Boa Technology, Inc. v. Macneill Engineering Company, Inc.

Opinion

1 2 3 4 5 6 7 10 11 BOA TECHNOLOGY, INC., Case No.: 23-CV-01431-GPC-JLB

12 Plaintiff, ORDER DENYING MOTION TO 13 v. DISMISS AND MOTION TO TRANSFER

COMPANY, INC., PRIDE 15 [ECF No. 52] MANUFACTURING COMPANY, LLC, 16 and MACNEILL PRIDE GROUP CORP., 17 Defendants. 18 19 Before the Court is Defendants Pride Manufacturing Company, LLC’s (“Pride”), 20 MacNeill Pride Group Corp.’s (“MPGC”), and MacNeill Engineering Company, Inc.’s 21 (“MacNeill”) (collectively “Defendants”) Motion to Dismiss the Complaint as to MPGC 22 and MacNeill and Motion to Transfer the action as to Pride. ECF No. 52-1. Plaintiff Boa 23 Technology, Inc.’s (“Plaintiff”) opposes. ECF No. 55. The Court DENIES Defendants’ 24 motion to dismiss and motion to transfer. 25 26 27 2 Plaintiff filed a complaint against MacNeill for patent infringement on August 4, 3 2023. ECF No. 1. The complaint alleged that MacNeill infringed on Plaintiff’s patents 4 for its reel- and dial-based closure systems―which are used to more easily and precisely 5 tighten the laces or fit of a boot, shoe, or helmet―by making and selling these closure 6 systems, including those used in some Puma and Skechers athletic shoes. Id. 7 MacNeill filed a Motion to Dismiss for lack of venue and personal jurisdiction 8 pursuant to Federal Rules of Civil Procedure (“Rule”) 12(b)(2)-(3). ECF No. 18-1 at 4, 9 8, 10,1 and the parties proceeded to limited discovery as to venue and personal 10 jurisdiction. ECF No. 21. Following this preliminary discovery, Plaintiff moved for, and 11 the Court granted, leave to file an Amended Complaint (“AC”). ECF Nos. 28, 28-2, 43. 12 The AC contains substantially the same allegations as in the original complaint, except 13 that it added two Defendants: Pride and MPGC, which it alleges are alter egos of 14 MacNeill. See ECF No. 28-13 ¶ 8 (redline version showing changes between original 15 complaint and AC). The AC alleges that Defendants worked in concert with Skechers, 16 headquartered in Manhattan Beach, CA to research, design, and produce shoes 17 incorporating the infringing products. ECF No. 47 at 6-7 ¶¶ 13, 14. 18 Plaintiff is a Delaware company headquartered in Colorado. ECF No. 47 at 2 ¶ 1. 19 Pride is a Wisconsin company with headquarters in Wisconsin, Maine, and Tennessee. 20 ECF No. 52-2 at 2 ¶ 2. The Pride Division responsible for “all aspects of” the allegedly 21 infringing products is located in Brentwood, Tennessee. Id. at 3 ¶ 4. Joseph Henderson, 22 President of the Recreation Division at Pride, has decision-making authority “for all 23 research, design, development, marketing, and sales decisions” regarding Defendants’ 24 reel- and dial-based closure systems. Id. at 3 ¶ 6. Henderson works at the Tennessee 25

