Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 1 of 21
`
`
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
`
`Plaintiff,
`
`STRATOSAUDIO INC.,
`
`
`
`v.
`
`VOLKSWAGEN GROUP OF
`AMERICA, INC.,
`
`
`Defendant.
`
`Case No. 6:20-CV-01131-ADA
`
`JURY TRIAL DEMANDED
`
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`
`STRATOSAUDIO, INC.’S OPPOSITION TO
`VOLKSWAGEN GROUP OF AMERICA, INC.’S
`MOTION TO DISMISS OR TRANSFER
`
`
`
`
`
`
`
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 2 of 21
`
`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`INTRODUCTION .........................................................................................................1
`
`LEGAL STANDARDS ..................................................................................................2
`
`III. ARGUMENT .................................................................................................................2
`
`A.
`
`Volkswagen Has Ratified Its Dealership As “The Place Of Business” ..................3
`
`1.
`
`2.
`
`The Facts Alleged in StratosAudio’s Complaint Demonstrate that Venue
`Is Proper under the “Ratification” Theory .................................................3
`
`Additional Facts Further Demonstrate That Venue Is Proper under the
`“Ratification” Theory ...............................................................................7
`
`Venue Is Also Proper Because Volkswagen Exercises Significant Control Over Its
`Dealerships ..........................................................................................................8
`
`To the Extent Helpful To the Court, Volkswagen’s Motion Should Be Denied
`Until Parties Have Completed Venue Discovery ................................................ 16
`
`B.
`
`C.
`
`IV. CONCLUSION ............................................................................................................ 17
`
`
`
`
`
`i
`
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 3 of 21
`
`
`
`
`
`TABLE OF AUTHORITIES
`
`FEDERAL CASES
`
`Page(s)
`
`Blitzsafe Tex., LLC v. Bayerische Motoren Werke AG,
`2018 U.S. Dist. LEXIS 173065 (E.D. Tex. Sep. 5, 2018), vacated by party
`stipulation by Blitzsafe Tex., LLC v. Mitsubishi Elec. Corp., 2019 U.S. Dist.
`LEXIS 129945 (E.D. Tex. Aug. 1, 2019) ...................................................................... passim
`
`Blitzsafe Tex., LLC v. Mitsubishi Elec. Corp.,
`2019 U.S. Dist. LEXIS 86350 (E.D. Tex. May 22, 2019)........................................... 4, 16, 17
`
`Blitzsafe Tex., LLC v. Mitsubishi Elec. Corp.,
`2019 U.S. Dist. LEXIS 129945 (E.D. Tex. Aug. 1, 2019) ...................................................... 3
`
`etradeshow.com, Inc. v. Netopia Inc.,
`2004 WL 515552 (N.D. Tex. Jan. 30, 2004) .......................................................................... 2
`
`In re Cray Inc.,
`871 F.3d 1355 (Fed. Cir. 2017) .................................................................................. 2, 3, 6, 8
`
`Langton v. CBeyond Communication, LLC,
`282 F. Supp. 2d 504 (E.D. Tex. 2003) ................................................................................... 2
`
`National Steel Car Ltd. v. Greenbrier Co., Inc.,
`No. 6:19-cv-00721-ADA, Slip Op. (W.D. Tex. July 27, 2020)............................................... 6
`
`Omega Patents, LLC v. Bayerische Motoren Werke AG,
`2020 U.S. Dist. LEXIS 248567 (N.D. Ga. Dec. 21, 2020) ...................................................... 5
`
`Oppenheimer Fund, Inc. v. Sanders,
`437 U.S. 340 (1978) ............................................................................................................ 16
`
`TC Heartland LLC v. Kraft Foods Group Brands LLC,
`137 S. Ct. 1514 (2017) .......................................................................................................... 2
`
`West View Research, LLC v. BMW of N. Am., LLC,
`2018 WL 4367378 (S.D. Cal. Feb. 5, 2018) ........................................................................... 5
`
`STATE CASES
`
`PHC Minden L.P. v. Kimberly-Clark Corp.,
`235 S.W.3d 163 (Tex. Sup. Ct. 2007) .................................................................................... 6
`
`28 U.S.C. § 1400(b) .................................................................................................................... 2
`
`FEDERAL STATUTES
`
`ii
`
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 4 of 21
`
`
`
`I.
