Celgard, LLC v. SK Innovation Co., Ltd.

Filing 265

ORDER denying 148 Motion to Expedite; granting 156 Motion to Dismiss for Lack of Jurisdiction; affirming 236 Memorandum and Recommendations.; granting 238 Motion to Seal Document ; denying 251 Motion for Prelimi nary Injunction; denying 256 Motion to Stay. This action is dismissed without prejudice as to re-filing in a jurisdiction where personal jurisdiction of this defendant is found. Signed by District Judge Max O. Cogburn, Jr on 8/29/2014. (eef)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:13-cv-00254-MOC-DSC
CELGARD, LLC,

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Plaintiff(s),
Vs.
SK INNOVATION CO., LTD.,
Defendant(s).

ORDER

THIS MATTER is before the court on review of a Memorandum and
Recommendation issued in this matter. In the Memorandum and Recommendation, the
magistrate judge advised the parties of the right to file objections within 14 days, all in
accordance with 28, United States Code, Section 636(b)(1)(c). Objections have been
filed within the time allowed.
The Federal Magistrates Act of 1979, as amended, provides that “a district court
shall make a de novo determination of those portions of the report or specific proposed
findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1); Camby
v. Davis, 718 F.2d 198, 200 (4th Cir.1983). However, “when objections to strictly legal
issues are raised and no factual issues are challenged, de novo review of the record may
be dispensed with.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir.1982). Similarly, de
novo review is not required by the statute “when a party makes general or conclusory
objections that do not direct the court to a specific error in the magistrate judge’s
proposed findings and recommendations.” Id. Moreover, the statute does not on its face
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require any review at all of issues that are not the subject of an objection. Thomas v. Arn,
474 U.S. 140, 149 (1985); Camby v. Davis, 718 F.2d at 200. Nonetheless, a district judge
is responsible for the final determination and outcome of the case, and accordingly the
court has conducted a careful review of the magistrate judge’s recommendation.
In response to defendant’s Amended Motion to Dismiss or Transfer, plaintiff filed
a motion for jurisdictional discovery, which the magistrate judge allowed. According to
the magistrate judge, this limited discovery was “contentious” and occupies pleadings
numbered 73 through 215. M&R at 4. Notably, the magistrate judge concluded that
Jurisdictional discovery has revealed precious little, if any, contacts
between SKI and North Carolina. Contrary to Celgard’s earlier assertions,
there is no evidence that SKI offered its accused products to Saft. There is
no evidence that SKI has solicited any other sales in North Carolina and
none of SKI’s products have been found here.
M&R (#236) at 4.
After applying the appropriate legal standards provided by the Federal Circuit for
evaluating personal jurisdiction in like of the jurisdiction facts, the magistrate judge
concluded that
no basis exists for the exercise of personal jurisdiction over SKI in this
forum. There is no dispute that SKI is not subject to general personal
jurisdiction. Celgard argues that SKI may be haled into court here pursuant
to specific jurisdiction under a stream of commerce theory. Despite being
permitted to conduct extensive jurisdictional discovery, Celgard offers no
more than it did initially. Even viewing the record entirely in Celgard’s
favor, there is no indication that SKI has made a sale or even an offer of
sale in North Carolina. None of SKI’s products have been found in this
forum. Even assuming arguendo that an SKI component was found in a
product sold in this state, personal jurisdiction would not exist absent some
action by SKI directed specifically at North Carolina.
M&R at 7.
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Despite plaintiff’s 21 pages of Objections to the magistrate judge’s nine-page
decision (and a five-page Motion for Reconsideration (#240) supported by a seven-page
Brief in Support (#241), which the magistrate judge promptly handled), the court fully
concurs in the magistrate judge’s conclusion that there is no there is no indication that
SKI has made a sale or even an offer of sale in North Carolina and that SKI has not
directed any of its actions specifically at North Carolina. Further, the court also concurs
in the magistrate judge’s legal conclusion that SKI is not subject to national jurisdiction
under Rule 4(k)(2), Fed.R.Civ.P., as such provision is only applicable where the
defendant is not subject to jurisdiction in any state’s courts of general jurisdiction. Here,
SKI consents to be sued in the United States Court for the Southern District of New
York, where it has an employee engaged in marketing its products, and the magistrate
judge further determined that personal jurisdiction would also exist in California, where
SKI provided samples at substantial expense and held meetings with significant corporate
buyers. While recommending dismissal of this action for lack of personal jurisdiction, the
magistrate judge did not address the alternative motion for transfer of venue. The reason
for such demurer is obvious: defendant is subject to suit in two different jurisdictions. If
the court were to transfer the action to one jurisdiction over the other, it would be
selecting the forum, a task which is left to plaintiff to accomplish among those
jurisdictions where personal jurisdiction is properly found.
The court has carefully reviewed the M&R alongside the Objections. After such
careful review, the court determines that the recommendation is fully consistent with and
supported by current law. Further, the factual background and recitation of issues is
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supported by the applicable pleadings and the evidence that was presented to the
magistrate judge. Finally, the court has read the Objections and determined that those
objections simply seek to reargue points and evidence fully and properly considered by
the magistrate judge both in the M&R and upon reconsideration.
Rule 12(b)(2) provides for dismissal where the court lacks personal jurisdiction
over a particular defendant. Federal Circuit law governs personal jurisdiction in patent
cases. IMO Indus., Inc. v. SEIM S.R.L., 2007 WL 1651838, at *1 (W.D.N.C. June 4,
2007). Plaintiff has the burden of proving personal jurisdiction. Thomas v. Centennial
Commc'ns Corp., 2006 WL 6151153, at *2 (W.D.N.C. Dec. 20, 2006). Plaintiff must
show that the exercise of personal jurisdiction over the Defendant complies with the
forum state's long-arm statute and the constitutional requirements of due process.
Grober v. Mako Products, Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012), reh'g denied
(Sept. 14, 2012). Since North Carolina's long-arm statute extends jurisdiction to the
outer b oundaries of due process, the jurisdiction analysis merges into a single due
process inquiry. Thomas, 2006 WL 6151153, at *2. To be consistent with the
limitations of due process, a defendant must have “minimum contacts” with the forum
state “such that the maintenance of the suit does not offend traditional notions of fair
play and substantial justice.” International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945).

