EON Corp, IP Holdings, LLC v. AT&T Mobility LLC
Filing
157
OPINION AND ORDER re #39 Motion to Dismiss for Lack of Jurisdiction; re #77 Motion to Dismiss for Lack of Jurisdiction; and re #120 Report and Recommendation. The Court has made an independent examination of the entire record in this case, including plaintiff's objections to the R&R and defendants' opposition to those objections, and ADOPTS IN PART AND DENIES IN PART the magistrate judge's findings and recommendations as the opinion of this Court. Regarding ATT-M, the Court finds that specific jurisdiction is proper and therefore REJECTS ATT-M's motion to dismiss. Regarding ATT-I, the Court also finds that specific jurisdiction is proper and therefore DENIES ATT-I's motion to dismiss. Signed by Judge Francisco A. Besosa on 07/24/2012. (brc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
EON CORP., IP HOLDINGS, LLC,
Plaintiff,
v.
CIVIL NO. 11-1555 (FAB)
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.
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
1
Jared Killeen, a second-year student at Brooklyn Law School,
assisted in the preparation of this Opinion and Order.
Civil No. 11-1555 (FAB)
and REJECTS
IN
PART
2
the
findings
and
recommendations
of
the
magistrate judge.
I.
Procedural and Factual Background
On
June
liability
14,
2011,
company,
brought
(Docket Nos. 1 & 49.)
mobile technologies
plaintiff
a
Eon,
patent
a
suit
Texas-based
against
limited
defendants.
Eon alleges that it holds several patents to
used
or
sold
by defendant
ATT-I
and
its
subsidiaries, ATT-M and AT&T Mobility Puerto Rico, Inc. (“ATTMPR”).
that
by
(Docket No. 49 at ¶¶ 18-44.)
knowingly
infringing
upon
In short, plaintiff alleges
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.
2
Id. at p. 2.
Defendant ATT-MPR, whose primary place of business is Puerto
Rico, does not contest the Court’s exercise of personal
jurisdiction.
Civil No. 11-1555 (FAB)
3
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 ATTM’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
Civil No. 11-1555 (FAB)
4
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 ATTI submitted vociferous objections.
(Docket Nos. 127 & 128.)
First, ATT-M argued that the magistrate judge erred in finding
sufficient facts to support general jurisdiction.
at pp. 3-9.)
(Docket No. 128
For good measure, ATT-M also maintained that it is
not subject to specific jurisdiction in Puerto Rico, either.
Id.
at
the
pp.
9-14.
Like
ATT-M,
defendant
ATT-I
argued
that
magistrate judge erred in recommending that the Court exercise
Civil No. 11-1555 (FAB)
5
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
defendants
2
and
ATT-M
Nos. 130 & 131.)
plaintiff
3, 2012,
and
plaintiff
ATT-I’s
submitted
objections
to
responses
the
R&R.
to
(Docket
With regard to the objections filed by ATT-M,
maintained that
personal
(Docket No. 130 at pp. 6-14.)
jurisdiction
is justified.
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.
ATT-M
once
more
contested
the
(Docket Nos. 138 & 139.)
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.)
Civil No. 11-1555 (FAB)
6
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 Standards
A.
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.
See 28 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.
See 28 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 (1980)).
rule precludes further review.
22, 30-31 (1st Cir. 1992).
Failure to comply with this
See Davet v. Maccorone, 973 F.2d
In conducting its review, the court is
Civil No. 11-1555 (FAB)
7
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
1985);
245,
247
Pharmaceuticals,
(1st
Cir.
Inc.,
286
Alamo
F.Supp.2d
144,
Rodriguez
146
v.
Pfizer
(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 jurisdiction is challenged, it is
the
plaintiff
who
bears
the
burden
of
“establishing
jurisdiction exists over the nonresident defendant.”
that
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
Civil No. 11-1555 (FAB)
8
absence of an evidentiary hearing, a plaintiff need only make a
prima
facie
showing
jurisdiction.
that
defendants
are
subject
to
personal
Id. at 1349; Deprenyl Animal Health, Inc. v. Univ.
of Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed. Cir.
2002).
Furthermore,
the
Court
must
accept
as
true
the
uncontroverted allegations in the plaintiff’s complaint and resolve
all factual conflicts in the plaintiff’s favor.
C.
Id.
Personal Jurisdiction Standard
The Supreme Court has held that the Due Process Clause of
the Fourteenth Amendment limits the power of a court to render a
valid personal judgment against a nonresident defendant.
Goodyear
Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2853
(2011); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291
(1980).
Pursuant
to
Federal
Circuit
law,
the
Court’s
jurisdictional reach is further limited by the forum’s long-arm
statute.
LSI Indus., Inc. v. Hubbell Lighting, Inc., 232 F.3d
1369, 1371 (Fed. Cir. 2000).
Because the Puerto Rico long-arm
statute extends personal jurisdiction to the outer bounds permitted
by the Fourteenth Amendment, the exercise of jurisdiction by the
Court is limited only by judicial Due Process analysis.
Pritzker v. Yari, 42 F.3d 53, 60 (1st Cir. 1990).
Id.;
In its decision
in Int’l. Shoe Co. v. State of Wash., the Supreme Court held that
pursuant to the Fourteenth Amendment, courts may exercise personal
Civil No. 11-1555 (FAB)
9
jurisdiction over an out-of-state defendant if the defendant has
“certain
minimum
contacts
with
[the
State]
such
that
the
maintenance of the suit does not offend traditional notions of fair
play and substantial justice.”
quotations omitted).
326 U.S. 310, 316 (1945) (internal
Since then, Int’l. Shoe has provided the
basic template for personal jurisdiction analysis.
Following Int’l. Shoe, however, the Supreme Court has
further sharpened its analysis by distinguishing between two kinds
of personal jurisdiction:
general and specific.
See Goodyear
Dunlop, 131 S.Ct. at 2854; Helicopteros Nacionales de Colombia,
S.A. v. Hall, 466 U.S. 408, 414 (1984); Perkins v. Benguet Consol.
Mining
Co.,
342
U.S.
437
(1952).
On
the
whole,
“specific
jurisdiction has become the centerpiece of modern jurisdiction
theory, while general jurisdiction plays a reduced role.” Goodyear
Dunlop, 131 S.Ct. at 2853 (quoting Twitchell, The Myth of General
Jurisdiction, 101 Harv.L.Rev. 610, 628 (1988)). First, a court may
assert general jurisdiction over an out-of-state corporation only
when its contacts with the forum are so “continuous and systematic”
as to render it essentially at home in the state.
Goodyear Dunlop,
131 S.Ct. at 2851 (quoting Int’l. Shoe, 326 U.S. at 317).
Indeed,
in matters of general jurisdiction the corporation’s activities in
the forum are so continuous and substantial as to “justify suit
against it on causes of action arising from dealings entirely
Civil No. 11-1555 (FAB)
10
distinct from those activities.” Id. at 2853 (quoting Int’l. Shoe,
326 U.S. at 318). Accordingly, it is a stringent standard by which
a court evaluates the propriety of general jurisdiction, and a
standard that is rarely met.
Harlow v. Children’s Hosp., 432 F.3d
50, 64 (1st Cir. 2005); see Perkins, 342 U.S. 437 (the one instance
in which the Supreme Court has found general jurisdiction over a
nonresident corporation to be warranted).
Specific jurisdiction, on the other hand, is proper when
there exists a relationship between the forum and the underlying
controversy.
Goodyear Dunlop, 131 S.Ct. at 2851.
When the
contacts between a corporation and the forum are fairly limited, as
is often the case, the Court may inquire whether there is “some act
by
which
the
defendant
purposefully
avail[ed]
itself
of
the
privilege of conducting activities within the forum State, thus
invoking the benefits and protections of its laws.”
Denckla, 357 U.S. 235, 245 (1958).
Hanson v.
See World-Wide Volkswagen, 444
U.S. at 287; Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75
(1985); Asahi Metal Indus. Co. v. Super. Ct. of Cal., Solano Cty.,
480 U.S. 102, 105 (1987).
Thus, a court may assert specific
jurisdiction over a nonresident corporation “where an alleged
injury arises out of or relates to actions by the defendant
[itself] that are purposefully directed toward forum residents, and
where
jurisdiction
would
not
otherwise
offend
fair
play
and
Civil No. 11-1555 (FAB)
substantial justice.”
