Opposition Brief — Phonometrics, Inc. v. Hotel Corp. of the Pacific

IN RNa ae a

om

~ Supreme Court, U.S.

FILED

MAY 6 2002

No. 01-1468 OBEICE OF 335 CL eR

IN THE

Supreme Court of the United States

PHONOMETRICS, INC.,

Petitioner,

v,

HOTEL CORPORATION OF THE PACIFIC, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CourT OF APPEALS FOR THE FEDERAL CIRCUIT

BRIEF IN OPPOSITION

Ury FISCHER

Counsel of Record

Lesuie J. Lott

Lott & FRIEDLAND, P.A.

Attorneys for Respondent

355 Alhambra Circle

Suite 1100

Coral Gables, FL 33134

(305) 448-7089

173877 cr

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

1

QUESTIONS PRESENTED

1. Whether the district court properly granted, and the

circuit court properly affirmed granting of, the motion to

dismiss for lack of personal jurisdiction filed by Respondent.

2. Whether this Court should decline to consider

Petitioner’s argument concerning the district court’s decision

to dismiss for lack of personal jurisdiction where Respondent

has never maintained a regular or established place of

business in, nor has it ever been a resident of, the forum

below, and generally does not have the “significant contacts”

constitutionally required to establish personal jurisdiction.

il

STATEMENT PURSUANT TO RULE 29.6

Respondent, Hotel Corporation Of The Pacific, Inc., is

a wholly subsidiary of ResortQuest International, Inc., a

publicly traded company.

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TABLE OF CONTENTS

COmOUtNOMS PYOOOIOD. ~. ow ccc ccc ceacccuess

Statement Pursuant to Rule 29.6 ...............

I op a we aude ebee andar

A.

B.

ee

a

Reasons for Denying the Writ..................

I.

II.

The Underlying Action Is Rendered Irrelevant

By The Federal Circuit’s Decisions In The

Intellicall And Northern Telecom Actions

And Petitioner’s Admission That Respondent

Does Not Infringe The Patent-In-Suit .....

The District Court Properly Granted, And The

Circuit Court Properly Affirmed Granting Of,

The Motion To Dismiss For Lack Of Personal

EE fe OCs a ovkw o dake cee ke ees

A. The Trial Court’s Sua Sponte Dismissal

Cannot be Imputed to Respondent as a

Prior Rule 12 Motion ..............

Page

Conclusion

lv

Contents

Respondent’s Joinder in a Co-Defendant’s

Motion for Stay Does Not Constitute

Waiver of a Motion to Dismiss for Lack

of Personal Jurisdiction .............

Petitioner Has Waived Any Argument

Under Rule 12(h) By Failing To Raise It

Pee ere rT oe ree ree eT

The District Court’s Finding of Lack of

Personal Jurisdiction was in Accord With

the Applicable LAW ... 2... cs cccaces

1. The district court Applied the Proper

BO soccheeseuensarke aeons

2. The Record is Replete with

Uncontroverted Evidence that

Respondent Lacks the Requisite

Significant Contacts with Northern

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TABLE OF CITED AUTHORITIES

Page

Cases:

Akro Corp. v. Luker, 45 F.3d 1541(Fed. Cir.), cert.

denied, 515 U.S. 1122 (1995) ............... 17

Allegiant Physicians Serv., Inc. v. Sturdy Memorial

Hospital, 926 F. Supp. 1106 (N.D. Ga. 1996) ... 18

Amba Marketing Systems, Inc. v. Jobar International,

Inc., 551 F.2d 784 (9th Cir. 1977) ............ 18

Beverly Hills Fan Co. v. Royal Sovereign Corp.,

21 F.3d 1558 (Fed. Cir. 1994) ............... 17

Boggs v. West, 188 F.3d 1335 (Fed. Cir. 1999) .... 16

Braun, Inc. v. Dynamics Corp. of America, 975 F.2d

SES Crem: Gir TIRES 6 ko ks od ok ncanae bene eeeee. 16

Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482

COU, FOR ics Sen eae 17,18

CPG Products Corp. v. Pegasus Luggage, Inc.,

776 F.2d 1007 (Fed. Cir. 1985) .............. 16

Data Disc, Inc. v. Systems Tech. Assocs., Inc.,

557 F.2d 1280 (9th Cir. 1977) ............. ~ 19, 20

Haisten v. Grass Valley Med. Reimbursement Fund,

784 F.2d 1392 (9th Cir. 1986) ............... 19

vi

Cited Authorities

Page

Helicopteros Nacionales de Colombia S.A. v. Hall,

466 U.S. 408, 104 S. Ct. 1868, 80 L. Ed. 2d 404

(29GD cvccivccnccssducevacdaaesssensasneee 19

Hortonville Joint Sch. Dist. No. 1 v. Hortonville

Educ. Ass'n, 426 U.S. 482, 96 S. Ct. 2308,

49 1. BG. BG 1 CAGE eo wices cbesuccacasesern 18

Indiana Plumbing Supply, Inc. v. Standard of Lynn,

Inc., 880 F. Supp. 743 (C.D. Cal. 1995) ....... 19”

