Petition for Writ of Certiorari — Rates Technology Inc. v. Nortel Networks Corp.
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5 9 MAY 18 200
OFFICE OF THE CLERK
3n The
Supreme Court of the United States
2
aA
RATES TECHNOLOGY INC.,
Petitioner,
Vv.
NORTEL NETWORKS CORPORATION,
Respondent.
e
On Petition For Writ Of Certiorari
To The United States Court Of Appeals
For The Federal Circuit
PETITION FOR WRIT OF CERTIORARI
oO
JAMES B. HICKS
ERVIN, COHEN & JESSUP LLP
9401 Wilshire Boulevard, Ninth Floor
Beverly Hills, California 90212-2974
Telephone: (310) 273-6333 Fax: (310) 859-2325
Attorneys for Petitioner Rates Technology Inc.
COCKLE LAW BRIEF PRINTING CO. (800) 225-6964
OR CALL COLLECT (402) 342-2831
QUESTIONS PRESENTED FOR REVIEW
1. Especially since at least one court of appeals has
said that federal law on this issue “appears to be in disar-
ray”, should this Court resolve the conflict between cir-
cuits as to whether a defendant waives objections to
personal jurisdiction by filing a permissive counterclaim
against the plaintiff?
2. Did it violate the plaintiff’s due process rights for
the district court to set a deadline for the plaintiff to move
to add additional defendants, and then dismiss the case
before that deadline had passed and without any notice to
the plaintiff?
3. Did it violate the plaintiff’s due process rights for
the district court to stay discovery while a hearing date
was pending for the magistrate to review whether the
defendant had adequately responded to jurisdictional
discovery, and then dismiss the case without such review?
i ei
PARTIES TO THE PROCEEDING
The parties to the proceeding are:
Rates Technology Inc., a corporation;
Nortel Networks Corporation, a corporation; and
Nortel Networks, Inc., a corporation.
CORPORATE DISCLOSURE
Petitioner Rates Technology Inc. is a closely held corpora-
tion.
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED FOR REVIEW ............... i
PARTIES TO THE PROCEEDING...............cccc00000000+ ii
CORPORATE DISCLOGURB...........0.0..ccscccccccsccsssccees ii
TATE OF ALFTIBORITING.. .......<00coccccccceececsasscceceeseee v
CITATIONS OF REPORTS OF OPINION ENTERED
lil li Re Se ARSE Rea AC d ROR S 1
BASIS FOR SUPREME COURT JURISDICTION.... 1
CONSTITUTIONAL PROVISION INVOLVED IN THE
CASE....... stescasnsesessensssesesseeseseeseesesseseesensesesseasensaees 1
STATEMENT OF THE CASE .................ssscescsssssseeees 1
SEATTIIIIINTE sh sndnehinbepensccccnannesecsenesenntesssoieneteenspucniistos 6
A. BY HOLDING THAT FILING A PERMISSIVE
COUNTERCLAIM DOES NOT WAIVE JURIS-
DICTIONAL OBJECTIONS, THE COURT OF
APPEALS DECISION CONFLICTS WITH
OTHER COURTS’ DECISIONS ................:::0000 6
B. THE COURT OF APPEALS DECISION
ALSO VIOLATED RTIS DUE PROCESS
RIGHTS, BY FAILING TO ADDRESS THE
DISTRICT COURTS DECISION TO DE-
PRIVE RTI OF ITS RIGHT TO MOVE TO
JOIN ADDITIONAL DEFENDANTS UNDER
THE PRIOR SCHEDULING ORDER.............. 10
C. THE COURT OF APPEALS DECISION
FURTHER VIOLATED RTI’S DUE PROC-
ESS RIGHTS, BY FAILING TO ADDRESS
THE DISTRICT COURTS REFUSAL TO
ALLOW RTI TO TAKE ADEQUATE JURIS-
DICTIONAL DISCOVERY ...................secseeeees 13
IITs cdhnsschavnsbvaktnvabinbinectecusdunssnndstadcsniecsen 18
iii
iv
TABLE OF CONTENTS -— Continued
Page
APPENDIX
1. Federal Circuit’s Judgment, dated February
ee ORE Se TE Sr App. 1
2. Federal Circuit’s Opinion, dated February 17,
Ee OE PE vtinnidiiaitctntdcticptneeincinabininnsinuees App. 2
3. District Court’s Docket Sheet (excerpts, show-
NE SEI I aesttintenttncnensincecckcetieiannetuamniendad App. 17
4. District Court, Order dated June 27, 2003......... App. 22
5. District Court, Order dated July 17, 2003.......... App. 24
6. District Court, Order dated August 11, 2003 .....App. 26
7. District Court, Order dated September 9, 2003 ...App. 28
8. District Court, Order dated September 15,
IETF Asc sniicicnnipbndeesihiasiesseaneiniiasinadtelaaedaadaniaisiaiiians App. 29
9. District Court, Order and Opinion, - dated
I tee BI ins nsiccciininistoniciniaceaninnissindeleasuctaliies App. 31
10. District Court, Order and Opinion, dated
ND Gi, Fascist cctcensestcethcsncnadndnniannninsiathiiins App. 41
11. District Court, Handwritten Order dated
I Te Bi iiccncttnisinsesienninneiiclnsnascistidesminiiiea App. 47
12. Transcript of January 11, 2005 Appellate Oral
I SD siti tnthinisnbdsiscenincnsicsiccineniibaia App. 48
TABLE OF AUTHORITIES
Page
CASES
A. Stucki Co. v. Shwam, 638 F.Supp. 1257 (E.D. Pa.
ROOD inctisccsinssccincintansnscctsanercsinsnnehtensdtbsvatiatinnatienissbestkeiaies 14
Bayou Steel Corp. v. M/V Amstelvoorn, 809 F.2d
SEGT Cia Cle TGF vaecincisecscvecsicesancsenessenetnchdettnnvnntncnssnsiuns 8
Beaunit Mills, Inc. v. Industrias Reunidas F.
Matarazzo, S.A., 23 F.R.D. 654 (S.D.N.Y. 1959) ... 7, 9, 10
BMI v. Hearst, 746 F.Supp. 320 (S.D.N.Y. 1990).............. 12
Cargill, Inc. v. Sabine Trading & Shipping Co., 756
DG TE CG ie TID ncainsncnscnroscevcnnscsevoctaticnss 7, 8, 10, 18
Chase v. Pan-Pac. Broad., Inc., 50 F.2d 131 (D.C.
Ce, SID scccsnsavtiichirecthashientapaicisitsctintnashindinntassaininendetnianends 8
Chudasama v. Mazda Motor Corp., 23 F.3d 1353
CEs Ge CFP icccctintniitcistasssciacnnitasinsnntvaniniiten 13, 15, 18, 19
City of Los Angeles v. David, 123 S.Ct. 1895 (2003) .....passim
Conley v. Gibson, 355 U.S. 41 (1957)............0+ ren 15,17
Data Disc, Inc. v. Systems Tech. Assocs., 557 F.2d
BEI Cia Ce, TE ainsi tanesttncinnctisnsimnssiatsscinncicnsapic 15, 16, 17
Frank’s Casting Crew & Rental Tools, Inc. v. PMR
Technologies, Ltd., 292 F.3d 1363 (Fed. Cir. 2002) ......... 7
Gates Learjet Corp. v. Jensen, 43 F.2d 1325 (9th Cir.
BOIDAD incasnisincncsnvrtotinienandscdaniiducnnienseidisiteisiaslismaiinmnnaiecaninas 8
General Contracting & Trading Co. v. Interpole,
Kare... BOD RBG BO Ciae Cae, TED vecncsesistcenccssoncnnsssasspasses 7,9
Hamilton v. Atlas Turner, Inc., 197 F.3d. 58 (2d Cir.
1999), cert. denied, 530 U.S. 1244 (2000).................eeees 7
vi
TABLE OF AUTHORITIES — Continued
Page
In re Golden Distributors, Ltd., 134 B.R. 766
GEEDE. Es BIIED ceernnccciccenntemainnisttiinnaiienniameainiaiiaisinaal 17
Keller v. Niskayuna Cons. Fire Dist. 1, 51 F.Supp.2d
SED GAB ie ee ictcnicsbantsctevitatnvintsensiaiiiniiaaiindsin: 15, 17
Rates Technology Inc. v. Nortel Networks Corp., 399
ees Res GE GIR BIS ctnccscncsscsesessnsshnsinenneiitnts passim
Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.,
4B FE BES GEOR, Ga Fe ccccsscessenstenninenvscensenpesesenvetnins 9
Sames v. Gable, 732 F.2d 49 (3d Cir. 1984)................. 15, 16
Trustees v. Hudson, 871 F.Supp. 631 (S.D.N_Y.
BOD cccesscccsninnnsientinisietiibimniiniipsiiaaiiaiidaeiiabiecseiel 17
Trustees v. Lowery, 924 F.2d 731 (7th Cir. 1991)................ 7
STATUTES AND RULES
CEE, Clam g SUG. EW sictcensetiiicssinnnniscpuiertieaiiicaiiiiaaamiealiias 1
BB TBA), SRB) ccrevssintisevicrniniitiniiitialiiduiainaaliititsatetaaiatiianialinn 1
BB ULE, GO ciitccisencentaniidinnecnitaniieiniiammaienian 1
COE GB. Gy. Baie BBE cssnctscecensasenssiietscchannaiconttlandiediaaiattin 1
OTHER AUTHORITIES
Wright, Miller & Kane, Federal Practice and
PUCREIIG Citcssecisnistendlnicmienaaes 2, 7, 8, 9, 10
1
CITATIONS OF REPORTS OF OPINION
ENTERED IN THE CASE
Rates Technology Inc. v. Nortel Networks Corp., 399
F.3d 1302, 73 U.S.P.Q.2d 1904 (Fed. Cir. 2005)
+
BASIS FOR SUPREME COURT JURISDICTION
The Court of Appeais for the Federal Circuit entered
its judgment on February 17, 2005. App. 1. Petitioner
Rates Technology Inc. (“RTI”) seeks review of that judg-
ment on a writ of certiorari. The present petition is timely
filed under 28 U.S.C. §2101(c) and under Rule 13.1 of this
Court.
This Court has jurisdiction under 22 U.S.C. §1254(1)
to review on a writ of certiorari the judgment of a federal
court of appeals.’
S
CONSTITUTIONAL PROVISION
INVOLVED IN THE CASE
Constitution of the United States, Amendment XIV,
Due Process Clause.
+
STATEMENT OF THE CASE
This proceeding involves issues of exceptional impor-
tance, including a conflict between circuits and questions
* “App.” citations are to the attached Appendix, and “R” citations
are to the corrected appellant’s appendix in the record on appeal.
2
about basic due process. The two basic questions in this
petition are: .
(1) Whether this Court should resolve the conflict
between circuits about whether filing a permissive coun-
terclaim waives jurisdictional objections (Issue No. 1 — see
6 Wright, Miller & Kane, Federal Practice and Procedure
§1416, at p. 125 (1990)), and
(2) Whether a district court can vacate previously-
set discovery and motion deadlines without any notice
whatsoever, so as to deprive a plaintiff of due process.
Issues Nos. 2 & 3 — see City of Los Angeles v. David, 123
S.Ct. 1895, 1896-97 (2003).
These aren't minor procedural issues, but instead go
to the heart of a plaintiff’s — any plaintifi’s — ability to
pursue litigation, arid “to be heard at a meaningful time
and in a meaningful manner.” Jd. Granting a writ of
certiorari to resolve these issues will restore harmony to
the Circuits, and preserve fundamental notions of ordered
government and due process, as detailed below.
Petitioner RTI owns the rights to U.S. Patent Number
4,209,668 (the “‘668 Patent”) for an invention entitled
TELEPHONE HAVING REITERATIVE DIALING FEA-
TURE. See R25-28 & 46-49 (Complaint and First Amended
Complaint). It filed this patent infringement lawsuit on
the ‘668 Patent against respondent Nortel Networks
Corporation (“NNC”) in the Eastern District of New York
in late 2002. R24.
Since the Nortel entities which had engaged in the
infringing conduct apparently no longer existed because of
various corporate reorganizations (such as “Northern Tele-
com, Inc.”, see R142-49), RTI alleged that the surviving
3
entity NNC was liable for the infringing conduct of its
predecessor corporations, who supplied infringing tele-
phone switches to phone companies such as Verizon, which
then used those products to offer infringing services to
their own customers, including repeat dialing services for
telephones, fax machines, and computer internet connec-
tors. R25-28, 46-49 (Complaint and First Amended Com-
plaint).’
