Datatreasury Corporation v. Wells Fargo & Company et al

Filing 702

MOTION to Dismiss for Lack of Jurisdiction Defendant First Citizens BancShares, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction by First Citizens Bancshares, Inc.. (Attachments: #1 Exhibit Exhibit A; Declaration of John Gray#2 Text of Proposed Order Order Granting Defendant First Citizens Bancshares, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction)(Carlson, Larry)

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UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

DATATREASURY CORPORATION
Plaintiff
CIVIL ACTION NO. 2:06- CV- 72JURY TRIAL DEMANDED

WELLS FARGO & COMPANY , et al.
Defendants.

DEFENDANT FIRST CITIZENS BANCSHARES, INC.' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Defendant First Citizens BancShares ,

Inc. (" BancShares

) moves pursuant to Federal

Rule of Civil Procedure 12(b)(2) to dismiss Plaintiff DataTreasury Corporation s claims against
BancShares for lack of personal jurisdiction. BancShares is a non-resident holding company that
conducts no

business and sells no services

or products in Texas.

BancShares lacks the

minimum contacts " with Texas that the United States Constitution and other applicable laws
require to justify the exercise of personal jurisdiction over a non-resident. Accordingly, all of the
claims against BancShares must be dismissed.

PROCEDURAL BACKGROUND
On June 1 ,

2006 , BancShares filed its first Motion to Dismiss for Lack of Personal

Jurisdiction. (Docket Entry 84) DataTreasury Corporation (" DataTreasury ) moved the Court to
authorize jurisdictional discovery, (Docket Entry 213), which the Court granted in part. (Docket
Entry 394) BancShares subsequently responded

to DataTreasury s written discovery requests on

jurisdictional issues and presented a corporate representative for deposition.

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On February 16, 2007, DataTreasury filed its supplemental
Motion to Dismiss and moved to compel the production of

response to BancShares

additional documents from

BancShares related to jurisdictional discovery. (Docket Entry 522) Magistrate Judge Craven

granted the motion in part , requiring BancShares to produce limited additional jurisdictional
discovery in the form of certain corporate records. (Docket Entry 597) Following this ruling,
the Court dismissed BancShares ' Motion to Dismiss without prejudice to refiing the motion , or
an Answer, within 30 days after "the conclusion of the new round of jurisdictional discovery.

(Docket Entry 599 (March 22 , 2007)) BancShares was required to provide the jurisdictional
discovery by April 30 ,
2007. See

Docket Entry 650 (Order extending

BancShares ' time to
BancShares has

comply with the order requiring the production of certain corporate records).

complied with Magistrate Judge Craven s Order, and files this Motion to Dismiss for Lack of
Personal Jurisdiction in a timely manner.

II.

BACKGROUND

DataTreasury alleges that BancShares has been and is infringing United States Patents
Nos. 5

910 988

032 137

265 007 , and 5 717 868 (collectively, the " Asserted Patents

) by

making, using, selling, offering for sale , and/or importing in or into the United States , directly,
contributory (sic J, and/or by inducement , without authority, products and services that fall within
the scope of the claims of' the

Asserted Patents.

First Amended Complaint For Patent

Infringement at

, 77 , 81 , and 87.

To support personal jurisdiction over BancShares , DataTreasury alleges that BancShares
does business in Texas ; has " suffcient

minimum contacts with the forum as a result of

business conducted within the State of Texas and within this (DJistrict" ; engages in conduct
I By Order dated December 15
032
137. (Docket Entry 397)

2006 , the Court stayed this matter as to United States Patents Nos. 5 910

988 and

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including "making, using, selling, offering to sell , and/or importing, directly, contributorily,
and/or by inducement, infringing products and services within the State of Texas and within this
(DJistrict" ; has "provided services and sold products in this District separately and with or for

other infringing companies which are or were Defendants in related pending litigation "

in this

District; engages in "infringing activities with relation to the products and services of Small
Value Payments Co. ,

LLC and The Clearing House Payments Company, LLC"

operate ( s J a

nationwide check image archive and exchange service that operates in or through this District";
and has "authorized , participated in,
or facilitated transactions

occurring in whole or in part
Jd.

within this District that , in whole or in part , infringe" the Asserted Patents.

at ~ 41 , 60 , 65.