Intellicall, Inc. v. Phonometrics, Inc., 952 F.2d 1384

(FoG, Co. FRRE) ss oncc¥e cesses banners 4, 6,7

International Shoe Co. v. Washington, 326 U.S. 310

£0) ee rrr nr rr er 10, 16, 18, 19

Maxwell Chase Techs., L.L.C. v. KMB Produce, Inc.,

79 F. Supp. 2d 1364 (11th Cir. 1999) ......... 17

Munoz v. Strahm Farms, Inc., 69 F.3d 501 (Fed. Cir.

PODS) cncccksceentatvabassssc tee 11

Phonometrics, Inc. v. Choice Hotels, 117 F. Supp. 2d

bo: 88, PF) Perey rr ee 7

Phonometrics, Inc. v. Choice Hotels, No. 01-1045,

2001 U.S. App. LEXIS 23565 (Fed. Cir. Oct. 9,

YS re re ene 7,8

vil

Cited Authorities

Page

Phonometrics, Inc. v. Hospitality Franchise Sys., 203

F.3d 790, 53 U.S.P.Q.2d (Fed. Cir. 2000) ...... l

Phonometrics, Inc. v. Northern Telecom Inc.,

133 F.3d 1459 (Fed. Cir. 1998) ............ 4,6, 7,8

Prentice v. Prentice Colour, Inc., 779 F. Supp. 578

| enn 18

Robinson v. Giarmarco & Bill, P-C., 74 F.3d 253

GRRU EME BOUD nk cn sn dns cuudneccocccce,, 17

Singleton v. Wulff, 428 U.S. 106, 96 S. Ct. 2868,

49 L. Ed. 2d 826 (1976) .................... 16

3D Sys. v. Aarothech Labs, 160 F.3d at 1377, 48

BPE TTS onc cc cnccccncceccacncce.. 16, 18

/

Trust Co. of Louisiana v. NNP, Inc., 104 F.3d 1478

See OPE hee Wises ncaecc ecu l 13

Zelson v. Thumforde, 412 F.2d 56 (3d Cir. 1969)

SkEad RAN OEE EAD URS E Ewha ane oe cee: 13

United States Constitution:

Fourteenth Amendment ....................... 16

vill

Cited Authorities

Page

Statutes:

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Rules:

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]

STATEMENT OF THE CASE.

A. Procedurai History

This action arises from allegations of patent infringement

made by Petitioner in a complaint filed with the United States

District Court for the Northern District of California on

February 26, 1996. On July 1, 1996, the California District

Court entered a stay of all proceedings. The stay was entered

as a result of a motion joined, inter alia, by Respondent

requesting such relief. On December 11, 1996, the Judicial

Panel on Multidistrict Litigation, pursuant to 28 U.S.C.

§ 1407, transferred this action to J udge Kenneth Ryskamp at

the United States District Court for the Southern District of

Florida for consolidated or coordinated pretrial proceedings.

On October 23, 1998, Judge Ryskamp entered an order

dismissing this action sua sponte and on December 8,

1998, final judgment was entered against Petitioner. Judge

Ryskamp’s sua sponte dismissal was reversed on appeal by

the United States Court of Appeals for the Federal Circuit,

Phonometrics, Inc. v. Hospitality Franchise Sys., 203 F.3d

790, 53 U.S.P.Q.2d (Fed. Cir. 2000), and the case was

re-opened below on April 19, 2000.

On May 3, 2000, Respondent filed a motion to dismiss

the complaint for lack of personal jurisdiction. On September

25, 2000, Respondent’s motion to dismiss was granted and

final judgment was entered against Petitioner. Petitioner

appealed the dismissal to the Federal Circuit and, on October

3, 2001, the dismissal was affirmed per curiam. Petitioner

filed petitions for panel rehearing and rehearing en banc both

of which were denied by the Federal Circuit on November

13, 2001.

B. Relevant Facts

Petitioner filed a complaint alleging that Respondent

infringed United States Patent No. 3,769,463 (hereinafter “the

°463 patent”) through the use of certain telephone equipment.

Petitioner alleges that during the relevant time period

Respondent maintained a regular and established place of

business within the territorial limits of the United States

District Court for the Northern District of California.

Petitioner’s allegations of patent infringement are limited

to infringing activities purportedly committed by Respondent

within a relatively narrow window of time beginning on

February 26, 1990 and ending on October 30, 1990

(hereinafter “the relevant time.”) During the relevant time,

Respondent had its corporate offices in the State of Hawaii.

