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New World International, Inc. v. Ford Global Technologies, LLC

United States District Court, N.D. Texas, Dallas Division

March 22, 2017

NEW WORLD INTERNATIONAL, INC., and NATIONAL AUTO PARTS, INC., Plaintiffs,
v.
FORD GLOBAL TECHNOLOGIES, LLC, and FORD MOTOR COMPANY, Defendants.

          MEMORANDUM OPINION AND ORDER

          BARBARA M. G. LYNN CHIEF JUDGE.

         Before the Court is the Motion to Dismiss of Defendant Ford Global Technologies, LLC (“FGTL”) for Res Judicata on Lack of Personal Jurisdiction and Improper Venue and Motion for Sanctions (the “First Motion to Dismiss”) [ECF No. 11], Plaintiffs' Amended Complaint [ECF No. 34], the Motion to Dismiss of Defendants FGTL and Ford Motor Company (“FMC”) (the “Second Motion to Dismiss”) [ECF No. 47], Plaintiffs' Motion for Jurisdictional Discovery [ECF No. 59], and the parties' Notices regarding whether the Court needs to make determination of both Motions to Dismiss [ECF Nos. 63, 64]. For the following reasons, the First Motion to Dismiss is DENIED as moot, except with respect to arguments incorporated by reference in the Second Motion to Dismiss, the Second Motion to Dismiss is GRANTED, and Plaintiffs' Motion for Jurisdictional Discovery is DENIED.

         1. PROCEDURAL BACKGROUND

         This declaratory judgment action is brought by New World International, Inc. (“NWI”) and National Auto Parts, Inc. (“NAP”) against FGTL and FMC. Of significance to this case is an earlier action, filed in this Court on April 14, 2015, and styled New World International Inc. and National Auto Parts, Inc. v. Ford Global Technologies, LLC, Case No. 3:15-cv-1121 (the “2015 Action”). In the 2015 Action, NWI and NAP sought a declaratory judgment of invalidity and unenforceability of U.S. Design Patent No. D489, 299 (“the '299 patent”) and U.S. Design Patent No. D501, 685 (“the '685 patent”). The defendant in the 2015 Action was FGTL, which claimed that automotive parts sold by NWI and NAP were the subject of design patents assigned to FGTL. On March 16, 2016, the Court, on FGTL's motion, dismissed the 2015 Action and held that the Court lacked personal jurisdiction over FGTL. New World Int'l, Inc. v. Ford Global Techs., LLC, No. 3:15-cv-01121, 2016 WL 1069675, at *1 (N.D. Tex. Mar. 16, 2016) (Lynn, J.). The Court also denied leave to amend the complaint on the grounds that NWI and NAP had been given ample opportunities to plead facts indicative of personal jurisdiction, but had not done so. NWI and NAP are currently appealing the Court's ruling to the Federal Circuit. See New World Int'l, Inc. v. Ford Global Techs., LLC, No. 16-2097 (Fed. Cir. Apr. 14, 2016).

         On April 25, 2016, NAP and NWI filed the Complaint in this case, again seeking a declaratory judgment against FGTL of invalidity and unenforceability of the '299 and '685 patents. Compl. [ECF No. 1] ¶¶ 23-27 . Plaintiffs' Complaint in this case was almost identical to the proposed amended complaint NWI and NAP had asked the Court for leave to file in the 2015 Action and asserted no new factual allegations. See App. to 1st Mot. [ECF No. 13-1] at 40-47. The Complaint did not reference the Court's earlier Order dismissing the 2015 Action for want of personal jurisdiction, and instead repeated the same jurisdictional assertions that this Court had previously held insufficient. See Compl. ¶ 6.