DataTreasury s jurisdictional allegations are incorrect and unsupported. BancShares is a

holding company that holds stock in a number of companies. Declaration of John Gray at ~ 3
attached as Exhibit A.

BancShares has not and does not , on behalf of itself, its subsidiaries , or
sell

any other persons or entities , offer for sale ,

, advertise or provide any document , receipt, or
elsewhere. Jd.

check imaging or processing
BancShares does not own any patents

services to any customers in Texas or

at ~ 4.

Jd.

at ~ 5. BancShares has never engaged in any activities

with respect to the products and services of Small Value Payments Co. , LLC ("SVPCo ) or The

Clearing House Payments Company, LLC (" CHPCo
authorized ,
participated in,

Jd.

at ~ 13. BancShares has never

or facilitated transactions through any check image archive or
Jd.

exchange service operated by SVPCo or CHPCo.

at ~14. BancShares does not own or

operate any check image exchange

program , nor has it ever entered into any contract with

SVPCo or CHPCo related to any check image archive exchange service or anything else.

Jd.

15 and 16.

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Moreover, BancShares conducts no business in Texas and directs none of its activities
toward residents of Texas. ld.

at ~ 12. BancShares is incorporated and organized under the laws
place of business in Raleigh , North

of the State of Delaware ,
Carolina. Jd.

and maintains its principal

at ~ 2. It does not maintain a place of business in Texas , nor has it ever maintained
ld.

a place of business in Texas.

at ~ 7. It is not licensed or otherwise authorized to do business
ld.

in Texas , nor has it ever been licensed or otherwise authorized to do business in Texas.

~ 8. It does not have assets , employees, or agents in Texas , nor has it ever had assets , employees
or agents in Texas. ld.

at ~ 9.

BancShares does not manufacture goods , distribute products , or

provide services in Texas.

ld.

at ~ 10. Nor does it pay franchise or any other taxes to the State of

Texas.

Jd.

at ~ 11. In short,

BancShares conducts no business in Texas and directs none of its
ld.

activities toward residents of Texas.

at ~ 12.

As a holding company, BancShares holds stock in a number of companies.

ld.

at ~ 3.

But all of BancShares ' subsidiaries - regardless of the use of " First Citizens" in their names - are

separate and distinct from BancShares. BancShares has its own board of directors and officers.
Id.

at ~ 6.

BancShares maintains books and bank accounts separate from its subsidiaries.

Jd.

Similarly, its subsidiaries maintain books and bank accounts separate from BancShares.

Id.

Furthermore , all of BancShares s operating subsidiaries operate with suffcient capital to conduct
day- to- day operations.
ld.

III.

ARGUMENT

DATATREASURY' S CLAIMS AGAINST BANCSHARES MUST BE DISMISSED FOR LACK OF PERSONAL JURISDICTION

DataTreasury Bears the Burden of Establishing Personal Jurisdiction.
Once a defendant challenges personal jurisdiction ,

the plaintiff bears the burden of
See McNutt v.

producing facts that support the existence of jurisdiction.

General Motors

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Acceptance Corp.,

298 U. S. 178 ,

189 (1936);

Patent Incentives, Inc.
1989);

v.

Seiko Epson Corp.,

No.

89- 1087 878 F.2d 1446 1989 WL 59272, at *1 (Fed. Cir. June 7
Corp. v.

Gundle Lining Constr.

Adams County Asphalt, Inc. 85 F. 3d 201 , 204 (5th Cir. 1996)?
Personal Jurisdiction Analysis

Focuses on Due Process.

Generally speaking, a plaintiff must make two showings to establish personal jurisdiction
over a non-consenting, non-resident defendant. Dainippon Screen Mfg. Co. v.

CFMJ Inc. ,

142

3d 1266 , 1269- 70
amenable to process.

(Fed. Cir. 1998). First, it must show that a statute makes the defendant
Id.

This determination typically turns on whether a state court in the
s long-arm

forum at issue could assert jurisdiction over the defendant under the forum state
statute.

Second , maintenance of the suit in the forum at issue must be consistent with traditional

notions of fair play and substantial justice embodied in the Due Process Clause of the United
States Constitution.

Dainippon 142 at 1269-70;

International Shoe Co.

v.