11
Burger King Corp., 471 U.S. at 463.
When a
defendant’s contacts with the forum are sufficient, jurisdiction
may not be avoided simply because the defendant did not physically
enter the forum.
Id.
III. Personal Jurisdiction Analysis
A.
ATT-M
Defendant ATT-M objects to the magistrate judge’s finding
that there are sufficient facts to support general jurisdiction.
(Docket No. 120 at p. 10.)
ATT-M protests that plaintiff has
failed to demonstrate the existence of continuous and systematic
contacts between ATT-M and Puerto Rico that render the former at
home
here.
Id.
Indeed,
as
ATT-M
points
jurisdiction standard is difficult to meet.
out,
the
general
Campbell Pet Co. v.
Miale, 542 F.3d 879, 882 (Fed. Cir. 2008); Ubid, Inc. v. GoDaddy
Group, Inc., 623 F.3d 421, 426 (7th Cir. 2010).
Thus, for the
reasons
that
set
forth
below,
the
Court
concedes
general
jurisdiction is inappropriate in this case, but nonetheless finds
sufficient cause to exercise specific jurisdiction and to deny ATTM’s
motion
to
dismiss.
We
consider
in
turn
both
forms
of
jurisdiction and their appropriateness to this case.
i.
General Jurisdiction
ATT-M
objects
to
the
magistrate
judge’s
determination that this Court is entitled to exercise general
Civil No. 11-1555 (FAB)
jurisdiction over it.
12
Id.
ATT-M’s objection rings true even
despite three compelling instances of substantial business contacts
between ATT-M and Puerto Rico.
First, and most intriguing, is a
contract--or “wireless customer agreement” (“WCA”)--between ATT-M
and Puerto Rico resident Juan R. Rivera-Font (“Rivera”).
No. 54-2.)
(Docket
The WCA includes a balance statement for wireless
service, instructions to send payment to ATT-M’s corporate address
in Atlanta, GA, and an arbitration agreement invoking Puerto Rico
law.
Id.
According
to
the
magistrate
judge,
WCAs
define
relationships between ATT-M and approximately 440,000 residents of
Puerto Rico3 by which ATT-M purposefully engages those residents
within the forum.4
(Docket No. 120 at p. 4.)
Moreover, the
magistrate judge found that by contracting with residents of Puerto
Rico, ATT-M initiates delivery of products and services into the
3
Plaintiff also submitted an affidavit by Daniel Scardino, a
Texas lawyer familiar with the 2009 merger between AT&T and
Centennial Communications Corp. (“Centennial”) that eventually led
to the creation of ATT-MPR. Scardino states that at the time of
its conception, ATTM-PR had contracts with some 440,000 customers
in Puerto Rico. (Docket No. 54-4 at ¶ 7.) It follows, then, that
ATT-M is party to each of these customers’ WCAs.
4
In its reply in support of its motion to dismiss, ATT-M
avers in regard to the WCA that it is merely “acting on behalf of
its FCC-licensed affiliates doing business as AT&T,” and that only
ATT-MPR provides service to AT&T’s wireless customers. (Docket
No. 73 at p. 3.) No doubt the magistrate judge makes short work of
ATT-M’s rather sophistic protestation, noting that, even if this is
so, ATT-M still very much acts in the Commonwealth of Puerto Rico.
Id. at p. 5.
Civil No. 11-1555 (FAB)
13
Puerto Rico “stream of commerce.”
Id. at p. 7; see Asahi Metal,
480 U.S. 102; World-Wide Volkswagen, 444 U.S. at 298. Second among
its apparent contacts with Puerto Rico is ATT-M’s offer to provide
stateside customers with coverage in the Commonwealth so that “when
an ATT-M customer flies from New York to San Juan, his or her
service continues with no complexity or confusion.”
see Docket No. 54-2 at pp. 6-7.
Id. at p. 10;
And third, the magistrate judge
found that contacts arise when the ATT-M wireless page of the AT&T
Web site specifically targets customers in Puerto Rico.
Id.
The magistrate judge noted that no single piece of
this evidence would support the exercise of general jurisdiction.
Id. at p. 11.
But the magistrate judge found that the WCAs, the
offer of stateside service, and the Web site together demonstrate
ATT-M’s continuous and systematic business contacts within the
forum state and warrant the exercise of general jurisdiction.
at p. 12.
We disagree.
Id.
The Court of Appeals for the Federal
Circuit has cautioned that “the degree of contact with the forum
that is necessary to establish general jurisdiction is quite high.”
Campbell Pet Co., 542 F.3d at 882.
Even considering the combined
evidence of business affiliations between ATT-M and Puerto Rico, we
find that plaintiff fails to meet the demanding standard.
Court will examine each piece of evidence in turn.
The
Civil No. 11-1555 (FAB)
14
First, we consider the WCAs between ATT-M and the
440,000 residents of Puerto Rico. In her R&R, the magistrate judge
stated that the “sheer number of contracts that ATT-M has entered
into
in
Puerto
Rico
is,
we
think,
‘continuous and systematic contacts.’”
sufficient
to
constitute
(Docket No. 120 at p. 10.)
ATT-M argues that, even assuming it has WCAs with 440,000 residents
of Puerto Rico, “neither the number of contracts nor the revenue
received therefrom [sic] is sufficient to show that [ATT-M] is
essentially at home in Puerto Rico for jurisdictional purposes.”
(Docket No. 128 at p. 4.)
The Court agrees with ATT-M.
Typically,
de minimis purchase or sales transactions between a nonresident
defendant and the forum state are insufficient to establish general
jurisdiction.
See Helicopteros Nacionales, 466 U.S. at 416-18
(finding that the regular purchase of helicopters, equipment, and
training services for substantial sums was not enough to warrant
the
assertion
of
general
jurisdiction
over
a
nonresident
corporation); Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com. de
Equip. Medico, 563 F.3d 1285, 1291 (Fed. Cir. 2009) (finding that
limited sales and purchases between defendant and forum did not
establish general jurisdiction); Campbell Pet Co., 542 F.3d at 884
(finding that two percent of defendant’s sales in forum state was
insufficient to warrant general jurisdiction); Ubid, Inc., 623 F.3d
at 426 (holding that the marketing and sale of registrations for
Civil No. 11-1555 (FAB)
15
Internet domain names, as well as numerous contracts with customers
in the forum, did not justify the exercise of general jurisdiction
over a nonresident corporation).
While the considerable revenue
that ATT-M must derive from these contracts is likely greater than
that found in Synthes, Campbell Pet Co., or uBid,5 the general
amount of commercial activity conducted between ATT-M and Puerto
Rico is no more than what is present in Helicopteros Nacionales.
Measured against that case, the facts here are unimpressive.
Accordingly,
residents,
no
sales
contracts
matter
their
between
multitude,
ATT-M
do
and
not
Puerto
constitute
Rico
the
continuous and systematic contacts required to warrant general
jurisdiction.
To bolster her analysis, the magistrate judge evoked
the “stream-of-commerce”
theory, a
mainstay
of
jurisdictional
jurisprudence since the Supreme Court’s decision in Asahi Metal,
480 U.S. 102.
According to the R&R, the contracts between ATT-M
and 440,000 residents of Puerto Rico facilitate the delivery of
5
When its contracts in the Commonwealth are viewed as a
percentage of its total revenue, ATT-M may be said to conduct less
business in Puerto Rico than the Campbell Pet Co. defendants
conducted in the state of Washington. In Campbell Pet Co., general
jurisdiction was deemed improper when defendants made two percent
of their sales in the forum state. Considering that the 440,000
WCAs in Puerto Rico comprise not even a tenth of a percent of ATTM’s total 78 million wireless contracts, it becomes clear that ATTM’s business in Puerto Rico is relatively insubstantial.
(See
Docket No 83-2 at p. 4.)
Civil No. 11-1555 (FAB)
products
or
services
16
“into
the
stream
of
commerce
with
the
expectation that they will be purchased by consumers in the forum
state.”
omitted.)
(Docket No. 120 at p. 7) (internal quotation marks
In
this
way,
the
magistrate
judge
finds,
ATT-M
purposefully directs its actions toward residents of Puerto Rico.
Id. (citing Asahi Metal, 480 U.S. at 107.)
No matter how availing
this argument may be, however, the magistrate court’s stream-ofcommerce
analysis
“elides
the
essential
specific and general jurisdiction.
at 2849.
difference”
between
Goodyear Dunlop, 131 S.Ct.