         On May 24, 2016, FGTL filed its Motion to Dismiss, or Alternatively to Transfer for Res Judicata, Lack of Personal Jurisdiction and Improper Venue, and Motion for Sanctions, arguing that res judicata bars the current action. In addition, FGTL moved for a sanctions, in the form of attorneys fees and costs, against NAP and NWI for unnecessarily multiplying proceedings. Def.'s 1st Mot. at 25. On June 14, 2016, NWI and NAP filed the First Amended Complaint, adding FMC as a Defendant, and seeking to invalidate three additional asserted patents that had been assigned to FGTL: U.S. Patents Nos. D492, 801, D489, 658, and D607, 785 (“the '801 patent, ” “the '658 patent, ” and “the '785 patent, ” respectively). Am. Compl. at 15-16. On July 19, 2016, FGTL and FMC filed a Motion to Dismiss for Res Judicata, Lack of Personal Jurisdiction, Lack of Standing/Subject Matter Jurisdiction and Improper Venue, under Federal Rules of Civil Procedure 12 and 19 (the “Second Motion to Dismiss”), in which FGTL renewed its arguments to dismiss or transfer the case. On August 24, 2016, NWI and NAP filed a Motion for Jurisdictional Discovery.

         2. FACTUAL BACKGROUND

         The Court adopts its summary of the factual background of this case from its Order dismissing NWI and NAP's claims in the 2015 Action:

The Defendant, Ford Global Technologies, LLC (“FGTL”), claims that automotive parts sold by the Plaintiffs are the subject of design patents. The Plaintiffs, who seek a declaratory judgment of invalidity, unenforceability, and non-infringement, are New World International, Inc. (“NWI”) and National Auto Parts, Inc. (“NAP”)-two automotive parts sellers located in Irving, Texas.
FGTL is incorporated in Delaware and headquartered in Michigan. It owns, manages, and licenses intellectual property. According to the Declaration of Damian Porcari, FGTL does not do any business in Texas nor have any employees or offices in Texas. It is a subsidiary of Ford Motor Company (“[FMC]”), also a Delaware company headquartered in Michigan. The Porcari Declaration states that FGTL does not make or sell automobiles or automotive products. FGTL licenses patents to [FMC] and LKQ Corporation (“LKQ”), a Delaware company headquartered in Illinois. [FMC] and LKQ do business in all fifty states. FGTL's relationship with LKQ arose out of earlier patent litigation. As part of a settlement, LKQ was granted a license by FGTL, giving LKQ a right to import and sell aftermarket products covered by the patents which are the subject of the Plaintiffs' declaratory judgment action (“the License”).
The License does “not prohibit FGTL and Ford . . . from making, having made, importing, exporting, selling, offering for sale[, ] distributing or licensing any products anywhere in the world that are branded, endorsed, manufactured or made by a Ford Associated Company, ” but it is “otherwise . . . exclusive” to LKQ. It includes several provisions relating to litigation on the patents subject thereto.
The License makes clear that LKQ “has no right, title or interest in or to the FGTL Design Patents, ” and that LKQ has no “right to grant sublicenses.” The License states that each party is “an independent contractor in the performance of each and every part of the license, ” and that “neither party has the power or authority to act as agent, employee or in any other capacity to represent, act for, bind or otherwise create or assume any obligation on behalf of the other party for any purpose whatsoever.” The License states that LKQ may not use FMC's or FGTL's trademarks. It also requires LKQ to identify its products as “Non Original Equipment Aftermarket Part[s].”
From at least September, 2011, to November, 2013, FGTL sent various communications to NWI, including cease and desist letters, in which it accused NWI of infringing FGTL's patents, and threatened to initiate litigation. For example, in May of 2013, FGTL wrote NWI, advising that to prevent legal action against it, NWI had to “agree to refrain from importing or selling parts covered by Ford design patents.” That letter, copied to LKQ, also stated that “LKQ Corporation may be able to assist you in the disposal of your existing inventory.” LKQ then contacted NWI, asking it to provide details regarding its inventory in order to “determine the most prudent disposal method.”

