American GNC Corporation v. ZTE Corporation et al

Filing 91

MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE for 77 Report and Recommendations, 17 Motion to Dismiss filed by ZTE (USA) Inc. Defendant ZTE USAs Motion to Dismiss for Improper Venue (Dkt. #17) is DENIED. Signed by District Judge Amos L. Mazzant, III on 11/7/2017. (cm, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

AMERICAN GNC CORPORATION,
Plaintiff,
V.
ZTE CORPORATION. ET AL.,
Defendants.

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CASE NO. 4:17CV620
Judge Mazzant/Judge Johnson

MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF
UNITED STATES MAGISTRATE JUDGE
Came on for consideration the report of the United States Magistrate Judge in this action,
this matter having been heretofore referred to the United States Magistrate Judge pursuant to 28
U.S.C. § 636. On October 4, 2017, the report of the Magistrate Judge was entered containing
proposed findings of fact and recommendations (see Dkt. #77) that Defendant ZTE (USA) Inc.’s
(“Defendant” or “ZTE USA”) Motion to Dismiss for Improper Venue (Dkt. #17) be DENIED.
ZTE USA filed objections to the report (Dkt. #82), and Plaintiff filed a response (Dkt. #89).
The Court has made a de novo review of the objections and is of the opinion that the findings and
conclusions of the Magistrate Judge are correct and the objections are without merit as to the
ultimate findings of the Magistrate Judge. The Court hereby adopts the findings and conclusions
of the Magistrate Judge as the findings and conclusions of this Court.
ZTE USA first objects to the burden of proof applied by the Magistrate Judge. ZTE USA
argues that it is Plaintiff American GNC Corporation’s burden to establish that venue
is improper. See Dkt. 82 at 5-7. However, as the report notes, “courts are not uniform in their views
as to which party bears the burden of proof with respect to venue,” and the Magistrate Judge
provided ample authority for her conclusion that the burden of proof here lies with Defendant ZTE

USA. See Dkt. 77 at 3-4. Thus, the Court finds no error in the Magistrate Judge’s conclusion, and
ZTE USA’s objections are overruled.
ZTE USA also objects to the Magistrate Judge’s finding that ZTE USA’s “dedicated call
center in Plano, Texas” establishes that ZTE has a regular and established place of business in the
District. See Dkt. 77 at 6-7. ZTE USA first argues that the Magistrate Judge inappropriately relied
on supplemental briefing (see Dkt. 49) submitted by Plaintiff, to which ZTE USA did not have an
opportunity to respond. See Dkt. 82 at 7-8. However, the record indicates that ZTE USA presented
arguments in opposition to the supplemental briefing before Magistrate Judge Roy S. Payne on
September 1, 2017 See Dkt. 70. Furthermore, the report indicates that Magistrate Judge Johnson
considered those oral arguments in her analysis. See Dkt. 77 at 1. The Court finds no error in the
Magistrate Judge’s findings and conclusion regarding the call center, and, therefore, this objection
is also overruled.
ZTE USA next argues that the Magistrate Judge’s conclusion regarding the call center is
inconsistent with the Federal Circuit’s recent ruling in In re Cray Inc., 871 F.3d 1355, 1363 (Fed.
Cir. 2017). However, the Court finds Cray factually distinguishable, in that the location at issue in
Cray was an employee’s home. See id. In Cray, the Federal Circuit did not consider the issue of
whether a business location established in partnership with a third party—as is the case here—
qualifies as a regular and established place of business. After reviewing a number of factors (see
Dkt. 77 at 6-7), the Magistrate Judge identified the call center as “a physical place” from which
ZTE USA “actually engage[s] in business.” In re Cray Inc., 871 F.3d at 1364. As the Magistrate
Judge noted, the fact that ZTE USA “has chosen to delegate its call center operations to a third
party” does not invalidate this finding. See Dkt. 77 at 7. The Court finds that the Magistrate Judge’s

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conclusion is not precluded by Cray. Thus, the Court finds no error, and this objection is likewise
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overruled.
Based on the foregoing, Defendant ZTE USA’s Motion to Dismiss for Improper Venue
(Dkt. #17) is DENIED.
It is SO ORDERED.
SIGNED this 7th day of November, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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