26 1 Page numbers reflect CM/ECF pagination. 27 1 headquarters, as does Sean Slater, the Director for Brand and Product Innovation at Pride, 2 who is responsible for marketing the closure systems. Id. Pride and MPGC also lease a 3 small office on Balfour Court in Carlsbad, CA, in this district, out of which two 4 individuals work part-time. Id. at 3 ¶ 8; ECF No. 40-3 at 4-5. The two individuals are 5 Kent Richard, a consultant at MPGC whose title is also sometimes listed as Senior Vice 6 President of OEM Sales at MacNeill Engineering, and Kevin Osborn, Regional OEM 7 Sales Manager/Sales Director at MacNeill Engineering. ECF No. 47 at 6 ¶ 12; ECF No. 8 40-2 at 2; ECF No. 29-4 at 2; ECF No. 55-1 at 2. 9 Pride is wholly owned by MPGC, a Delaware holding company which according 10 to Defendants has no employees or property of its own. Id. at 4 ¶ 11.2 However, 11 Richard’s consulting contract is with MPGC and MPGC appears on the lease for the 12 space at Balfour Court. ECF No. 40-2 at 2; ECF No. 40-3 at 4-5. MacNeill is a 13 Massachusetts corporation, ECF No. 52-2 at 4 ¶ 9, and the extent to which MacNeill is 14 still an operating entity is disputed, compare id. with ECF No. 55 at 8-9. Plaintiff alleges 15 MacNeill’s principal place of business is the Balfour Court office, ECF No. 47 at 2 ¶ 2, 16 but Defendants contend that MacNeill has no activities, place of business, bank accounts, 17 employees, or property and that “MacNeill Engineering” is a brand used by Pride. ECF 18 No. 52-2 at 4 ¶¶ 9-10. Nonetheless, MacNeill has a LinkedIn presence and both Richard 19 and Osborn present themselves to the public as employees of “MacNeill Engineering.” 20 21 22 23 24 25 2 The AC alleges that MPGC has a principal place of business on Rutherford Road in 26 Carlsbad, CA. ECF No. 47 at 2 ¶ 4. But the Henderson Declaration explains that no Defendant has leased space at that location since 2020. ECF No. 52-2 at 5 ¶ 17. 27 1 ECF Nos. 29-3, 29-4; 29-5. Osborn’s offer letter also lists his employer as MacNeill. 2 ECF No. 55-1 at 2. 3 On March 25, 2024, Defendants filed the instant motion to dismiss MacNeill and 4 MPGC and to transfer the action against Pride to the Middle District of Tennessee. ECF 5 No. 52. With the motions, they also filed a Declaration from Joseph Henderson, 6 President of the Recreation Division at Pride (“Henderson Declaration”). ECF No. 52-2. 7 Plaintiff responded and Defendants replied. ECF Nos. 55, 59. 8 On June 18, 2024, the Court sua sponte raised the question of whether MacNeill 9 and MPGC can and should be transferred to the Middle District of Tennessee and 10 directed the parties to provide supplemental briefing on whether the case could have been 11 brought against MacNeill and MPGC there. ECF No. 62. Pursuant to that order, 12 Defendants filed a brief, Plaintiff responded, and Defendants replied. ECF Nos. 63-65. 14 I. Legal Standard