`
`INTRODUCTION
`
`Volkswagen Group of America, Inc.’s (“Volkswagen”) Motion to Dismiss or Transfer
`
`(D.I. 16) (“Motion”) presents one main argument for transfer: that Plaintiff StratosAudio, Inc.
`
`(“StratosAudio”) cannot utilize Volkswagen’s dealers in this District to establish venue because
`
`the dealers are “separate entities.” Motion at 4. This argument both ignores the controlling law
`
`on venue determination for patent cases and the facts regarding Volkswagen’s relationship to its
`
`dealers.
`
`The U.S. Court of Appeals for the Federal Circuit has set forth the legal requirements for
`
`venue that relate to a defendant’s “control” or “ratification” of a place of business. In re Cray,
`
`871 F.3d 1355, 1363 (Fed. Cir. 2017). Notwithstanding Volkswagen’s arguments, the mere fact
`
`that a defendant and an entity in a judicial district are “separate entities” is not dispositive in
`
`determining venue.
`
`In addition, Volkswagen’s Motion ignores the facts of its actual relations with its dealers.
`
`The reality is that Volkswagen ratifies and controls almost every aspect of its dealers’ business,
`
`including, but not limited to, (i) the location, structure, use, and maintenance of its dealers’
`
`premises and facilities, (ii) advertising, (iii) sales, (iv) parts, (v) inventory, (vi) service and
`
`warranty, (vi) pricing, (viii) personnel, and (ix) records keeping. As set forth in more detail
`
`below, Volkswagen’s ratification and control over its dealers is so pervasive that Volkswagen
`
`even controls what brochures the dealers must display in their waiting areas, as well as what
`
`computer equipment and stationery the dealer may use.
`
`Judge Gilstrap in the Eastern District of Texas has already examined the venue issue
`
`raised by Volkswagen – whether a vehicle manufacturer ratifies or controls its dealers under In
`
`Re Cray – and determined that venue in that judicial district was proper. Blitzsafe Tex., LLC v.
`
`Bayerische Motoren Werke AG, 2018 U.S. Dist. LEXIS 173065 (E.D. Tex. Sep. 5, 2018). This
`
`1
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 5 of 21
`
`
`
`Court should apply that same analysis and reach the same conclusion: that Volkswagen’s
`
`dealers’ premises are, for the purposes of venue, to be treated as Volkswagen’s own place of
`
`business. Volkswagen’s Motion to Dismiss/Transfer for Improper Venue should be denied.
`
`II.
`
`LEGAL STANDARDS
`
`A plaintiff bears the burden of establishing proper venue. In re Cray Inc., 871 F.3d at
`
`1360. On a motion to dismiss for improper venue, a plaintiff need only present facts which,
`
`taken as true, establish venue. Langton v. CBeyond Communication, LLC, 282 F. Supp. 2d 504,
`
`508 (E.D. Tex. 2003). “Courts will accept as true uncontroverted facts in a plaintiff’s pleadings,
`
`and will resolve any conflicts in the plaintiff’s favor.” Id.; see also etradeshow.com, Inc. v.
`
`Netopia Inc., 2004 WL 515552, at *2 (N.D. Tex. Jan. 30, 2004).
`
`Venue for domestic defendants in patent infringement cases is governed by 28 U.S.C. §
`
`1400(b). TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514, 1521 (2017).
`
`Section 1400(b) provides that “[a]ny civil action for patent infringement may be brought [1] in
`
`the judicial district where the defendant resides, or [2] where the defendant has committed acts of
`
`infringement and has a regular and established place of business.” TC Heartland, 137 S. Ct. at
`
`514. As to venue under the second prong of Section 1400(b), there are “three general
`
`requirements relevant to the inquiry: (1) there must be a physical place in the district; (2) it must
`
`be a regular and established place of business; and (3) it must be the place of the defendant.” In
`
`re Cray Inc., 871 F.3d 1355 at 1360.