NNC filed an amended answer to RTT’s claims, and
also, a counterclaim, on November 15, 2002. R77-91.
Notably, although RTI had sued only for infringement
claims relating to RTI's ‘668 patent (R25-28, 46-49), NNC’s
counterclaim alleged a permissive unfair competition
claim against RTI, and also permissive declaratory relief
claims relating to different patents — i.e., RTT’s ‘085 and
‘769 patents — which weren’t at issue in RTI’s pleadings.
R86-89.
NNC then moved to dismiss RTI’s amended complaint
on December 3, 2002, on jurisdictional and other grounds.
RTI timely opposed NNC’s motion, and also promptly
sought discovery about the identity of the successors-in-
interest of the entities which had infringed RTI's ‘668
Patent. As noted above, a central issue in this case was the
question of which surviving Nortel entity was responsible
for the allegedly infringing conduct during the life of the
‘668 Patent by various “Nortel” and “Northern Telecom”
entities which apparently no longer exist because of
corporate reorganizations, and RTT’s pleadings alleged
* RTI also sued Verizon on similar infringement claims (R47-49),
but Verizon settled with RTI (see R92), and is no longer a party to this
case.
4
that the surviving entity NNC was liable for the infringing
conduct of these predecessor corporations. R25-28, 46-49.
NNC disputed this issue, but its corporate structure
was confusing at best. NNC’s lawyer explained at the
appellate oral argument “that Nortel Networks Corpora-
tion, NNC, is a Canadian holding company who owns
100% of the Canadian operating company Nortel Networks
Limited, NNL, and that company owns 100% of USS.
operating company Nortel Networks, Inc., NNI” (App. 48),
prompting the following exchange:
“Judge Rader: Why can’t this court look past
some of the technicalities and say look, they were
trying to sue Nortel, they got close enough?
“Mr. Gittes: There was no personal jurisdiction
over NNC at any time, your honor.
“Judge Rader: That’s not really the question I
asked. Of course, I’m taking that into account,
and I’m saying, why didn’t they, why can’t we in
a sense kind of pierce through these multiple
layers of corporate governments and say they
were suing Nortel, didn’t they get close enough?
“Mr. Gittes: Well, they did not get close enough,
they would have had to sue NNI which they were
invited to... .”
Id. at 48-49 (ellipse in original).
However, although NNC’s counsel said that RTI had
been “invited” to sue the “NNI” subsidiary (id.), NNC’s
corporate designee testified under oath at his deposition
that the current “NNI” was not the same company as the
subsidiary “Northern Telecom, Inc.” which had sold ac-
cused products in New York during the applicable time
5
period, and which apparently also changed its name to
“Nortel Networks, Inc.” R142 & 143-48 (deposition tran-
script). NNC’s designee also testified that he did not know
whether “NNI” had divested assets or potential liabilities
or obligations during its numerous “acquisitions, divesti-
tures, internal reorganizations, [and] downsizing|[s]” over
the years. R148-49.
In view of the confusion surrounding NNC’s relation-
ship with these apparently different and/or no longer
existing companies, the magistrate entered several orders
dealing with NNC’s jurisdictional objections:
First, she ordered NNC to provide jurisdictional
discovery to allow RTI to respond to NNC’s motion to
dismiss, and to determine which surviving entity (or
entities) was responsible for the predecessor Nortel com-
panies’ conduct, including “Nortel entities beyond the
actual holding company.” App. 18, 22-23. She also set a
hearing for October 9, 2003, to monitor NNC’s (and RTT’s)
compliance with her discovery orders. App. 19; and
Second, although her scheduling order generally
provided for “joinder of additional parties” by June 24, ©
2003 (see App. 17), she ordered that “this question may be
re-visited after [District Court] Judge Wexler’s resolution
of outstanding dismissal motions,” and she specifically
ordered that RTI would be allowed to move to join or add
additional parties within 30 days after the pending Rule
12 motions were decided (id.) — which deadline (as noted
below) did not expire until early the following year, 2004.
Meanwhile, as the magistrate was sorting through
these discovery issues, the district court suddenly entered
an order adjourning the discovery magistrate’s October 9
6
discovery hearing and staying all discovery (R96), and
eventually set a hearing date on the pending motions for
December 3, 2003.
At the December 3 hearing, the district court granted
NNC’s jurisdictional motion and dismissed RTI’s amended
complaint — without giving RTI an opportunity to move to
join or add additional parties as provided by the schedul-
ing order, and also without allowing RTI to pursue the
jurisdictional discovery previously ordered by the magis-
trate. R161-N; see App. 41-46 (Order dated December 4,
2003). RTI timely appealed, and the Court of Appeals for
the Federal Circuit entered its judgment affirming the
dismissal on February 17, 2005. App. 1.
As detailed below, the lower courts’ errors have
allowed one of the largest multinational companies in the
world — telecommunications giant Nortel — to get away
with infringing a small company’s hard-won patent rights
to an important invention, which its predecessor compa-
nies had effectively been stealing for years. Certiorari
should be granted to restore harmony to the Circuits, and
to preserve basic notions of due process.
2
-
ARGUMENT
A. BY HOLDING THAT FILING A PERMISSIVE
COUNTERCLAIM DOES NOT WAIVE JURIS-
DICTIONAL OBJECTIONS, THE COURT OF AP-
PEALS DECISION CONFLICTS WITH OTHER
COURTS’ DECISIONS
A leading commentator has explained that “courts
have held that when a defendant asserts a permissive
counterclaim, he indicates a desire to use the forum for his
7
own objectives and should not be permitted simultane-
ousl object _to plaintiff’s claim on the unds of
personal inconvenience.” Wright & Miller, supra, §1416 at
p. 125 (emphasis added). Similarly, the First Circuit has
explained that “[t]he requirement that a court possess in
personam jurisdiction is a shield to protect the interests of
an affected defendant — and, like most shields, can be
discarded by the bearer.” General Contracting & Trading
Co. v. Interpole, Inc., 940 F.2d 20, 25 (1st Cir. 1991). Thus,
it only follows that when “a plaintiff [has] purposefully
-availed itself of the benefits and protections of the forum,”
it “voluntarily submit[s] itself to the jurisdiction of [that
forum’s} courts.” Jd.
Indeed, the Federal Circuit has itself favorably cited
the First Circuit’s Interpole case, as holding that “a defen-
dant that invokes the jurisdiction of a court as a plaintiff
waives its personal jurisdiction defense in all actions
related to the claim for which it invoked the court’s juris-
diction.” Frank’s Casting Crew & Rental Tools, Inc. v. PMR
Technologies, Ltd., 292 F.3d 1363 (Fed. Cir. 2002), citing
Interpole, supra; 940 F.2d at 25. Accord, Beaunit Mills, Inc.
v. Industrias Reunidas F. Matarazzo, S.A., 23 F.R.D. 654
(S.D.N.Y. 1959) (filing a permissive counterclaim waives
jurisdictional objections). See generally Cargill, Inc. v.
Sabine Trading & Shipping Co., 256 F.2d 224, 229-30 (2d
Cir. 1985) (finding that defendant’s counterclaim arose
from the method by which plaintiff obtained jurisdiction,
and therefore did not waive objections to personal jurisdic-
tion); Hamilton v. Atlas Turner, Inc., 197 F.3d. 58, 60-63
(2d Cir. 1999), cert. denied, 530 U.S. 1244 (2000) (reversing
dismissal of complaint for lack of personal jurisdiction,
where the defendant forfeited the defense through its
active participation in the lawsuit); Trustees v. Lowery, 924
8
F.2d 731, 732-33 (7th Cir. 1991) (finding that personal
jurisdiction defense had been waived).
In other words, although the appellate panel went to
some length to distinguish the facts of these other cases
(App. 12-13; 399 F.3d at 1308-09), it’s only logical that if a
defendant raises new issues in a permissive counterclaim
— as NNC did here, when it sued RTI for unfair competi-
tion, and for declaratory relief on two new patents which
were not addressed in RTT’s patent infringement lawsuit
against NNC, and then persued these permissive claims,
including by taking discovery (see App. 22) - NNC “should
not be permitted simultaneously to object to plaintiff’s claim
on the grounds of personal inconvenience.” Wright & Miller,
supra, §1416 at p. 125. Thus, “courts have held that when a
defendant asserts a permissive counterclaim, he indicates a
desire to use the forum for his own objectives.” Id.
In contrast, the appellate panel in this case unequivo-
cally held that “filing a counterclaim, compulsory or
permissive, cannot waive a party’s objections to personal
jurisdiction, so long as the requirements of Rule 12(h)(1)
[to object to jurisdiction] are satisfied.” App. 10-12; 399
F.3d at 1308, citing Bayou Steel Corp. v. M/V Amstelvoorn,
809 F.2d 1147, 1149 (5th Cir. 1987); Gates Learjet Corp. v.
Jensen, 743 F.2d 1325, 1330 (9th Cir. 1984); and Chase v.
Pan-Pac. Broad., Inc., 750 F.2d 131, 132 (D.C. Cir. 1984).
There is not just a conflict between Circuits, since the
Second Circuit has observed that “federal law on this issue
appears to be in disarray” (Cargill, supra, 756 F.2d at 229),
and so RTI respectfully submits that this Court should rule on
this basic procedural issue, i.e., whether “when a defendant
asserts a permissive counterclaim, he indicates a desire to use
the forum for his own objectives.,” and therefore “should not
be permitted simultaneously to object to plaintiff’s claim on
9
the grounds of personal inconvenience.” Wright & Miller,
supra, §1416 at p..125. RTI agrees with the First Circuit,
that “the cases holding that service of a counterclaim will not
undercut a preserved jurisdictional defense are premised on
an assumption not present in this case: that the counter-
claim is put forward as a conditional position and will not be
independently pressed if the primary action is dismissed for
lack of personal jurisdiction. Interpole, supra, 940 F.2d at 25.
“T]his case perches at precisely the opposite end of the
spectrum” (id.), since NNC did not plead its permissive
counterclaim in the alternative, nor did it allege that it was
only pursuing its counterclaim as a conditional position —
especially since it took extensive discovery on these permis-
sive claims. R70-74, 83-89, 121.
Thus, although “courts should not ordinarily treat
counterclaims — at least compulsory counterclaims -— as
waivers of jurisdictional objections” (940 F.2d at 24), NNC
raised permissive counterclaims against RTI, failed to allege
them in the alternative or as a conditional position, and took
discovery on them, so it “should not be permitted simultane-
ously to object to plaintiff’s claim on the grounds of personal
inconvenience.” Wright & Miller supra, §1416 at p. 125.
Allowing this issue to remain unresolved invites arbi-
trary rulings. For example, the appellate panel in this case
“appllied] our own law, not that of the regional [Second
Circuit, to issues of personal jurisdiction in a patent in-
fringement case.” App. 9; 399 F.3d at 1307, citing Red Wing
Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358
(Fed. Cir. 1998). In doing so, the appellate panel ignored the
New York federal decision in the Beaunit Mills case, 23 F.R.D.
654 — which held that when a defendant asserts a permissive
counterclaim, it indicates a desire to use the forum for his own
objectives and waives jurisdictional objections — and also the
10
Second Circuit’s decision in Cargill, even though NNC’s
unfair competition permissive counterclaim against RTI
would normally have been subject to Second Circuit stan-
dards of review rather than those of the Federal Circuit, and
was only subject to Federal Circuit review because RTTs
underlying complaint had sued for patent infringement.
In other words, by filing its permissive counterclaim in
a New York federal court, NNC would normally have
waived its jurisdictional objection under the Beaunit case,
but it was allowed to maintain that objection only because
RTT’ underlying complaint alleged patent law issues.
Such arbitrary application of conflicting rules of law is
exactly the sort of thing that having national Federal Rules
of Civil Procedure was intended to prevent, which is why
“federal law on this issue appears to be in disarray.” Cargill,
supra, 756 F.2d at 229. The reported decision in this case
adds to that disarray, and RTI therefore asks this Court to
accept this issue, and to approve those “courts [who] have
held that when a defendant asserts a permissive counter-
claim, he indicates a desire to use the forum for his own
objectives and should not be permitted simultaneously to
object to plaintiff’s claim on the grounds of personal incon-
venience.” Wright & Miller, supra, §1416 at p. 125.
