Soverain IP, LLC v. AT&T, Inc. et al

Filing 39

ORDER ADOPTING REPORT AND RECOMMENDATION re 34 Report and Recommendation. ORDERED that 18 AT&T Defendants motion to dismiss is GRANTED-IN-PART as to AT&T Inc., and DENIED-IN-PART as to AT&T Services, and that AT&T Inc. is accordingly DISMISSED WITHOUT PREJUDICE. AT&T, Inc. terminated. Signed by District Judge Robert W. Schroeder, III on 12/18/2017. (slo, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
SOVERAIN IP, LLC,
Plaintiff,
v.
AT&T, INC., AT&T SERVICES, INC.,
Defendants.

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CIVIL ACTION NO. 2:17-CV-00293-RWS

ORDER ADOPTING REPORT AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
The above-entitled and numbered civil action was referred to United States Magistrate
Judge Roy S. Payne pursuant to 28 U.S.C. § 636. Now before the Court is Judge Payne’s Report
and Recommendation (Docket No. 34), which recommends the Court grant-in-part and deny-inpart Defendants AT&T Inc. and AT&T Services, Inc.’s Motion to Dismiss for Improper Venue
Under Rule 12(b)(3) (Docket No. 18). Specifically, the Magistrate Judge recommends that
AT&T Inc. be dismissed for improper venue, and that the motion be denied as to AT&T Services,
Inc. Soverain IP, LLC (“Soverain”) filed objections (Docket No. 35) and AT&T, Inc. filed a
response (Docket No. 36).1 Having considered the parties’ arguments and having made a de novo
review of the Report and Recommendation, the Court concludes that the findings and conclusions
of the Magistrate Judge are correct. See Fed. R. Civ. P. 72(b)(3); 28 U.S.C. § 636(b)(1)(C).
In its objections, Soverain argues that the Magistrate Judge should have disregarded
corporate form when considering whether AT&T Services’ physical place of business in the

Soverain filed a reply to AT&T’s response on December 5, 2017. AT&T, Inc. filed a surreply on December 12,
2017. The Court will not consider these additional briefings because the parties did not comply with the local rules of
this District before filing. See E.D. Tex. Local R. 72(c) (“Objections to reports and recommendations and any
response hereto shall not exceed eight pages. No further briefing is allowed absent leave of court.”).
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District should be imputed to AT&T Inc. and that, instead, the Court should find venue is
proper for AT&T Inc. under an agency-relationship theory. Docket No. 35 at 2-6.
The Court disagrees.

As the Report and Recommendation explains, a subsidiary’s

presence in a venue cannot be imputed to a parent unless the corporations disregard their
separateness and act as a single enterprise. Docket No. 34 at 1–2 (citing Federal Practice &
Procedure § 3823 & nn.24–26; Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U.S. 333,
334–35 (1925)). Soverain objects to the Magistrate Judge’s reliance on Cannon, citing to a
number of post-Cannon district court opinions, infra, to argue that the formal separation inquiry
has since been abandoned. Docket No. 35 at 3–4. These cases, however, are inapposite because
they address corporate separation as it relates to the “minimum contacts” standard for personal
jurisdiction (In re Telectronics Pacing Sys., 953 F. Supp. 909, 916–17 (S.D. Ohio 1997); Fin. Co.
of Am. v. Bankamerica Corp., 493 F. Supp. 895, 903–07 (D. Md. 1980); Meredith v. Health Care
Products, Inc., 777 F. Supp. 923, 926 (D. Wyo. 1991); Superior Coal Co. v. Ruhrkohle, 83 F.R.D.
414, 421 (E.D. Pa. 1979); Avery Dennison Corp. v. UCB SA, No. 95 C 6351, 1997 WL 441313, at
*1 (N.D. Ill. Mar. 11, 1997)), or the “doing business” standard for general venue (Echeverry v.
Kellogg Switchboard & Supply Co., 175 F.2d 900, 902–03 (2d Cir. 1949)). See Docket No. 35 at
3–4. Soverain does not point to any cases where courts have imputed the “regular and established
place of business” of a subsidiary to a corporate affiliate under an “agency” theory, much less
point to any authority to support its contention that “[a] proper analysis of imputing venue
proceeds on an agency or blending of identities theory.” Id. at 4.
To the contrary, as one court has recognized after TC Heartland and In re Cray, for a
“regular and established place of business” of a subsidiary to be imputed to a corporate
relative, there must be a lack of formal corporate separateness. See Symbology Innovations,

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LLC, v. Lego Systems, Inc., No. 2:17-CV-86, 2017 WL 4324841 (E.D. Va. Sept. 28, 2017).
Soverain points to nothing in the record to indicate a specific or unusual circumstance that
justifies ignoring the corporate separateness of AT&T Inc. and AT&T Services. See Docket No.
34 at 2. Nor is the Court persuaded that Soverain should be permitted to conduct venue-related
discovery, especially in the face of AT&T Services, Inc.’s uncontroverted declaration that AT&T
Inc. is a “legally and factually separate corporate entity” and that each AT&T Inc. subsidiary
“maintains its own independent corporate, partnership, or limited liability company status,
identity, and structure.” Long Decl. ¶ 2, Docket No. 18-1.
Having made a de novo review of the written objections filed by Soverain in response to
the Report and Recommendation, the Court concludes that the findings and conclusions of the
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Magistrate Judge are correct. Accordingly,
It is ORDERED that Soverain’s objections (Docket No. 35) are OVERRULED. The
Court ADOPTS the Magistrate Judge’s Report and Recommendation (Docket No. 34) in its
entirety.
It is further ORDERED that AT&T Defendants’ motion to dismiss (Docket No. 18) is
GRANTED-IN-PART as to AT&T Inc., and DENIED-IN-PART as to AT&T Services, and that
AT&T Inc. is accordingly DISMISSED WITHOUT PREJUDICE.
SIGNED this 18th day of December, 2017.

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ROBERT W. SCHROEDER III
UNITED STATES DISTRICT JUDGE

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