The flow of a defendant’s products or services into the
forum may bolster an affiliation relevant to specific jurisdiction,
“but ties serving to bolster the exercise of specific jurisdiction
do not warrant a determination that, based on those ties, the forum
has general jurisdiction over a defendant.”
Id.
This is because
a corporation’s continuous activity within a forum is not enough to
support the notion that the corporation be amenable to suits
unrelated to that activity.
at 318.)
Id. (citing Int’l. Shoe, 326 U.S.
Therefore, the magistrate judge errs in applying a
stream-of-commerce theory to her general jurisdiction analysis.
Next,
we
consider
the
fact
that
ATT-M
offers
stateside customers wireless coverage in Puerto Rico. ATT-M denies
that
its
offer
Commonwealth.
constitutes
a
business
(Docket No. 128 at p. 6.)
contact
with
the
Rather, ATT-M argues that
Civil No. 11-1555 (FAB)
17
its “offer” merely assures stateside customers that they will
receive services in Puerto Rico provided by ATT-MPR, an entirely
separate corporate entity.6
Id.
Without peering any closer at
ATT-M’s relationship with ATT-MPR, the Court finds unpersuasive the
magistrate judge’s finding that ATT-M’s offer to provide stateside
customers with service in Puerto constitutes a contact with the
forum.
While ATT-M’s reassurances that stateside customers will
receive coverage in Puerto Rico clearly underscores ATT-M’s general
provision of service there, such statements are undeniably directed
to stateside customers, and not to residents of the Commonwealth.
By offering uniform service to stateside customers, ATT-M is not
purposefully reaching out to residents of Puerto Rico.
It is
enough to say that ATT-M’s offer to provide non-residents of Puerto
Rico with wireless coverage in the Commonwealth reveals only what
is already evident: that ATT-M is directly or indirectly concerned
with providing AT&T’s wireless service in Puerto Rico.
This fact
has been made quite clear by ATT-M’s undisputed contracts with
6
Nonetheless, by passing the buck to ATT-MPR, ATT-M
inadvertently concedes that it does in fact do business with a
corporate entity in Puerto Rico. (“Thus, any offer that [ATT-M]
may make to stateside customers for coverage in Puerto Rico can
arise only from a business arrangement between [ATT-M] and [ATTMPR] that ensures that ATT-MPR will provide wireless services in
Puerto Rico to stateside customers.” (Docket No. 128 at p. 10.))
That admission is certainly relevant when performing the specific
jurisdiction analysis, even though it may not be relevant in a
general jurisdiction analysis.
Civil No. 11-1555 (FAB)
440,000
residents
of
18
Puerto
Rico;
that
ATT-M
offers
similar
services to other customers visiting Puerto Rico sheds no new light
on the matter.
Finally,
we
consider
ATT-M’s
objection
to
the
magistrate judge’s contention that ATT-M, via the AT&T Web site,
specifically targets Commonwealth customers.7
p. 10.)
(Docket No. 120 at
Citing Campbell Pet Co., the magistrate judge noted that
an interactive Web site that targets goods or services at residents
of a forum may support the exercise of personal jurisdiction.
Campbell Pet Co., 42 F.3d at 884.8
Id;
That ATT-M acts via the AT&T
Web site is clear enough from the wireless service page, which
7
ATT-M denies that it uses the site to sell goods and
services in Puerto Rico, pointing out that the site is “generally
available to anyone who has access to the Internet.”
(Docket
No. 128 at p. 10.)
8
Contrary to the magistrate judge’s intimation, however, the
Court in Campbell Pet Co. found that the defendant’s Web site did
not target residents of the forum, and therefore that the Web
site’s activity was insufficient to give rise to general
jurisdiction. 42 F.3d at 884. In Campbell Pet Co., the Court held
that a Web site fails to establish general jurisdiction if it is
not specifically directed at the forum state, “but instead is
available to all customers throughout the country who have access
to the Internet.”
Id.
Moreover, “[T]he ability of [forum]
residents to access defendants’ [Web sites] . . . does not by
itself show any persistent course of conduct by the defendants in
the forum.” Id. (quoting Trintec Indus., Inc. v. Pedre Promotional
Prod., Inc., 395 F.3d 1275 (Fed. Cir. 2005)).
Civil No. 11-1555 (FAB)
19
states, “Service provided by AT&T Mobility.”9
(Docket Nos. 120 at
p. 10; 54-5). But whether the site interactively targets residents
of Puerto Rico, and whether this warrants the exercise of general
jurisdiction, are separate questions altogether.
before
the
Court,
then,
is
whether
the
The first matter
AT&T
Web
site
is
sufficiently interactive to target customers in Puerto Rico.
We
find that it is.
There
exists
no
reliable
standard
by
which
to
measure the “interactivity” of a commercial Web site; nor is there
an easy way to ascertain whether a site targets a particular forum.
Nonetheless, a number of circuit and district court cases provide
some useful instruction.
In general, these cases have found that
interactive targeting exists where a defendant is clearly doing
business
through
its
Web
site
in
the
forum
state.
See
CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1075 (9th
9
ATT-M denies that the appearance of the “AT&T Mobility”
brand on the AT&T Web site proves that ATT-M uses the Web site to
sell goods and services to residents of Puerto Rico.
(Docket
No. 128 at p. 10.) ATT-M also contends that the “AT&T Mobility”
brand is used by many AT&T-branded companies, including ATT-MPR,
which unlike ATT-M is the only true provider of goods and services
in the Commonwealth.
Id. at pp. 6-7.
But ATT-M declines to
acknowledge the fact that the Web site makes available WCAs to
which ATT-M is a party, and, moreover, that “AT&T Mobility” is
identified on the Web site as a service provider according to the
coverage maps for Puerto Rico. (Docket No. 130 at p. 13.) Given
the clear and abundant evidence that ATT-M is concerned with
providing wireless service to customers in Puerto Rico via WCAs,
the Court finds defendant’s argument unavailing.
Civil No. 11-1555 (FAB)
20
Cir. 2011) (holding that continuous commerce via a Web site may
justify personal jurisdiction); Toys “R” Us, Inc. v. Step Two,
S.A., 318 F.3d 446, 451-55 (3rd Cir. 2003) (holding that the Web
site must be “designed or intended” to reach the forum state); ALS
Scan v. Digital Serv. Consultants, Inc., 293 F.3d 707, 714 (4th
Cir. 2002) (holding that the Web site must show manifested intent
of engaging in business or other interactions in the forum); Neogen
Corp. v. Neo Gen. Screening, Inc., 282 F.3d 883, 890 (6th Cir.
2002)
(holding
that
the
purposeful
availment
requirement
is
satisfied if the Web site is interactive to a degree that reveals
specifically intended interaction with residents of the forum);
CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1264-66 (6th Cir.
1996)
(holding
that
the
Web
site’s
interactivity
reflects
specifically intended interaction with residents of the forum);
Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1124
(W.D.Pa. 1997) (requiring that the defendant is clearly doing
business through it Web site and the claim relates to or arises out
of use of the site).
In light of these cases, there remains little doubt
that the AT&T Web site is “designed and intended” to reach the
forum of Puerto Rico, Toys “R” Us, 318 F.3d at 454, and that its
interface reflects specifically intended interaction with forum
residents.
CompuServe, 89 F.3d at 1264-66.
First, the Web site is
Civil No. 11-1555 (FAB)
21
highly interactive.
(Docket Nos. 54-5; 130 at p. 12.)
example,
a
it
allows
resident
of
Puerto
Rico
to
For
enter
electronically into a WCA; it also permits customers to order
products and services for delivery in the Commonwealth.
Id.
Moreover, the Web site appears to target residents of Puerto Rico
specially.
The site makes reference to a resolution process
specific to Puerto Rico and invokes Puerto Rico law.
Id.
It also
specifically lists the ATT-M service plans available in Puerto Rico
and goes so far as to modify the mailing-address form to include
“urbanizations” and “residenciales,” a type of address peculiar to
Puerto Rico (Docket Nos. 83-11; 130 at p. 12.)
Though the Web site
is “generally available to anyone who has access to the Internet,”
(Docket No. 128 at p. 12), it is more than just a passive site, and
encourages interactive commercial activities with its users.