B. THE COURT OF APPEALS DECISION ALSO
VIOLATED RITS DUE PROCESS RIGHTS,
BY FAILING TO ADDRESS THE DISTRICT
COURT’S DECISION TO DEPRIVE RTI OF ITS
RIGHT TO MOVE TO JOIN ADDITIONAL DE-
FENDANTS UNDER THE PRIOR SCHEDULING
ORDER
As noted above, in view of the confusion surrounding
NNC’s relationship with the different and/or no longer
11
existing “Nortel” companies, the magistrate’s scheduling
order generally provided for “joinder of additional parties” by
June 24, 2003 (App. 17), but said “this question may be re-
visited after Judge Wexler’s resolution of outstanding dis-
missal motions.” Id. She also specifically ordered that RTI
would be allowed to move to join or add additional parties
within 30 days after NNC’s pending Rule 12 motions were
decided (id.) — which didn’t happen until December 3, 2003.
R161-N; see App. 41-46 (Order dated December 4, 2003). In
other words, under the scheduling order governing this case,
upon which RTI relied, RTI should have had 30 days after
December 3, 2003 — or until January 2, 2004 — to be able to
file a motion to join or add additional parties (such as NND),
if the district court dismissed its claims against NNC.
Yet at the December 3 hearing, the district court
- dismissed this lawsuit altogether, and did not allow RTI to
move to join or add additional parties as provided by the
scheduling order. Id. See also App. 20 (“The Clerk of this
Court is ordered to terminate all motions and to close the
file in this case.”). This violated RTT’s due process rights,
since RTI had rightfully relied upon the prior scheduling
order, which specifically allowed RTI to wait until after the
district court ruled on NNC’s jurisdictional motion, before
RTI had to move to add new defendants such as NNI.
Moreover, at the December 3 hearing, NNC’s counsel
stated in oral argument that NNI had sold the allegedly
infringing products in New York (R161-K), and so there
was no jurisdictional issue as to NNI. By suddenly taking
away RTT’s right to move to add NNI (or other potential
defendants), without notice, the district court deprived RTI
of its basic due process right to be heard by filing a motion
12
as previously allowed by the scheduling order. See City of
Los Angeles v. David, supra, 123 S.Ct. at 1896.°
Amazingly, the appellate panel did not even address this
issue, but instead merely said that RTI missed its “June 24,
2003 deadline for joining additional parties without leave of
court. The proper course of conduct for RTI would have been
to seek leave of the district court to join NNI as a defendant
to the suit prior to the June 24 cutoff.” App. 14; 399 F.3d at
1309. But the “June 24 cutoff’ did not relate to the schedul-
ing order’s proviso that RTI would be allowed to move to join
or add additional parties within 30 days after NNC’s Rule 12
motion was decided (App. 17) — which deadline did not expire
until January 2, 2004, as noted above.
Because RTI was pursuing jurisdictional discovery
before the magistrate, it rightfully waited until the schedul-
ing order’s January 2, 2004 deadline to move to add addi-
tional parties, and should not have been forced to deal with
the June 24, 2003 deadline as the only applicable deadline on
* Refusing to allow RTI to move to add NNI as a defendant was
especially improper because RTI had previously sued NNI by means of
a counterclaim responsive to NNC’s counterclaim — showing that RTI
wanted to bring in NNI as a party. R110-18. See BMI v. Hearst, 746 F.Supp.
320, 330 (S.D.N.Y. 1990) (noting that a counterclaimant may sue a new
party which is related to an existing party in its counterclaim).
Yet at the December 3 hearing, the district court not only dismissed
RTI’s amended complaint, but — apparently as an after-thought — also
dismissed RTT’s counterclaim without notice, even though nobody had
even moved to dismiss that pleading. As the district court hearing
transcript shows, RTT’s counsel was in the midst of arguing NNC’s
motion to dismiss RTI’s amended complaint, when the district court
judge suddenly shut down his argument mid-sentence, told him to file
an appeal (“Go back to the Second Circuit”), abruptly announced that
the court was “dismissing it [the amended complaint] and the counter-
claims,” and walked out of the courtroom. R161-N (emphasis added).
See App. 41-46 (Order dated December 4, 2003).
13
an after-the-fact basis. Indeed, the appellate panel’s refusal
even to address this issue was a violation of RTTs due
process rights. See Chudasama v. Mazda Motor Corp., 123
F3d 1353, 1365 (11th Cir. 1997) (“a court of appeals simply
has no power to limit its jurisdiction to certain issues”).
The bottom line is that the district court’s decision to
deprive RTI of its right under the scheduling order to move
to join or add additional parties by January 2, 2004, without
notice; and the appellate panel's refusal to address this issue
at all, both violated RTTs fundamental due process right “to
be heard at a meaningful time and in a meaningful manner.”
See City of Los Angeles, supra, 123 S.Ct. at 1897.
C. THE COURT OF APPEALS DECISION FURTHER
VIOLATED RTI’S DUE PROCESS RIGHTS, BY
FAILING TO ADDRESS THE DISTRICT COURT'S
REFUSAL TO ALLOW RTI TO TAKE ADEQUATE
JURISDICTIONAL DISCOVERY
As noted above, because of the questions about NNC’s
relationship with the apparently different and/or no longer
existing “Nortel” companies, the magistrate ordered NNC
to provide documents and interrogatory answers relating
to the allegedly infringing products at issue in this lawsuit
and “Nortel entities beyond the actual holding company”
(App. 22-23), and set a follow-up hearing for October 9,
2003 to monitor NNC’s (and RTI’s) compliance with her
discovery orders. App. 19.
This was because RTI’s primary jurisdictional argu-
ment was that NNC was subject to the district court's
jurisdiction on a successor-in-interest theory, i.e., that it
was subject to personal jurisdiction as a successor-in-
interest to prior companies who had engaged in the
14
alleged infringing activity within New York. E.g., R44-45
(First Amended Complaint 72, alleging that NNC was the
successor-in-interest of “its predecessor company Northern
Telecom”). See A. Stucki Co. v. Shwam, 638 F.Supp. 1257
(E.D. Pa. 1986) (holding that a plaintiff may sue a succes-
sor-in-interest for its predecessors’ patent infringement).
Yet far from providing any real information to RTI as
directed by the magistrate, NNC’s court-ordered discovery
responses generally merely identified the seller or manu-
facturer of the infringing products as “Nortel” or “North-
ern Telecom” — thus making it impossible for RTI to
determine the identities of the responsible legal entities.
R107-08, 109 (Hicks Decl. {2 & Gleason Decl. 2).
Thus, NNC violated the magistrate’s discovery orders,
and RTI planned to follow up on NNC’s incomplete discov-
ery responses at the October 9, 2003 discovery hearing
before the magistrate (R107, Hicks Decl. {3), but it was
prevented from doing so because that hearing was vacated
by the district court at the same time that it stayed dis-
covery generally. App. 30 (Order dated Sept. 15, 2003).
The district court’s decision to prevent RTI from
following up on necessary jurisdictional discovery violated
RTTs fundamental due process right “to be heard at a
meaningful time and in a meaningful manner.” See City of
Los Angeles, supra, 123 S.Ct. at 1897. As the district court
itself had explained in one of its prior rulings on NNC’s
jurisdictional motion, “A motion to dismiss is properly
granted only if ‘it appears beyond doubt that the plaintiff
can prove no set of facts in support of his claim which
would entitle him to relief’ ”:
“When ruling on a motion to dismiss, the court
must accept as true all factual allegations in the
complaint. All reasonable inferences must be
15
drawn in favor of the non-moving party. It is not
for the court to ‘weigh the evidence that might be
presented at trial; the Court must merely deter-
mine whether the complaint itself is legally suffi-
cient....’”
App. 36 (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957),
and other cases).
Thus, as the district court noted, “A motion for lack of
personal jurisdiction may be defeated by the good faith
pleading of ‘legally sufficient allegations of jurisdiction.’”
Id. Although it went on to say a different standard applies
“where the parties have engaged in discovery,” and that
under such circumstances “the plaintiff’s prima facie
showing must be ‘factually supported’” (App. 37), all the
cases are clear that a plaintiff cannot be restricted to just
“engaging in discovery,” but must instead be allowed to
take sufficient jurisdictional discovery. E.g., Data Disc, Inc.
v. Systems Tech. Assocs., 557 F.2d 1280, 1285-86 (9th Cir.
1977). Accord, Chudasama, supra, 123 F.3d at 1367
(noting that a motion to dismiss for lack of personal
jurisdiction may require limited discovery before a ruling
can be made); Sames v. Gable, 732 F.2d 49, 52 (3d Cir.
1984) (reversing judgment entered against plaintiff
without reasonable discovery); Keller v. Niskayuna Cons.
Fire Dist. 1, 51 F.Supp.2d 223, 226 (N.D.N.Y. 1999) (re-
versing dismissal where plaintiff had not completed
discovery).
In this case, RTI was prevented from taking discovery
which the magistrate had actually ordered against NNC.
Thus, although NNC had filed a conclusory declaration
claiming that it was “not the successor in interest to any
company that manufactured, used or sold the products
accused of infringement in this action” (see App. 4), its
16
claim was belied by its steadfast refusal to provide discov-
ery to reveal the identities of such company or companies,
or NNC’s relationship with them. £.g., R107-08 (Hicks
Decl. {2), and R109 (Gleason Decl. 2).
Although the magistrate had ordered NNC to provide
documents and interrogatory answers relating to the
allegedly infringing products at issue in this lawsuit and
“Nortel entities beyond the actual holding company” (App.
22-23), and set a follow-up hearing to monitor NNC’s
compliance with her orders (App. 19), NNC’s discovery
responses just identified the seller or manufacturer of the
allegedly infringing products as “Nortel” or “Northern
Telecom” — thus making it impossible for RTI to determine
the identities of the responsible legal entities, and violat-
ing the magistrate’s discovery orders by failing to provide
basic evidence about the Nortel and Northern Telecom
entities’ relationships with NNC. R107-09.
Under these circumstances, the district court should
have allowed the magistrate to enforce her discovery
orders against NNC at the October 9 hearing — and in any
event, it clearly did not “appear beyond doubt that the
plaintiff can prove no set of facts in support of his claim
which would entitle him to relief” (App. 36, citing Conley,
supra, 355 U.S. at 45-46), so NNC’s jurisdictional motion
should have been denied, so that RTI could have a chance
to get the magistrate to enforce her discovery orders
against NNC. Data Disc, supra, 557 F.2d at 1285-86 (a
plaintiff must be allowed to take sufficient jurisdictional
discovery); Sames, supra, 732 F.2d at 52 (reversing judgment
entered against plaintiff without reasonable discovery);
17
Keller, supra, 51 F.Supp.2d at 226 (reversing dismissal
where plaintiff had not completed discovery).
The appellate panel did not really address this issue
either, saying that “RTI points to no adverse discovery
ruling by the district court, particularly no denial of any
motion to enlarge discovery or compel production [and so]
* RTI further notes that, based on NNC’s limited discovery
responses, RTI posited to the district court that NNC could also be
subject to personal jurisdiction on two other, alternative legal theories:
First, entities using the “Nortel” or “Northern Telecom” names had
sold accused products into New York during the applicable time period
(see R142 & 143-48, deposition transcript), and NNC could be liable for
the infringing conduct of those affiliates’ infringing activities under the
“Nortel” and “Northern Telecom” trade names. See In re Golden
Distributors, Ltd., 134 B.R. 766, 769 (S.D.N.Y. 1991) (holding corpora-
tion liable for sales made under a trade name); and
Second, NNC admitted that a company called Northern Telecom,
Inc. had sold accused products in New York during the applicable time
period (R142 & 143-48, Powers deposition transcript), and although it
later changed its name to “Nortel Networks, Inc.”, it was not the same
company as the current “NNI” company. R145-47 (deposition tran-
script). Because NNC’s allegedly most knowledgeable witness swore
under oath at his deposition that he did not know whether that
company had divested assets or potential liabilities or obligations
during its numerous “acquisitions, divestitures, internal reorganiza-
tions, [and] downsizing[s]” since 1998 (R148-49), NNC could also be
liable under a traditional alter ego theory if it divested Northern
Telecom’s assets or potential liabilities after it received notice of RTI's
patent claims. Trustees v. Hudson, 871 F.Supp. 631, 639 (S.D.N.Y. 1994)
(applying federal common law to alter ego claim under federal statute,
rather than state law).
Thus, it did not “appear beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to relief”
(App. 36, citing Conley, supra, 355 U.S. at 45-46), and the district court
improperly dismissed RTI’s amended complaint for these additional
reasons as well, since RTI never had a chance to get the magistrate to
enforce her discovery orders against NNC, and to use that new informa-
tion to develop these additional personal jurisdictional theories. Data
Disc, supra, 557 F.2d at 1285-86.