15 Defendants move to dismiss MPGC and MacNeill pursuant to Rule 12(b)(3) and 16 28 U.S.C. § 1406(a) arguing that venue is improper for them in this district under the 17 patent venue statute, 28 U.S.C. § 1400(b). See ECF No. 52-1 at 17-20. In reviewing a 18 challenge to venue under Rule 12(b)(3), “pleadings need not be accepted as true, and 19 facts outside the pleadings may be considered.” Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 20 (9th Cir. 2009). The Court accepts as true the allegations in the complaint unless they are 21 contradicted by Defendant’s evidence. Allstar Mktg. Grp., LLC v. Your Store Online, 22 LLC, 666 F. Supp. 2d 1109, 1129 (C.D. Cal. 2009). Even where the facts are 23 contradicted, the Court must still “draw all reasonable inferences in favor of the non- 24 moving party and resolve all factual conflicts in favor of the non-moving party[.]” 25 Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1138 (9th Cir. 2004). 26 27 1 The plaintiff bears the burden of demonstrating venue is proper once the defendant 2 makes a venue challenge. See Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 3 491, 496 (9th Cir. 1979); Kelly v. Qualitest Pharms., Inc., No. F06-116, 2006 WL 4 2536627, at *7 (E.D. Cal. Aug. 31, 2006) (collecting cases). If venue is not proper, the 5 district court “shall dismiss, or if it be in the interest of justice, transfer such case to any 6 district or division in which it could have been brought.” 28 U.S.C. § 1406(a). 7 Venue in patent cases is governed by 28 U.S.C. § 1400(b), which requires that 8 patent infringement cases “be brought in the judicial district where the defendant resides, 9 or where the defendant has committed acts of infringement and has a regular and 10 established place of business.” A U.S. corporation “resides” only in its state of 11 incorporation. TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 267- 12 68 (2017). Because MPGC is a Delaware corporation and MacNeill is a Massachusetts 13 corporation, there is no question that neither “resides in this district. ECF No. 47 at 2 ¶¶ 14 2, 4. Venue is therefore proper only if MPGC and MacNeill have committed acts of 15 infringement and have a regular and established place of business in this district. See 28 16 U.S.C. § 1400(b). A “regular and established place of business” exists in a district in 17 which the defendant has (1) a physical place in the district; (2) that is regular and 18 established; and (3) that is the place of the defendant. In re Google LLC, 949 F.3d 1338, 19 1340 (Fed. Cir. 2020). Acts of infringement include the marketing and sales of an 20 infringing product. See 35 U.S.C. § 271(a) (“[W]hoever without authority makes, uses, 21 offers to sell, or sells any patented invention . . . infringes the patent.”). 22 II. Venue is proper over MPGC.

23 MPGC allegedly committed acts of infringement and has a regular and established 24 place of business in this district. The lease agreement for the Balfour Court property lists 25 the lessee as “MacNeill Pride Group Corp[;] Pride Manufacturing Group, LLC” and was 26 signed by an individual on behalf of the same. ECF No. 40-3 at 4-5. In addition, the 27 1 Consulting Agreement signed by Kent Richard⸺the consultant/Senior Vice President of 2 OEM Sales who works from the Balfour Court office⸺is with MPGC. ECF No. 40-2 at 3 2. This is sufficient to allege that MPGC engaged in acts of infringement⸺marketing 4 and sales⸺in this district. The AC alleges that Defendants produce shoes incorporating 5 the infringing product with the intent to sell them in this district, ECF No. 47 at 14 ¶ 44, 6 and evidence demonstrates that an individual with the title “Senior Vice President of 7 OEM Sales” works from an office in this district, ECF No. 40-2 at 2; ECF No. 55-1 at 3. 8 Defendants contend that all of the alleged infringing activity⸺research, design, 9 development, marketing, and sales decisions⸺took place outside of California. ECF No. 10 52-1 at 8. But the court must “resolve all factual conflicts in favor of the non-moving 11 party,” and given Richard’s title and the Carlsbad office space, it is more than reasonable 12 to infer that marketing and sales, infringing activities, occurred in this district. Murphy, 13 362 F.3d at 1138. 14 Moreover, the Balfour Court location is a regular and established place of business 15 for MPGC. The lease for the building in which MPGC’s contracted consultant works 16 indicates that (1) MPGC has a physical location in the district; (2) the physical location is 17 “regular and established” because it is a permanent not temporary space and it is used 18 regularly not sporadically; and (3) it is the place of MPGC, who signed the lease, not the 19 home of an employee. See In re Cray Inc., 871 F.3d 1355, 1362-64 (Fed. Cir. 2017) 20 (explaining the meaning of each element of “a regular and established place of 21 business”). 22 Defendants contend, with no further reasoning, that “[t]he fact that [MPGC] . . . in 23 effect co-signed an addendum to the Carlsbad lease that identified Pride as the lessee 24 does nothing to prove [MPGC] has a regular and established physical place of business 25 and committed acts of infringement in this District.” ECF No. 59 at 8. This is 26 unpersuasive. “Relevant considerations include whether the defendant owns or leases the 27 1 place,” Cray, 871 F.3d at 1363, and here, that MPGC signed the lease and contracted 2 with a consultant who works out of the space demonstrates each element of “regular and 3 established place of business,” see id. at 1362-64. Thus, the Court finds that Plaintiff has 4 sufficiently shown that “the defendant has committed acts of infringement and has a 5 regular and established place of business” in the district and that venue in this district is 6 therefore proper over MPGC. 28 U.S.C. § 1400(b). 7 III. Venue is proper over MacNeill.