The second, and more difficult, question is whether
the Web site’s interactivity warrants general jurisdiction over
ATT-M.
The Court finds that it does not.
conclusion,
we
bear
in
mind
the
sobering
In reaching this
ramifications
of
exercising general jurisdiction over a nonresident corporation
based on its Web site. As the Ninth Circuit Court of Appeals notes,
the standard for general jurisdiction “is an exacting standard, as
it should be, because a finding of general jurisdiction permits a
defendant to be haled into court in the forum state to answer for
Civil No. 11-1555 (FAB)
22
any of its activities anywhere in the world.” CollegeSource, Inc.,
653 F.3d at 1074 (quoting Schwarzenegger v. Fred Martin Motor Co.,
374 F.3d 797, 801 (9th Cir. 2004) (internal quotations omitted).
These considerations are all the more urgent when dealing with a
commercial Web site.
Cossaboon v. Maine Med. Ctr., 600 F.3d 25,
35-36 (1st Cir. 2010); CollegeSource, Inc., 653 F.3d at 1075.
Indeed, interactive Web sites where a user can exchange information
with a corporation are extremely common.
CollegeSource, Inc., 653
F.3d at 1075 (citing Zippo Mfg. Co., 952 F.Supp. at 1124).
If the
activities of an interactive commercial Web site were enough to
support
general
jurisdiction
in
every
forum
in
which
users
interacted with the Web site, we would soon face the inevitable
demise of all restrictions on the personal jurisdiction of the
courts.
Id. at pp. 1075-76 (quoting World-Wide Volkswagen, 444
U.S. at 286) (internal quotations omitted).
See also Dagesse v.
Plant Hotel N.V., 113 F.Supp.2d 211, 217 (D.N.H. 2000); Millennium
Enter. v. Millennium Music, 33 F.Supp.2d 907, 910 (D.Or. 1999).
Therefore, case law concerning interactive Web sites has tended to
set the jurisdictional bar quite high.
See Campbell Pet Co., 42
F.3d at 884 (holding Internet sales of $14,000 insufficient for
general jurisdiction); Revell v. Lidov, 317 F.3d 467, 471 (5th Cir.
2002) (holding subscription sales to be insufficient for general
jurisdiction); Bird v. Parsons, 289 F.3d 865, 873-74 (6th Cir.
Civil No. 11-1555 (FAB)
2002)
(holding
that
23
4,666
Internet
domain-name
registrations
insufficient for general jurisdiction). We find no reason to stray
from established precedent: ATT-M’s activities, conducted via the
AT&T Web site, are insufficient to warrant general jurisdiction.
We note again the magistrate judge’s admission that
alone, no single piece of this evidence would support the exercise
of general jurisdiction–-but that together, they are sufficiently
compelling.
(Docket No. 120 at p. 11.)
Again, we must disagree.
Even when considered together, the evidence enumerated above is
insufficient to meet the stringent general jurisdiction standard.
In support of this assertion, we need look only to the canonical
decision in Perkins, in which the Supreme Court found reason to
grant
342
general
U.S.
conducted
437.
a
jurisdiction
In
Perkins,
“continuous
business in Ohio.
and
over
a
a
nonresident
Philippine
systematic”
Id. at 438.
corporation.
mining
part
of
corporation
its
general
The corporation’s president
maintained his office in the state, kept the company’s files in
that office, and supervised work plans from there.
Id. at 447.
Moreover, the corporation carried on continuous activities in the
forum
state,
including
“directors’
meetings,
business
correspondence, banking, stock transfers, payment of salaries,
purchasing of machinery, etc. . . .”
Id. at 445.
against Perkins, the facts in this case pale.
When held up
As ATT-M avers, and
Civil No. 11-1555 (FAB)
24
plaintiff fails to contest, ATT-M has no employees in the forum,
rents no offices and owns no property here, pays no taxes in Puerto
Rico, and is not registered to do business in the Commonwealth.
(Docket No. 138 at p. 4.)
Granted, the world today is not the
world of Perkins; a modern telecommunications corporation may
easily establish affiliations within a forum state without ever
setting up an office there.
While this may seem at first glance
like good reason to exercise general jurisdiction over ATT-M, such
an approach would render defendants susceptible to suit in any
forum
no
matter
how
unrelated
corporation’s activities there.
the
claim
might
be
to
the
Simply put, a loose exercise of
general jurisdiction would act to eviscerate the jurisdiction
requirement itself.
Therefore, the Court REJECTS the magistrate
judge’s findings that general jurisdiction may be appropriately
exercised over ATT-M.
ii.
Specific Jurisdiction
ATT-M also contends that it is not subject to
specific jurisdiction.
pp. 8-14.)
three-prong
(Docket Nos. 128 at pp. 13-18; 139 at
The Court of Appeals for the Federal Circuit applies a
test
when
determining
whether
the
application
of
specific jurisdiction satisfies the requirements of Due Process.
Breckenridge Pharm., Inc. v. Metabolite Lab., Inc., 444 F.3d 1356,
1362-63 (Fed. Cir. 2006);
Akro Corp., 45 F.3d at 1545.
The Court
Civil No. 11-1555 (FAB)
must examine whether:
25
(1) the defendant purposefully directed its
activities at residents of the forum; (2) the claim arises out of,
or relates to, those activities; and (3) assertion of personal
jurisdiction is reasonable and fair.
Id.
We address each prong in
turn, relying upon the relevant analysis performed above, and
conclude that ATT-M is properly subject to specific jurisdiction.
a.
Purposefully Directed Activity
ATT-M objects that it has not purposefully
directed any activity toward residents of Puerto Rico.
No. 128 at p. 13.)
(Docket
While admitting that it has entered into WCAs
with Commonwealth customers, ATT-M contends that a contract between
a resident and nonresident alone is not enough to show that a
defendant deliberately engaged in activities in the state.
Id.;
see Burger King Corp., 471 U.S. at 478. Instead, ATT-M argues that
the
terms
of
the
agreement
must
also
create
a
“continuing
obligation” between the defendant and the resident. Id. at pp. 1417; see Burger King Corp., 471 U.S. at 475-76.
Unsurprisingly,
ATT-M disclaims any continuing obligation to its customers in
Puerto Rico, averring that it is ATT-MPR, and not ATT-M, that
provides products and services to AT&T subscribers.
Id. at p. 14.
In the same breath, ATT-M argues that in no way does it deliver any
goods or services into the stream of commerce, and that at most
ATT-M and ATT-MPR have an agreement by which ATT-MPR provides “its
Civil No. 11-1555 (FAB)
26
own services” to customers in the Commonwealth.
Id. at pp. 14-16.
For
ATT-M’s
the
reasons
set
forth
below,
we
find
To
begin
with,
ATT-M
argument
unsatisfactory.
strains
too
hard
in
asserting that a continuing obligation is required to show directed
activity.
This assertion arises from an intentional misreading of
Burger King Corp. that conveniently lops off the head of the
relevant sentence
while
keeping
only
its
tail;
in
full,
the
sentence reads:
Thus where the defendant deliberately has engaged in
significant activities within the State or has created
continuing obligations between himself and the forum, he
manifestly has availed himself of the privilege of
conducting business there, and . . . it is presumptively
not unreasonable to require him to submit to the burdens
of litigation in that forum . . . . 471 U.S. at 475-76
(internal quotations and citations omitted; emphasis
added).
The disjunctive nature of the entire sentence indicates that a
defendant may either deliberately engage in significant activities
or create continuing obligations.
We find that ATT-M has in fact
done both, though this amounts to a myopic reading of the text.
If
we are to stay true to the analysis in Burger King Corp., we must
adopt the broader and “highly realistic” approach that considers
all factors in the relationship between a nonresident and the forum
state.
Id. at 479.
Here, we find three primary factors in
determining whether ATT-M purposefully directed activity toward the
Civil No. 11-1555 (FAB)
forum:
27
ATT-M’s contracts with residents of Puerto Rico, its
relationship with ATT-MPR, and the activity of the AT&T Web site
directed at customers living in the Commonwealth.
First, ATT-M undisputedly enters into numerous
contracts with residents of Puerto Rico.
this number somewhere around 440,000.
54-4 at ¶ 7.)
The magistrate judge put
(Docket Nos. 120 at p. 4;
According to the sworn statement submitted by Neal
S. Berinhout, associate general counsel for ATT-M, “all customers
must agree to a WCA that sets forth or incorporates by reference
the terms and conditions of service” as a condition of receiving
wireless
service
from
ATT-M.
