, L.P., Plaintiff, v. COX COMMUNICATIONS, INC., Cox Communications Kansas, LLC, Cox Kansas Telcom, LLC, and, CoxCom, LLC., Defendants. |
| Court | U.S. District Court — District of Kansas |
OPINION TEXT STARTS HERE
Bart Alan Starr, Lynn C. Herndon, B. Trent Webb, Shook, Hardy & Bacon LLP, Kansas City, MO, for Plaintiff.
David S. Bloch, Winston & Strawn, San Francisco, CA, Jay F. Fowler, Foulston Siefkin LLP, Wichita, KS, Michael L. Brody, Winston & Strawn, LLP, Chicago, IL, for Defendants.
Before the Court is Defendant Cox Communications Inc.'s (“CCI”) Motion to Dismiss under Rule 12(b)(2) and 12(b)(3) for Lack of Personal Jurisdiction and Improper Venue (Doc. 31) and Defendants CCI, Cox Communications Kansas, LLC, Cox Kansas Telcom, LLC, and CoxCom, LLC's Motion to Transfer (Doc. 33). The Court granted Sprint's request to conduct jurisdictional discovery and the Court held an evidentiary hearing on August 9, 2012. The Court has considered the briefs, as well as the evidence submitted with the briefs and at the evidentiary hearing, and is prepared to rule. As described more fully below, the Court finds CCI is not subject to personal jurisdiction, but rather than grant the motion to dismiss, the Court grants Defendants' motion to transfer this case to the United States District Court for the District of Delaware.
I. Background
Plaintiff Sprint Communications Company L.P. (“Sprint”) is a telecommunications company incorporated in Delaware with its principal place of business in Overland Park, Kansas. Among its patent portfolio is a series of patents relating to voice-over-packet (“VoP”) telecommunications technology. Sprint alleges in the Amended Complaint that Defendants made, used, offered to sell, and/or sold (and continue to make, use, offer to sell, and/or sell) broadband and/or packet-based telephony products and services that infringe Sprint's Asserted Patents without Sprint's permission.
On April 16, 2012, Defendants filed a declaratory judgment action for noninfringement in the United States District Court for the District of Delaware, along with several other Cox entities not named in this suit. Sprint notified this Court that on July 9, 2012, it filed a motion to sever and transfer the declaratory judgment action from Delaware to this Court (Doc. 45). CCI contends that it is not amenable to suit in the District of Kansas and that any adjudication of patent infringement by the Cox companies must include CCI and therefore should be consolidated in one action in the District of Delaware, where all of the Cox entities, including CCI and the Cox subsidiaries not named in this action, are subject to suit.
It is uncontroverted that CCI is incorporated in Delaware and maintains its principal place of business in Atlanta, Georgia. All Defendants are incorporated in Delaware. CCI is a subsidiary of Cox Enterprises, Inc. and acts as a holding company, providing certain corporate services to the Cox subsidiaries in the communications industry. Cox Enterprises, Inc. is not a party to this action. CCI in turn owns Co–Defendant CoxCom but does not directly own or finance Co–Defendants Cox Kansas Telcom or Cox Communications Kansas. CCI is not registered to do business in Kansas and it does not maintain an office here. CCI is a separate legal entity from the other Defendants. CCI concedes that it hosts the cox.com website and that it owns all copyrights, trade and service marks, and patents for its affiliates. CCI also admits that it provides a marketing platform and administrative infrastructure to Cox Kansas Telcom and Cox Communications Kansas, providing “back office functions” for all of its subsidiaries.
Sprint alleges the following jurisdictional facts in the Amended Complaint to support its contention that CCI is subject to specific jurisdiction: (1) CCI makes, uses, or offers for sale infringing products and/or services in Kansas, including the “Cox Digital Telephone,” Cox's “SIP Trunking” service, and “other related telephony services”; (2) CCI receives revenues from the sale of telephony services in Kansas, including those services offered for sale by the Cox subsidiaries; (3) CCI is the registered owner of the “cox.com” domain, which hosts Cox websites that advertise, market, sell, and offer to sell the allegedly infringing products or services in Kansas; (4) one of the Kansas subsidiaries' websites includes a copyright notice identifying CCI as the owner of the copyrighted website; (5) current or former employees of CCI participated in the design, development, funding, testing, and use of Cox's nationwide telephone network; (6) CCI directs,controls, and issues Cox's nationwide telephony tariffing, including tariffs submitted by CCI and the Kansas subsidiaries to Kansas regulatory authorities; (7) CCI instructs users of its telephony services in Kansas on how to use the network in an infringing manner; (8) and CCI leads, manages, and controls the marketing and advertising efforts of the allegedly infringing products to Kansas residents.
