Raytheon Company v. ITT Corporation et al
Filing
68
MEMORANDUM OPINION AND ORDER GRANTING IN PART DEFENDANTS MOTION TO DISMISS re 37 MOTION to Dismiss filed by ITT Night Vision, ITT Exelis Geospatial Systems, ITT Corporation, ITT Geospatial Systems, ITT Defense and Information Solution s, Exelis Inc. d/b/a ITT Exelis, 46 MOTION to Strike Portions of Declaration filed by Raytheon Company. The court hereby GRANTS IN PART the Defendants motion to dismiss (docket entry #37). ITT Defense and Information Solutions, ITT Nigh t Vision, ITT Geospatial Systems, and ITT Exelis Geospatial Systems are hereby DISMISSED WITH PREJUDICE. ITT Corporation shall remain a party to this lawsuit. the plaintiffs motion to strike portions of the declaration of Andrea M.Quercia (docket entry #46) is DENIED. Signed by Judge Richard A. Schell on 9/30/13. (cm, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
RAYTHEON COMPANY,
Plaintiff,
v.
ITT CORPORATION, ITT DEFENSE
AND INFORMATION SOLUTIONS, ITT
NIGHT VISION, ITT GEOSPATIAL
SYSTEMS, EXELIS INC. d/b/a ITT
EXELIS, and ITT EXELIS GEOSPATIAL
SYSTEMS,
Defendants.
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Case No. 4:11-CV-800
MEMORANDUM OPINION AND ORDER GRANTING IN PART
DEFENDANTS’ MOTION TO DISMISS
The following are pending before the court:
1.
Defendants’ motion to dismiss (docket entry #37);
2.
Plaintiff’s response to Defendants’ motion to dismiss (docket entry #42);
3.
Defendants’ reply in support of motion to dismiss (docket entry #45); and
4.
Plaintiff’s sur-reply to Defendants’ motion to dismiss (docket entry #47).
1.
Plaintiff’s motion to strike portions of the declaration of Andrea M. Quercia (docket
entry #46);
2.
Defendants’ response to motion to strike (docket entry #49); and
3.
Reply in support of Plaintiff’s motion to strike portions of the declaration of Andrea
M. Quercia (docket entry #54).
Having considered the motion to dismiss and the responsive briefing thereto, the court finds that the
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motion should be granted in part.
On December 6, 2011, the Plaintiff filed the instant action against six Defendants. The two
incorporated defendants are ITT Corporation and Exelis Inc. d/b/a ITT Exelis.
The four
unincorporated defendants are ITT Defense and Information Solutions, ITT Night Vision, ITT
Geospatial Systems, and ITT Exelis Geospatial Systems. In its most recent complaint, the Plaintiff
asserts the following claims against the Defendants: (1) breach of contract; (2) promissory estoppel;
(3) fraud (misrepresentation); (4) fraud (inducement); (5) fraud by nondisclosure; (6) breach of the
non-disclosure agreement; (7) misappropriation of trade secrets; (8) Texas Theft Liability Act
violations; and (9) unjust enrichment. PL. SECOND AMD . COMPL. (docket entry #60). In their motion
to dismiss, the Defendants argue that (1) the unincorporated defendants should be dismissed with
prejudice as a matter of law because unincorporated business units, divisions, or segments do not
have the capacity to be sued in federal court, and (2) ITT Corporation should be dismissed because
Exelis Inc. is the only proper defendant herein.
The parties do not dispute that the unincorporated defendants should be dismissed. However,
the Plaintiff seeks a dismissal without prejudice while the Defendants urge the court to dismiss the
unincorporated defendants with prejudice. It is undisputed that the unincorporated defendants were
merely divisions under the parent legal entity, ITT. It is further undisputed that ITT was the
predecessor legal entity which included the unincorporated defendants. Finally, it is undisputed that
Exelis Inc. is the current corporate defendant over the relevant Defendant divisions. Since divisions
of companies are not separate legal entities but, rather, are parts of the corporation to which they
belong, the unincorporated defendants should be dismissed with prejudice as a matter of law. See
Western Beef, Inc. v. Compton Investment Co., 611 F.2d 587, 591 (5th Cir. 1980).