During the relevant time, Respondent dedicated itself solely

to the management of hotels and other hospitality properties

owned by third parties; Respondent did not own any of the

properties it managed. During the relevant time, none of the

properties managed by Respondent were located in any state

other than Hawaii. Moreover, Respondent did not decide what

type of telephone equipment was selected, purchased or

installed at any of the properties it managed during the

relevant time.

Respondent has never maintained any regular and

established place of business in the Northern District of

California. In fact, Respondent has: (i) never done any

business in California; (ii) never derived az.y profit from any

property located in California; (iii) never solicited business

related to any hotel or hospitality property located in

California; (iv) never been licensed to do business in

California, and (v) never been a resident of California.

3

There is no evidence on the record which refutes the

evidence presented by Respondent that it did not manage or

own any hotels in California or that it did not have any

Significant contacts with California during the time period

relevant to Petitioner’s allegations.

In fact, the only reason Respondent was named as a

defendant in this case is that Petitioner intended to sue every

hotel chain which operated a property in Northern California

during the relevant time, and erroneously assumed that certain

properties located in San Francisco were managed or owned

by Respondent.

Petitioner presented no evidence to the district court

establishing that Respondent had an actual presence, however

tenuous, in Northern California. Instead, Petitioner relied on

arguments which purported to explain the reasons for its

erroneous assumptions regarding the ownership or

management of properties by Respondent in Northern

California. Both the district and circuit courts found

Petitioner’s arguments unpersuasive.

4

REASONS FOR DENYING THE WRIT

I. The Underlying Action Is Rendered Irrelevant By The

- Federal Circuit’s Decisions In The Jntellicall And

Northern Telecom Actions And Petitioner’s Admission

That Respondent Does Not Infringe The Patent-In-

Suit

The ’463 patent claims an apparatus for automatically

computing and recording the cost of a long-distance telephone

call. As described in the specification, cumulative call cost

information about the call is displayed to the caller while

the call is being made. Claim 1' of the ’463 patent, the only

1. Claim 1 of the ’463 patent reads, in its entirety, as follows:

An electronic solid state long-distance telephone

call cost computer apparatus for computing and

recording the cost of each long-distance telephone call

initiated from a given calling telephone, actuated by the

lifting and replacement of the calling telephone to operate

switch means coupled to the calling telephone, and

further actuated by a call-completion signal generated

in the telephone system when a called party answers at

a called telephone, the computer apparatus comprising:

call timing means for timing the duration of each

completed call;

settable charge selector means for storing initial

fixed charge data for a given predetermined initial

call interval and incremental charge data for

subsequent additional predetermined incremental

call intervals;

(Cont'd)

(Cont’d)

call cost register means, including a digital display,

for providing a substantially instantaneous display

of cumulative call cost in dollars and cents;

and computer circuit means, coupled to said

Switch, to said timing means, to said charge

selector means, and to said call cost register

means, for automatically recording, in the call cost

register means, the cost of each long-distance call

made from the calling telephone, said computer

circuit means comprising:

reset means for resetting said timing means and

said call cost register means immediately upon

occurrence of said call-completion signal;

initial cost transfer means initiating operation of

said call timing means and for applying the

complete initial fixed charge data from said charge

selector means to said call cost register means

substantially instantaneously upon resetting of

said call timing means and said call cost register;

incremental cost transfer means for applying the

complete incremental charge data from said

charge selector means to said call cost register

means substantially instantaneously upon

completion of timing out the initial call interval

by said call timing means and for again applying

the complete incremental charge data from said

charge selector means to said call cost register

means substantially instantaneously upon

completion of timing out of each incremental call

interval following said initial call interval:

(Cont’d)

6

claim at issue in this case, was interpreted in Jntellicall, Inc.

v. Phonometrics, Inc., 952 F.2d 1384 (Fed. Cir. 1992), as

requiring any infringing device to “provide an instantaneous

visual display of cumulative call cost in dollars and cents.”

Intellicall, 952 F.2d at 1386-87 (emphasis added).

The scope of claim 1 was revisited in Phonometrics, Inc.

v. Northern Telecom Inc., 133 F.3d 1459 (Fed. Cir. 1998),

where the court went into great detail in evaluating the scope

of the ’463 patent. The court in Northern Telecom emphasized

that its previous interpretation in Jntellicall was indeed

correct. The court further explained its interpretation by

stating that one of the primary components at issue in claim

1, the “call cost register means”, must “provide[] the caller

with real time, accurate information about the cost of the

call via digital display as the long distance charges accrue

during the call.” Northern Telecom, 133 F.3d at 1465.