Washington

326 U.

310 , 316-20 (1945). The Due Process Clause poses two requirements for the proper assertion of

personal jurisdiction: (1) the non-resident must have some "minimum contacts" with the forum

that results from an affirmative act on its par such

that the non-resident defendant could

anticipate being haled into the courts of the forum state; and (2) it must be fair or reasonable to
require the non-resident to defend a suit in the forum such that the assertion of personal

jurisdiction comports with traditional notions of fair play and substantial justice.
Shoe
326 U. S.
v.

International
LS!
AAAA

at 316-20;

Burger King Corp.

v.

Rudzewicz 471 U.S. 462, 474-77 (1985);
1369, 1374- 75
(Fed. Cir. 2000); Mink v.

Indus. Inc.,

Hubbell Lighting, Inc. 232 F. 3d

Dev. LLC 190 F. 3d 333 335 (5th Cir. 1999).
2 In patent infringement cases ,

Federal Circuit law governs determinations of personal jurisdiction.

Red Wing Shoe

Co. v. Hockerson-Halberstadt, Inc.

148 F.3d 1355

1358 (Fed. Cir. 1998).

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The Texas long-arm statute extends as far as the United States Constitution allows. Tex.
Civ. Prac. & Rem. Code Ann. 17. 042 (West 1997);
In this situation

Gundle Lining Constr. Corp. 85 F. 3d at 204.

, the personal jurisdiction analysis folds into one question: whether the exercise

of personal jurisdiction would violate the Due Process Clause of the United States Constitution.
See ,
e. g., HollyAnne Corp.
v.

TFT, Inc. 199 F.3d 1304, 1307 (Fed. Cir. 1999);

3D Sys. , Inc.

Aarotech Labs. ,

Inc. 160 F. 3d 1373 1377 (Fed. Cir. 1998).

BancShares Does Not Have Minimum Contacts with Texas.
To establish "minimum contacts " DataTreasury must show that BancShares is subject to
either specific jurisdiction or general jurisdiction.

LSI Indus. 232 F. 3d

at 1374- 75;

Alpine View

Co.

v.

Atlas Copco AB 205 F.3d 208 , 214- 15 (5th Cir. 2000). In either case, DataTreasury must

show that BancShares has purposefully directed activities at the forum or its residents. A
defendant will not be haled into a jurisdiction solely as a result of ''' random,' ' fortuitous,'
or

attenuated' contacts , . . . or of the ' unilateral activity of another party or a third person.'''
King,

Burger

471 U. S.

at 475 (citations omitted).

BancShares Has No Contacts with Texas to Support General Jurisdiction.

General jurisdiction exists when the non-resident's contacts with the forum state are
continuous and systematic,"
LSI Indus. 232 F. 3d. at 1375;
even if the cause of action has no relation to those contacts.

Helicopteros Nacionales de Columbia, S.A.

v.

Hall 466 U. S. 408

414- 416 (1984). The plaintiff must establish a substantial connection between the non-resident
defendant and the forum state.

See, e. g., McGee

v.

Int' l Life Ins. Co. 355 U.S. 220 , 223 (1957).

BancShares does not have continuous and systematic contacts with Texas. BancShares is

a Delaware corporation with its principal place of business in Raleigh, North Carolina. Exhibit
A (Declaration of John Gray) at ~ 2. BancShares does not maintain a place of business in Texas
nor has it ever maintained a place of business in Texas. Id.

at ~ 7. It is not licensed or otherwise

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authorized to do business in Texas , nor has it ever been licensed or otherwise authorized to do
business in Texas. Id.

at ~ 8. It does not have assets, employees, or agents in Texas , nor has it
Id.

ever had assets, employees , or agents in Texas.
goods , distribute products , or provide services in Texas.
any other taxes to the State of Texas. Id.

at 'I 9. BancShares does not manufacture
Id.

at ~ 10. Nor does it pay franchise or

at ~ 11. In short , BancShares conducts no business in
Id.

Texas and directs none of its activities toward residents of Texas.

at ~ 12. BancShares thus
even if they

lacks even "random

fortuitous

" or " attenuated"

contacts with Texas , which,

existed , would stil be insufficient to assert personal jurisdiction over the company. Moreover
DataTreasury cannot ,

under any circumstances , show that BancShares has had continuous and

systematic contacts with Texas.
DataTreasury cannot rely on the

activities of BancShares '

subsidiaries to support

jurisdiction over BancShares.
BancShares observes all corporate formalities.