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This lawsuit stems from a development contract between Raytheon Company, Combat
Systems (an unincorporated division of Raytheon) and ITT Night Vision (an unincorporated business
unit within ITT). The contract became effective on April 26, 2005. Under the contract, Raytheon
provided the Defendants with infrared thermal cameras which were incorporated into the
Defendants’ night vision goggles.
On October 31, 2011, ITT restructured its business. The restructuring consisted of ITT
splitting into three corporations – Exelis Inc., Xylem, Inc., and ITT Corporation. Exelis now
encompasses ITT’s Defense and Information business segment which includes ITT’s Geospatial
Systems division and Night Vision business unit. Pursuant to the terms of a Distribution Agreement,
each of the entities created by the restructuring of ITT Corporation agreed to assume responsibility
for certain liabilities that arose prior to the restructuring, including the defense of litigation based on
the alleged conduct or activities of its component business units, divisions, or segments. Under the
terms of the Distribution Agreement, Exelis Inc. is the legal entity responsible for any liability of a
current or former ITT Corporation division or business unit. Based on the restructuring and the
Distribution Agreement, the Defendants urge the court to dismiss ITT.
The Defendants further argue that on August 29, 2012, the United States District Court for
the District of Connecticut held that “Exelis, Inc, is hereby substituted as a party in this case for ITT
Corporation. The distribution agreement provides that Exelis is the legal entity responsible for ITT’s
liability. Therefore, pursuant to Federal Rule of Civil Procedure 25(c), Exelis is the proper party to
this case.” United States ex rel. Ladas v. ITT Corp., 3:10-cv-1132 (D. Conn. Aug. 29, 2012).
However, the Defendants’ reliance on Ladas is misplaced. The Ladas court clearly relied on Rule
25(c) of the Federal Rules of Civil Procedure. However, “Rule 25(c) applies only to transfers of
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interest occurring during the pendency of litigation and not to those occurring before the litigation
begins.” Andrews v. Lakeshore Rehabilitation Hosp., 140 F.3d 1405, 1407 (11th Cir. 1998). Here,
the transfer occurred prior to the Plaintiff initiating the instant lawsuit. Accordingly, the Ladas
decision is not dispositive of the issue before the court.
The Defendants further argue that ITT should be dismissed because ITT does not possess any
documents relevant to the claims or defenses asserted herein or related to this matter. Further, the
Defendants argue that ITT does not possess any knowledge or discoverable materials relevant to the
claims or defenses asserted herein or related to this matter, nor does ITT employ any persons with
knowledge or information relevant to the claims or defenses asserted herein or related to this matter.
While the court appreciates the Defendants’ position that ITT does not possess any relevant
knowledge or materials related to the matters herein, the Plaintiff apparently disputes such
assertions.1 If necessary, it will be the court’s responsibility to ultimately determine whether ITT
possesses any relevant knowledge or materials related to the matters herein. As such, the court does
not find the Defendants’ arguments to dismiss ITT compelling. In light of the fact that ITT entered
into the contract with Raytheon and in light of the fact that Raytheon has alleged numerous causes
of action against ITT (the contracting party), the court finds that the Defendants’ motion to dismiss
ITT should be denied.
Based on the foregoing, the court hereby GRANTS IN PART the Defendants’ motion to
dismiss (docket entry #37). ITT Defense and Information Solutions, ITT Night Vision, ITT
1
The Plaintiff moved to strike portions of the declarations attached to the Defendants’
briefing. Although the Plaintiff’s motion has merit, the court hereby denies the motion to strike
because the portions of the declarations that the Plaintiff requests be stricken have no probative
value.
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Geospatial Systems, and ITT Exelis Geospatial Systems are hereby DISMISSED WITH
PREJUDICE. ITT Corporation shall remain a party to this lawsuit. It is further
ORDERED that the Plaintiff’s motion to strike portions of the declaration of Andrea M.
Quercia (docket entry #46) is DENIED.
IT IS SO ORDERED.
.
SIGNED this the 30th day of September, 2013.
_______________________________
RICHARD A. SCHELL
UNITED STATES DISTRICT JUDGE
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