Petitioner did not seek review of either the Jntellicaill or

the Northern Telecom decisions. Accordingly, all appellate

remedies having been exhausted, the definitive interpretation

of claim 1 requires that in order for a device to infringe the

463 patent it must provide a caller using the device to place

along distance call with a real time digital display of the cost

of the call as the-call progresses.

However, by Petitioner’s own admissions on the record,

Petitioner cannot prove that any device owned or operated

(Cont'd)

and termination means for interrupting operation

of said computer apparatus, with the cumulative

call cost held in and displayed by said call cost

register means, upon operation of said switch by

replacement of the calling telephone.

7

by Respondent during the relevant time infringes the ’463

patent. Furthermore, Petitioner has admitted that respondent

has never owned or operated any such device.

Specifically, shortly after the Respondent was dismissed

from the case by the district court, Petitioner’s corporate

representative, and one of the inventors of the ’463 patent,

testified under oath that Petitioner is not aware of any hotel,

including those managed by Petitioner, having telephone

systems that display the cost of the call to the caller as the

call is taking place. Moreover, during a February 13, 1997

hearing before the district court, Petitioner’s counsel stated

that “the fact of the matter is that there are none of these

equipments that these defendants have that has a display to

the caller during the call in progress.” Petitioner’s statements

are a direct admission that Respondent, as well as every one

of Respondent’s co-defendants below, has not infringed the

°463 patent.

On the basis of these admissions and the F ederal Circuit’s

interpretation of claim 1 in Jntellicall and Northern Telecom,

on April 12, 2002, the district court granted summary

judgment against Petitioner in connection with all remaining

co-defendants in the case below. Prior to that, the district

court granted summary judgment for the defendant in an

identical case filed by Petitioner against an identically

situated hotel chain, also on the basis of the Intellicall and

Northern Telecom decisions. Phonometrics, Inc. v. Choice

Hotels, 117 F. Supp. 2d 1341 (S. D. Fla. 2000). The Choice

Hotels decision was subsequently affirmed by the Federal

Circuit in Phonometrics, Inc. v. Choice Hotels, No. 01-1045,

2001 U.S. App. LEXIS 23565 (Fed. Cir. Oct. 9, 2001).

8

In fact, the district court below is so convinced that

Petitioner’s admissions, and the previous decisions by the

Federal Circuit, have rendered Petitioner’s claims totally

meritless, that on the same day the court granted summary

judgment in favor of Respondent’s co-defendants below, it

granted a motion for sanctions under Fep. R. Crv. P. 11 against

Petitioner. In its ruling on the Rule 11 motion, the district

court judge below stated that “when [Petitioner] continued

to pursue his claims after Northern Telecom, he was

advocating legal theories which he knew were no longer

tenable.”

Accordingly, it is clear that regardless of the outcome of

the of the instant proceeding, Petitioner, by its own admission,

has no valid claim for patent infringement against

Respondent. In fact, should this matter be remanded to the

district court, Petitioner’s continued prosecution of its

frivolous claims of patent infringement will, without a doubt,

2. Itis apparent that the Federal Circuit shares the district court’s

conclusion that Petitioner’s claims are totally devoid of merit.

To wit, in its opinion affirming the Choice Hotels decision, the Federal

Circuit stated:

[W]e have already addressed and answered the precise

question presented in this appeal . . . [uJnder principles of

stare decisis, moreover, future panels like the present panel

will follow the claim construction set forth by our court in

[Intellicall and Northern Telecom] and, therefore, we would

not welcome further appeals seeking to re-litigate the

meaning of that phrase. Indeed, further appeal on that issue

would appear to be subject to possible sanctions as

frivolously filed under Fed. R. App. P. 38.

Choice Hotels, 2001 U.S. App. LEXIS 23565, at *3 -*4

gue ae de © ei

9

be sanctioned under Fep. R. Civ. P. 11 and/or Feb. R. App. P.

38 in accordance with the admonitions of the district court

and the Federal Circuit.

With all deference due to this Court, Respondent would

propose that this case does not warrant the Court’s review.

It is well settled that a petition for a writ ofvcertiorari will

be granted only for compelling reasons. Sup. Cr. R. 10. None

of the traditional reasons for granting certiorari (such as a

conflict between two courts of appeal; a decision affecting

an important federal question not yet settled by this Court;

or a significant departure from the accepted and usual course

of judicial proceedings invoking the Court’s supervisory

power) have been raised by Petitioner.

On the contrary, Petitioner requests the Court to review

this case purely on grounds that the circuit and district courts

made erroneous factual findings (i.e., that Respondent did

not have “significant contacts” with the forum in question)

and misapplied a properly stated rule of law (i.e., that

Respondent did not waive its defense of lack of personal

jurisdiction.) Both are grounds upon which certiorari is rarely,

if ever, granted. Jd.

To compound matters, Petitioner seeks review of a

decision so insignificant that it did not even merit an opinion

from the Federal Circuit, in a case which is all but decided

regardless of whether Petitioner’s appeal is successful.