(Docket
No.
130-2
at
p.
5.)
Moreover, customers are directed to make payment for those services
to ATT-M’s headquarters in Atlanta, GA.
(Docket No. 54-2 at
p. 11.)
Though Burger King Corp. holds that a single contract
between
a
nonresident
defendant
and
a
resident
does
not
automatically establish minimum contacts, 471 U.S. at 478, surely
440,000 contracts, established over the course of several years, is
sufficient to do so.
Additionally, ATT-M does indeed demonstrate
continuing obligations to its contracted customers in Puerto Rico
by including in its WCA a Puerto Rico-specific arbitration clause
and, moreover, by providing ongoing customer service to resolve
concerns and complaints. (Docket 130-2 at pp. 2-3; see Burger King
Corp., 471 U.S. at 482 (holding that a choice-of-law provision may
Civil No. 11-1555 (FAB)
28
be considered as showing deliberate affiliation with a forum
state)).
Given the multitude of the WCAs between ATT-M and
residents of Puerto Rico, and the ongoing obligations that arise
from these contracts, the nature of the relationship between ATT-M
and the forum “can in no sense be viewed as random, fortuitous, or
attenuated.”
Id. at 480 (citing Hanson, 357 U.S. at 253; Keeton v.
Hustler Magazine, Inc., 465 U.S. 770, 774 (1984); World-Wide
Volkswagen Corp., 444 U.S. at 299).
Second, ATT-M clearly maintains a business
relationship with ATT-MPR, an AT&T subsidiary with its principal
place of business in Puerto Rico.
pp. 15-16.)
(Docket Nos. 49 at ¶ 12; 128 at
ATT-M is quick to point out that this relationship is
“undefined,” but it cannot hide the fact that it comprises some
sort of “agreement” with ATT-MPR.
(Docket No. 128 at pp. 15-16.)
For instance, ATT-M states that “any offer that [ATT-M] may make to
stateside customers for coverage in Puerto Rico can arise only from
a business arrangement between [ATT-M] and [ATT-MPR] that ensures
Civil No. 11-1555 (FAB)
29
that [ATT-MPR] will provide wireless services in Puerto Rico to
stateside customers.”10
Id. at p. 10.
ATT-M relies on Red Wing Shoe Co. v. HockersonHalberstadt,
Inc.
to
argue
that
for
the
purpose
of
personal
jurisdiction, doing business with a company that does business in
a state is not the same as doing business in that state.
1355, 1361 (Fed. Cir. 1998).
148 F.3d
This is undoubtedly true in the
context of Red Wing Shoe Co., but given the facts of this case,
that an argument is unavailing.
In Red Wing Shoe Co., the court
found insufficient contacts between the defendant and the forum
state when a number of the defendant’s licensees sold products in
that state.
Id. at 1357-58.
None of the licensees, however, was
incorporated in the forum or had its principal place of business
there.
Id. at 1358.
Moreover, the defendant had no dealings with
its licensees in that state.
Id.
This case, however, may be
easily distinguished from Red Wing Shoe Co.
10
In contrast to Red
There is some plangent dispute about whether ATT-M’s
relationship with ATT-MPR may be properly analyzed pursuant to the
“stream of commerce” theory. (See Docket Nos. 120 at p. 7; 128 at
p. 15.) We decline to address this matter largely because it is
unnecessary to do so.
For the purpose of establishing minimum
contacts, it is enough that ATT-M contracts with residents of
Puerto Rico, maintains a substantial business relationship with
ATT-MPR in the forum, and conducts business via the AT&T Web site
specifically targeted at customers in the Commonwealth; thus, we
need not determine whether ATT-MPR acts as a distribution channel
for goods or services produced by ATT-M.
Civil No. 11-1555 (FAB)
30
Wing Shoe Co., ATT-M’s relationship with ATT-MPR is predicated on
ATT-MPR’s activity in the forum, where ATT-MPR has it principal
place of business.
Indeed, according to ATT-M, its business
arrangement with ATT-MPR ensures that ATT-MPR will provide wireless
services in Puerto Rico.
(Docket No. 128 at p. 10.)
Several
courts have found that a meaningful agreement between resident and
nonresident companies in the forum state is enough to warrant
personal jurisdiction.
See Cognex Corp. v. Lemelsen Med., Educ. &
Research Found., Ltd. P’ship., 67 F.Supp.2d 5, 9 (D.Mass. 1999)
(holding
that
personal
jurisdiction
is
proper
where
business
agreements constitute clear contacts with the forum);11 Abbott Labs.
v. Mylan Pharms., Inc., 05-CV-6561, 2006 WL 850916 (N.D. Ill.,
Mar. 28, 2006) (holding that jurisdiction is proper where defendant
maintains business agreements with seven companies with their
11
ATT-M argues that Cognex Corp. is inapplicable because the
court dismissed the case for lack of personal jurisdiction after
finding the agreements did not constitute minimum contacts in the
forum. (Docket No. 139 at p. 11.) That statement is not correct.
In reality, the court found that “[i]n the instant case, unlike in
Red Wing, it is clear that [defendant’s] non-exclusive licencing
agreements with Massachusetts companies constitute contacts with
the forum.” Cognex Corp., 67 F.Supp.2d at 9. Rather, the court
dismissed the claim not because contacts were lacking, but because
the claim did not arise from or relate to those contacts pursuant
to the second prong of the specific jurisdiction test. Id. (“It
is unclear, however, whether the present action arises out of or
relates to those contacts . . . .
As such, Cognex’s cause of
action cannot be said to arise out of or relate to [defendant]’s
licenses.”)
Civil No. 11-1555 (FAB)
31
principal place of business in the forum).
Thus, we find that the
agreement between ATT-M and ATT-MPR, which specifically concerns
substantial business in the forum state, shows purposeful activity
on the part of ATT-M.
Finally, ATT-M targets residents of Puerto Rico
via the AT&T Web site.
As we have discussed above, the Web site is
clearly “designed and intended” to reach the forum of Puerto Rico,
Toys
“R”
Us,
318
F.3d
at
454,
and
its
interface
reflects
specifically intended interaction with forum residents, CompuServe,
89 F.3d at 1264-66.
That ATT-M acts through the AT&T Web site is
clear enough from the wireless service page, which states, “Service
provided by AT&T Mobility.”
(Docket No. 120 at p. 10.)
Moreover,
the Web site makes available WCAs to which ATT-M is a party, and
“AT&T Mobility” is identified as a service provider on the coverage
maps for Puerto Rico.
(Docket No. 130 at p. 13.)
Though the Web
site is “generally available to anyone who has access to the
Internet,” (Docket No. 128 at p. 12), it is more than just a
passive site.
Therefore, we find that it conducts purposeful
activity directed at the forum.
In sum, it is reasonable to infer from ATT-M’s
multitudinous
contracts
with
residents
of
Puerto
Rico,
its
meaningful business relationship with ATT-MPR, and the business it
Civil No. 11-1555 (FAB)
32
conducts with Commonwealth customers via the AT&T Web site, that
ATT-M purposefully directs activity at the forum.
b.
Claim Arises From or Relates to Activity
ATT-M contends that plaintiff’s claim does not
arise out of or relate to ATT-M’s alleged activity in Puerto Rico.
(Docket Nos. 128 at pp. 17-18; 139 at 13-14.)
Essentially, ATT-M
falls back on its initial insistence that it conducts no business
at all in the Commonwealth, and therefore that there is no activity
from which the claim can conceivably arise.
p. 17; 139 at 13.)
(Docket Nos. 128 at
Because this Court has found that ATT-M does
purposefully direct activity toward the forum of Puerto Rico,
however, ATT-M’s argument is rendered nonsensical. For the reasons
adumbrated below, this Court determines that plaintiff’s claim
clearly arises out of and relates to ATT-M’s activity in the
Commonwealth.
Although the nexus necessary to satisfy the
“arise out of or related to” requirement has not been clearly
delineated by the Supreme Court, the United States Court of Appeals
for the Federal Circuit has stated that the phrase is disjunctive
in nature, indicating an added flexibility.
Avocent Hunstsville
Corp. v. Aten Intern Co., Ltd., 552 F.3d 1324, 1330 (Fed. Cir.
2008) (citing Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1362 (Fed.