8 The Court agrees with Plaintiff that MacNeill committed acts of infringement and 9 has a regular and established place of business in this district. Plaintiff argues that venue 10 is proper here because the MacNeill Engineering website list MacNeill’s address as the 11 same Balfour Court building leased by Pride and MPGC and because the employee and 12 consultant who work out of that office present themselves to the public as working for 13 “MacNeill Engineering.” ECF No. 55 at 8. Moreover, the offer letter for Osborn lists the 14 employer as MacNeill Engineering and his title as “Regional OEM Sales Manager.” ECF 15 No. 55-1 at 2. Similar to MPGC, the presence of a sales employee who works out of an 16 office space in this district is sufficient to allege that MacNeill engaged in acts of 17 infringement⸺marketing and sales⸺here. 18 Furthermore, the Court finds that listing a building in this district on its 19 website⸺at which two individuals who list their employer as MacNeill work⸺and 20 contracting directly with one of those individuals is enough to show that MacNeill has a 21 (1) physical place in the district; (2) the place is permanent and used regularly not 22 sporadically; and (3) the place is that of the company MacNeill, even if through its 23 connections with MPGC and Pride. See In re Cray Inc., 871 F.3d 1355, 1362-64 (Fed. 24 Cir. 2017) (explaining the meaning of each element of “a regular and established place of 25 business”). Thus, MacNeill has a regular and established place of business in the district. 26 27 1 Defendants explain in their brief and in the Henderson Declaration that Pride uses 2 “MacNeill Engineering” as a brand and that it is not a separate company. ECF No. 59 at 3 8; ECF No. 52-2 at 4 ¶ 10. The Henderson Declaration also states that MacNeill has been 4 non-operational since 2017, ECF No. 52-2 at 4 ¶ 9, but Plaintiff points out that MacNeill 5 continues to file annual reports with the Commonwealth of Massachusetts, maintains a 6 LinkedIn presence, and that Osborn’s offer of employment came from “MacNeill 7 Engineering” in 2019. ECF No. 55 at 8-9 (citing 29-2; ECF No. 29-3; ECF No. 55-1 at 8 2). Resolving the factual dispute in favor of the non-movant, see Murphy, 362 F.3d at 9 1138, the Court finds that for the purposes of the instant motion, MacNeill is an 10 operational company, not just a brand. 11 Thus, drawing reasonable inferences in Plaintiff’s favor, MacNeill has committed 12 acts of infringement and has a regular and established place of business in the district and 13 the Court therefore holds that venue is proper over MacNeill under 28 U.S.C. § 1400(b). 14 Accordingly, the Court DENIES the motion to dismiss. Because the Court holds 15 that venue is appropriate over MPGC and MacNeill independently, it does not address 16 Plaintiff’s argument regarding alter ego liability. 18 I. Legal Standard