Minimum contacts may be established by showing “general” or “specific”

jurisdiction. Helicopteres Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414
(1984). A court may exercise general jurisdiction over a non-resident defendant if the

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defendant has contacts with the State that are so “continuous and systematic” as to render
them “essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v.
Brown, 131 S. Ct. 2846, 2851 (2011).
In the absence of general jurisdiction, a court may exercise specific jurisdiction
over the defendant in a cause of action that arises out of the defendant’s activities in the
forum state. In analyzing specific jurisdiction over a defendant, the Federal Circuit
considers whether: “(1) the defendant purposefully directed its activities at residents of
the forum state, (2) the claim arises out of or relates to the defendant’s activities with
the forum state, and (3) assertion of personal jurisdiction is reasonable and fair.”
Grober, 686 F.3d at 1346 (citation omitted). Plaintiff has the burden of making a prima
facie showing of specific jurisdiction by satisfying the first two elements. The burden
then shifts to defendant to show that such assertion of personal jurisdiction is not
reasonable and fair. Id.

A prima facie case of personal jurisdiction over an alien

defendant is made by meeting a “stream of commerce” standard. IMO Industries, Inc.,
2007 WL 1651838, at *1 (citing Beverly Hills Fan Co. v. Royal Sovereign Corp., 21
F.3d 1558, 1564-65 (Fed. Cir. 1994)). This standard requires that (1) the alien defendant
placed the accused product into the stream of commerce, (2) the alien defendant knew or
should have known the likely destination of the product, and (3) the alien defendant’s
conduct and connections with the forum state are such that it may reasonably foresee
being haled into court within that forum. Id.; see also Cree, Inc. v. Bridgelux, Inc., 2007
WL 3010532, at *6 (M.D.N.C. July 5, 2007) (declining to exercise personal jurisdiction
over a “component manufacturer [d]efendant . . . on the sole basis that an item is
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found [in the forum state] which incorporates [d]efendant’s product”); QR Spex, Inc. v.
Motorola, Inc., 507 F. Supp. 2d 650, 658 (E.D. Tex. 2007) (“[T]he Court finds that an
exercise of personal jurisdiction under the stream-of-commerce theory is only
appropriate where the allegedly infringing product reaches the forum.”). “A rational
belief that a component or product will eventually end up in a particular state—even
if that belief amounts to a substantial certainty—does not, by itself, amount to
purposeful conduct nor ‘manifest an intention to submit to the power of a sovereign.’”
Freescale Semiconductor, Inc., 2014 WL 1603665, at *6 (quoting J. McIntyre Mach.,
Ltd. v. Nicastro, 131 S. Ct. 2780, 2788 (2011)). The test for reasonableness is a “multifactored balancing test that weighs any burdens on the defendant against various
countervailing considerations, including the plaintiff's interest in a convenient forum
and the forum state's interest in resolving controversies flowing from in-state events.”
Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996). The
Federal Circuit considers five factors in determining whether jurisdiction would be
reasonable: “(1) the burden on the defendant; (2) the interests of the forum state; (3) the
plaintiff's interest in obtaining relief; (4) the interstate judicial system's interest in
obtaining the most efficient resolution of controversies; and (5) the interest of the
states in furthering their social policies.” Id.
Despite its earlier contentions made upon information and belief, plaintiff has
provided this court with no indication that SKI has ever made a sale or even an offer of
sale in North Carolina and none of SKI’s products have been found in this forum.
Assuming arguendo that plaintiff could point to a SKI component found in a product sold
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in this state at some point, personal jurisdiction would not exist absent some action by
SKI directed specifically at North Carolina. The fact that some of defendant’s batteries
may end up as a component in another manufacturer’s device is simply not enough, as
this court’s colleague found in Cree, Inc., supra. Based on such determinations, the court
will overrule the objections, fully affirm the Memorandum and Recommendation and
grant relief in accordance therewith.
ORDER
IT

IS,

THEREFORE,

ORDERED

that

the

Objections

(#246)

are

OVERRULED, the Memorandum and Recommendation (#236) is AFFIRMED, the
Amended Motion to Dismiss (#156) is GRANTED, and this action is dismissed without
prejudice as to refiling in a jurisdiction where personal jurisdiction of this defendant is
found.

As a matter of housekeeping, all other motions are denied without prejudice as
moot, with the exception of the Motion to Seal (#238) various memoranda as such
contain proprietary business information of little public interest. The court will not seal
this Order as the discussion of defendant’s contacts with the forum state, as well as its
contacts with corporations in other jurisdictions, has avoided specifics to preserve such
business secrets while providing the public with access to the court’s reasoning for
dismissal of this action, which is of some public interest.

Signed: August 29, 2014

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