18
no discovery issue is properly before us on appeal.” App.
15-16; 399 F.3d at 1310. The appellate panel therefore just
ignored the magistrate’s orders that NNC provide docu-
ments and interrogatory answers relating to the infringing
products at issue (App. 22-23); her order setting a hearing
to monitor NNC’s compliance with her discovery orders
(App. 19); NNC’s violation of these discovery orders, by
identifying the seller or manufacturer of the infringing
products as “Nortel” or “Northern Telecom”, and so making
it impossible for RTI to determine the identities of the
responsible legal entities (R107-08, 109); and the district
court’s decision to vacate the magistrate’s discovery
compliance hearing and to stay all discovery. App. 30.
But as noted above, “a court of appeals simply has no
power to limit its jurisdiction to certain issues” (Chu-
dasama, supra, 123 F.3d at 1365), and the appellate panel
therefore compounded the district court’s violation of RTI’s
basic due process right, “to be heard at a meaningful time
and in a meaningful manner.” See City of Los Angeles,
supra, 123 S.Ct. at 1897.
,
v
CONCLUSION
As noted above, the errors below have allowed a huge
multinational company — telecommunications giant Nortel
— to infringe a small company’s hard-won patent rights to
an important invention, which its predecessor companies
effectively stole for years. This petition involves issues of
exceptional importance since “federal law on this issue [of
counterclaims and the waiver of jurisdictional objections]
appears to be in disarray” (Cargill, supra, 756 F.2d at 229),
and this case also “illustrates the mischief that results when
19
a district court effectively abdicates its responsibility to
manage a case.” Chudasama, supra, 123 F.3d at 1356.
RTI therefore respectfully submits that for all the
reasons stated above, this Court should grant a writ of
certiorari, and resolve the conflict about whether filing a
permissive counterclaim waives jurisdictional objections,
and also set a clear precedent that a district court cannot
vacate its own previously-set discovery and motion dead-
lines without notice, so as to deprive a plaintiff of due
process. Granting a writ of certiorari to resolve these
issues will restore harmony to the Circuits; end the exist-
ing “disarray” in federal law; and preserve the fundamen-
tal due process right “to be heard at a meaningful time
and in a meaningful manner.” City of Los Angeles v. David,
supra, 123 S.Ct. at 1896-97.
| Respectfully submitted,
JAMES B. HICKS
Attorneys for Petitioner
Rates Technology Inc.
May 18, 2005
App. 1
United States Court of Appeals for the Federal Circuit
04-1212
RATES TECHNOLOGY INC.,
Plaintiff-Appellant,
v.
NORTEL NETWORKS CORPORATION,
Defendant-Appellee.
Judgment
(Filed Mar. 21, 2005)
ON APPEAL from the
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
In CASE NO(S). 02-CV-4570
This CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
AFFIRMED
ENTERED BY ORDER
OF THE COURT
DATED FEB 17 2005 /s/_ Jan Horbaly/ka
Jan Horbaly, Clerk
App. 2
United States Court of Appeals
for Federal Circuit
RATES TECHNOLOGY INC.,
Plaintiff-Appellant,
v.
NORTEL NETWORKS CORPORATION,
Defendant-Appellee.
James B. Hicks, Ervin, Cohen & Jessup LLP, of
Beverly Hills, California, argued for plaintiff-appellant.
Marvin S. Gittes, Mintz, Levin, Cohn, Ferris, Glovsky
& Popeo, P.C., of New York, New York, argued for defen-
dant-appellee. With him on the brief were Richard G.
Gervase, Jr. and Carrie Kei Heim.
Appealed from: United States District Court for the
Eastern District of New York
Senior Judge Leonard D. Wexler
DECIDED: February 17, 2005
Before MICHEL, Chief Judge, RADER and LINN, Circuit
Judges.
MICHEL, Chief Judge.
Rates Technology Inc. (“RTI”) appeals the dismissal
for lack of personal jurisdiction of its amended complaint
for infringement of U.S. Patent No. 4,209,668 (“the ‘668
patent”) against Nortel Networks Corporation (“NNC”)
and its counterclaim-in-reply for infringement of the same
App. 3
patent against NNC and against a related but distinct
corporation, Nortel Networks, Inc. (“NNI”). The appeal
was submitted after oral argument on January 11, 2005.
We agree with the district court that NNC, having raised
the affirmative defense of no personal jurisdiction in a
timely answer, did not, and indeed could not, waive its
jurisdictional objections by merely asserting permissive
counterclaims against RTI in the same pleading. We
further hold that RTI’s counterclaim-in-reply against both
NNC and NNI was dismissible as an improper pleading,
although for different reasons as to each. Accordingly, we
affirm the district court’s dismissal of the entire action.
BACKGROUND
On August 16, 2002, RTI filed a complaint for in-
fringement of the ‘668 patent in the United States District
Court for the Eastern District of New York. RTI alleged
that NNC, a Canadian corporation, is the successor in
interest to other Nortel companies, including Northern
Telecom, Inc., that infringed the ‘668 patent. RTI then
filed an amended complaint, adding Verizon Communica-
tions, Inc. as a codefendant.’ Although RTI named NNC
(not NNI) as a defendant, RTI served its first amended
complaint on the designated agent for NNI. On October
14, 2002, counsel for NNC informed RTI that it had served
NNI, not a named party to the lawsuit, rather than NNC.
Counsel for NNC, however, ultimately accepted service on
behalf of its client.
1 RTI dismissed its claims against Verizon with prejudice on March
25, 2003.
App. 4
On October 29, 2002, NNC answered the complaint,
raising lack of personal jurisdiction as an affirmative
defense. NNC also counterclaimed for declaratory judg-
ment of noninfringement, invalidity, and unenforceability
of the ‘668 patent, as well as for unfair competition and
patent misuse. In its first amended answer, filed Novem-
ber 15, 2002, NNC again objected to personal jurisdiction,
and sought a declaration of noninfringement of two addi-
tional RTI patents, U.S. Patent Nos. 5,425,085 (“the ‘085
patent”) and 5,519,769 (“the ‘769 patent”).
After obtaining leave as required by the rules of the
trial judge, on January 24, 2003, NNC moved to dismiss
RTT’s amended complaint, inter alia, for lack of personal
jurisdiction under Fed. R. Civ. P. 12(b)(2). In a supporting
declaration filed with NNC’s motion to dismiss, NNC’s
Assistant Secretary explained that NNC is a Canadian
holding company that does not, and did not, manufacture,
use, sell, or offer for sale products in the United States. He
further declared that NNC is not a successor in interest to
any company that manufactured, used, sold, or offered for
sale products accused of infringement in this action.
Instead, NNC’s Assistant Secretary stated that NNC
wholly owns Nortel Networks Limited, which, in turn,
wholly owns NNI. “All operations of the Nortel Networks
companies in the United States,” NNC clarified, “are
conducted by subsidiaries such as [NNIT].”
The parties commenced discovery on February 10,
2003.” i¥'ne days later, RTI deposed NNC’s designee under
Fed. R. Civ. P. 30(bX(6), Donald Powers, an in-house attorney
* The district court assigned a Magistrate Judge to preside over
discovery matters.
App. 5
for NNI. Mr. Powers confirmed that NNC, a Canadian
holding company, never manufactured or sold any prod-
ucts. Mr. Powers also testified that NNC’s predecessor in
interest, New Nortel Inc., did not manufacture or sell any
products. Mr. Powers further explained that NNI — Nortel
Networks Inc., formerly known as Northern Telecom Inc. —
may have manufactured or sold at least some of the
accused products between 1996 and 1998, the period of
alleged infringement. RTI deposed no other NNI employ-
ees, although discovery continued into September.
On February 24, 2003, the Magistrate Judge issued a
scheduling order setting a deadline of June 24, 2003 for
joining additional parties to the suit." Despite Mr. Powers’
testimony on February 19, 2003, RTI did not seek to join
NNI as a party to the action by the June 24, 2003 dead-
line.
In early September 2003, the Magistrate Judge
scheduled a discovery status conference for October 9,
2003. That conference never transpired, however, because
on September 22, 2003, the district court issued an order
staying all proceedings and setting oral argument on NNC's
January motion to dismiss for lack of personal jurisdiction.
The district court’s order stressed that, to date, RTI had
failed to present any evidence contradicting NNC’s Rule
12(bX2) motion, yet afforded RTI the opportunity to
* Although the scheduling order is not part of the record on appeal,
the docket sheet in this action indicates the Magistrate ruled that:
“Joinder of additional parties due by 6/24/03. Additionally, this question
may be re-visited after Judge Wexler’s resolution of additional dis-
missal motions. To [the] extent counts are dismissed and require
additional joinder, the parties will have 30 days after decision on these
motions to request additional joinder. This latter provision is not
intended to lift the ‘good cause’ standard for joinder motions.”
App. 6
submit any evidence obtained in discovery supporting its
allegations of personal jurisdiction over NNC.
On October 15, 2003, RTI filed a supplemental opposi-
tion to NNC’s motion to dismiss its first amended com-
plaint, again alleging jurisdiction over NNC by virtue of
its purported status as a successor in interest to Nortel
companies that engaged in infringing activities, despite
the uncontradicted testimony to the contrary. RTI further
argued that NNC waived its jurisdictional objections by
filing permissive counterclaims against RTI in its answer.
As Exhibit 1 to its supplemental opposition, RTI attached
a purported counterclaim-in-reply for infringement of the
‘668 patent, naming both NNC and NNI as counterclaim
defendants. As to NNC, the counterclaim-in-reply repeated
verbatim the infringement allegations in RTTs amended
complaint.
RTI did not serve its supplemental opposition, includ-
ing the attached counterclaim-in-reply, on NNI, a non-
party to the proceeding. RTI did serve NNC, which did not
respond to the purported counterclaim-in-reply. On De-
cember 3, 2003, RTI moved for entry of default judgment
against NNC for failing to respond to its counterclaim-in-
reply. On the same day, however, after hearing oral argu-
ment, the court ruled from the bench, dismissing both
RTTs complaint and its purported counterclaim-in-reply.
The court issued its written opinion the next day,
December 4, 2003. The district court ruled that NNC did
not waive its personal jurisdiction defense, as it had
properly raised its jurisdictional objections from the
inception of the litigation. The court further ruled that,
despite discovery, RTI had presented no evidence to
contradict the basic facts testified to by NNC that it is not
App. 7
the successor in interest to any Nortel entity that made,
used, sold, or offered to sell the accused products, but is
instead merely a Canadian holding company, one lacking
even minimum contacts with the State of New York.
Similarly, the court reasoned that even though RTI had
long known of NNI’s existence, it failed (1) to allege that
NNI is a “mere department” of NNC, which, if proven,
would provide jurisdiction over NNC, or (2) to properly
name and serve NNI as a defendant to the suit. The
district court thus concluded that “the successor status of
NNI and/or any relationship between NNI and NNC has
no relevance to this motion.” The court, consequently,
dismissed the entire action for lack of personal jurisdiction
over NNC.
RTI timely appealed. We have jurisdiction under 28
U.S.C. § 1295(a)(1).
DISCUSSION
I
The issues on appeal are narrow. RTI does not appeal
the district court’s determination that it had failed to
prove personal jurisdiction over NNC under its “successor
in interest” theory. RTI instead challenges the district
court’s dismissal of its amended complaint and counter-
claim-in-reply for three reasons. First, RTI argues the
court erred in dismissing its amended complaint, as NNC
submitted to personal jurisdiction in the district court by
filing permissive counterclaims for declaratory judgment
on the ‘085 and ‘769 patents. The dismissal was especially
improper, RTI claims, because it had no opportunity to
take full discovery on the question of personal jurisdiction.
Second, RTI contests the district court’s dismissal of its
App. 8
counterclaim-in-reply. RTI argues that it properly “filed its
counterclaim against NNC in large part to get past NNC’s
now-moot jurisdictional motion as to RTTs amended
complaint.” Accordingly, RTI claims that the district
court’s sua sponte dismissal of that counterclaim-in-reply ~
violated the rules of procedure and its due process rights.
Third, RTI contends that the district court’s dismissal of
claims against NNI was equally improper because a new
party may be named as a counter-defendant in a newly-
filed counterclaim without leave of court, so long as the
claims against that new party relate to a counterclaim
against an existing party. RTI argues its claims against
NNI were, in fact, identical to its counterclaims against
NNC, the existing defendant. Moreover, as the 120-day
time period for serving NNI had not yet expired, the
district court should have given RTI notice of any intent to
dismiss its counterclaim-in-reply against NNI as not
timely served, as required by Fed. R. Civ. P. 4(m).