`
`III. ARGUMENT
`
`Volkswagen meets the requirements of the second prong of Section 1400(b). First,
`
`Volkswagen has not disputed – because there can be no dispute – that Volkswagen’s dealerhips
`
`are both “physical places” within the District and that they are “regular and established.” See,
`
`e.g., Blitzsafe Tex., LLC v. Bayerische Motoren Werke AG, 2018 U.S. Dist. LEXIS 173065, *13
`
`2
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 6 of 21
`
`
`
`(E.D. Tex. Sep. 5, 2018) (hereinafter “Blitzsafe I”), vacated by party stipulation by Blitzsafe Tex.,
`
`LLC v. Mitsubishi Elec. Corp., 2019 U.S. Dist. LEXIS 129945 (E.D. Tex. Aug. 1, 2019)
`
`(hereinafter “Blitzsafe III”).1 The only issue is whether Volkswagen’s dealers located in this
`
`District satisfy the third requirement – that the dealerships are “places” of Volkswagen for the
`
`purposes of the venue statute. A location is a “place of the defendant” if the defendant (i)
`
`“exercises … attributes of possession or control over” the place or (ii) has taken steps to “ratify
`
`the place of business.” In re Cray, 871 F.3d at 1363 (emphasis added). Volkswagen’s relations
`
`with its dealers meet both the “ratification” and “control” tests of a “place of the defendant.”
`
`Venue in this judicial district is thus proper over Volkswagen.
`
`A.
`
`Volkswagen Has Ratified Its Dealership As “The Place Of Business”
`
`1.
`
`The Facts Alleged in StratosAudio’s Complaint Demonstrate that Venue
`Is Proper under the “Ratification” Theory
`
`There are at least five authorized Volkswagen dealerships (including Volkswagen and
`
`Audi dealerships) in this District. D.I. 1 (Compl.), ¶ 10. New Volkswagen vehicles are available
`
`for purchase exclusively through these authorized dealers. Id. The dealerships include the name
`
`“Volkswagen” or “Audi” with no reservations or disclaimers. Id., ¶ 11. The dealerships also
`
`prominently display the “Volkswagen” or “Audi” logos and use Volkswagen’s and Audi’s
`
`trademarks, trade names, and other intellectual property associated with the distribution and sale
`
`of vehicles and provision of related services. Id., ¶ 11. Moreover, Volkswagen’s websites
`
`(www.vw.com and www.audiusa.com/us/web/en.html) direct users to these dealerships when
`
`
`1 The court vacated its order in Blitzsafe I pursuant to the parties’ joint stipulation to vacate,
`not based on any consideration of the merits or its analysis in Blitzsafe I. Blitzsafe III, 2019
`U.S. Dist. LEXIS 129945, *4 (In the Motion, the Parties jointly move to vacate the Court’s
`September 6, 2019 Order Denying Defendant’s Motion to Dismiss for Lack of Personal
`Jurisdiction or Improper Venue”). Consequently, the original reasoning articulated by the
`court in Blitzsafe I remains sound.
