Loyalty Conversion Systems Corp. v. American Airlines, Inc.

66 F. Supp. 3d 813
CourtDistrict Court, E.D. Texas
DecidedSeptember 2, 2014
DocketCase No. 2:13-CV-655 (LEAD CASE); Case No. 2:13-CV-662
StatusPublished
Cited by2 cases

This text of 66 F. Supp. 3d 813 (Loyalty Conversion Systems Corp. v. American Airlines, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Loyalty Conversion Systems Corp. v. American Airlines, Inc., 66 F. Supp. 3d 813 (E.D. Tex. 2014).

Opinion

MEMORANDUM OPINION AND ORDER

WILLIAM C. BRYSON, UNITED STATES CIRCUIT JUDGE

Before the Court is Defendant JetBlue , Airways Corporation’s Rule 12(b)(3) Motion to Dismiss for Improper Venue. Case No. 2:13-cv-662, Dkt. No. 11. After considering full briefing and argument on the motion, the Court DENIES the motion.

I. BACKGROUND

This action against JetBlue Airways Corporation (“JetBlue”) is one of nine separate actions brought against various United States airline companies by plaintiff Loyalty Conversion Systems Corporation (“Loyalty”). Loyalty owns two U.S. patents, U.S. Patent Nos. 8,313,023 (“the '023 patent”) and 8,511,550 (“the '550 patent”), which relate to methods and computer program products for converting loyalty award credits earned from one vendor into loyalty award credits of a second vendor that the second vendor will accept as payment for purchases. Loyalty alleges that JetBlue, like the other eight defendant airlines, infringes those patents through the operation of its frequent flyer mileage program. In particular, Loyalty alleges that JetBlue infringes the patents by allowing customers to exchange loyalty award credits earned from other vendors for mileage credits in JetBlue’s frequent flyer program, which is known as' True-Blue.

JetBlue is a Delaware corporation with its principal place of business and corporate headquarters in New York. Although JetBlue has flights to three airports in Texas, none of those airports are in the Eastern District of Texas. It has no offices or employees in the Eastern District of Texas, nor does it own any property in the district. Based on the absence of contacts between JetBlue and this district, JetBlue has moved to dismiss for improper venue under Fed. R. Civ. P. 12(b)(3).

A. Governing Legal Principles

A patent infringement action may be brought “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b); see In re Cordis Corp., 769 F.2d 733, 734-35 (Fed. Cir.1985). JetBlue does not have “a regular and established place of business” in the Eastern District of Texas. Venue is therefore proper in the Eastern District only if JetBlue can be said to “reside” there.

As a defendant, a corporation or other entity that is subject to suit is deemed to reside, for venue purposes, “in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.” 28 U.S.C. § 1391(c)(2); see also VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed.Cir.1990). A different subsection of the same statute, 28 U.S.C. § 1391(d), provides that when a suit is filed against a corporate defendant in a multidistrict state such as Texas, the corporation is “deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State.” See In re Volkswagen of Am., Inc., 545 F.3d 304, 312-13 (5th Cir.2008). In a case such as this one, then, the question of proper venue turns on the question whether there is personal jurisdiction over the defendant in the district where the action has been brought.

[818]*818The general principles that apply to the question whether a federal court has in personam jurisdiction over a non-resident defendant are well-settled. If the federal statute under which an action is brought contains an applicable service-of-process provision, the court looks to whether that provision can be satisfied by service of process on the defendant. See Omni Capital Int’l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 105-06, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987). When the federal statute has no such applicable service of process provision, as is the case for the Patent Act,1 the federal court may reach those entities that are subject to the jurisdiction of the state in which the district court sits. See Fed. R. Civ. P. 4(e). In that setting, federal courts “follow state law in determining the bounds of their jurisdiction over persons.” Daimler AG v. Bauman, — U.S. -, 134 S.Ct. 746, 753, 187 L.Ed.2d 624 (2014).

A district court may exercise personal jurisdiction over a defendant if the defendant “is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.” Fed. R. Civ. P. 4(k)(l)(A). In order to satisfy that requirement, the district court’s exercise of jurisdiction over an out-of-state defendant must be consistent with both the forum state’s long-arm statute and the requirements of due process. See Walden v. Fiore, — U.S. -, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014); Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 788-89 (Fed.Cir.2011); Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1329 (Fed.Cir.2008); Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed.Cir.1998).2

Texas’s long-arm statute is coterminous with the extent of personal jurisdiction permitted by due process principles. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413 & n. 7, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Great W. United Corp. v. Kidwell, 577 F.2d 1256, 1266 (5th Cir.1978), rev’d on other grounds, 443 U.S. 173, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979); Prod. Promotions, Inc. v. Cousteau, 495 F.2d 483, 491 (5th Cir.1974); Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990); U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 762 (Tex.1977). Where, as here, the forum state’s long-arm statute “is coextensive with the limits of due process, the two inquiries collapse into a single inquiry: whether jurisdiction comports with due process.” Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed.Cir.2001).

Due process requires that, to subject a defendant to the judicial power of a forum state, the defendant must have sufficient “minimum contacts” with the forum “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 [819]*819S.Ct. 154, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S.

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Bluebook (online)
66 F. Supp. 3d 813, Counsel Stack Legal Research, https://law.counselstack.com/opinion/loyalty-conversion-systems-corp-v-american-airlines-inc-txed-2014.