United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
GILSTRAP, UNITED STATES DISTRICT JUDGE
the Court is Plaintiff Blitzsafe Texas, LLC's
(“Blitzsafe”) Opposed Motion for Venue Discovery
(“the Motion”). (Dkt. No. 115). In the Motion,
Blitzsafe seeks targeted venue discovery based on factual
representations made by counsel for Defendant Bayerische
Motoren Werke, AG (“BMWAG”) and BMW of North
America, LLC (“BMWNA”) (collectively,
“BMW”) at this Court's April 30, 2019 hearing
(Dkt. No. 116) on BMW's Motion to Reconsider Denial of
Motion to Dismiss for Lack of Personal Jurisdiction or
Improper Venue or, in the Alternative, to Transfer
(“BMW's Motion to Reconsider”) (Dkt. No. 94).
Having considered the Motion, the Court finds it should be
and hereby is GRANTED.
the Supreme Court's decision in TC Heartland LLC v.
Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), BMW
sought to dismiss or transfer the instant case for improper
venue (“BMW's Initial Venue Motion”). (Dkt.
No. 60). This Court found that venue remained proper applying
TC Heartland and the Federal Circuit's
explication thereof in In re Cray, 871 F.3d 1355
(Fed. Cir. 2017), based on the particular business structure
between BMW and BMW-brand dealers. The primary dispute was
whether the established BMW-brand dealers were places
“of the defendant” as required by Cray.
871 F.3d at 1360.
Court found that BMW-brand dealers were places “of the
defendant” for at least two reasons. First, the Court
found that BMW “exercises . . . attributes of
possession or control over, ” accord Id. at
1363, the BMW-brand dealers in the form of warranty work that
BMW-brand dealers are required to carry out, and which BMW
supervises. (Dkt. No. 90 at 21-25). Since the Court found
that BMW controlled the provision of warranty services, the
Court found that “the defendant [BMW] . . . actually
engage[d] in business” at the BMW-brand dealers,
accord Cray, 871 F.3d at 1364, and thus found venue
was proper. (Dkt. No. 90 at 14, 22-25).
as an independent basis for venue, the Court found that BMW
had taken a number of steps to ratify the BMW-brand dealers.
See Cray, 871 F.3d at 1363 (“Thus, the
defendant must establish or ratify
the place of business.”). BMW-brand dealers are named
“BMW, ” bear the trademarked BMW logo, and are
seamlessly integrated into BMW's public-facing website.
BMW's website allows visitors to “Apply for
Financing, ” “Get a Quote, ” “Search
New Vehicle Inventory, ” “Schedule a Test Drive,
” “Build Your Own, ” “Contact a BMW
Center, ” and even “Order Now” for cars
that are located at the BMW-brand dealerships within this
District. (Dkt. No. 90 at 15-21). In executing these
functions, BMW's website does not include disclaimers
that emphasize separation between BMW and the BMW-brand
dealers, such as “authorized dealer” or
“exclusive distributor” or “John Doe's
BMW, ” and instead appears to represent that the
BMW-brand dealers are merely location-specific stores of
BMW-i.e., BMW of Tyler is BMW's location in Tyler.
(Id. at 16). BMW's own public description of the
BMW-dealers as “BMW Centers” reinforced the
Court's conclusion that BMW adopted and ratified the
BMW-brand dealers as its own. (Id. at 20). The Court
also took judicial notice that in a previous case before this
Court, BMW had expressly conceded without reservation that it
“has conducted and does conduct business in [the
Eastern District of Texas] by distributing automobiles to
dealers.” (Id. at 13 (citing Entry
Systems, LLC v. Vivint, Inc., No. 2:14-cv-1089-JRG, Dkt.
No. 21 ¶ 4 (E.D. Tex. Nov. 14, 2012)). In view of
BMW's concession, its public representation, and the
affirmative steps it takes to integrate the operations of BMW
and BMW-brand dealers, the Court found that venue was proper.
the Court issued its order, BMW moved for reconsideration.
(Dkt. No. 94). In BMW's Motion to Reconsider, BMW
substantially expanded an argument that the Texas Occupations
Code (“TOC”) precludes BMW from exercising
control over BMW-brand dealers. In BMW's Initial Venue
Motion, BMW consigned the TOC argument to a single sentence
on a single page of BMW's 28-page brief. (See
Dkt. No. 60 at 19). However, in BMW's Motion to
Reconsider, BMW extensively discussed the TOC as a basis for
rejecting venue and also submitted an “expert
declaration on TOC” from Kenneth Herring, a former
administrative law judge in the Texas Department of Motor
Vehicles, purporting to definitively construe Texas law.
(See, e.g., Dkt. No. 94 at 8, 10-13 (arguing for
reconsideration based on the TOC); Dkt. No. 94-7 (Herring
Declaration)). When the Court granted oral argument on the
Motion to Reconsider, BMW focused a large part of its
argument on urging reconsideration based on the TOC.
(See Dkt. No. 116).
BMW's Motion for Reconsideration and at the hearing
thereon, BMW made a series of factual representations about
the degree of control it exercises over BMW-brand dealers, in
light of BMW's apparent interpretation of the TOC. BMW
claimed, for example, that it believed the TOC required it to
honor any request for reimbursement of warranty work, no
matter how unreasonable the BMW-brand dealer's request:
THE COURT: So you're telling me if I go buy a new BMW and
I have a mechanical problem within 30 days, it's covered
by the warranty, and I take it to the dealership in my area
and they repair that mechanical problem, if any
other mechanic anywhere on the planet would charge not more
than $500.00 for it but that particular dealer wants to
charge $50, 000.00 for it, BMW will write them a check for
$50, 000.00 and not question it in any way?
MR. LAVENUE: BMW would pay the
check. Whether they would question it, I think
they would question it and they would ask about it, but
it's basically a relationship issue in that BMW North
America wants to have good relations with the dealer.
(Id. at 13:2-14) (emphasis added). BMW went so far
as to claim that BMW-brand dealers could make purchases from
BMW competitors and BMW would have no choice but to
grant reimbursement, effectively putting money into the
pockets of its own competitors. (Id. at 12)
(“MR. LAVENUE: The dealer is able to do
whatever they wish. In Texas --
unlike any other state in the -- in the country, Texas has
the most harsh occupational code for automotive dealerships
than any. It's - it's number 1 out of 50. And
basically dealerships have carte blanche to
do whatever they want
in Texas.”) (emphasis added).
also claimed that it believes that Texas law renders
unenforceable all of its contractual rights against
BMW-brand dealers. (Id. at 58:12-14). When the Court
sought to confirm this description with BMW's counsel,
BMW repeated its assertion:
THE COURT: So it's just a good faith
handshake between BMWNA and BMW of Tyler? They
just smile at each other while millions of dollars of
inventory go back and forth and millions of dollars of sales
take place, and because of this one state
statute, they can't have any binding contractual
obligations where the manufacturer would exercise ...