Westport Fuel Systems Canada Inc. v. Ford Motor Company

Filing 121

ORDER ADOPTING REPORT AND RECOMMENDATIONS for #56 Sealed Motion, filed by FCA USA LLC D/B/A FCA Group US LLC, #115 Report and Recommendations,. Signed by District Judge Robert W. Schroeder, III on 9/15/2022. (ch, )

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
WESTPORT FUEL SYSTEMS CANADA
INC.,
v.

Plaintiff,

FORD MOTOR COMPANY,
Defendant,
FCA USA, LLC D/B/A FCA GROUP US
LLC,
Defendant.

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CIVIL ACTION NO. 2:21-CV-00453-RWS
(LEAD)

CIVIL ACTION NO. 2:21-CV-00457-RWS
(MEMBER)

ORDER
Before the Court is the Report and Recommendation of the United States Magistrate Judge
(Docket No. 115), which contains his findings, conclusions and recommendations concerning
Defendant FCA USA, LLC d/b/a FCA Group US LLC’s (“FCA”) Renewed Motion to Dismiss or
Transfer for Improper Venue (Docket No. 56). Plaintiff Westport Fuel Systems Canada Inc.
(“Westport”) filed the above-captioned civil actions to allege patent infringement against FCA and
other vehicle manufacturers. See, e.g., Docket No. 1. The case was referred to the United States
Magistrate Judge in accordance with 28 U.S.C. § 636. FCA later moved to dismiss Plaintiff’s
claims against FCA for improper venue. Docket No. 56.
After reviewing the pleadings, the Magistrate Judge issued a report that recommended
granting FCA’s Motion to Dismiss (Docket No. 56) and dismissing Plaintiff’s complaint against
FCA without prejudice. Docket No. 115. Plaintiff filed responsive objections on two grounds:
(1) assertions that the Magistrate Judge’s Report deviates from the Federal Circuit’s requirements
for showing a “regular and established” place of business and (2) assertions that the Report fails

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to consider the totality of evidence establishing FCA’s alleged interim control over dealerships in
the district. Docket No. 117. Having reviewed the Magistrate Judge’s Report and Plaintiff’s
objections thereto, the Court hereby adopts the Report and Recommendation of the Magistrate
Judge (Docket No. 115) as the findings and conclusions of this Court.
In its objections, Plaintiff first argues that the Magistrate Judge’s Report “imposes a
requirement to show” predictability or a reserved office space for FCA employees at the
dealership. Docket No. 117 at 3. Plaintiff submits that such requirements exceed the standard set
forth by the Federal Circuit to show a “regular and established” place of business. Docket No. 117
at 3–5 (citing In re Cray, 871 F.3d 1355, 1362 (Fed. Cir. 2017)). As an initial matter, the Court
does not interpret the Magistrate Judge’s Report as imposing a requirement of predictability or a
reserved office space to demonstrate a “regular and established” place of business. Rather, these
showings are merely exemplary factors that the Court may consider under the “regular and
established” prong of Cray. Accordingly, Plaintiff’s objection on this basis is without merit.
Plaintiff does, however, correctly note that the Federal Circuit’s explanation of “regular”
references a “series of … acts.” Id. at 4 (citing Cray at 1362). But despite this reference, the
Federal Circuit clearly states that “sporadic activity cannot create venue.” Cray, 871 F.3d at 1362
(citation omitted). Thus, while a regular series of acts may establish venue, a sporadic set of acts
cannot. Id. Plaintiff must, therefore, show more than mere “sporadic activity” in the district to
establish venue. Here, Plaintiff’s evidence of FCA’s presence in the district primarily consisted
of, and relied on, 588 dealership visits over the course of a year between five FCA employees
responsible for 42 dealerships. Docket No. 115 at 5. Indeed, Plaintiff’s evidence demonstrates a
set of sporadic visits. But contrary to its assertion, Plaintiff failed to offer any evidence that
demonstrated such visits were “steady, uniform, orderly, and methodical,” as the Magistrate
Judge’s Report finds. 1 Docket No. 115 at 5 (citing Cray, 871 F.3d at 1362); see also Docket No.
117 at 5.

For example, in its response to FCA’s Motion to Dismiss (Docket No. 56), Plaintiff concedes that the time and
frequency of FCA’s employees’ dealership visits are discretionary. Docket No. 74 at 16.
1

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Plaintiff next argues that the Magistrate Judge failed to consider the totality of FCA’s
employee presence in the district together with FCA’s (1) equipment at the dealerships, (2)
personal property and (3) contractual control over the dealerships. Docket No. 117 at 5–6. As
noted in the Magistrate Judge’s Report, the primary question is whether FCA “had an employee
… with a regular, physical presence at its ‘place of business’ and whether that employee … was
conducting [FCA]’s business.” Docket No. 115 (citing In re Google LLC, 949 F.3d 1338, 1345
(Fed. Cir. 2020)). Plaintiff failed to cite any controlling law to support its contention that the
existence of FCA equipment or personal property within the district is relevant to this inquiry.
Accordingly, the remaining considerations are whether FCA’s employee presence and
contractual control over the dealerships in the district satisfy the second prong of Cray. As
discussed above, the evidence demonstrating FCA’s employee presence in the district was
insufficient to establish regularity above sporadic activity. The Magistrate Judge’s Report also
compares contractual provisions, that Plaintiff claims are relevant to interim control, with similar
provisions discussed by the Federal Circuit in In re Volkswagen Grp. of Am., Inc., 28 F.4th 1203
(2022). Docket No. 115 at 3–4.
The contractual provisions Plaintiff relies on in its objections were either discussed in the
Magistrate Judge’s Report or are otherwise “merely reflective of the ordinary desire of
manufacturers to set sufficient minimum performance and quality standards to protect the good
name of their trademark that they are allowing another to display” and “do not establish, without
more, the kind of close control … that would indicate” an agency relationship. Docket No. 115
(citing Volkswagen, 28 F.4th at 1213 (citation omitted)). Plaintiff has not convinced the Court that
the regular and established prong of Cray is satisfied by a combination of employee presence that

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is not “steady, uniform, orderly, and methodical” with contractual provisions insufficient to show
interim control.
The Court has conducted a careful de novo review of those portions of the Magistrate
Judge’s proposed findings and recommendations to which the Petitioner objected. See 28 U.S.C.
§ 636(b)(1) (explaining that a district judge shall “make a de novo determination of those portions
of the report or specified proposed findings or recommendations to which objection is made.”).
.
Upon such review, the Court has determined that the Report of the Magistrate Judge is correct and
Plaintiff’s objections are without merit. Accordingly, it is
ORDERED that Plaintiff’s objections (Docket No. 117) are OVERRULED, and the
Report of the Magistrate Judge (Docket No. 115) is ADOPTED as the opinion of the District
Court. It is further
ORDERED that Defendant FCA’s Renewed Motion to Dismiss for Improper Venue
(Docket No. 56) is GRANTED.
So ORDERED and SIGNED this 15th day of September, 2022.

____________________________________
ROBERT W. SCHROEDER III
UNITED STATES DISTRICT JUDGE

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