Accordingly, on these grounds alone, the Petition should be

denied.

10

II. The District Court Properly Granted, And The

Circuit Court Properly Affirmed Granting Of, The

Motion To Dismiss For Lack Of Personal Jurisdiction

The sole issue raised in the appeal below by Petitioner

was whether Respondent, pursuant to Rule 12(h) of the

Federal Rules of Civil Procedure, waived a defense of lack

of personal jurisdiction. In fact, the clear and unambiguous

language of Rule 12(h) states that in order for a prior Rule

12 motion to act as a bar to a subsequent motion to dismiss

for lack of personal jurisdiction, both motions must be made

by the same party. To the extent the Trial Court’s dismissal

sua sponte can be deemed to be a motion under Rule 12, it

was Clearly not filed by Respondent and therefore it cannot

act to bar Respondent’s motion to dismiss. In addition,

contrary to Petitioner’s assertions, Respondent’s joinder in

a motion to stay, which was eventually granted, similarly

cannot act as a bar to a subsequent motion to dismiss under

Rule 12. Finally, it was Petitioner itself who waived any

argument under Rule 12(h) by failing to raise it prior to filing

the circuit court appeal.

Substantively, the district court reached the correct legal

conclusions in granting the motion to dismiss for lack of

personal jurisdiction. The court below applied the proper law

and after reviewing all of the evidence presented by the

parties concluded that Respondent’s lacked the required

significant contacts with the Northern District of California

to satisfy the Due Process requirements of the Fourteenth

Amendment pursuant to /nternational Shoe Co. v.

Washington, 326 U.S. 310 (1945) and its progeny.

Accordingly, the district court’s ruling was correct and

the circuit court was correct in leaving it undisturbed.

1]

A. The Trial Court’s Sua Sponte Dismissal Cannot be

Imputed to Respondent as a Prior Rule 12 Motion

Petitioner’s primary argument below was that the district

court’s October 23, 1998 sua sponte dismissal of the

complaint is equivalent to a motion to dismiss under Rule

12(b)(6) which should be imputed on Respondent because

Respondent “accepted” the dismissal. Petitioner argued that

the purported 12(b)(6) motion should be imputed on

Respondent so as to prevent any subsequent motions under

Rule 12, including the 12(b)(2) motion which was eventually

granted. Petitioner’s argument is unsupported by law and is

unpersuasive. See Munoz v. Strahm F., arms, Inc., 69 F.3d 501,

504-505 (Fed. Cir. 1995.)

Petitioner’s argument is fatally flawed in at least two

respects. First of all, the district court sua sponte dismissed

Petitioner’s complaint. No party filed a motion to dismiss

under Rule 12. The district court of its own accord decided

to dismiss the complaint. There is simply no legal basis to

| impute on Respondent or any other party the district court’s

; sua sponte action as a Rule 12 motion to dismiss. The fact

_ that the circuit court reviewed the sua sponte dismissai using

the same standards used in a 12(b)(6) motion provides no

| basis to impute on Respondent actions not taken by

| Respondent. To accept Petitioner’s argument would require

this Court to adopt the unreasonable notion that an order

-entered by the district court on its own accord, without any

input from, or notice to, a defendant, may be imputed on the

defendant to the defendant’s prejudice. Petitioner is unable

to cite a single authority in support of its position. The circuit

court, therefore, rightfully rejected Petitioner’s argument.

12

Second, Rule 12(g) Fep. R. Civ. P., which forms the basis

for the waiver provisions of Rule 12(h)(1)(A), states that

“if a party makes a motion under this rule but omits therefrom

any defense or objection then available to the party which

this rule permits to be raised by motion, the party shall not

thereafter make a motion based on the defense or objection

so omitted.” (emphasis added). The district court’s sua sponte

dismissal was not a motion made by “a party.” It was a

decision made by the district court without any input or

motion by any party. Accordingly, since there was no motion

made by a party, the provisions of Rules 12(g) and

12(h)(1)(A) are inapplicable to the instant facts.

A contrary application of Rules 12(g) and 12(h)(1)(A)

would deprive Respondent of due process. In the instant

situation, Respondent did not learn of the district court’s

sua sponte dismissal until after it had been entered. Contrary

to Petitioner’s suggestion, it was not up to Respondent to

“accept” or reject the district court’s dismissal. It was simply

entered by the district court and Respondent, like the

Petitioner, was bound by it. Even if Respondent had learned

of the dismissal prior to it having been entered, Respondent

would not have had an opportunity to advance its defense of

lack of personal jurisdiction since the matter below was under

a court-ordered stay. Under Petitioner’s reading of Rules

12(g) and 12(h)(1)(A), once the dismissal was entered it was

too late for Respondent to raise its jurisdictional defense.