Those

subsidiaries are separate and distinct from BancShares.
Id.

at 6. It is hornbook law that facts

relating to a

holding company s subsidiaries cannot establish personal jurisdiction over the holding company
itself.

See Phonometrics , Inc.

v.

Northern Telecom Inc. 133 F. 3d

1459 ,

1463 , 1468 (Fed. Cir.

1998); Alpine 205 F. 3d at 218 (noting that a foreign parent corporation is not subject to the

jurisdiction of a forum state merely because its subsidiary is present or doing business there and

that the mere existence

of a parent-subsidiary relationship is not sufficient to
Kelly v.

warrant the

assertion of jurisdiction over the foreign parent);

Syria Shell Petroleum Dev. B. V , 213
maintain separate

F . 3d 841 ,

856 (5th Cir. 2000) (noting that so long as a parent and subsidiary

and distinct corporate entities , the presence of one in a forum state may not be attributed to the
other);

Nutriton Physiology Corp.

v. Enviros Ltd. 87 F. Supp. 2d 648 , 653-7

(N. D. Tex. 2000)

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(applying Federal Circuit law and granting motion to dismiss a parent company for lack of
personal jurisdiction).

BancShares Has No Contacts with Texas to Support Specific Jurisdiction.
Specific jurisdiction over a non-resident defendant exists when the defendant
has

purposefully directed its activities at the forum state and "the litigation results from alleged

injuries that arise out of or relate to those activities.
(Fed. Cir. 1995) (quoting Burger King,

Akro Corp.

v.

Luker 45 F . 3d

1541 ,

1545

471 U. S.

at 472). To determine if minimum contacts
the

exist for

specific jurisdiction,

the Federal

Circuit examines (1) whether

defendant

purposefully directed its activities at residents of the forum , and (2) whether the plaintiffs claim
arises out of or relates to those activities.

See 3D Systems, Inc. 160 F. 3d

at 1378.

As discussed , BancShares conducts no business in Texas and directs none of its activities

toward residents of Texas. Exhibit A at ~ 12. In particular, BancShares has not and does not , on

behalf of itself, its subsidiaries, or any other persons or entities , offer for sale, sell , advertise or
provide any document, receipt,
Texas or elsewhere. Id.

or check imaging or processing services to any customers in

at ~ 4.

Since BancShares does not provide any document, receipt, or check imaging or

processing services to any customers , and since BancShares conducts no business at all in this

jurisdiction , DataTreasury cannot show that BancShares purposefully directed its activities at
Texas residents. DataTreasury s cause of action cannot arise out of BancShares s conduct in this

forum because BancShares has not directed any activities at residents of this forum.

The Assertion of Jurisdiction Is Not Fair and Reasonable.
Given the absence of both general and specific jurisdiction over
BancShares in Texas

this Court need not consider whether the assertion of jurisdiction comports with traditional

principles of fair play and
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substantial justice.

See Burger King,

471 U.S. at 476;

Nutrition

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Physiology Corp.

87 F. Supp. 2d at 651 ("Only if the nonresident defendant purposefully

establishes minimum contacts with the forum state does the court consider whether maintenance

of the suit comports with traditional notions of fair play and substantial justice.

). For the

reasons given above, however, there is nothing reasonable about haling BancShares - a

Delaware corporation with no minimum contacts with Texas - into the Eastern District of Texas
to confront a lawsuit.
IV.

CONCLUSION

DataTreasury canot establish that personal jurisdiction exists over BancShares in the

Eastern District of Texas. As a result, this Court should dismiss DataTreasury s claims against
BancShares.

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Respectfully submitted

/s/ Larry D. Carlson Larry D. Carlson , Attorney-in- Charge Texas State Bar No. 03814500 Mail: larry. carlson bakerbotts. com David O. Taylor Texas State Bar No. 24042010 Mail: david. taylor bakerbotts. com BAKER BOTTS L.L.P. 2001 Ross Avenue Dallas , Texas 75201 Telephone: [phone]
Facsimile: (214) 953- 6503

ATTORNEYS FOR DEFENDANT FIRST CITIZENS BANCSHARES , INC.

CERTIFICATE OF SERVICE

I certify that on the 30th

consented to electronic service are being served with a copy of this document by the Court'
Electronic Filing System , pursuant to Local Rule CV - 5(a)(3)(A).

day of May, 2007 ,

all counsel who are deemed to have

/s/ Larry D. Carlson Larry D. Carlson

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