`
`3
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 7 of 21
`
`
`
`searching for Volkswagen vehicles in this district. Id., ¶ 12. These websites will display a list of
`
`these franchise dealerships when a user inputs a zip code within this District. From there, the
`
`user can view inventory and trade-in information, apply for financing, and arrange a test drive at
`
`these franchise dealerships. Id., ¶ 12. A Texas court has already analyzed, and confirmed, that
`
`an automobile distributor (BMW North America, or “BMWNA”) can “ratify” its dealerships for
`
`venue purposes under these same facts. Blitzsafe I, 2018 U.S. Dist. LEXIS 173065 at *20. In
`
`reaching this conclusion, the court noted that (i) BMWNA did not permit sales of its vehicles
`
`except through its authorized dealers; (ii) the dealerships were named “BMW”; (iii) BMW’s
`
`dealerships prominently displayed BMW’s logo, indicating to the public that they are a place
`
`where BMWNA, through its franchised dealers, sells BMW vehicles; and (iv) BMWNA’s
`
`website directed its users to nearby dealerships and allowed them to search for new vehicle
`
`inventory, browse bochures, schedule test drives, select vehicle models and trims, and obtain
`
`pricing information for its vehicles from the dealerships. Id. at *20-22; see also Blitzsafe Tex.,
`
`LLC v. Mitsubishi Elec. Corp., 2019 U.S. Dist. LEXIS 86350, *6-7 (E.D. Tex. May 22, 2019)
`
`(summarizing the factors considered in finding venue proper under the ratification theory).2
`
`Volkswagen does not dispute any of these factual allegations. Volkswagen merely
`
`argues that the Blitzsafe I decision is “wrong” and instead argues exclusively that Volkswagen’s
`
`lack of ownership interest in its dealerships defeats venue. Motion at 4 (“regardless of the fact
`
`that dealerships sell cars, and use the car makers’ trademarks to do so, and regardless of the fact
`
`that the car makers refer consumers to the dealers, the dealerships are nonetheless separate
`
`entities from the car makers.”). Volkswagen’s argument, however, ignores the fact that the
`
`Federal Circuit has not articulated such a rigid “ownership” test for venue. The test instead
`
`2
`
`
`
`4
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 8 of 21
`
`
`
`focuses on “ratification” or “control” of the entity’s activities. In re Cray, 871 F.3d at 1363. As
`
`noted by Judge Gilstrap, ownership is not a dispositive factor:
`
`Even though [an automobile distributor] is not permitted to own or
`control, generally, the dealerships within this District, that does not
`mean that they are not places of [the automobile distributor] under
`the third In re Cray factor ... [T]he Federal Circuit expressly
`endorsed holding a location that the Defendant has advertised as its
`own to be a place of business where ‘the defendant [] actually
`engage[s] in business from that location. The considerations a
`district court may examine in determining the extent to which a
`defendant has ratified a place of business as its own include
`‘whether the defendant lists the alleged place of business on a
`website, or in a telephone or other directory; or places its name on
`a sign associated with or on the building itself.’”
`
`Blitzsafe I, 2018 U.S. Dist. LEXIS 173065, *19-20 (internal citations omitted).
`
`In addition to its cursory discussion of Blitzsafe I, Volkswagen relies on two cases to
`
`support its argument: West View Research, LLC v. BMW of N. Am., LLC, 2018 WL 4367378
`
`(S.D. Cal. Feb. 5, 2018) and Omega Patents, LLC v. Bayerische Motoren Werke AG, 2020 U.S.
`
`Dist. LEXIS 248567 (N.D. Ga. Dec. 21, 2020). Neither of these cases supports a finding that
`
`Volkswagen has not “ratified” the activites of its dealerships in this district. First, Omega
`
`Patents expressly acknowledges that “a defendant may ‘ratify the place of business,’ even if it
`
`does not own, lease, or rent it.” Omega Patents, 2020 U.S. Dist. LEXIS 248567, at *9
`
`(emphases added). Second, West View Research “focused entirely on the alleged ‘control’ which
`
`BMWNA exerts on its dealerships” and did not address ratification. Blitzsafe I, 2018 U.S. Dist.
`
`LEXIS 173065, *30, n.15.3 For example, West View Research “did not address BMWNA’s
`
`provisioning of new vehicle warranties to customers through the dealerships,” which the
`
`Blitzsafe I court found to be “an independent basis for proper venue” under the ratification
`
`3
`
`
`In this regard, Volkswagen Group has it backwards. Motion at 4 (“But … the West View
`Research court … explicitly rejected this reasoning [of Blitzsafe I].”).
`
`5
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 9 of 21
`
`
`
`theory. Blitzsafe I, 2018 U.S. Dist. LEXIS 173065, at *30, n.15. Omega Patents also failed to
`
`analyze venue separately under ratification and control, instead collapsing those two into a single
`
`analysis.
`
`Moreover, both decisions opt for a rigid rule (that a separate entity cannot be a basis to
`
`support venue of another absent an alter ego relationship4) over a more flexible, fact-based
`
`approach. The Federal Circuit, however, expressly cautioned against such a rigid rule-based
`
`approach. In re Cray, 871 F.3d at 1362 (“In deciding whether a defendant has a regular and
`
`established place of business in a district, no precise rule has been laid down and each case
`
`depends on its own facts.”) (emphasis added).