Respondent would have no avenue to assert a defense of lack

of personal jurisdiction. The circuit court properly reject

Petitioner’s argument and this Court should leave it

undisturbed. ;

During the circuit court appeal, Petitioner cited two cases

in support of its waiver theory. Both cases were easily

13

distinguished on the facts and neither lends any support to

the relief requested by Petitioner. In Zelson v. Thumforde,

412 F.2d 56 (3d Cir. 1969) the trial court was reversed when

it dismissed a complaint for lack of personal jurisdiction. In

that case, however, the defendant who sought dismissal had

filed a motion to dismiss pursuant to a statute of limitations

prior to seeking dismissal on jurisdictional grounds. In the

court’s own words,

[i]t should be emphasized that this is not a case

where a defendant takes no action whatsoever to

submit himself to the jurisdiction of the court...

[i]n the instant appeal, of course, the defendants-

appellants did move to dismiss, on the Statute of

limitations ground, without raising the issue of

proper service of process.

Id. at 59. Clearly the facts in Zelson are distinguishable from

those here since Respondent did not take any actions which

would submit it to the court’s jurisdiction.

Similarly, in 7rust Co. of Louisiana v. NNP, Inc., 104

F.3d 1478 (Sth Cir. 1997), the court ruled that the claim of

lack of personal jurisdiction was waived by a defendant who

Participated in an entire trial without raising the defense and

then raised the defense for the first time on appeal. This ruling

in fact lends support to Respondent’s argument, infra, that

Petitioner has waived its right to assert an argument for the

first time on appeal. It does not lend any support to

Petitioner’s position

14

B. Respondent’s Joinder in a Co-Defendant’s Motion

for Stay Does Not Constitute Waiver of a Motion to

Dismiss for Lack of Personal Jurisdiction.

Petitioner’s argument, raised for the first time in its

December 20, 2000 circuit court brief, that joinder in a motion

to stay constitutes waiver of the personal jurisdiction

question, has been waived and should not even have been

considered by the circuit court. Notwithstanding this, the

circuit court entertained the argument and found it lacking

in merit.

The filing which Petitioner claims constitutes a waiver

under Rule 12(h), was Respondent’s joinder in a Motion for

a Stay, or in the Alternative, for a More Definite Statement,

filed by co-defendant below, Red Lion Hotels, Inc.

The request for a more definite statement was raised only as

an alternative relief and was only to be considered by the

district court in the event the motion for stay was denied.

The district court, recognizing the propriety of entering a

stay under the circumstances, granted the motion for a stay

and did not even consider the request for alternative relief.

This much is clear from the order granting the motion for a

stay which does not even address the merits of the request

for alternative relief. Accordingly, since the request for a more

definite statement was never even reached or decided by the

district court below, it could not constitute a waiver of the

personal jurisdiction question which resulted in Petitioner’s

dismissal.

The express intent of Rule 12(h), as noted in the official

Advisory Committee Notes for the 1966 amendment, is to

prevent “piecemeal consideration of acase” through the filing

of “successive motions” under Rule 12. Had the circuit court

15

ruled that the aforementioned joinder should act as a waiver

under Rule 12(h), it would not have promoted the express intent

of the Rule’s drafters. It would have been inconsistent with that

express intent to allow Rule 12(h) to be used to dictate the waiver

of a clearly valid jurisdictional defense on the basis ofa request

for alternative relief which was never even addressed or ruled

upon by the Court with which it was filed.? Moreover, it is

contrary to the law and unjust to do so under the circumstances

of the instant matter where the Petitioner failed altogether to

even raise the issue of waiver until more than seven months

after Appellee filed the motion from which judgment is appealed.

C. Petitioner Has Waived Any Argument Under Rule

12(h) By Failing To Raise It Below

Petitioner waived its right to assert any argument under

Rule 12(h) by failing to raise it during any of the district court

proceedings. In fact, Rule 12(h) was never even mentioned in

any of the several pleadings or memoranda of law filed by

Petitioner in response to Respondent’s motion to dismiss and

was never raised by Petitioner’s counsel during the hearing held

on the same motion or at any time prior to the instant appeal.

3. Appellant asserts that the request for a more definite statement

was ultimately denied by the district court. However, that denial was

solely in response to a motion requesting a continuation of the stay

in discovery filed by Respondent’s co-defendants below. Respondent

did not join in said motion and therefore should not be held to have

waived the defense of lack of personal jurisdiction based on that

ruling. Moreover, the district court’s ruling was based on events

subsequent to the filing of Respondent's original joinder (i.e., the

circuit court’s reversal of the sua sponte dismissal of the Complaint)

and, therefore, the fact remains that the merits of the original

alternative request for more definite statement were never addressed

prior to it becoming a moot point.