Cir. 2001)); see Helicopteros Nacionales, 466 U.S. at 415.
In a
Civil No. 11-1555 (FAB)
33
patent suit like this one, the inquiry is easily discerned from the
nature and extent of the commercialization of the patented product
or service by defendant in the forum.
Id. at 1332.
Thus, a
plaintiff’s claim may “arise out of” or “relate to” a defendant’s
alleged manufacturing, using, or selling of the claimed invention.
Id.
While there is currently no evidence that ATT-M manufactures
the mobile devices and wireless services that allegedly infringe
upon plaintiff’s patented technology, it is evident that ATT-M has
a hand in selling or providing those devices and services to the
public.
First, it is undisputed that ATT-M enters into WCAs with
AT&T customers in Puerto Rico.
(Docket No. 54-2.)
The WCAs
include a balance statement for wireless service, instructions to
send payment directly to ATT-M’s corporate address in Atlanta, GA,
and an
arbitration
agreement
invoking
Puerto Rico
law.
Id.
According to ATT-M’s own associate counsel, “all customers must
agree to a WCA that sets forth or incorporates by reference the
terms and conditions of service” as a condition of receiving
wireless
service
from
ATT-M.
(Docket
No.
130-2
at
p.
5.)
Moreover, ATT-M admits to a business arrangement with ATT-MPR that
ensures ATT-MPR will provide wireless services in Puerto Rico.
(Docket No. 128 at p. 10.)
ATT-M may attempt to obfuscate its role
in selling and providing wireless services to Puerto Rico customers
as much as it likes, but the evidence before the Court is clear;
Civil No. 11-1555 (FAB)
34
therefore, plaintiff’s claim arises from and relates to ATT-M’s
role as a provider and seller of these services.
c.
Reasonable and Fair
ATT-M contends simply that because it lacks
minimum contacts with Puerto Rico, subjecting it to jurisdiction
would be neither reasonable nor fair; no other argument is offered.
(Docket No. 128 at p. 18.)
As we have determined, however, ATT-M
does have minimum contacts with the Commonwealth, and plaintiff’s
claim arises from and relates to those contacts. This leaves ATT-M
with little ground to stand on. We find now, without substantial
protest from ATT-M, that subjecting it to jurisdiction in this
Court would indeed be fair and reasonable.
“Once it has been decided that a defendant
purposefully established minimum contacts with the forum State,
these contacts may be considered in light of other factors to
determine whether the assertion of personal jurisdiction would
comport with fair play and substantial justice.”
Burger King
Corp., 471 U.S. at 476 (citing Int’l. Shoe, 326 U.S. at 320).
Relevant factors include: (1) the burden on the defendant; (2) the
forum
State’s
interest
in
adjudicating
the
dispute;
(3)
the
plaintiff’s interest in obtaining convenient and effective relief;
(4) the interstate judicial system’s interest in obtaining the most
efficient resolution of controversies; and (5) the shared interest
Civil No. 11-1555 (FAB)
35
of the several states in furthering fundamental substantive social
policies.
at 292).
Id. at 477 (citing World-Wide Volkswagen, 444 U.S.
“These considerations sometimes serve to establish the
reasonableness of jurisdiction upon a lesser showing of minimum
contacts than would otherwise be required.
On the other hand,
where a defendant who purposefully has directed his activities at
forum residents seeks to defeat jurisdiction, he must present a
compelling case that the presence of some other considerations
would render jurisdiction unreasonable.”
Id. at 477 (internal
citations omitted).
As noted, ATT-M provides no compelling case
against the reasonableness of jurisdiction in Puerto Rico.
We
look, then, to plaintiff’s argument in favor of jurisdiction.
It
is clear from this argument that litigation in Puerto Rico would
not present an overwhelming burden to ATT-M; indeed, AT&T has
touted itself as “one of the premiere telecommunications companies
in the United States and throughout the world . . .” and should
have
little
trouble
representing
(Docket No. 130 at p. 20.)
itself
in
the
Commonwealth.
Moreover, because plaintiff sues
several AT&T entities at once, separate trials “would require
duplicate efforts by [plaintiff] and the court system and would
result in overlapping and potentially contradictory rulings.”
Id.
Granting jurisdiction in Puerto Rico, then, would ensure efficiency
Civil No. 11-1555 (FAB)
36
and “relieve parties of the cost and vexation of multiple lawsuits,
converse
judicial
resources,
and,
by
preventing
inconsistent
decisions, encourage reliance on adjudication.” Carson v. Dept. of
Energy, 398 F.3d 1369, 1375 (Fed. Cir. 2005) (quoting Allen v.
McCurry, 449 U.S. 90, 94 (1980) (internal quotations omitted). The
Court agrees
with
plaintiff,
and
thus holds
the
exercise
of
personal jurisdiction over ATT-M to be reasonable and fair.
In sum, the Court finds there to be sufficient
reason to exercise specific jurisdiction over defendant ATT-M.
ATT-M
maintains
adjudication
in
minimum
the
contacts
forum
would
within
not
Puerto
offend
fair
As
Rico,
and
play
and
substantial justice, we see no reason that ATT-M should not be
required to defend itself in this Court.
Therefore, we DENY ATT-
M’s motion to dismiss.
B.
ATT-I
Defendant ATT-I objects to the magistrate judge’s finding
that there are sufficient facts to support specific jurisdiction.
(See Docket Nos. 127 & 138.)
As noted above, the Court of Appeals
for the Federal Circuit applies a three-prong test when determining
whether the application of specific jurisdiction satisfies the
requirements of Due Process.
Breckenridge Pharm., Inc., 444 F.3d
at 1362-63; Akro Corp., 45 F.3d at 1545.
We address each prong in
Civil No. 11-1555 (FAB)
37
turn, and conclude that ATT-M is properly subject to specific
jurisdiction.
i.
Purposefully Directed Activity
ATT-I argues that it has not directed any activities
toward the forum of Puerto Rico, because ATT-I “is a holding
company that does not directly conduct business with or provide
services to the public.”
argues that
without
the
(Docket No. 77 at p. 5.)
existence
of
an
Moreover, ATT-I
alter-ego
or
agency
relationship between ATT-I and ATT-MPR, the activities of ATT-MPR
are irrelevant to a minimum contacts analysis.
Id. at 10; see
Escude Cruz v. Ortjo Pharm. Corp., 619 F.2d 905-06 (1st Cir. 1980).
In her R&R, the magistrate judge considered voluminous evidence of
business contacts between ATT-I and Puerto Rico.
at p. 12.)
(Docket No. 120
Most compelling, according to the magistrate judge, is
an array of Federal Communications Commission (“FCC”) filings by
ATT-I that point to its direct role in negotiating a 2009 merger
with Centennial
Rico.12
Communications
Corp. (“Centennial”)
in
Puerto
(Docket Nos. 120 at p. 13; 83-2, 83-6 & 83-8.)
In
addition, there is evidence of business conducted by ATT-I in
Puerto Rico before the merger; this evidence purportedly shows ATT-
12
The merger between AT&T and Centennial led to the creation
of ATT-MPR and the establishment of WCAs with 440,000 customers in
Puerto Rico. (Docket No. 54-4 at ¶ 7.)
Civil No. 11-1555 (FAB)
38
I’s close ties with America Movil, then a wireless carrier doing
business in Puerto Rico, as well as ATT-I’s possession of certain
node and
submarine
cable
Nos. 83-2, 83-16 & 83-18.)
interests
in
Puerto
Rico.
(Docket
We consider in turn the merger and pre-
merger evidence of ATT-I’s contacts with Puerto Rico.
a.
Merger-Related Evidence
Defendant ATT-I objects to the finding that
ATT-I’s role in negotiating the Centennial merger is compelling
evidence of its activity in Puerto Rico.
pp. 8-11; 120 at p. 13.)
(Docket Nos. 127 at
The magistrate judge noted that “merger
negotiations can constitute actions directed towards a forum state
for the purposes of personal jurisdiction, especially where, as
here, the merger agreement affected the forum state.”
No. 120 at p. 18.)
(Docket
See Wolverine Proctor & Schwartz, Inc. v.
Aeroglide Corp., 394 F.Supp.2d 299 (D.Mass. 2005).
Specifically,
the magistrate judge found that ATT-I’s senior executives were
“intimately involved in the planning, negotiation, and execution of
the merger,” and that ATT-I committed its operating subsidiaries in
Puerto Rico to certain conduct.