`
`Volkswagen’s focus on “ownership” and the cursory analyses Omega Patents and West
`
`View Research is thus misplaced. Indeed, Volkswagen has all but ignored the wide scope of its
`
`4
`
`
`The alter ego test is also inapplicable in this case because StratosAudio is not alleging
`any parent-subsidiary relationship between Volkswagen Group and its dealers in this
`District. For this reason, this Court’s holding in National Steel Car Ltd. v. Greenbrier
`Co., Inc., No. 6:19-cv-00721-ADA, Slip Op. at 5 (W.D. Tex. July 27, 2020), which only
`addressed the question of establishing venue over a parent based on its subsidiary’s
`presence in this district, does not apply to this case. Further, neither West View Research
`nor Omega Patents apply the correct law or standard for determining the existence of an
`alter ego relationship. For example, the criteria for “veil-piercing” to determine alter ego
`status is different for the purposes of considering jurisdictional issues as opposed to
`liability. “Courts have acknowledged that jurisdictional veil-piercing and substantive
`veil-piercing involve different elements of proof.” PHC Minden L.P. v. Kimberly-Clark
`Corp., 235 S.W.3d 163, 174 (Tex. Sup. Ct. 2007). For jurisdictional purposes,
`jurisdiction over a parent may be imputed on its subsidiary if “the parent corporation
`exerts such domination and control over its subsidiary ‘that they do not in reality
`constitute separate and distinct corporate entities but are one and the same corporation for
`purposes of jurisdiction.’” Id. at 173. As set forth herein, Volkswagen’s control over its
`dealers is so extensive and pervasive that in reality, Volkswagen “and [its] dealer[s]
`function as an integrated, two-part seller (or lessor),” leaving little, if any, independence
`to its dealers. Blitzsafe I, 2018 U.S. Dist. LEXIS 173065, at *25. Given these facts, even
`if the alter ego test for jurisdictional purposes were to apply, Volkswagen would meet its
`requirements.
`
`6
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 10 of 21
`
`
`
`activities showing “ratification” of its dealers – activities that clearly demonstrate the connection
`
`and influence by Volkswagen over its dealer entities.
`
`2.
`
`Additional Facts Further Demonstrate That Venue Is Proper under the
`“Ratification” Theory
`
`Additional facts exist which further demonstrate Volkwagen’s ratification of its
`
`dealerships activities beyond those considered in Blitzsafe I, West View Research, or Omega
`
`Patents. Public records indicate that Volkswagen has the authority to approve or reject any
`
`proposed locations and structures of its dealer’s premises. See e.g., Declaration of Ryuk Park
`
`(“Park”), Ex. A at 1 (“VWoA5 has approved the location of Dealer’s Premises as specified in the
`
`Dealer Premises Addendum”); Park Ex. D at 1 (same for Audi). Volkswagen also prohibits its
`
`dealers from changing the location or structure of its premises without its approval. Park Ex. A
`
`at 1 (“Dealer agrees that, without VWoA’s prior written consent, it will not (a) make any major
`
`structural change in any of the Dealer’s Premises, (b) change the location of any of Dealer’s
`
`Premises or (c) establish any additional premises for Dealer’s Operations” without Volkswagen’s
`
`prior written consent.”); Park Ex. D at 1 (same for Audi). Volkswagen further requires its
`
`dealers to construct and use its facilities according to its specifications and requirements. Park
`
`Ex. A at 6 (“Dealer agrees to construct a new or renovated Volkswagen dealership facility at the
`
`Fairfield Facility that complies in full with all of VWoA’s requirements for a White Frame
`
`Facility …, including without limitation sufficient square footage to meet White Frame Facility
`
`requirements, Corporate Identification, Branding Elements, full compliance with all current
`
`Volkswagen Dealer Operating Standards.”); Park Ex. B at 3 (“Dealer will display conspicuously
`
`5
`
`
`“WVoA” stands for “Volkswagen of America, Inc.” which is “an operating unit of
`Volkswagen Group of America, Inc.” See Volkswagen of America, Inc. v. Maverick Auto
`Group 2, LLC, No. 2:13-cv-00802-JAM-EFB, ECF No. 1 at 1:17-18 (E.D. Cal. Apr. 24,
`2013).