16

It is well settled that an appellate court generally need

not consider an argument not raised in the proceedings below

and this Court should not carve out an exception for this

case. Singleton v. Wulff, 428 U.S. 106, 120, 96 S. Ct. 2868,

49 L. Ed. 2d 826 (1976); Boggs v. West, 188 F.3d 1335, 1338

(Fed. Cir. 1999); Braun, Inc. v. Dynamics Corp. of America,

975 F.2d 815, 821 (Fed. Cir 1992); CPG Products Corp. v.

Pegasus Luggage, Inc., 776 F.2d 1007, 1009 (Fed. Cir. 1985).

Petitioner, for the first time, raised its argument under

Rule 12(h) in its appellate brief dated December 20, 2000

without providing any justification for omitting same from

any proceeding before the district court.

D. The District Court’s Finding of Lack of Personal

Jurisdiction was in Accord With the Applicable Law

Certiorari should be denied because the record clearly

shows that the district court correctly granted, and the circuit

court correctly affirmed granting of, Respondent’s motion

to dismiss for lack of personal jurisdiction.

1. The district court Applied the Proper Law

In order to determine whether it may exercise personal

jurisdiction over an out of state defendant, the court must

determine: (1) whether the state long-arm statute permits

assertion of jurisdiction; and (2) whether sufficient

“minimum contacts” exist to satisfy the due process

requirements of the Fourteenth Amendment so that

maintenance of the suit does not offend “traditional notions

of fair play and substantial justice” under Jnternational Shoe.

See 3D Sys. v. Aarotech Labs., Inc., 160 F.3d 1373, 48

U.S.P.Q.2d 1773 (Fed. Cir. 1998).

“

17

In analyzing the issue of personal jurisdiction over a

defendant accused of patent infringement, a district court

must apply the law of the Federal Circuit rather than that of

the regional circuit in which the case arises. See Akro Corp.

v. Luker, 45 F.3d 1541, 1543 (Fed. Cir.), cert. denied, 515

U.S. 1122 (1995); Beverly Hills Fan Co. y, Royal Sovereign

Corp., 21 F.3d 1558, 1565 (Fed. Cir. 1994). Despite this

requirement, the same basic test utilized in the Eleventh

Circuit for determining the existence of personal jurisdiction

applies in the Federal Circuit: the court must conduct a two-

part inquiry to determine whether personal jurisdiction exists

under the forum state’s long arm statute and the Due Process

Clause of the United States Constitution. See Akro, 45 F.3d

at 1544-45; Beverly Hills Fan, 21 F.3d at 1564-66; Robinson

v. Giarmarco & Bill, P.C.,74F.3d 253, 256 (11th Cir. 1996);

Maxwell Chase Techs., L.L.C. v. KMB Produce, Inc., 79

F. Supp. 2d 1364 (11th Cir. 1999).

This is exactly the kind of analysis the district court

engaged in rendering its decision. The district court first

determined, and the Parties are in agreement, that California’s

long-arm statute, and not Florida’s, was the proper state

Statute to apply for the first part of the analysis. California’s

long-arm statute reads in its entirety: “A court of this state

may exercise jurisdiction on any basis not inconsistent

with the Constitution of this State or of the United States”

Cal. Code Civ. Proc. § 410.10.

California courts have held that the limits of the state

long arm statute are co-extensive with the limits of the United

States Constitution. Core- Vent Corp. v. Nobel Indus. AB, 11

F.3d 1482, 1484 (9th Cir. 1993). Where a State’s long arm

Statute confers personal jurisdiction to the limits of Due

Process, the court may pass over analysis of the statute and

18

exercise jurisdiction where the constitutional requirements

are satisfied. Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d at

1484; Allegiant Physicians Serv., Inc. v. Sturdy Memorial

Hospital, 926 F. Supp. 1106, 1112 (N.D. Ga. 1996).

Accordingly, the district court properly analyzed the question

of personal jurisdiction in accordance with Jnternational Shoe

Co. v. Washington, 326 U.S. 310, 316 (1945) and its progeny.

2. The Record is Replete with Uncontroverted

Evidence that Respondent Lacks the Requisite

Significant Contacts with Northern California

The Federal Circuit generally defers to a state’s highest

court to interpret whether a defendant is amenable to process

in the forum state. See Hortonville Joint Sch. Dist. No. 1 v.