Id. at p. 14.
Rather than dispute
these facts, ATT-I contends that its negotiations with Centennial
are insufficient to demonstrate purposeful activity because the
negotiations “did not create any continuing obligation of ATT-I in
Civil No. 11-1555 (FAB)
Puerto Rico.”
39
(Docket No. 127 at p. 10.)
We find this argument
unavailing.
The Court has already noted that the mere
existence of a contractual relationship is not enough to establish
minimum contacts between a nonresident corporation and a forum
state. Burger King Corp., 471 U.S. at 478.
Rather, “[i]t is these
factors – prior negotiations and contemplated future consequences,
along with the terms of the contract and the parties’ actual course
of dealing – that must be evaluated in determining whether the
defendant
forum.”
purposefully
established
Id. at p. 479.
minimum
contacts
with
the
Therefore, where a corporation, through
its interstate contractual obligations, reaches out beyond one
state and creates beneficial contacts with citizens of another
state, it is “subject to regulation and sanctions in the other
state for consequences of [its] activities.”
Id. at p. 473
(quoting Travelers Health Assn. v. Va., 339 U.S. 643, 647 (1950)
(internal quotation marks omitted).
See Kulko v. Cal. Super. Ct.,
436 U.S. 84, 96 (1978); Quill Corp. v. N.D., 504 U.S. 298, 307
(1992); Phillips Exeter Acad. v. Howard Phillips Fund, 196 F.3d
284, 292 (1st Cir. 1999).
We
have
no
doubt
that
ATT-I
purposefully
reached out to Puerto Rico to establish a long-term, beneficial
relationship with its citizens.
In Wolverine, the district court
Civil No. 11-1555 (FAB)
40
found that through its continuing negotiations concerning a merger
with the plaintiff, the defendant deliberately reached out and
created contacts with the forum.
394 F.Supp.2d at 310.
Indeed,
personal jurisdiction was found to be proper even though the
parties did not follow through with the agreement.
great
conceptual
leap,
then,
to
say
that
It requires no
ATT-I
purposefully
directed activity at Puerto Rico by negotiating and executing a
merger with Centennial that had a profound effect on residents of
the forum. Moreover, once the merger was approved by the FCC, ATTI benefitted substantially, both long- and short-term, from the
“contemplated future consequences” of the agreement.
Corp., 471 U.S. at 479.
Burger King
By its own admission, ATT-I intended to
benefit from the merger by: transferring Centennial’s licences and
assets to itself; increasing ATT-I’s presence in Puerto Rico by
establishing a subsidiary, ATT-MPR, that would adopt Centennial’s
400,000 customers pursuant to ATT-I’s corporate policies (at great
economic advantage to ATT-I); providing former Centennial customers
with increased availability of international roaming, along with
more application and network options; better serving the company’s
existing enterprise customers with operations in Puerto Rico and
competing for additional business there; demonstrating ATT-I’s
general commitment to rural coverage by enhancing its network
coverage; expanding ATT-I’s wireless footprint, thereby making it
Civil No. 11-1555 (FAB)
41
more attractive to business customers who demand an integrated
provider; and taking advantage of a “deal [that] makes financial
sense for AT&T and will create value for [its] shareholders, with
synergies
expected
in
areas
including
customer care and network operations.”
The
Court
finds
overhead,
advertising,
(Docket Nos. 83-2 & 83-4.)
that
this
long
list
of
consequential benefits amply demonstrates ATT-I’s decision to reach
out to Puerto Rico purposefully and establish long-term contacts
there. See Kulko, 436 U.S. at 96 (holding that defendants ought to
be held accountable in the forum state if they purposefully derive
benefit from their interstate activities); Quill Corp., 504 U.S.
at 307 (“[I]f a foreign corporation purposefully avails itself of
the benefits of an economic market in the forum State, it may
subject itself to the State’s in personam jurisdiction even if it
has no physical presence in the State.”); Phillips Exeter Acad.,
196 F.3d at 292 (holding that personal jurisdiction is proper when
a defendant benefits from its contacts with a forum in a way that
made jurisdiction foreseeable).
It makes no difference that ATT-
I’s subsidiary, ATT-MPR, maintains its own contacts with the
Commonwealth; rather, it was ATT-I which negotiated and entered
into an agreement with Centennial, and it is ATT-I which reaps the
continuing benefits of that transaction.
In no way can these
benefits be imputed to ATT-MPR; for instance, ATT-I’s ability to
Civil No. 11-1555 (FAB)
42
demonstrate its commitment to rural coverage, expand the company’s
larger
wireless
footprint,
all
and
benefits
create
specific
value
to
for
ATT-I
as
ATT-I’s
shareholders
are
a larger
corporation.
The Court therefore rejects ATT-I’s contention that
its negotiations and subsequent agreement with Centennial do not
constitute contacts with the forum.
b.
Pre-Merger Evidence
Defendant ATT-I also objects to the magistrate
judge’s
finding
that
ATT-I’s
pre-merger
activity
constitutes
compelling evidence of its contacts in Puerto Rico.
(Docket
Nos. 127 at pp. 8-11; 120 at p. 13.)
The magistrate judge found
that
ATT-I
before
the
Centennial
merger,
provided
management
services under an agreement with America Movil, then a wireless
carrier doing business in Puerto Rico.
83-2 at p. 5.)
(Docket Nos. 120 at p. 15;
Pursuant to this agreement, ATT-I had the right to
appoint two members of America Movil’s corporate board, and it
regularly
positions.
assigned
its
own
high-ranking
executives
to
(Docket Nos. 120 at p. 15; 83-18 at p. 7.)
those
It is
notable, indeed, that “the FCC found that the two companies’
relationship was significantly close that, given the Centennial
merger, it
might
have created
anti-competitive
harms
.
(Docket No. 120 at p. 16; see also Docket No. 83-2 at p. 9.)
.
.”
Civil No. 11-1555 (FAB)
43
ATT-I is quick to point out that the FCC
filings establish only that “AT&T Mexico, Inc. – and not ATT-I –
had a relationship with American Movil, that the relationship was
in Mexico, and that the agreement between AT&T Mexico and America
Movil expressly precluded the provision of services to any America
Movil subsidiary with operations in the United States.”
No. 127 at p. 11.)
(Docket
Indeed, the second amendment to the agreement
stipulates that
[a]n ‘AMERICAN MOVIL Subsidiary’ is defined as a
corporation (or similar entity) (y) whose operations are
completely limited to one or more of the following
countries: Mexico, Guatemala, Nicaragua, El Salvador,
Ecuador, Colombia, Brazil, Argentina . . . For the
avoidance of any doubt, subsidiaries or affiliates of
AMERICA MOVIL that fail to fully satisfy the definition
of an AMERICA MOVIL Subsidiary (including without
limitation, any subsidiary with operations in the United
States) shall not be entitled to receive services or
information under the Agreement.(Docket No 127-2 at
p. 19.)
All of this might be convincing if ATT-I had not previously
admitted to providing services to America Movil in Puerto Rico.
For example, in response to an FCC information request, ATT-I
conceded that after America Movil acquired Telecomunicaciones de
Puerto Rico in 2007, ATT-I “provided services to America Movil in
Puerto Rico” on several occasions.
(Docket No. 83-18 at p. 10.)
It is telling that ATT-I conspicuously fails to address this
revelation in its reply in support of its objections to the R&R.
Civil No. 11-1555 (FAB)
(Docket No. 138.)
44
Revealing, also, is ATT-I’s failure to explain
its apparent “commitment” to the FCC’s condition that it limit its
“participation in the business and operations of America Movil in
the United States (including Puerto Rico and the U.S. Virgin
Islands)” before merging with Centennial.
p. 4.)
of
(Docket No. 83-2 at
The Court finds this commitment to be sufficient evidence
ATT-I’s
contacts
with
Puerto
Rico
before
its
merger
with
Centennial.
In addition to ATT-I’s agreement with America
Movil, plaintiff provides snapshots of ATT-I’s alleged contacts in
the forum that, when viewed together, form a clear picture of the
company’s purposeful activity in Puerto Rico before its merger with
Centennial.
First is ATT-I’s contested ownership of a node and
submarine cable assets in Puerto Rico.
(Docket No. 120 at p. 15.)
