United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE.
the Court is Defendants OutdoorLink, Inc. and OutdoorLink
Services, Inc.'s ("Outdoor") Motion to Dismiss
Pursuant to Federal Rule of Civil Procedure 12(c) (Dkt.
#17). After reviewing the relevant pleadings and
motion, the Court finds the motion should be granted.
March 21, 2017, Lites Out, LLC ("Lites Out") sued
Outdoor for infringement of U.S. Patent No. 7, 501, 941
("the '941 Patent"), infringement of U.S.
Patent No. 8, 497, 773 ("the '773 Patent"), and
infringement of U.S. Patent No. 8, 912, 898 ("the
'898 Patent") (Dkt. #1). Outdoor answered on May 1,
2017 (Dkt. #10). The Court issued its Order Governing
Proceedings and its Scheduling Order (Dkt. #14); Lites
Out, LLC v. OutdoorLink Services, Inc., 4:16-cv-00565 at
Dkt. #14. The parties served their initial
disclosures (Dkt. #9; Dkt. #13). Then, on May 24, 2017, after
the Supreme Court issued its opinion in TC Heartland LLC
v. Kraft Food Group Brands LLC, Outdoor filed the
present motion to dismiss, arguing that venue is improper in
the Eastern District of Texas (Dkt. #17); See TC
Heartland LLC v. Kraft Food Group Brands LLC', 137
S.Ct. 1514 (2017). Lites Out filed its response to
Outdoor's Motion to Dismiss on August 11, 2017 (Dkt.
#34). Outdoor filed its reply on September 1, 2017 (Dkt.
#46). Lites Out filed its sur-reply to Outdoor's Motion
to Dismiss on September 7, 2017 (Dkt. #50). Outdoor filed
supplemental authority in support of its motion to dismiss on
September 25, 2017 (Dkt. #56). Lites Out filed a response to
the notice of supplemental authority in support of
Outdoor's Motion to Dismiss on September 27, 2017 (Dkt.
#59). The Court held a Markman hearing on October 4,
2017 (Dkt. #64).
provides digital monitoring services for billboards. The
company sells surveillance computers-SmartLink units-to
billboard owners who hold legal title to the units. SmartLink
units track billboard structural integrity and detect
defects-e.g. a broken floodlight or power outage-as they
arise. The SmartLink units wirelessly report such
wear-and-tear to Outdoor, enabling it to oversee and control
myriad billboards across large areas. Outdoor's employees
physically install SmartLink units. Upon installation,
SmartLink usually earns several years of revenue per unit.
Thereafter, Outdoor services, maintains, and repairs
SmartLink units through independent contractors. All told,
Outdoor monitors about two thousand billboards through nearly
one thousand SmartLink units in The Eastern District of Texas
("District"). Outdoor does not have a retail store,
warehouse, or other physical facility in the District.
Outdoor keeps neither inventory nor property in the District.
Rather, Outdoor ships SmartLink units to its customers within
the District and supplies to its employees and independent
contractors for installation and repair work. One independent
contractor, Todd Grace ("Mr. Grace"), resides in
Texas outside of this District.
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." 28U.S.C. § 1406(a).
Federal Rule of Civil Procedure 12(h)(1) "advises a
litigant to exercise great diligence in challenging personal
jurisdiction, venue, or service of process. If he wishes to
raise any of these defenses he must do so at the time he
makes his first defensive move." Golden v. Cox
Furniture Mfg. Co. Inc., 683 F.2d 115, 118 (5th Cir.
1982). Under Federal Rule of Civil Procedure 12(h)(1),
"[a] party waives any defense listed in rule
12(b)(2)-(5) by . . . omitting it from a motion in the
circumstances described in Rule 12(g)(2)." FED. R. Civ.
P. 12(h)(1)(A). Federal Rule of Civil Procedure 12(g)
provides that "a party that makes a motion under this
rule must not make another motion under this rule raising a
defense or objection that was available to the party but
omitted from its earlier motion." FED. R. Civ. P.