In addition, RTI contends that the district court erred
in denying its motion for a default judgment against NNC
on its so-called counterclaim. Because NNC simply chose
not to respond to RTT’s counterclaim and thus cannot show
“excusable neglect” to avoid default, RTI argues, the
district court was without discretion to decline entry of
default judgment.
NNC responds that no jurisdictional waiver occurred.
NNC explains that to preserve the defense of lack of
personal jurisdiction under the Federal Rules of Civil
Procedure, a defendant need only assert it in its first
responsive filing, which it did in its answer and amended
answer. NNC further argues that RTT’s purported counter-
claim-in-reply constitutes an improper pleading, wholly
duplicative of the amended complaint. What is more, NNC
ee
App. 9
argues that the counterclaim was never properly filed with
the court or served on NNC, but instead was merely
attached as an exhibit to a supplemental opposition to
NNC’s motion to dismiss. With respect to NNI, NNC
contends that RTI's counterclaim was untimely filed
without leave of court some four months past the June 24,
2003 deadline for joining new parties.
II
We apply our own law, not that of the regional circuit,
to issues of personal jurisdiction in a patent infringement
case. Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.,
148 F.3d 1355, 1358 (Fed. Cir. 1998). This court places
waiver of personal jurisdiction within the discretion of the
trial court, consistent with the trial court’s broad authority
to manage actions pending before it. See United States v.
Ziegler Bolt & Parts Co., 111 F.3d 878, 882 (Fed. Cir. 1997)
(citing Chambers v. NASCO, Inc., 501 U.S. 32, 43-46
(1991)). “On appeal, this court defers to the judgment of
the trial court on such matters closely associated with the
standard functions of the adjudicative process, so long as
that judgment is not an abuse of the trial court’s discre-
tion.” Id.
“Because the requirement of personal jurisdiction
represents first of all an individual right, it can, like other
such rights, be waived.” Ins. Corp. of Ir. Ltd., v. Compagnie
des Bauxites de Guinee, 456 U.S. 694, 703 (1982). To this
end, Fed. R. Civ. P. 12(h)(1) establishes that
[a] defense of lack of jurisdiction over the person,
improper venue, insufficiency of process, or insuf-
ficiency of service of process is waived ... if it
is neither made by motion under this rule nor
App. 10
included in a responsive pleading or an amend-
ment thereof permitted by Rule 15(a) to be made
as a matter of course.
Rule 12(h)(1) “advises a litigant to exercise great diligence
in challenging personal jurisdiction, venue or service of
process.” 5C Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure §1291 (3d ed. 2004).
These defenses must be raised “at the time the first
significant defensive move is made — whether it be by way
of a Rule 12 motion or in a responsive pleading.” Jd.
Here, the parties do not dispute that NNC objected to
personal jurisdiction in a timely manner, in its answer and
again in its amended answer. Similarly, RTI does not
contest that NNC moved to dismiss the amended com-
plaint for lack of personal jurisdiction as soon as it ob-
tained the required leave of the district court, which it
promptly sought. Thus, NNC satisfied the requirements of
Rule 12(h)(1).
Despite NNC’s compliance with Rule 12(h)(1), RTI
contends that NNC nevertheless submitted to personal
jurisdiction in the district court simply by filing permis-
sive counterclaims. We disagree. We hold that filing a
counterclaim, compulsory or permissive, cannot waive a
party's objections to personal jurisdiction, so long as the
requirements of Rule 12(h\(1) ary Uatisfied. Indeed, holding
to the contrary would effectively eliminate the unqualified
right provided by Rule 12(b) of raising jurisdictional
defenses either by motion or answer.‘ As the Third Circuit
* See Frank's Casing Crew & Rental Tools, Inc. v. PMR Techs., Lid.,
292 F.3d 1363, 1372 (Fed. Cir. 2002) (noting that personal jurisdiction is
not waived “where an unrelated claim is brought as a permissive
(Continued on following page)
App. 11
stated in Neifeld v. Steinberg, 438 F.2d 423, 428-29 (3d Cir.
1971),
[i]f we were to take the position that a defendant,
by raising his jurisdictional defenses in the same
pleading in which he asserted a counterclaim,
waived his jurisdictional defenses, we would in
effect be engrafting a judicial exception to Rule
12(b). We would be requiring a defendant to raise
his jurisdictional defenses by motion when he in-
tends to file a counterclaim in his responsive
pleading. This requirement would be contrary to
the option provided to the defendant in Rule 12(b).
We agree with this view, shared by several of our sister
circuits. See, e.g., Bayou Steel Corp. v. M/V Amstelvoorn,
809 F.2d 1147, 1149 (5th Cir. 1987) (“We now adopt what
we consider to be the better reasoned and prevailing view,
and hold that the filing of a counter-claim, cross-claim, or
third-party demand does not operate as a waiver of an
objection to jurisdiction, whether that objection is raised
by motion or answer, provided that the objection is not
otherwise waived in the course of the litigation.”); Gates
Learjet Corp. v. Jensen, 743 F.2d 1325, 1330 (9th Cir. 1984)
(Rule 12(b) of the Federal Rules of Civil procedure “implic-
itly authorizes a defendant to join a jurisdictional defense
with a counterclaim without waiving this defense.”); Chase
v. Pan-Pac. Broad., Inc., 750 F.2d 131, 132 (D.C. Cir. 1984)
(“The holding that a defendant may not state in an answer
both a jurisdictional defense and a counterclaim is incon-
sistent with the design and purpose of the pleading pre-
scriptions set out in the Federal Rules of Civil
counterclaim against the plaintiff” if the proper objection is raised by
motion or answer).
App. 12
Procedure.”). Nor has any contrary holding of another
circuit been cited to us by RTI.° Thus, RTI’s waiver argu-
ment must be rejected.
The cases on which RTI relies are readily distinguish-
able. In Hamilton v. Atlas Turner, Inc., 197 F.3d 58 (2d Cir.
1999), defendants participated in four years of litigation
before moving to dismiss under Rule 12(b)(2). The Second
Circuit thus concluded that “Atlas forfeited its defense of
lack of personal jurisdiction by participating in extensive
pretrial proceedings and forgoing numerous opportunities
to move to dismiss during the four-year interval that
followed its inclusion of the defense in its answer.” Id. at
62. Similarly, in Trustees of Central Laborers’ Welfare
Fund v. Lowery, 924 F.2d 731 (7th Cir. 1991), after partici-
pating in intensive post-judgment proceedings, defendants
moved to vacate the default judgment entered against
them six years earlier. Jd. at 732-33. The defendants
claimed that the plaintiff’s failure to properly serve them at
the beginning of the lawsuit (in 1982) rendered the judgment
void. The Seventh Circuit held that the defendants had
waived their Rule 12(h)(1) objections, explaining that “[t]he
* RTI's reply brief references General Contracting & Trading Co. v.
Interpole, Inc., 940 F.2d 20 (1st Cir. 1991), in support of its waiver
argument. RTI's invocation of Interpole is wholly misplaced as that case
involved a third-party defendant, Trastco, who objected to personal
jurisdiction in the New Hampshire district court, yet filed a new suit in
the same court based on the same transaction as the original complaint
and third-party complaint. Jd. at 21. Holding that Trastco submitted
itself to jurisdiction in New Hampshire, the Interpole court specifically
rejected Trastco’s argument that it did not waive jurisdictional objec-
tions in the first suit by bringing the second because the second suit
was essentially a counterclaim. Jd. at 24. “We reject the contention that
being a plaintiff in an independent, later-filed suit is, or should be
treated as, the functional equivalent of being a counter-claimant.” Jd.
App. 13
conduct engaged in by both the defendants and their
attorney over a six year period indicated to the plaintiffs
that service had been properly effectuated and that no
such defense would be raised.” Jd. at 734. Neither Hamil-
ton nor Lowery is relevant to this case. While a party may
consent to personal jurisdiction by extensively participat-
ing in the litigation without timely seeking dismissal, this
is not such a case. Here, NNC did not dally, but moved to
dismiss on jurisdictional grounds at its earliest opportu-
nity.
In sum, NNC complied with Rule 12(h)(1) by objecting
to personai jurisdiction in its answer and amended an-
swer. The mere fact that NNC included permissive coun-
terclaims for declaratory judgment on the ‘085 and ‘769
patents cannot effect waiver of personal jurisdiction.
Furthermore, NNC moved to dismiss the amended com-
plaint under Rule 12(b)(2) within days of promptly obtain-
ing the required leave from the district court. We thus
affirm the district court’s dismissal of RTT’s first amended
complaint and the so-called counterclaim-in-reply as to
NNC for lack of personal jurisdiction over NNC.°
* Even absent the jurisdictional defect, RTI’s counterclaim-in-reply
against NNC would fail on other grounds. Most notably, as RTI admits,
the counterclaim-in-reply against NNC merely restates the same
infringement claims already asserted in the first amended complaint.
As such, it is wholly duplicative. Surely, the district court would not
abuse its discretion in dismissing this pleading as redundant. Further,
we question whether merely attaching the counterclaim as an exhibit to
an opposition to a motion can constitute a proper filing with the district
court. In view of the other infirmities plaguing RTI’s counterclaim-in-
reply, however, we need not resolve the soundness of its filing. Likewise,
we need not reach RTI's arguments regarding the district court’s denial
of its motion for default judgment.
App. 14
Moreover, we are unpersuaded by RTTs contention
that the district court’s sua sponte dismissal of its counter-
claim-in-reply somehow deprived it of due process. Be-
cause NNC’s permissive counterclaims did not submit it to
jurisdiction in the United States District Court for the
Eastern District of New York, the district court had no
more authority to entertain RTT’s so-called counterclaim-
in-reply against NNC than it did to hear the amended
complaint in the first place. RTI cites no authority, and we
are aware of none, requiring the district court to give
notice under such circumstances before dismissing this
purported pleading.
Ill
RTTs counterclaim, in so far as it names NNI as a
defendant, is also defective because it was untimely filed
some four months after the June 24, 2003 deadline for
joining additional parties without leave of court. The
proper course of conduct for RTI would have been to seek
leave of the district court to join NNI as a defendant to the
suit prior to the June 24 cutoff.’ RTT’s failure to seek such
leave, much less to do so in a timely fashion, renders its
purported counterclaim-in-reply improper.
” Even if the court’s scheduling order were read, as RTI suggests,
to permit joinder within thirty days of the court’s ruling on NNC’s
motion to dismiss, the district court clearly stated that “[t]his latter
provision is not intended to lift the ‘good cause’ standard for joinder
motions.” RTI provides no evidence that it met the “good cause”
requirement when it submitted its counterclaim-in-reply. RTI, there-
fore, failed to demonstrate that its counterclaim-in-reply against NNI
was otherwise properly filed.
en PTAA LATERAL OPER IT RTE a ~ ——
App. 15
The district court stated that because it was never
served with process, “NNI is not now, no([r] has it ever
been, a party to this action.” RTI argues that dismissal
was improper because it had 120 days to serve NNI and,
in any event, the court must provide notice before sua
sponte dismissing for failure to serve. See Fed. R. Civ. P.
4(m).* Because we hold that RTT’s so-called counterclaim
against NNI was improper as filed without leave of court,
we need not reach that argument. Therefore, the district
court did not abuse its discretion in dismissing the coun-
terclaim-in-reply against NNI.
IV
Finally, we must dispense with RTI’s discovery com-
plaints. Despite its protests that it had no opportunity to
conduct effective discovery, RTI points to no adverse
discovery ruling by the district court, particularly no
denial of any motion to enlarge discovery or compel pro-
duction. As such, RTI presents nothing for us to review on
appeal. Appellate courts are not in the business of redress-
ing discovery discontents absent a reviewable order from a
district court. Here, none exists.
We note, moreover, that RTI conducted seven months of
discovery. In fact, only nine days after discovery commenced,
RTI learned the corporate structure of the relevant Nortel
group from deposing NNC’s Rule 30(b)(6) representative. Mr.
Powers testified that NNC wholly owns Nortel Networks
* Fed. R. Civ. P. 4(m) states, in relevant part: “If service of the
summons and complaint is not made upon a defendant within 120 days
after the filing of the complaint, the court, upon motion or on its own
initiative after notice to the plaintiff, shall dismiss the action without
prejudice as to that defendant... .”
App. 16
Ltd., which wholly owns NNI, the corporate entity that
may have manufactured, used, sold, or offered for sale
some of the accused products. RTI also knew of NNI’s
representative designated for receiving service of process.
