Orthosie Systems, LLC v. Redtail Telematics Corporation

Filing 31

MEMORANDUM OPINION AND ORDER - It is therefore ORDERED that Redtail's Motion to Dismiss Plaintiff's Complaint for Improper Venue Pursuant to 28 U.S.C. § 1406(a), or in the Alternative, to Transfer (Dkt. 17 ) is hereby GRANTED and this case is transferred to the United States District Court for the Southern District of California. Signed by Judge Amos L. Mazzant, III on 8/22/2017. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

ORTHOSIE SYSTEMS, LLC

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v.
REDTAIL TELEMATICS, CORP.

Civil Action No. 4:16-CV-00927
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant Redtail Telematics Corp.’s (“Redtail”) Motion to
Dismiss Plaintiff’s Complaint for Improper Venue Pursuant to 28 U.S.C. § 1406(a), or in the
Alternative, to Transfer (Dkt. #17). The Court, having considered the relevant pleadings, finds
that Redtail’s motion should be granted.
BACKGROUND
On December 5, 2016, Orthosie Systems, LLC (“Orthosie”) sued Redtail for infringement
of U.S. Patent No. 7,430,471 (“the ‘471 Patent”) (Dkt. #1). Redtail answered on March 6, 2017
(Dkt. #8). Subsequently, the Court issued its Order Governing Proceedings and its Scheduling
Order (Dkt. #11, 13). The parties then filed a joint motion to amend the Scheduling Order, which
the Court granted (Dkt. #14, 15). Orthosie complied with the first deadline in the Scheduling
Order by disclosing its asserted claims and infringement contentions to Redtail (Dkt. #16). Then,
on June 6, 2017, after the Supreme Court issued its opinion in TC Heartland LLC v. Kraft Food
Brands Group LLC, Redtail filed the present motion to dismiss arguing that venue is not, and has
never been, proper in the Eastern District of Texas (Dkt. #17).

APPLICABLE LAW
If venue is not proper in the district or division where the case is filed, the case may be
dismissed under Federal Rule of Civil Procedure 12(b)(3). Alternatively, under § 1406(a), “[t]he
district court of a district in which is filed a case laying venue in the wrong division or district shall
dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it
could have been brought.” 28 U.S.C. § 1406(a).
Venue in patent infringement actions is governed by 28 U.S.C. § 1400(b). Fourco Glass
Co. v. Transmirra Prod. Corp., 353 U.S. 222, 229 (1957); TC Heartland LLC v. Kraft Foods Grp.
Brands LLC, 137 S.Ct. 1514 (2017) (holding § 1400(b) “is the sole and exclusive provision
controlling venue in patent infringement actions.”). Under § 1400(b), venue is only proper (1) in
the district in which the defendant resides or (2) in a district where the defendant has committed
acts of infringement and has a regular and established place of business. “A domestic corporation
‘resides’ only in its State of incorporation for purposes of the venue statute.” TC Heartland, 137
S.Ct. at 1517.
ANALYSIS
Redtail maintains that it “is a California corporation with its principle place of business in
San Diego, California,” and that it “has no established place of business or any other physical
presence in the Eastern District of Texas.” (Dkt. #17 at 1–2). Orthosie does not respond to
Redtail’s substantive assertions regarding venue. Instead, Orthosie contends that Redtail waived
its improper venue defense in three ways: (1) by filing an answer before its motion to dismiss;
(2) by not making a specific objection in its answer; and (3) because the motion was filed late
according to the Court’s Order Governing Proceedings. The Court will address each argument in
turn.

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First, Orthosie argues Redtail’s motion was late under the plain terms of Rule 12 because
Redtail filed its motion after its answer. The Court disagrees. Even though Federal Rule of Civil
Procedure 12 requires defendants to file motions contained in that rule before filing an answer,
courts often consider a motion to dismiss under Rule 12(b) timely as long as the defense is properly
preserved in the party’s answer. Brokerwood Intern. (U.S.), Inc. v. Cuisine Crotone, Inc., 104 F.
App’x 376, 379–81 (5th Cir. 2004); Isbell v. DM Records, Inc., 2011 WL 1299611, at *2 n.2 (E.D.
Tex. March 31, 2011) (“courts often ‘consider a post-answer motion to dismiss as properly before
the court as long as the movant also raised the defense . . . in his or her answer.’” (quoting
Delhomme v. Caremark RX Inc., 232 F.R.D. 573, 575–76 (N.D. Tex. 2005))); Cloeren Inc. v.
Extrusion Dies Indus., LLC, 2012 WL 12897045 (E.D. Tex. Aug. 14, 2012) (“Although a postanswer Rule 12(b)(6) motion is technically untimely under the Rules, if a defense has previously
been included in the answer, a court will generally allow a Rule 12(b)(6) motion.” (citing Jones v.
Lopez, 262 F. Supp. 2d 701, 706 (W.D. Tex. 2001); Puckett v. United States, 82 F. Supp. 2d 660,
663 (S.D. Tex. 1999))). Accordingly, as long as Redtail otherwise preserved its improper venue
defense its failure to file a motion before it filed its answer did not constitute waiver.
Next, Orthosie argues that Redtail did not preserve its improper venue defense because
Redtail’s response in its answer was not specific and did not object to venue as improper under
§ 1400(b). (Dkt. #25 at 4) (citing Elbit Sys. Land & C4I Ltd. v. Hughes Network Sys., LLC, No.
2:15-cv-37, 2017 WL 2651618, at *20–21 (E.D. Tex. June 20, 2017)).