`
`7
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 11 of 21
`
`
`
`at Dealer’s Premises such Authorized Signs at such location as VWoA reasonable may
`
`require.”) (emphases added); Park Ex. E at 3 (same for Audi); Park Ex. C at 8 (Standards 19-23,
`
`detailing requirements for the facility interior and exterior space, such as showrooms, reception
`
`area, and lounge); Ex. F at 1-2 (detailing similar facility requirements for Audi). In other words,
`
`Volkswagen adopts, and thus ratifies, the location, structure, and use of its dealers’ premises.
`
`Further, Volkswagen retains title to the vehicles delivered to its dealers until Volkswagen
`
`has “collected their full purchase price in cash.” Park Ex. B at 9 (Volkswagen); Park Ex. E at 9
`
`(Audi). In other words, until Volkswagen collects the full purchase price for its vehicles stored
`
`at its dealers’ premises, those vehicles belong to Volkswagen. And to the extent Volkswagen
`
`provides “floor plan” loans to its dealers through its affiliates (e.g., Volkswagen Credit and Audi
`
`Financial Services), those affiliates will likely retain title to the vehicles until the loans are
`
`repaid. Compl., ¶ 14. Put differently, except where a dealer always purchases all of its inventory
`
`using its own funds, a dealer effectively provides its premises to Volkswagen and/or its affiliates
`
`for “the storing of materials at a place in the district so that they can be distributed or sold from
`
`that place,” a relevant factor for determining whether a place is a place of the defendant. In re
`
`Cray, 871 F.3d at 1363.
`
`None of these additional factors were considered in West View Research or Omega
`
`Patents. Yet these facts, combined with those specific facts analyzed in the Blitzsafe I decision,
`
`demonstrate the breadth of Volkswagen’s “ratification” of its dealerships and the propriety of
`
`venue over Volkswagen in this Court.
`
`B.
`
`Venue Is Also Proper Because Volkswagen Exercises Significant Control
`Over Its Dealerships
`
`While ratification alone sufficiently establishes venue against Volkswagen, venue is also
`
`proper against Volkswagen under the “control” theory. Volkswagen’s Motion all but ignores
`
`8
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 12 of 21
`
`
`
`this issue, as it must, because the facts demonstrate an extraordinary amount of control exerted
`
`by Volkswagen over its dealers.
`
`All of the above-stated facts regarding Volkswagen’s “ratification” of its dealerships
`
`apply equally to demonstrating Volkwagen’s “control” of its dealerships for venue purposes.
`
`These facts and other demonstrate that Volkswagen exercises authority over nearly all aspects of
`
`a dealer’s business operations, including, but not limited to, (i) advertising, (ii) sales, (iii) parts,
`
`(iv) service, (v) purchase of inventory, (vi) warranty to customers, and (vii) facilities
`
`maintenance, and (viii) records keeping. See generally Park Ex. B at 3-4 (Volkswagen); Park
`
`Ex. E at 3-4 (Audi). Volkswagen’s Dealer Agreements (Park Exs. A & D), Standard Provisions
`
`(Park Ex. B & E), and Operating Standards (Park Ex. C & F). The following examples, from
`
`Volkswagen’s own documents, demonstrate this control.
`
`First, Volkswagen has control over the dealer premises. As noted above, Volkswagen
`
`has the authority to approve or reject any proposed locations and structures of its dealer’s
`
`premises. See e.g., Park Ex. A at 1; Park Ex. D at 1 (same for Audi). Volkswagen prohibits its
`
`dealers from changing the location or structure of its premises without its approval. Park Ex. A
`
`at 1; Park Ex. D at 1 (same for Audi). Volkswagen further requires its dealers to construct and
`
`use its facilities according to its specifications and requirements, including specific designs (such
`
`as the “white frame” facility). Park Ex. A at 6 Moreover, dealers are not permitted to “(a) make
`
`any major structural change in any of the Dealer’s Premises, (b) change the location of any of
`
`Dealer’s Premises or (c) establish any additional premises for Dealer’s Operations” without
`
`Volkswagen’s approval. Park Ex. A at 1; Park Ex. D at 1.