RTI, nevertheless, ignored this critical information and,
therefore, has only itself to blame for missed discovery
opportunities. In any event, we conclude that no discovery
issue is properly before us on appeal.
CONCLUSION
For these reasons, the district court’s dismissal of the
entire action is AFFIRMED.
App. 17
U.S. District Court
Eastern District of New York (Central Islip)
CIVIL DOCKET FOR CASE #: 2:02-cv-04570-LDW
Rates Technology Inc. v. Nortel
Networks Corporation et al Date Filed: 08/16/2002
[Excerpts]
* “ .
02/24/2003
42
Minute Entry: Before Arlene R. Lindsay
on 2/24/03 at 11:00 a.m., civil cause for
Telephone Status Conference. Case
called. All counsel present. Conf. held.
The following rulings were made: Join-
der of additional parties due by 6/24/03.
Additionally, this question may be re-
visited after Judge Wexler’s resolution
of outstanding dismissal motions. To
extent counts are dismissed and require
additional joinder, the parties will have
30 days after decision of these motions
to request additional joinder. This latter
provision is not intended to lift the
“good cause” standard for joinder mo-
tions. Initial disclosure as well as re-
sponses to outstanding discovery
requests from plaintiff are due 3/17/03.
Plaintiff to resolve confidentiality issue
by close of business 3/25/03. All fact
Discovery due by 10/24/03. Expert
Discovery to be completed by 12/31/03.
Joint Pretrial Order due by 1/27/04 and
Final Pretrial Conference set for 2/3/04
at 10:00 A.M. Briefing schedule on claim
construction to be proposed by parties.
Plaintiff's response on request for
sanctions due 2/28/03. Reply by 3/5/03.
Request to bifurcate liability/damages to
App. 18
be addressed to Judge Wexler’s discre-
tion. In the absence of a contrary ruling,
all discovery will proceed as scheduled
on all issues. So ordered (signed by Mag/
Judge Arleme R. Lindsay on 2/24/03)
(Montero, Edher) Modified on 3/3/2003
(Montero, Edher). (Entered: 03/03/2003).
* * *
07/17/2003
85
Minute Entry: Before Arlene R. Lindsay
on 7/17/03 at 11:00 a.m., civil cause for
telephone status conf. Case called. All
counsel present. Conf. held. The follow-
ing rulings were made: 1) Discovery on
a theory of contributory infringement
may proceed requiring defts to produce
customer information as requested. This
information may, as appropriate, be
designated “for attorney’s eyes only”. 2)
Plaintiff may supplement rsonses to
Interrogatories 11 & 15 concerning
damages. Supplemental response due
8/5/03. 3) Telephone conf. of 8/19/03 is
cancelled. A telephone conference will
be held on 8/12/03 at 11:30 A.M. So
ordered (signed by Mag/Judge Arlene R.
Lindsay on 7/17/03) c/f (Montero, Edher)
(Entered:08/19/2003)
*” * *
08/11/2003
89
Minute Entry for proceedings held before
Arlene R. Lindsay on 8/11/2003. As the
parties have submitted letters indicating
that there are outstanding discovery
disputes, the telephone conference
scheduled for 8/12/03 is adjourned to
9/3/03 at 2pm as an in-person conference.
(Barhome, Sydelle) (Entered: 09/05/2003)
Ce a abel
PAI DOP RO HIRE
Oe Re TT RT MTL OR Cysts Bh Oy FN Ee 199 ~
App. 19
09/09/2003
ORDER: A status conf in the above-
captioned case has been scheduled for
10/9/03 at 10:30 a.m. to be held in
courtroom 810 in the US Federal Court-
house in CI. The parties should be
prepared to address any outstanding
discovery disputes. The deft. shall also
inform the court as to the outcome of its
motion to dismiss prior to the conf. So
ordered (Signed by Judge Arlene R.
Lindsay on 9/9/03) c/f (Montero, Edher)
(Entered: 09/17/2003)
* * *
09/15/2003
91
ORDER denying [29] Motion to Dismiss:
All pending motions are hereby denied
without prejudice to automatic renewal
upon the scheduling of oral argument;
discovery is stayed pending the court’s
rulings on the motions to dismiss; the
conf. currently scheduled to be held
before Mag/Judge Lindsay on 10/9/03 is
adjourned as are all other dates in this
matter. So Ordered (Signed by Judge
Leonard D. Wexler on 9/15/03). c/m
(Mon-tero, Edher) (Entered: 09/17/2003)
09/22/2003
92
MEMORANDUM AND OPINION: (see
Order for details) In light of the forego-
ing, the court issues the following
order: Order argument will be held on
Wednesday, 11/12/03 at 10:30 a.m.; The
Court will give RTI the opportunity,
prior to that date, to submit any evi-
dence obtained in discovery that sup-
ports its allegation sof jurisdiction over
NNC. Such evidence and any accom-
panying memorandum, shall be served
on the Court and opposing counsel by
App. 20
10/15/03; NNC shall have the right to
submit opposition to any such documen-
tation to this Court, and opposing coun-
sel, by 10/22/03; RTI shall have the right
to reply to any such opposition by
10/29/03; The stay of discovery and
adjournment of all court dates will re-
main in effect. SO ORDERED (Signed by
Judge Leonard D. Wexler on 9/22/03) c/m
(Montero, Edher) (Entered: 09/26/2003)
* * *
12/03/2003] 101|Minute Entry: Before Leonard D. Wex-
ler on 12/3/03 at 11:00 a.m., civil cause
for Motion Hearing. Case called. Coun-
sel present. Court Reporter Mary Ann
Steiger. Defendant’s Motion to Dismiss
held. Motion argued. Motion granted as
indicated on the record. Decision to be
published. Motion hearing concluded.
(Montero, Edher) (Entered: 01/05/2004)
12/04/2003 Judge Arlene R. Lindsay no longer
assigned to case. (Lopez, Adriana)
(Entered: 12/11/2003)
12/04/2003} 102}ORDER: It is clear, therefore, that NNI
is not now, or has it ever been, a party to
this action. Thus, the successor status of
NNI and/or any relationship between
NNI and NNC has no relevance to this
motion. For the foregoing reasons,
defendant’s Motion to Dismiss this action
for lack of personal jurisdiction is|
granted. All other pending motions are
denied as moot. The Clerk of the Court is
directed to terminate all motions and to
close the file in this case. SO ORDERED
(Signed by Judge Leonard D. Wexler on
App. 21
12/4/03) c/m(Montero, Edher) (Entered:
01/05/2004)
* * *
01/08/2004 ENDORSED ORDER re [104]: Constru-
ing this document as a motion to re-
argue this Court’s order of 12/4/03, the
motin is hereby DENIED. SO OR-
DERED (Signed by Judge Leonard D.
Wexler on 1/8/04) c/m (Montero, Edher)
(Entered: 01/13/2004)
* * *
03/25/2004} 113}ORDER denying [106] Motion for Sanc-
tions: Upon consideration of those
standards and the submissions of the
parties, the court denies to impose
sanctions in this matter. The motion is}
accordingly, denied. The Clerk of the
court is directed to terminate the motion
as denied. SO ORDERED (Signed by
Judge Leonard D. Wexler on 3/25/04)
c/m (Montero, Edher) (Entered:
03/31/2004)
App. 22
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
RATES TECHNOLOGY,
Plaintiff(s). ORDER
guns CV 02-4570 (LDW) (ARL)
NOTEL NETWORKS,
Defendant(s).
2)
3)
4)
5)
The following rulings result from today’s conference:
Plaintiff is to provide an analysis of its infringement
claims by product and in detail based upon the 25-30
products previously identified as infringing. This
analysis is due by July 25, 2003.
Plaintiff is directed to supply Defendant with a list of
cases brought by Plaintiff pursuing violations of 668,
769 and 735 parents. Included in this submission
should be the docket numbers if known, and copies of
any settlement agreements (but not settlement
amounts), license agreement or covenants not to sue
reached in settlement of these suits and which are
within Plaintiff's control. This submission i is also due
on July 25, 2003.
The damages discovery will be discussed further at a
conference on July 17, 2003 at 10:30 a.m.
A telephone status conference will also be held on
August 19, 2003 at 10 a.m. to establish a schedule for
the Weinberger deposition.
Defendants to respond to outstanding interrogatory
and document requests seeking information with
respect to the 25-30 products which are sold or
App. 23
manufactured by Nortel as that entity is defined in
Paragraph 3, which would include Nortel entities be-
yond the actual holding company. This submission is
due on July 25, 2003.
SO ORDERED
Dated: Central Islip, New /s/ Arlene Rosario Lindsay
York
June 27, 2003 ARLENE ROSARIO
LINDSAY
United States
Magistrate Judge
App. 24
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
Long Island Federal Courthouse
814 Federal Plaza
Central Islip, New York 11722-4451
(631) 712-5730
BEFORE: ARLENE R. LINDSAY USM
DATE: JULY 17, 2003
TIME: 11:00AM
DOCKET CV 02-4570 (LDW)
CAPTION: RATES TECH -V- NORTEL NETWORKS
__ INITIAL CONFERENCE __BY TELEPHONE
xx STATUS CONFERENCE
__SETTLEMENT CONFERENCE
___FINAL CONFERENCE
___OTHER
APPEARANCES: FOR PLAINTIFF: FOR DEFENDANT:
Ms. Toga Mr. Dinenberg
___PRETRIAL SCHEDULING ORDER ADOPTED
___DISCOVERY COMPLETED
___PRETRIAL ORDER APPROVED
CASE RETURNED TO ASSIGNED JUDGE FOR
TRIAL/FINAL DISPOSITION
___ CONFERENCE RESCHEDULED FOR
PLAINTIFF IS DIRECTED TO PROVIDE A COPY OF
___THIS ORDER TO ALL PARTIES.
The following rulings were made:
1) Discovery on a Theory of contributory infringement may
proceed requiring deft’s to produce customer information
App. 25
as requested. This information may as appropriate be
designated “for attorney’s eyes only”.
2) Plaintiff may supplement responses to Inters. 11 & 15
concerning damages. Supp. response due 8/5.
3) Tel. conf of 8/19 is cancelled. A tel conf will be held 8/12 ~
@ 11:30 AM
So ordered.
Arlene Rosario Lindsay
App. 26
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
Long Island Federal Courthouse
814 Federal Plaza
Central Islip, NY 11722-4451
(631) 712-5730
BEFORE: ARLENE R. LINDSAY DATE: 8/11/03
United States
Magistrate Judge
TIME:
DOCKET NO. CV 01-4570 LDW CASE: Rates Technology
v. Nortel
___INITIAL CONFERENCE __BY TELEPHONE
___ STATUS CONFERENCE . |
___SETTLEMENT CONFERENCE
___FINAL CONFERENCE
_X ORDER
APPEARANCES: FORPLAINTIFF: FOR DEFENDANT:
___PRETRIAL SCHEDULING ORDER ADOPTED
___DISCOVERY COMPLETED
___PRETRIAL ORDER APPROVED
CASE RETURNED TO ASSIGNED JUDGE FOR
TRIAL/FINAL DISPOSITION
___ CONFERENCE RESCHEDULED FOR
PLAINTIFF IS DIRECTED TO PROVIDE A COPY OF
__THIS ORDER TO ALL PARTIES
The following rulings were made: As the parties have
submitted letters indicating that there are outstanding
discovery disputes, the telephone conference scheduled for
App. 27
8/12/03 is adjourned to 9/03/03 at 2pm as an in-person
conference.
So ordered.
Arlene Rosario Lindsay
App. 28
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
X
RATES TECHNOLOGY, INC.,
Plaintiff, ORDER
CV 02-4570
(LDW) (ARL)
-against-
NORTEL NETWORKS CORP.,
Defendant.
».4
WALL, MagistrateJudge
A status conference in the above-captioned case has
been scheduled for October 9, 2003 at 10:30 a.m., to be
held in Courtroom 810 in the United States Federal
Courthouse in Central Islip. The parties should be
prepared to address any outstanding discovery disputes.
The defendant shall also inform the court as to the
outcome of its motion to dismiss prior to the conference.
Dated: Central Islip, New York
September 9, 2003
SO ORDERED
/s/ Arlene Rosario Lindsay
ARLENE ROSARIO LINDSAY
United States
Magistrate Judge
App. 29
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
X
RATES TECHNOLOGY, INC.,
Plaintiff, CV 02-4570
(Wexler, J.)