Hortonville Educ. Ass'n, 426 U.S. 482, 488, 96 S. Ct. 2308,

2312, 49 L. Ed. 2d 1 (1976); see also 3D Sys. v. Aarothech

Labs, 160 F.3d at 1377, 48 U.S.P.Q.2d at 1775-76. The Ninth

Circuit has recognized that in Florida, when the Complaint

contains sufficient allegations to form a basis for in personam

jurisdiction, the burden shifts to the defendant to challenge

plaintiff’s allegations by affidavits or other pleadings. Amba

Marketing Systems, Inc. v. Jobar International, Inc., 551 F.2d

784 (9th Cir. 1977). If the defendant sufficiently challenges

plaintiff’s assertions in an evidentiary hearing, the plaintiff

must affirmatively support its jurisdictional allegations and

may not merely rely upon the factual allegations set forth in

the complaint. Jd. at 787; see also Prentice v. Prentice Colour,

Inc., 779 F. Supp. 578, 586 (M.D. Fla. 1991) (Describing

similar requirements in the Eleventh Circuit)

There are two recognized bases for personal jurisdiction

over out of state defendants: (1) “general jurisdiction” which

arises when, a defendant’s contacts with the forum state are

19

SO pervasive as to justify the exercise of jurisdiction over the

person in all matters, and (2) “specific jurisdiction” which arises

out of the defendant’s contacts with the forum giving rise to the

subject litigation. See Helicopteros Nacionales de Colombia

S.A. v. Hall, 466 U.S. 408, 414, 104 S. Ct. 1868, 80 L. Ed. 2d

404 (1984). In view of the criteria advanced in Helicopteros,

the allegations of the complaint, and testimony presented during

an evidentiary hearing held below, it is clear that the facts of

this case do not support an assertion of general jurisdiction over

Respondent. The uncontroverted testimony of Respondent’s

corporate representative was that during the relevant period of

time Respondent was not a resident of California, had no offices

or facilities in California, was not licensed to do business in

California, did not operate or manage any hotels in California,

nor owned any real property in the state.

With regard to specific jurisdiction, the Ninth Circuit, in

Data Disc, Inc. v. Systems Tech. Assocs., Inc., 557 F.2d 1280,

1287 (9th Cir. 1977), has recognized that in California the

significant contacts between a party and the subject forum

required by International Shoe do not exist unless the p

through some act purposely avails itself of the benefits of

the forum state. See also Haisten v. Grass Valley Med.

Reimbursement Fund, 784 F.2d 1392, 1397 (9th Cir. 1986);

Indiana Plumbing Supply, Inc. v. Standard of Lynn, Inc., 880

F. Supp. 743 (C.D. Cal. 1995).

Again, at the hearing before the district court, Respondent’s

corporate representative unequivocally stated that Respondent

has never done any business in California, has never been a

resident of California, and has never maintained a regular and

established place of business in California. This evidence was

unrefuted by Petitioner who was given an opportunity to present

evidence to the contrary not only during the hearing but also for

thirty days thereafter.

20

The only evidence presented by Petitioner in an attempt

to refute Respondent’s testimony was a declaration from its

attorney which attached pages from a hospitality trade

publication and a San Francisco telephone book which

purportedly identified two hotels in San Francisco as

belonging to Respondent. This “evidence” was easily refuted

by Respondent’s witness who explained that the only reason

the owner of the two hotels (HCP, Inc., a company totally

separate and independent from Respondent) was permitted

to associate the Respondent name with the two San Francisco

properties was so that they could use Respondent’s toll-free

reservations telephone number.‘ This, however, did not mean

that Respondent had any ownership interest in the San

Francisco hotels or that Respondent had anything to do with

the management of said hotels. In short, the only connection

between Respondent and the two San Francisco hotels was a

shared toll-free reservations telephone line from which

Respondent derived no benefit. Accordingly, Respondent has

not purposefully availed itself of the benefits of the State of

California.

Moreover, Respondent established through the unrefuted

testimony of its witness that the activities conducted by

Respondent on behalf of hotels owners are limited to

management of their hotels, not operation, specification,

purchase or installation of telephone equipment. Therefore,

even if Respondent did conduct some activities in California

(which it did not), the Petitioner’s cause of action would not

arise out of those activities. That fact alone, under California

law, would act as a bar to personal jurisdiction. See Data

Disc, Inc. v. Systems Tech. Assocs., Inc., 557 F.2d 1280, 1287

(9th Cir. 1977).

4. The same witness testified that the toll-free reservations

number was answered by a company in Texas, not California.

ae ee nee

21

After reviewing all of the evidence presented and

reviewing all legal argument from counsel, the district court

properly determined, and the circuit court agreed, that any

contacts between Respondent and California were extremely

minimal and did not justify either general or specific

jurisdiction. This Court should not disturb that correctly

reached conclusion.

CONCLUSION

For the foregoing reasons, Respondent respectfully

requests that this Honorable Court deny the Petition.

Respectfully submitted,

Ury FIscHER

‘ Counsel of Record

Lesuie J. Lotr

Lotr & FriepLanp, P.A.

Attorneys for Respondent

355 Alhambra Circle

Suite 1100

Coral Gables, FL 33134

(305) 448-7089