It is difficult to determine from the limited and contradictory
evidence supplied by both parties whether the equipment was used
for “wireline” or “wireless” service, and, moreover, whether ATT-I
Civil No. 11-1555 (FAB)
45
actually owned it or simply had access to it.13
(Docket Nos. 127
at pp. 7-8; 131 at pp. 14-16; 138 at p. 11.)
Nonetheless, we
detect enough portent in ATT-I’s admission that it had “presence”
in Puerto Rico to forgo discounting this evidence outright.
In
fact, we are better able to divine ATT-I’s relation to the node and
submarine equipment when we consider its former contention, found
in the FCC filings, that a merger with Centennial will allow ATT-I
to “better serve the company’s existing enterprise customers with
operations in Puerto Rico and compete for additional business with
the rise range of businesses with a presence there . . . ” (Docket
No. 83-4 at p. 3.)
customers
with
That ATT-I hoped to “better serve its existing
operations
in
Puerto
Rico”
by
merging
with
Centennial certainly suggests that the company had contacts in the
forum leading up to the merger.
13
Id. at p. 4.
Indeed, the complicated question of ATT-I’s relation to
these assets arises from an innocuous passage found in the FCC
filings, where ATT-I reveals – perhaps unwittingly – that it
“currently lacks a wireline network presence in Puerto Rico (other
than a node and submarine cable assets) and must rely on third
parties for on-island connectivity.” (Docket No. 83-16 at p. 4.)
Much is made of this statement by plaintiff, with both parties
eventually endeavoring to parse the language and speculate on the
very nature of “presence” itself, all in a manner more reminiscent
of Heidegger than anything found in the case law.
Of course,
despite their foray into ontology, neither party is able to show,
one way or the other, whether ATT-I actually owned the assets, or
what purpose this equipment might serve in relation to AT&T’s
wireless coverage in Puerto Rico.
Civil No. 11-1555 (FAB)
46
In sum, we find that ATT-I has purposefully
directed activities toward the forum of Puerto Rico.
First, its
negotiation and execution of a merger with Centennial shows that
ATT-I purposefully reached out to Puerto Rico to establish a longterm, beneficial relationship with its citizens.
See Burger King
Corp., 471 U.S. at 473; Kulko,436 U.S. at 96; Quill Corp., 504 U.S.
at 307; Phillips Exeter Acad., 196 F.3d at 292.
Moreover, there is
evidence of ATT-I’s pre-existing contacts with Puerto Rico, most
notably an agreement with America Movil whereby ATT-I provided
services in Puerto Rico.
Combined, this evidence leaves little
doubt that ATT-I has purposefully availed itself of the forum of
Puerto Rico.
ii.
Claim Arises From or Relates to Activity
ATT-I contends that plaintiff’s claim does not arise
out of or relate to ATT-M’s alleged activity in Puerto Rico.
First, ATT-I avers that “participating in negotiations is not an
infringing activity under the Patent Act.”
p. 19.)
(Docket No. 127 at
But by focusing purely on the negotiations between ATT-I
and Centennial, ATT-I plainly ignores the fact that an agreement
was reached between the two parties that led to a corporate merger
Civil No. 11-1555 (FAB)
47
with far-reaching affects within the forum.14 Moreover, once it has
directed our attention to the Patent Act, ATT-I fails to point out
any language in the statute that precludes the consideration of
negotiations or corporate mergers as infringing activity. In fact,
there is no such language.
Rather, Section 271(b) of the Patent Act states that
“[w]hoever actively induces infringement of a patent shall be
liable as an infringer.”
35 U.S.C. § 271(b).
In Global-Tech
Appliances, Inc. v. SEB S.A., the Supreme Court held that a
defendant induces infringement when it encourages another entity to
infringe on
infringement.
a
patent
while
knowing
that
the
act
constitutes
131 S.Ct. 2060, 2068 (2011) (defendant knowingly
infringed a patent on a kitchen appliance, but did not apprise
third parties selling the appliance).
In this case, plaintiff
submits evidence allegedly showing that ATT-I knowingly infringed
on several of its patents.
(Docket No. 49 at ¶¶ 22 & 38.)
By
negotiating and executing the merger with Centennial, and by
establishing ATT-MPR in Puerto Rico, ATT-I also knowingly created
14
Also, despite ATT-I’s carping, negotiations can indeed be
considered in a patent infringement claim.
See MEMC Elec.
Materials, Inc. v. Mitsubushi Materials Silicon Corp., 420 F.3d
1369, 1376 (Fed. Cir. 2005) (considering negotiations as evidence
of infringement); Wing Shing Prods. (BVI), Ltd. v. Simatelex Mfg.
Co., Ltd., 479 F.Supp.2d. 388, 406 (S.D.N.Y 2007) (considering the
forum for negotiations when determining infringement).
Civil No. 11-1555 (FAB)
48
a situation in which patent-infringing products and services were
sold to customers in the Commonwealth by ATT-I’s subsidiaries.
We
find, therefore, that AT&T actively induced infringement of the
various patents in suit within Puerto Rico.
For this reason, it is
evident that plaintiff’s claim arises from and relates to ATT-I’s
activities in the forum.
iii. Reasonable and Fair
Much like ATT-M, ATT-I contends that because it
lacks
minimum
contacts
with
Puerto
Rico,
subjecting
it
to
jurisdiction would be neither reasonable nor fair. (Docket No. 127
at p. 24.)
As we have determined, however, ATT-I does have minimum
contacts with the Commonwealth, and plaintiff’s claim arises from
and relates to these contacts.
This leaves ATT-I, like ATT-M
before it, with little ground to stand on.
We find that subjecting
ATT-I to jurisdiction in this Court would indeed be fair and
reasonable.
ATT-I protests that it is merely a holding company
that
produces
no
goods
or
services,
and
that
in
exercising
jurisdiction over ATT-I, the Court would “effectively render the
corporate form meaningless . . .”
true.
Id.
This protest is simply not
Despite what ATT-I might think, the Court came to its
conclusion without piercing the corporate veil or in any way
attributing to ATT-I the acts of its subsidiaries. Therefore, ATT-
Civil No. 11-1555 (FAB)
49
I’s evocation of the agent or alter-ego theory is rendered moot; at
no point does the Court suggest that ATT-I controlled the actions
of others.
Rather, the Court finds ATT-I subject to personal
jurisdiction based solely on its own activities in the forum.
As ATT-I provides no compelling case against the
reasonableness
of
jurisdiction
in
Puerto
Rico,
plaintiff’s argument in favor of jurisdiction.
we
look
to
Plaintiff offers
the same argument against ATT-I as against ATT-M.
It is clear from
this argument that litigation in Puerto Rico would not present an
overwhelming
burden
to
ATT-M.
(Docket
No.
131
at
p.
19.)
Moreover, because plaintiff sues several AT&T entities at once,
separate trials “would require duplicate efforts by [plaintiff] and
the court system and would result in overlapping and potentially
contradictory rulings.” Id. Granting jurisdiction in Puerto Rico,
then, would ensure efficiency and “relieve parties of the cost and
vexation of multiple lawsuits, converse judicial resources, and, by
preventing
inconsistent
adjudication.”
decisions,
encourage
Carson, 398 F.3d at 1375.
reliance
on
We find this argument
convincing, and thus we hold the exercise of personal jurisdiction
over ATT-I to be reasonable and fair.
In sum, we find there to be sufficient reason to
exercise specific jurisdiction over defendant ATT-I.
As ATT-I
maintains minimum contacts within Puerto Rico, and adjudication in
Civil No. 11-1555 (FAB)
50
the forum would not offend fair play and substantial justice, we
see no reason that ATT-I should not be required to defend itself in
this Court.
IV.
Therefore, we DENY ATT-I’s motion to dismiss.
Conclusion
The Court has made an independent examination of the entire
record in this case, including plaintiff’s objections to the R&R
and defendants’ opposition to those objections, and ADOPTS IN PART
AND
DENIES
IN
PART
the
magistrate
judge’s
findings
and
recommendations as the opinion of this Court. Regarding ATT-M, the
Court finds that specific jurisdiction is proper and therefore
REJECTS ATT-M’s motion to dismiss. Regarding ATT-I, the Court also
finds that specific jurisdiction is proper and therefore DENIES
ATT-I’s motion to dismiss.
IT IS SO ORDERED.
San Juan, Puerto Rico, July 24, 2012.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE
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