`
`9
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 13 of 21
`
`
`
`Second, Volkswagen specifies how its dealers’ premises and facilities should be
`
`maintained and used. See e.g., Park Ex. C at 13 (“All Dealers will comply with the facility
`
`requirements as indicated in the Volkswagen Facility Supplement.”); see also id. (below):
`
`
`See also Park Ex. F at 15-16 (requirements regarding facility exterior space), 17-21
`
`
`
`(requirements regarding facility interior space, such as a customer lounge and an interior display
`
`stand) (see below):
`
`10
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 14 of 21
`
`
`
`
`
`
`
`Third, Volkswagen specifies how its dealers should utilize its trademarks, trade names,
`
`and other intellectual property in advertising and marketing. See e.g., Park Ex. B at 3 (requiring
`
`Volkswagen dealers to (i) “Display conspicuously at Dealer’s Premises such Authorized Signs at
`
`such locations as [Volkswagen] may require”; (ii) maintain “a listing in a principal local
`
`classified telephone directory in Dealer’s Area,” (iii) “prominently display and make readily
`
`available “all legally required brochures, as well as all current sales, service and parts literature
`
`and promotional materials” provided by Volkswagen; and even (iv) prepare “[a]ll stationery and
`
`business forms used in Dealer’s Operations … in accordance with Recommendations,” such as
`
`using stationery bearing “Authorized Trademarks”); see also Ex. E at 4 (same for Audi).
`
`Fourth, Volkswagen unilaterally determines the price and the terms upon which its
`
`dealers purchases its vehicles. See e.g., Park Ex. B at 7-8 (“VWoA will sell Authorized Products
`
`to Dealer at prices and upon terms established by VWoA” and to “transmit orders for [those
`
`vehicles] … electronically, at the times and for the periods, that VWoA reasonably requires.”);
`
`see also Park Ex. E at 7 (same for Audi).
`
`11
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 15 of 21
`
`
`
`Fifth, Volkswagen specifies the number and types of vehicle inventory its dealers must
`
`maintain at their premises. See e.g., Park Ex. B at 8 (“Dealers will maintain in inventory at all
`
`times the assortment and quantity of Authorized Products required by the Operating Standards,
`
`Operating Plan or Recommendations.”); Park Ex. E at 8 (same for Audi).
`
`Sixth, Volkswagen also specifies what parts its dealers may use and how many its dealers
`
`must maintain. See e.g., Park Ex. B at 6 (requiring Volkswagen dealers to “maintain an
`
`inventory of Genuine Parts which is sufficient to perform reasonably anticipated warranty
`
`service and wholesale trade requirements in Dealer’s Area”); Park Ex. E at 6 (same for Audi)..
`
`Seventh, Volkswagen specifies the terms and scope of warranties to be included in its
`
`vehicle sales as well as requires the manner in which its dealers provide notice and advertise
`
`such warranties. See e.g., Park Ex. B at 10 (requiring Volkswagen dealers to (i) ensure that all
`
`customers purchasing vehicles or parts also “acquire all rights
`
`in accordance with
`
`[Volkswagen’s] Warranties,” (ii) “make the text of [Volkswagen’s] Warranties part of its
`
`contracts for the sale of Authorized Products,” and (ii) “display the text of the warranties of all
`
`products it sells in customer contact areas where Authorized Products are offered.”); see also
`
`Park Ex. E at 10 (same for Audi). Further, Volkswagen, and not its dealers, establishes the
`
`procedures for processing warranty claims and returning and disposing of defective parts and
`
`requires its dealers to comply with such procedures. Park Ex. B at 10 (see below)6; Park Ex. E at
`
`10.
`
`6
`
`
`The Court in Blitzsafe I found the control over “the provision of warranty services” as an
`independent basis for venue under the “control” theory. Blitzsafe I, 2018 U.S. Dist.