-against-
NORTEL NETWORKS CORPORATION,
VERIZON COMMUNICATIONS, INC.,
Defendants.
X
APPEARANCES:
ERVIN, COHEN & JESSUP, LLP
BY: JAMES B. HICKS, ESQ.
Attorneys for Plaintiff
9401 Wilshire Boulevard, 9th Floor
~ Beverly Hills, CA 90212
GIBBONS, DEL DEO, DOLAN, GRIFFINGER
& VECCHIONE
BY: MARVIN S. GITTES, ESQ.
Attorney for Defendants Nortel Networks
Corporation
One Penn Plaza, 37th Floor
New York, NY 10119
WEXLER, District Judge
There are presently pending before the court three
motions directed to the pleadings. Specifically, Defendant
Nortel Networks Corporation (“Nortel”) has moved to
dismiss for failure to state a claim and for lack of personal
jurisdiction. Plaintiff has moved to dismiss certain of
App. 30
Nortel’s counterclaims. Although oral argument on these
motions was scheduled for September 16, 2003, a conflict
in scheduling has made that date impossible for one of the
lead attorneys in this matter to attend. In light of that
conflict, the dispositive nature of the pending motions and
this court’s schedule, the court issues the following ruling:
e All pending motions are hereby denied with-
out prejudice to automatic renewal upon the
scheduling of oral argument;
e discovery is stayed pending the court’s rul-
ings on the motions to dismiss
e the conference currently scheduled to be held
_before Magistrate Judge Lindsay on October
9, 2003 is adjourned as are all other dates in
this matter. |
SO ORDERED
/s/ Leonard D. Wexler
LEONARD D. WEXLER
UNITED STATES
DISTRICT JUDGE
Central Islip, New York
September 15, 2003
_ App. 31
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
X
RATES TECHNOLOGY, INC.,
Plaintiff, CV 02-4570
(Wexler, J.)
-against-
NORTEL NETWORKS CORPORATION,
VERIZON COMMUNICATIONS, INC.,
Defendants.
xX
APPEARANCES:
ERVIN, COHEN & JESSUP, LLP a
BY: JAMES B. HICKS, ESQ.
Attorneys for Plaintiff
9401 Wilshire Boulevard, 9th Floor
Beverly Hills, CA 90212
GIBBONS, DEL DEO, DOLAN, GRIFFINGER
& VECCHIONE
BY: MARVIN S. GITTES, ESQ.
Attorney for Defendants Nortel Networks
Corporation
One Penn Plaza, 37th Floor 2
New York, NY 10119
WEXLER, District Judge
This is a patent infringement case in which Plaintiff
Rates Technology, Inc. (“RTI”) alleges that Defendants
infringed a patent entitled, “Telephone with Reiterative
Dialing Device.” Verizon Communications, Inc. has settled
with RTI, leaving Nortel Networks Communications, Inc.
(“NNC’”) as the sole remaining defendant.
App. 32
NNC has submitted a motion dismiss the complaint
and RTI has moved to dismiss certain of NNC’s counter-
claims. NNC has moved to dismiss: (1) for lack of personal
jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules
of Civil Procedure and (2) for failure to state a claim
pursuant to Rule 12(b)(6). RTI has moved to dismiss
NNC’s Lanham Act unfair competition counterclaim as
well as NNC’s claim for sanctions pursuant to Rule 11 of
the Federal Rules.
Although this case was scheduled for oral argument
on September 16, 2003, a scheduling conflict resulted in
adjournment of that argument. This court thereafter
issued an order denying all parties’ motions to dismiss,
without prejudice to renewal of such motions upon re-
scheduling of the oral argument. The court’s order stayed
all further discovery in this matter and adjourned all court
dates.
Upon review the parties’ submissions, the court issues
this memorandum and order regarding the personal
jurisdiction issue. For the reasons set forth below, the stay
of discovery and adjournment of all court dates shall
remain in effect. However, the parties are granted the
right to submit additional material, already obtained
through discovery, prior to oral argument.
BACKGROUND
I. The Parties and Service on NNC
Plaintiff RTI is a Delaware corporation with its
principal place of business located in Suffolk County, New
York. As noted above, it commenced this action claiming
infringement of a patent for a telephone with a particular
App. 33
_ type of dialing device. Defendant NNC is a Canadian
corporation with its principal place of business in Ontario.
This case was commenced by service of process on CT
Corporation System (“CTCS”), in Dallas, Texas. Process
was forwarded to counsel for NNC, located in New York.
Upon receipt of the summons and complaint, counsel for
NNC wrote to Plaintiff’s counsel in a letter dated October
14, 2002 (the “October 14 Letter”). The October 14 Letter
informed RTI that CTCS was not authorized to accept
service on behalf of NNC, but stated that counsel would
accept service of process for its client, provided that all
documents and attachments were delivered to counsel and
that the time to respond to the complaint be deemed to
run from the time of counsel’s receipt of those documents.
The October 14 Letter alerted Plaintiff to the fact that
although CTCS was not authorized to accept process on
behalf of NNC, CTCS was authorized to accept service on
behalf of a company known as Nortel Networks, Incorpo-
rated (“NNI”), a New York corporation. It was noted by
counsel, however, that NNI was not named as a party to
this action.
One week after October 14, counsel for NNC again
wrote to RTI's counsel. This letter referred to the October
14 Letter and noted that RTI never responded to counsel’s
offer to accept process on behalf of NNC. Counsel’s second
letter to RTI stated his position that NNC had no obliga-
tion to respond to the improperly served process. The
letter closed by asking RTI to advise counsel directly
whether or not RTI intended to accept the offer set forth in
the October 14 Letter.
RTI did not respond to the offers set forth in the
October 14 and 21 letters. Instead, Plaintiff moved for a
App. 34
judgment of default. This court declined to enter a default
judgment and a conference was held. At that conference,
several matters were discussed, including NNC’s desire to
move to dismiss for lack of personal jurisdiction. The
parties were granted permission to make various motions.
Pending the outcome of these motions, the parties were
ordered to engage in discovery.
II. The Jurisdictional Allegations of the Complaint
Plaintiff’s complaint acknowledges that NNC is a
Canadian corporation with its principal place of business
in Ontario, Canada. Jurisdiction is sought to be supported
by the following allegations, each of which is derived from
the long arm statute of the State of New York. See CPLR
302(a).
e¢ that NNC transacts business within the
State of New York or contracts elsewhere to
supply goods or services in New York;
e that NNC committed tortious acts outside of
New York, causing injury to Plaintiff within
New York;
e that NNC regularly conducts and solicits
business, and engages in other persistent
course of action or derives substantial reve-
nue from goods used within New York;
e that NNC expects or reasonably should have
expected the acts committed by it to have
consequences in New York and NNC derives
substantial revenue from interstate or inter-
national commerce.
The factual allegations asserted in support of the
general jurisdictional allegations set forth above include
App. 35
the assertions that NNC “manufactured, made, used, sold,
offered to sell and/or imported” infringing products.
Although the complaint refers to NNC as the successor in
interest to Northern Telecom, there is no factual elabora-
tion on this issue. Additionally, the complaint states that
NNC “operates through various subsidiaries and divi-
sions.” However, none of these subsidiaries or divisions are
named as parties.
III. NNC’s Motion to Dismiss and RTI’s Opposition
As noted, NNC has submitted a motion to dismiss
RTI’s complaint for, inter alia, lack of personal jurisdic-
tion. In support of its motion NNC has submitted affida-
vits setting forth the activities of the company as well as
details regarding the company’s corporate structure. As
set forth in greater detail below, NNC’s allegations negate
completely the jurisdictional allegations of the complaint.
NNC states that it does not currently, nor is it the succes-
sor in interest, to any company that did any kind of
business in New York — much less engage in the infringing
activities set forth in the complaint.
In opposition to the motion RTI has submitted the
factual affidavit of its attorney. In addition to restating the
infringement allegations of the complaint, the attorney
affidavit states that he has “personally observed several of
Nortel’s predecessors’ infringing products which were sold
in this district. ...” RTT’s attorney affidavit further refers
to the fact that discovery was in its early stages and that
App. 36
he expected to obtain further information in support of
jurisdiction as discovery progressed.’
A motion to dismiss is properly granted only if “it
appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to
relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Bern-
heim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). When ruling
on a motion to dismiss, the court must accept as true all
factual allegations in the complaint. All reasonable infer-
ences must be drawn in favor of the non-moving party.
Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton
College, 128 F.3d 59, 62 (2d Cir. 1997). It is not for the
court to “weigh the evidence that might be presented at
trial; the Court must merely determine whether the
complaint itself is legally sufficient . . . ” Rodolico v. Unisys
Corp., 96 F. Supp.2d 184, 186 (E.D.N.Y. 2000).
A motion to dismiss for lack of personal jurisdiction
may be defeated by the good faith pleading of “legally
sufficient allegations of jurisdiction.” Teachers’ Retirement
System of Louisiana v. A.C.L.N. Limited, 2003 WL
21058090 *7 (S.D.N.Y. May 15, 2003). Prior to discovery
and in the absence of a hearing, a plaintiff is required only
* RTI also argues that NNC’s participation in this lawsuit has
resulted in a waiver of the right the object to this court’s exercise of
personal jurisdiction. The court rejects this waiver argument as belied
completely by the record.
App. 37
to make a prima facie showing of jurisdiction. Such a
showing is made by the allegations set forth in the plead-
ings as well as by affidavit. While this showing is minimal,
plaintiff is required to at least set forth factual allegations,
and not just legal conclusions. Jd.
On the other hand, where the parties have engaged in
discovery, plaintiff can defeat a Rule 12(b)(2) motion only
if facts can be averred that, if established, would be
sufficient to establish jurisdiction. SEB, S.A. v. Montgom-
ery Ward & Co. Inc., 2002 WL 31175244 *2 (S.D.N-Y.
October 1, 2002). Once discovery is taken, plaintiff’s prima
facie showing must be “factually supported.” Aerotel, Ltd.
v. Sprint Corporation, 100 F.Supp.2d 189, 193 (S.D.N.Y.
2000).
B. Standards for Exercise of Personal Jurisdiction
In a patent case, personal jurisdiction can be exer-
cised: (1) if jurisdiction exists pursuant to the law of the
forum state and (2) the exercise of such jurisdiction is
consistent with the Due Process clause of the United
States Constitution — that is, if the exercise of jurisdiction
does not upset fundamental notions of and fair play and
substantial justice. See Purdue Pharma, L.P. v. Impax
Laboratories, Inc., 2003 WL 22070549 *2 (S.D.N.Y. Sep-
tember 4, 2003); Meteoro Amusement Corp. v. Six Flags,
267 F.Supp2d 263, 267 (S.D.N.Y. 2003); Aerotel, Ltd. V.
Sprint Corporation, 100 F. Supp.2d 189, 191 (S.D.N.Y.
2000); see also, Aspex Eyewear, Inc. v. Miracle Optics, Inc.,
2001 WL 146732 *1 (S.D.N.Y. November 19, 2001).
App. 38
1. New York Long Arm Jurisdiction
RTI attempts to support the exercise of jurisdiction
over non-domiciliary NNC by relying on New York’s long
arm statute. CPLR § 302(a) (“Section 302”). Specifically,
RTI alleges that jurisdiction may be exercised because: (1)
NNC transacts business in New York, see CPLR
§ 302(aX(1); and/or (2) NNC committed a tortious act
within New York, see CPLR § 302(aX2) and/or (3) NNC
committed a tortious act outside of New York and either
regularly does business or derives substantial revenue
from goods used in New York, or expects or reasonably
should expects the tortious act to have consequences in
New York and derives substantial revenue from interstate
or international commerce, see CPLR § 302(a)(3).
II. Legal Issues Presented by the Motion and the
Submission of Additional Material
NNC’s affidavits describe, without contradiction by
RTI, the corporate structure of NNC. Specifically, NNC
states that it is a holding company that does nothing more
than own the stock of other companies. NNC has also
made clear the fact that it has no direct contacts with the
State of New York. It is not authorized to do business
here, has no New York employees and maintains neither a
New York office nor a New York bank account. Further,
NNC states that it is not the successor in interest to any
company that manufactured, used or sold any products in
New York, including those products alleged to have
infringed on RTTs patent.
RTI makes no attempt to counter these allegations,
choosing instead to refer vaguely to NNC in general terms
as “Nortel,” and to argue that counsel has “personally
App. 39
observed” NNC’s predecessors infringing the patents at
issue.