12(g)(2). Accordingly, a party must assert any Rule 12(b)(3)
motion that is available at the time it files any Rule 12
motion. See Elbit Sys. Land & C41 Ltd. v. Hughes
Network Sys., LLC, No. 2:15-cv-37, 2017 WL 2651618, at
*20 (E.D. Tex. June 20, 2017) (citing e.g., Peacock v.
Ins. & Bonds Agency of Tex., PLLC, No.
3:12-cv-1710-D, 2012 WL 3702920, at *1 (N.D. Tex. Aug. 28,
moves for dismissal based on improper venue. Lites Out
contends that venue is proper as Outdoor waived this
objection and the facts permit venue in this District. The
Court must determine whether Outdoor waived its venue
defense. Lites Out contends that Outdoor waived its improper
venue defense in several ways: (1) by filing an answer before
its motion to dismiss; (2) by failing to timely file its
venue challenge per the Court's Order Governing
Proceedings; (3) by not making a specific venue objection in
its answer; and (4) by waiving its venue objection through
conduct. The Court will address each argument in turn.
Lites Out argues Outdoor's motion was late under the
plain terms of Rule 12 because Outdoor 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 Fed.Appx. 376, 379-81 (5th Cir.
2004); Isbell v. DM Records, Inc., No.
4:07-cv-00146, 2011 WL 1299611, at *2 n.2 (E.D. Tex. Mar. 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, No. 1:12-CV-90, 2012 WL 12897045, at
*2 (E.D. Tex. Aug. 14, 2012) ("Although a post-answer
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. U.S., 82 F.Supp.2d 660, 663
(S.D. Tex. 1999))). Accordingly, as long as Outdoor otherwise
preserved its improper venue defense, its failure to file a
motion before it filed its answer did not constitute waiver.
Lites Out argues that Outdoor did not preserve its improper
venue defense because Outdoor's response in its answer
was not specific and did not object to venue as improper
under § 1400(b) (Dkt. #10) (citing Elbit Sys. Land
& C41 Ltd., No. 2:15-cv-37, 2017 WL 2651618, at
*20-21). This argument is unpersuasive. In its Complaint,
Lites Out asserted that "[v]enue is proper in this
District under 28 U.S.C. §§ 1391 and 1400."
(Dkt. #1 at p. 3). Outdoor answered Lites Out's Complaint
on May 1, 2017 (Dkt. #10). In its answer, Outdoor stated,
"OutdoorLink denies that venue is proper in the Eastern
District of Texas. OutdoorLink denies that it has performed
any infringing activities." (Dkt. #10 at p. 3). Outdoor
elaborated that it "is not incorporated in the Eastern
District of Texas, nor does it have a principal place of
business in the district as required by 28 U.S.C. §
1400(b)." (Dkt. #10 at p. 8). In other words, Outdoor
generally denied the allegations set forth by Lites Out in
its venue section.
it is true that [Outdoor] could have set forth a more
specific objection to venue as improper under § 1400(b)
in its Answer, [Outdoor] preserved a general objection to
venue." Blue Spike, LLC v. Contixo lnc., No.
6:16-cv-1220-JDL, 2017 WL 3172425, at *3 (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. 111. 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
plaintiffs 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 Outdoor preserved its
objection to improper venue, the defense is not waived
provided Outdoor timely brought its Rule 12(b) motion to
dismiss for improper venue.
Lites Out argues that Outdoor's motion was filed late
according to the Order Governing Proceedings. Lites Out
maintains that the deadline to file a motion to transfer was
no later than January 19, 2017-i.e. twenty-one days
before the Case Management Conference on February 9, 2017
(Dkt. #34 at p. 6). But Outdoor did not file its motion until
May 24, 2017-over four months after the January 19, 2017
deadline (Dkt. #34 at p. 6). However, because Outdoor
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, No. 6:16-cv-1220-JDL, 2017 WL
3172425, at *3. Here, the parties filed a Joint Report of
Rule 26(f) Conference (Dkt #6), filed a Joint Motion to Amend
the Scheduling Order, engaged in ongoing discovery, and Lites
Out served its infringement contentions on Outdoor. Beyond
these preliminary matters, "the Court and the parties
have not engaged in extensive litigation conduct."
Id. "Thus, because [Outdoor] denied venue in
its answer and timely filed its first Rule 12(b) motion for
improper venue before ...