This argument is

unpersuasive. In its Complaint, Orthosie asserts that “[v]enue is proper in this district under
28 U.S.C. §§ 1391(c) and 1400(b). Plaintiff’s principal place of business is within this district.
On information and belief, Defendant has transacted business in this district, and has committed
acts of patent infringement in this district.” (Dkt. #1 at 1–2). Redtail answered Orthosie’s

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Complaint on March 6, 2017 (Dkt. #8). In its answer, Redtail stated that “[t]he allegations in [the
venue paragraph] of the Complaint are legal conclusions to which no response is required. To the
extent any response is required, denied.” Id. at 2. In other words, Redtail generally denied the
allegations set forth by Orthosie in its venue section.
“While it is true that [Redtail] could have set forth a more specific objection to venue as
improper under § 1400(b) in its Answer, [Redtail] preserved a general objection to venue.” Blue
Spike, LLC v. Contixo Inc., 6:16-cv-1220-JDL, Dkt. #48 at 5 (E.D. Tex. July 26, 2017) (citing JPW
Indus., Inc. v. Olympia Tools Int’l, Inc., No. 16-cv-3153-JPM-bdh, slip. op., Dkt. #56, at *3–4
(M.D. Tenn. July 19, 2017) (finding that the defendant sufficiently preserved its improper venue
defense even though it did not list improper venue as an affirmative defense in its first responsive
pleading); ISA Chicago Wholesale, Inc. v. Swisher Int’l, Inc., No. 08 C 3461, 2009 WL 971432,
at *2–3 (N.D. Ill. Apr. 7, 2009) (determining that a general denial that venue was proper in
combination with the defendant’s timely filing of a Rule 12(b)(3) motion was sufficient to preserve
its improper venue defense); Phat Fashions, L.L.C. v. Phat Game Athletic Apparel, Inc., No.
00CIV0201, 2001 WL 1041990, at *3 (S.D.N.Y. Sept. 7, 2001) (concluding that the denial of a
plaintiff’s allegation of personal jurisdiction in a defendant’s answer is sufficient to preserve a
personal jurisdiction defense)). But cf. Elbit Sys., 2017 WL 2651618, at *20–21 (holding that a
defendant waived its objection to improper venue under § 1400(b) because it admitted the
applicability of § 1391(c) to patent infringement actions and omitted a specific objection to venue
under § 1400(b) from its first three motions to dismiss for improper venue). Because Redtail
preserved its objection to improper venue, the defense is not waived provided that Redtail brought
its Rule 12(b) motion to dismiss for improper venue timely.

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Finally, Orthosie argues that Redtail’s motion was filed late according to the Order
Governing Proceedings. Orthosie maintains that the deadline to file a motion to transfer was April
24, 2017, and that Redtail did not file its motion until June 6, 2017. However, because Redtail
properly preserved its objection to improper venue and filed a motion to dismiss based on improper
venue, the appropriate inquiry to determine timeliness is whether the parties engaged in extensive
litigation prior to the motion being filed. See Blue Spike, 6:16-cv-1220-JDL, Dkt. #48 at 5. Here,
the parties filed a Joint Report of Rule 26(f) Conference, filed a joint motion to amend the
scheduling order, engaged in ongoing discovery, and Orthosie served its infringement contentions
on Redtail. Beyond these preliminary matters, “the Court and the parties have not engaged in
extensive litigation conduct.” Id. “Thus, because [Redtail] denied venue in its answer and timely
filed its first Rule 12(b) motion for improper venue before the parties had begun to significantly
litigate the case, [Redtail] adequately preserved its improper venue defense.” Id. (citing JPW
Indus., No. 16-cv-3153-JPM-bdh, slip. op., Dkt. #56, at *3–4; Phat Fashions, 2009 WL 971432,
at *2–3; Phat Game Athletic Apparel, Inc., 2001 WL 1041990, at *3).
Orthosie does not challenge Redtail’s substantive assertions that it is a California
corporation with no regular and established place of business in the Eastern District of Texas.
Accordingly, because Redtail did not waive its venue defense and its assertions on the merits are
undisputed, Redtail’s motion should be granted. See id. However, in the interest of justice, the
Court will transfer the case to the Southern District of California.
CONCLUSION
It is therefore ORDERED that Redtail’s Motion to Dismiss Plaintiff’s Complaint for
Improper Venue Pursuant to 28 U.S.C. § 1406(a), or in the Alternative, to Transfer (Dkt. #17) is

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hereby GRANTED and this case is transferred to the United States District Court for the Southern
District of California.
SIGNED this 22nd day of August, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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