19 28 U.S.C. § 1404(a) permits a federal court to transfer a case to another federal 20 court “where it might have been brought” “[f]or the convenience of parties and witnesses, 21 in the interest of justice[.]” The district court has broad discretion to determine whether 22 to transfer, Hawkins v. Gerber Prod. Co., 924 F. Supp. 2d 1208, 1212 (S.D. Cal. 2013), 23 but a transfer is inappropriate where it would “merely shift rather than eliminate the 24 inconvenience.” Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th 25 Cir. 1986). The Court must make “individualized, case-by-case consideration of 26 convenience and fairness.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) 27 1 (citation omitted). The party moving for transfer bears the burden of demonstrating that 2 the transfer furthers the convenience of the parties and witnesses and the interests of 3 justice. Hawkins, 924 F. Supp. 2d at 1212. 4 Defendants argue that this Court should transfer Pride to the Middle District of 5 Tennessee. ECF No. 52-1 at 11. The parties do not dispute that the case “might have 6 been brought” against Pride in the Middle District of Tennessee. 28 U.S.C. § 1404(a). 7 However, upon the Court’s order for supplemental briefing regarding whether the case 8 should be transferred as to MacNeill and MPGC, ECF No. 62, both parties argued that 9 the case should not and could not be transferred as to MacNeill and MPGC, ECF No. 63 10 at 2; ECF No. 64 at 2. The Court may transfer a case properly in its district only “[f]or 11 the convenience of parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a). 12 To transfer two Defendants where both parties agree that those Defendants could not be 13 properly brought in the transferee district would be inconsistent with a transfer for the 14 “convenience of the parties . . . in the interest of justice.” See 28 U.S.C. § 1404(a). 15 The Court therefore cannot transfer MacNeill and MPGC, but it must still 16 determine if it should grant the motion to transfer Pride. “The overwhelming authority 17 suggests that in suits against multiple defendants, transfer is proper only to a district in 18 which all are subject to personal jurisdiction” and proper venue. Adam v. Barone, No. 19 20-CV-00761, 2020 WL 4584182, at *5 (N.D. Cal. Aug. 10, 2020). But “in situations 20 where a case could have been brought against some but not all of the defendants in the 21 transferee district, Section 1404 permits the Court to sever and transfer the claims against 22 those defendants while retaining the claims against the remaining defendants for whom 23 transfer would not be proper.” Id. 24 To transfer Pride and retain MacNeill and MPGC in this district would require the 25 parties to litigate two effectively identical cases in different forums. Plaintiff’s claims are 26 the same against each defendant, ECF No. 47 at 14, 17, 19, 21. And the Defendants, if 27 1 alter egos, are clearly very interrelated. See ECF No. 47 at 23-24 470. In the Court’s 2 || “individualized” consideration of this case, Stewart, 487 U.S. at 29, “it is highly desirable 3 || that all of [the plaintiffs] claims are tried in a single forum[.]” United Truck & Equip., 4 || Inc. v. Curry Supply Co., No. CV08-01046, 2008 WL 4811368, at *13 (D. Ariz. Nov. 5, 5 2008). To sever this case into two would be onerous for the parties, a waste of judicial 6 || resources, and produce potentially inconsistent judgments. See Van Dusen vy. Barrack, 7 ||376 U.S. 612, 616 (1964) (“The purpose of 28 U.S.C. § 1404(a) is to prevent the waste of 8 time, energy and money.” (cleaned up)). Because it is certainly not convenient for the 9 || parties to transfer Pride to Tennessee and keep MacNeill and MPGC in this district, the 10 || Court DENIES the motion to transfer Pride.* 12 For the reasons above, the Court DENIES the motion to dismiss MacNeill 13 || Engineering Company, Inc. and MacNeill Pride Group Corp. and DENIES the motion to 14 || transfer venue in the case against Pride Manufacturing Company, LLC. 16 || Dated: August 23, 2024 2 M7 Hon. athe Cate 18 United States District Judge 19 20 21 22 || Ma 23 The consideration of whether to split the case predominates the transfer analysis so 24 || substantially that the Court does not reach the traditional transfer factors enumerated in 45 Jones v. GNC Franchising, Inc., 21 1 F.3d 495, 498-99 (9th Cir. 2000) or the importance of the center of gravity in patent infringement cases, see, e.g., Anza Tech., Inc. v. Toshiba 26 || Am. Elec. Components, Inc., No. 2:17-01688, 2017 WL 6538994, at *4 (E.D. Cal. Dec. 57 21, 2017). , 28 23-CV-01431-GPC-JLB