New World Int'l, Inc. v. Ford Global Techs., LLC, No. 3:15-cv-01121, 2016 WL 1069675, at *1 (N.D. Tex. Mar. 16, 2016) (Lynn, J.).

         As of the outset of this case, four of the five patents in suit in this case had been assigned to FGTL. App. to 2d Mot. [ECF No. 49] at 78-87. FMC assigned the '785 patent to FGTL on July 14, 2016, after the Amended Complaint was filed. Id. at 78.

         3. LEGAL STANDARD

         a. Res Judicata

         Res judicata “bars the litigation of claims that either have been litigated or should have been raised in an earlier suit.” Duffie v. United States, 600 F.3d 362, 372 (5th Cir. 2010). “Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.” In re Paige, 610 F.3d 865, 870 (5th Cir. 2010) (quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)). “[A]t a minimum, . . . courts [are] not required to adjudicate, nor defendants to address, successive actions arising out of the same transaction, asserting breach of the same duty.” Nilsen v. City of Moss Point, Miss., 701 F.2d 556, 563 (5th Cir. 1983).

         Res judicata applies where “(1) the parties to both actions are identical (or at least in privity); (2) the judgment in the first action is rendered by a court of competent jurisdiction; (3) the first action concluded with a final judgment on the merits; and (4) the same claim or cause of action is involved in both suits.” Ellis v. Amex Life Ins. Co., 211 F.3d 935, 937 (5th Cir. 2000). To determine whether two suits involve the same claim under the fourth element, the critical issue is whether the two actions under consideration are based on “the same nucleus of operative facts.” In re Southmark Corp., 163 F.3d 925, 934 (5th Cir. 1999); see also Procter & Gamble Co. v. Amway Corp., 376 F.3d 496, 499 (5th Cir. 2004) (“If these [four] conditions are satisfied, all claims or defenses arising from a ‘common nucleus of operative facts' are merged or extinguished.”). When res judicata applies, it “prohibits either party from raising any claim or defense in the later action that was or could have been raised in support of or in opposition to the cause of action asserted in the prior action.” Liberto v. D.F. Stauffer Biscuit Co., Inc., 441 F.3d 318, 327 n.28 (5th Cir. 2006) (quoting United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir.1994)). When considering whether res judicata applies, a judgment is treated as final even if it is on appeal. Pharmacia & Upjohn Co. v. Mylan Pharms., Inc., 170 F.3d 1373, 1380-81 (Fed. Cir. 1999); Praer v. El Paso Nat'l Bank, 417 F.2d 1111, 1112 (5th Cir. 1969).

         “Although a jurisdictional ruling is technically not an adjudication on the merits, ‘[i]t has long been the rule that principles of res judicata apply to jurisdictional determinations-both subject matter and personal.'” Comer v. Murphy Oil USC, Inc., 718 F.3d 460, 469 (5th Cir. 2013) (internal quotation marks removed); see Ins. Corp. of Ire., Ltd. v. Compagnie des Bauxitesde Guinee, 456 U.S. 694, 703 n.9 (1982). Therefore, “the dismissal of a complaint for lack of jurisdiction . . . adjudicate[s] the court's jurisdiction, and a second complaint cannot command a second consideration of the same jurisdictional claims.” Id. (quoting Boone v. Kurtz, 617 F.2d 435, 436 (5th Cir. 1980)). Dismissals for lack of jurisdiction do not “preclude a party from later litigating the same claim, provided that the specific defect has been corrected.” Baris v. Sulpicio Lines, Inc., 74 F.3d 567, 571 (5th Cir. 1996); Rolls-Royce Corp. v. Heros, Inc., 576 F.Supp.2d 765, 777 (N.D. Tex. 2008) (“Thus . . . dismissal under Rule 12(b)(2) does not prevent [Plaintiff] from filing the same claims in another court where it appears that defendants are amenable to suit.” (emphasis added)); 18A Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Fed. Prac. & Proc. § 4432, at 52 (2d ed. 2002) (“A judgment dismissing an action ...


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