Sprint has also submitted evidence on the briefs to support this Court's jurisdiction. First, Sprint submits the declaration of Bruce McLeod, who is the Executive Director of Service and Enterprise Architecture for CCI.1 His declaration was filed in support of a successful motion to transfer filed by CCI in a different patent infringement case in the Eastern District of Virginia.2 Like this case, Bear Creek alleged claims of patent infringement related to VoP enabling technologies. Cox moved to transfer to the Northern District of Georgia, citing its ties to Atlanta, Georgia and both sides' lack of ties to the Eastern District of Virginia. McLeod declared in support of that motion:
The Cox telephony system was designed and is managed on the national level. In each region of operation, Cox offers its telephony service to customers through local affiliates that operate in each local market Cox serves. Similar to a hub and spoke system, Cox operates as the hub in Atlanta, Georgia, connecting to all of its local affiliates, which are the spokes. All of the research, design, and development work to implement Cox's telephony system have been handled at the hub level in Atlanta, Georgia, not at the local level (such as Virginia). The local affiliates (the spokes) merely provide local marketing, sales, installation and repair work in each local market.3
McLeod also asserts that “Cox's Digital Telephone service was developed and designed by Cox employees located at Cox's headquarters in Atlanta, Georgia” 4 and that “Cox coordinates the nationwide sale, marketing, and financial operations of the Cox Digital Telephone service at its business offices in Atlanta, Georgia.” 5
Sprint alleges that CCI's website advertises and markets products and services to Kansas residents, allowing them to purchase products and services that include the Cox Digital Telephone.6 The Cox Customer Service Agreement, available through the cox.com website, identifies the parties to the agreement as the customer and “Cox,” which it defines as “Cox Communications and any Cox affiliate authorized to provide you with our services.”
Sprint has submitted three white papers regarding Cox's transition to a VoP architecture and its network configurations issued by “Cox Communications.” 7 They highlight Cox's centralized operations.
Plaintiff submitted evidence on the briefs and at the hearing that CCI owns equipment in Kansas that is used in Cox's telecommunications system. This evidence consists of Sedgwick County-created tax records.8 These records show that CCI pays personal property and real estate taxes in Kansas for Cox business property.9 The personal property tax statements are signed by CCI's tax manager in the “Owner” signature block.
Sprint also submits evidence that “Cox Communications” has employees in Kansas, including executives,10 that it posts jobs on its website to be performed in Kansas,11 and that CCI has applied to the Kansas Corporation Commission for tariffs.12
At the August 13th hearing, Robin Sangston, Esq., the Vice President and Chief Compliance Officer for CCI in Atlanta, Georgia, testified about the issues related to the motion to dismiss, including Cox's corporate organization and CCI's contacts with the State of Kansas.
Sangston testified that the Cox family consists of seventy separate franchises with CoxCom as the operating business. Cox made a deliberate decision to form “drop down subsidiaries” to hold the telecommunications licenses so that the parent corporations are not engaged in the day-to-day operation of cable business.
Cox Communications Kansas manages the network and has a shared services agreement with Cox Kansas Telcom to provide cable services. Accordingly, Sangston testified that CCI conducts no business in Kansas, either directly or through a d/b/a. CCI neither owns nor operates any telecommunications or cable systems. Sangston also testified that a certificate of public convenience and necessity is required in each state to authorize a provider to sell telephone services to the public. Typically, a franchise applies to the Secretary of State's office and must show that the entity is financially, technically, and managerially capable of providing that service. Sangston testified that Cox's certificate in Kansas was granted largely to have phone offering competitive to Southwestern Bell and Sprint. Kansas requires that Cox submit tariffs that lay out prices and terms of sale; they are filed under the name “Cox Communications Kansas, LLC.” Kansas Telcom has interconnection agreements with Sprint and Southwestern Bell to permit the traffic of Cox customers to ride over their networks.
Sangston testified that Cox Communications Kansas owns the equipment and property used in Kansas and that it...
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