Upon review of the papers submitted it has become
clear to the court that jurisdiction over NNC, if it exists,
must be established through the acts of NNC’s subsidiar-
ies. Thus, the issue will be whether the acts of NNC’s
subsidiaries and the relationship between these entities
and NNC, their parent company, are sufficient to establish
jurisdiction over NNC.
In patent cases, courts will recognize and uphold the
separateness of corporate entities “unless specific, unusual
circumstances call for an exception.” Manville Sales Corp.
v. Paramount Sys., Inc., 917 F.2d 544, 552 (Fed. Cir. 1990)
(referring to standard for imposition of personal liability
on corporate officers). Moreover, under New York law, the
acts of a subsidiary will support jurisdiction only if the
subsidiary is deemed to be an agent or a “mere depart-
ment” of the parent corporation. See Meteoro, 267 F.
Supp.2d at 270-71; Aerotel, 100 F. Supp.2d at 193-94.
Facts important to consider in this analysis include: (1)
common ownership; (2) financial dependency; (3) “the
degree to which the parent corporation interferes in the
selection and assignment of the subsidiary’s executive
personnel and fails to observe corporate formalities,” and
(4) “the degree of control over the marketing and opera-
tional policies of the subsidiary exercised by the parent.”
Aerotel, 100 F. Supp.2d at 194, quoting, Jazini v. Nissan
Motor Co., Ltd., 148 F.3d 181, 184-85 (2d Cir. 1988),
quoting, Volkswagenwerk Aktiengesellschaft v. Beech Air-
craft Corp., 751 F.2d 117, 120-22 (2d Cir. 1984).
To date, RTI has failed to submit any evidence con-
tradicting NNC’s motion. The court notes, however, that
while this motion was pending, the parties have been
App. 40
engaging in discovery. Since the motion has been briefed,
RTI has had the opportunity to depose NNC. Additionally,
NNC has produced thousands of pages of documents to RTI.
Testimony and documents obtained through discovery may
very well change the outcome of this motion. Additionally,
having had the opportunity to take discovery places a
somewhat higher burden on RTI to establish jurisdiction.
In light of the foregoing, the court issues the following
order:
¢ Oral argument will be held on Wednesday
November 12, 2003 at 10:30 A.M.
e The court will give RTI the opportunity, prior
to that date, to submit any evidence obtained
in discovery that supports its allegations of
jurisdiction over NNC. Such evidence and
any accompanying memorandum, shall be
served on the court and opposing counsel by
October 15, 2003;
¢ NNC shall have the right to submit opposi-
tion to any such documentation to this court,
and opposing counsel, by October 22, 2003;
¢ RTI shall have the right to reply to any such
opposition by October 29, 2003;
e The stay of discovery and adjournment of all
court dates will remain in effect.
SO ORDERED
/s/ Leonard D. Wexler
LEONARD D. WEXLER
UNITED STATES
DISTRICT JUDGE
Central Islip, New York
September 22, 2003
App. 41
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
Xx
RATES TECHNOLOGY INC.,
ce CV 02-4570
Plaintiff, (Wexler, J.)
-against-
NORTEL NETWORKS CORPORATION,
and VERIZON COMMUNICATIONS, INC.,
Defendant.
X
APPEARANCES:
ERVIN, COHEN & JESSUP, LLP
BY: JAMES B. HICKS, ESQ.
Attorneys for Plaintiff
9401 Wilshire Boulevard, 9th Floor
Beverly Hills, CA 90212
GIBBONS, DEL DEO, DOLAN, GRIFFINGER
& VECCHIONE
BY: MARVIN S. GITTES, ESQ.
Attorney for Defendants Nortel Networks Corporation
One Penn Plaza, 37th Floor
New York, NY 10119
WEXLER, District Judge
' his is a patent infringement case in which Plaintiff
Rates Technology, Inc. (“RTI”) alleges infringement of a
patent entitled, “Telephone with Reiterative Dialing
Device.” Verizon Communications, Inc. has settled with
RTI, leaving Nortel Networks Communications, Inc.
(“NNC”) as the sole remaining defendant.
App. 42
NNC has submitted a motion dismiss the complaint
and RTI has moved to dismiss certain of NNC’s counter-
claims. NNC has moved to dismiss: (1) for lack of personal
jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules
of Civil Procedure and (2) for failure to state a claim
pursuant to Rule 12(b)\(6). RTI has moved to dismiss
NNC’s Lanham Act unfair competition counterclaim as
well as NNC’s claim for sanctions pursuant to Rule 11 of
the Federal Rules.
In a memorandum and order dated September 22,
2003, (the “September 22 Order”) this court focused on the
issue of personal jurisdiction over NNC. The court outlined
the relevant law and scheduled oral argument on all
outstanding motions. Additionally, the court granted the
parties the right to submit additional material, already
obtained through discovery, prior to argument. Upon
consideration of the parties’ submissions as well as hear-
ing oral argument, the court now grants NNC’s motion to
dismiss for lack of personal jurisdiction.
DISCUSSION
I. Standards on a Rule 12(b)(2) Motion to Dismiss for
Lack of Personal Jurisdiction
A motion to dismiss for lack of personal jurisdiction
may be defeated by the good faith pleading of “legally
sufficient allegations of jurisdiction.” Teachers’ Retirement
System of Louisiana v. A.C.L.N. Limited, 2003 WL
21058090 *7 (S.D.N.Y. May 15, 2003). Prior to discovery
and in the absence of a hearing, a plaintiff is required only
to make a prima facie showing of jurisdiction. Such a
showing is made by the allegations set forth in the plead-
ings as well as by affidavit. While this showing is minimal,
App. 43
plaintiff is required to at least set forth factual allegations,
and not just legal conclusions. Jd.
Where, as here, the parties have engaged in discovery,
plaintiff can defeat a Rule 12(b)(2) motion only if facts can
be averred that, if established, would be sufficient to
establish jurisdiction. SEB, S.A. v. Montgomery Ward &
Co., Inc., 2002 WL 31175244 *2 (S.D.N.Y. October 1,
2002). Once discovery is taken, plaintiffs prima facie
showing must be “factually supported.” Acrotel, Ltd. v.
Sprint Corporation, 100 F.Supp.2d 189, 193 (S.D.N.Y.
2000).
II. NNC Has Not Waived the Defense of Lack of Per-
sonal Jurisdiction |
RTI argues that NNC’s participation in this action has
resulted in a waiver of NNC’s right to object to the exer-
cise of personal jurisdiction. The court disagrees. It is well
settled that a party that properly objects to jurisdiction
may “fully participate in the litigation without waiving the
objection.” Donk v. Miller, 2000 WL 218400 (S.D.N-Y.
2000). Hamilton v. Atlas Turner, Inc., 197 F.3d 58 (2d Cir.
1999), relied upon by RTI does not require a contrary
result. There, the court held that defendant’s four year
participation in the case without ever raising a personal
jurisdiction defense resulted in a waiver. Here, NNC has
made clear since the inception of this litigation, that it
objects to the exercise of personal jurisdiction. Indeed, at
the first conference held before this court, NNC made clear
that it would be moving to dismiss this matter for lack of
personal jurisdiction. There has been no waiver.
App. 44
III. This Court Lacks Personal Jurisdiction Over NNC
NNC is a Canadian corporation with its principal
place of business in Ontario, Canada. It is RTT’s position
that personal jurisdiction over NNC exists on the ground
that NNC is the successor corporation to a company that
either sold, manufactured or used the allegedly infringing
products in the State of New York. NNC denies that it is
the successor to any such corporation. Despite NNC’s
extensive production of documents and that company’s
production of a witness pursuant to Rule 30(b)(6) of the
Federal Rules of Civil Procedure, RTI has failed to come
forward with facts or documents in support of its successor
corporation theory.
Under these circumstances, the court holds that RTI
has not sustained its burden of demonstrating personal
jurisdiction over NNC. Instead, the court finds that
despite the discovery taken by RTI, there have been no
facts presented to contradict the following facts set forth
by NNC:
e NNC is a Canadian holding company that holds the
stock of other companies;
e NNC conducts its Canadian operations through its
principal operating subsidiary, Nortel Networks, Ltd.
(“NNL”);
e NNC has no employees;
e NNC is not licensed to do business in New York;
e NNC does not operate, and has never operated any
facility within the State of New York;
Most importantly, there is nothing to contradict
NNC’s statement that it is not the successor in interest
to any company that manufactured, used, or sold the
App. 45
allegedly infringing products in this state. In view of these
facts, the court grants the motion of NNC to dismiss for
lack of personal jurisdiction.
IV. NNC’s Related United States Corporation
There is one final matter worth noting. NNC has long
made clear that it has a completely independent United
States subsidiary known as Nortel Networks, Inc.
(“NNT”). NNI is a wholly owned subsidiary of NNL (the
Canadian company through which NNC conducts its
Canadian operations). RTI has never taken the position
that NNI is a “mere department” of its parent, NNC, so as
to make the exercise of jurisdiction over NNC appropriate
because of the New York activities of NNI. See Meteoro
Amusement Corp. v. Six Flags, 267 F.Supp2d 263, 270-71
(S.D.N.Y. 2003) (acts of a subsidiary will support jurisdic-
tion over a parent only if the subsidiary is deemed to be an
agent or a “mere department” of the parent corporation).
Nor has RTI alleged that NNI is the successor corporation
to any company that sold allegedly infringing products in
this jurisdiction. Indeed, Plaintiff made no such allegation
at oral atgument.
Any allegations regarding the corporate structure of
NNC with respect to NNI is, however, irrelevant to this
motion. This is because despite the fact that Plaintiff has
long known of the existence of NNI, it has never taken
action to properly name and serve NNI as a defendant in
this lawsuit. At argument RTI referred to NNI as a defen-
dant named on a counterclaim. Upon questioning by the
court, counsel for RTI admitted, however, that NNI was
never served with any process in this matter. It is clear,
therefore, that NNI is not now, now has it ever been, a
App. 46
party to this action. Thus, the successor status of NNI
and/or any relationship between NNI and NNC has no
relevance to this motion.
CONCLUSION
For the foregoing reasons, Defendant’s motion to
dismiss this action for lack of personal jurisdiction is
granted. All other pending motions are denied as moot.
The Clerk of the Court is directed to terminate all motions
and to close the file in this case.
SO ORDERED
/s/ Leonard D. Wexler
LEONARD D. WEXLER
UNITED STATES DISTRICT
JUDGE
Central Islip, New York
December 4, 2003
App. 47
[Handwritten Order by Judge Wexler]
Construing this document as motion to re-argue this
court’s order of 12/4/03, the motion is hereby DENIED
So Ordered:
/s/ Leonard D. Wexler __
Central Islip, NY
1/8/04
App. 48
Excerpt from the Transcript Tape of the
January 11, 2005 Oral Argument before the United
States Court of Appeals for the Federal Circuit
Mr. Gittes:
Judge Rader:
Mr. Gittes:
Judge Rader:
* *. 7
Good morning your honors, were repre-
senting Northern Nortel Networks Corpo-
ration. We're going to attempt to simplify
some of the letter designations what we'll
throw out during the course of discussion. I
would like to tell you that Nortel Networks
Corporation, NNC, is a Canadian holding
company who owns 100% of the Canadian
operating company Nortel Networks Lim-
ited, NNL, and that company owns 100% of
U.S. operating company Nortel Networks,
Inc., NNI. That is established in an affida-
vit which is in the record at page 208 to 10,
but I thought it would simplify things. The
issue before the Court today is did the trial
court properly dismiss the Plaintiff’s
amended complaint for lack of personal ju-
risdiction? Did the trial court properly dis-
miss RTT’ alleged counterclaim?
Why can’t this court look past some of the
technicalities and say look, they were try-
ing to sue Nortel, they got close enough?
There was no personal jurisdiction over
NNC at any time your honor.
That’s not really the question I asked. Of
course, I’m taking that into account, and
I'm saying, why didn’t they, why can’t we in
a sense kind of pierce through these multi-
ple layers of corporate governments and
say they were suing Nortel, didn’t they get
close enough?
Mr. Gittes:
Judge Rader:
Mr. Gittes:
App. 49
Well, they did not get close enough, they
would have had to sue NNI which they
were invited to. ...
Which is 100% held by NNC, which is 100%
held by NNI, whatever, but why didn’t,
they missed an initial or whatever, why
can’t the court look at that?
These three companies have always main-
tained separate corporate formalities for
certain corporations. The law is pretty clear
that a parent is not liable for the subsidi-
ary, and I believe that’s what you're saying,
can’t we hold the parent liable for the acts
of the subsidiary? And the answer is no.
* ~ Oe *
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.