`LEXIS 173065, at *24; see also Blitzsafe Tex. LLC v. Mitsubishi Elec. Corp., 2019 U.S.
`Dist. LEXIS 86350, *6 (E.D. Tex. May 22, 2019) (hereinafter “Blitzsafe II”).
`
`12
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 16 of 21
`
`
`
`
`Eighth, Volkswagen, and not its dealer, determines the rate or price at which a
`
`
`
`Volkswagen or Audi dealer will be reimbursed for services. See e.g., Park Ex. B at 7 (“VWoA
`
`will reimburse Dealer for performing such services at the then-current rate of reimbursement
`
`specified by VWoA for Dealer.”) (emphasis added); Park Ex. D at 7 (same for Audi).
`
`Ninth, Volkswagen requires each Volkswagen or Audi dealer to report its finances and
`
`operations monthly, something one would ordinarily expect to be provided to an owner or a
`
`shareholder only. See e.g., Park Ex. B at 11 (“Dealer will transmit … a financial and operating
`
`statement reflecting the consolidated operations of Dealer.”); Park Ex. E at 11 (same for Audi).
`
`Volkswagen further requires its dealers to “use accounting, sales, bookkeeping and service
`
`workshop forms; business machines; data processing and transmission equipment; and other
`
`office equipment which meets specifications” required by Volkswagen, and “keep accurate and
`
`current records in accordance with [Volkswagen’s] uniform accounting system.” See e.g., Park
`
`Ex. B at 11; Park Ex. E at 11.
`
`Tenth, Volkswagen even specifies the type and quantity of IT equipment such as
`
`computers its dealers must use and maintain. See e.g., Park Ex. F at 22 (requiring dealers to
`
`maintain (i) one computer terminal with a minimum of 512K Internet speed for each brand
`
`specialist; (ii) one computer with a minimum of 512K Internet speed for every two technicians;
`
`13
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 17 of 21
`
`
`
`(iii) one designated computer with a minimum of 512K Internet speed for parts department) (see
`
`below).
`
`
`Eleventh, Volkswagen specifies the number of personnel that its dealers must have on
`
`
`
`site and their certifications and training. See e.g., Park Ex. E at 25 (see below):
`
`
`
`
`
`14
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 18 of 21
`
`
`
`Twlevth, Volkswagen also conducts performance reviews on (i) the dealers’ sales,
`
`service, and parts, (ii) customer satisfaction, and (iii) even the dealer’s maintenance of its
`
`premises and facilities. See e.g., Park Ex. B at 12 (for Volkswagen); Park Ex. E at 12 (same for
`
`Audi) (see below):
`
`
`Lastly, Volkswagen controls and can restrict whether and to whom a dealer may sell or
`
`
`
`transfer its business. See e.g., Park. Ex. B at 13 (“If Dealer chooses to transfer its principal assets
`
`or change owners, VWoA has the right to approve the proposed transferees … and … their
`
`premises. … VWoA will notify Dealer in writing of the approval or disapproval of a proposal by
`
`Dealer for transfer of principal assets or change of owners”); Park Ex. E at 12 (same for Audi).
`
`These scope and breadth of these agreements directly contradict Volkswagen’s claim that
`
`its dealers are “independent” franchises, at least for venue determination purposes.7 Motion at 4.
`
`On the contrary, they show that Volkswagen exercises a vast amount of control over its dealers
`
`by imposing various obligations and restrictions that one would ordinarily expect to be imposed
`
`7
`
`
`The Volkswagen and Audi documents were located in the public domain. To the extent
`more recent documents exist, they have not been located by StratosAudio nor cited by
`Defendant in its Motion.
`
`15
`
`

`

`Case 6:20-cv-01131-ADA Document 22 Filed 03/05/21 Page 19 of 21
`
`
`
`on its own employees only. Given the dominant control Volkswagen exercises over its dealers,
`
`venue against Volkswagen is proper in this District under the “control” theory as well.
`
`C.
`
`To the Extent Helpful To the Court, Volkswagen’s Motion Should Be Denied
`Until Parties Have Completed Venue Discovery
`
`The facts as set forth above are sufficient to establi