IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

AMERICAN VEHICULAR SCIENCES 

LLC,

 Plaintiff,

vs.

TOYOTA MOTOR CORPORATION, 

et al.,

 Defendants.

§

§

§ 

§ 6:12cv404 MHS-JDL (Lead)

§ 6:12cv405 MHS-JDL

§ 6:12cv406 MHS-JDL 

§ 6:12cv408 MHS-JDL

§ 6:12cv410 MHS-JDL

§

§

§

MEMORANDUM OPINION AND ORDER

On remand from the mandamus decision of the Court of Appeals for the Federal Circuit 

(Doc. No. 235), the Court reconsiders the sever-and-and-stay portion of Defendants’ Motion to 

Change Venue and to Sever and Stay Claims Against Gulf States Toyota (Doc. No. 19). The 

matter was fully briefed (Doc. Nos. 79, 83 & 88). Additionally before the Court is Defendants 

Toyota Motor Corporation, Toyota Motor Sales, U.S.A., Inc., Toyota Motor Engineering & 

Manufacturing North America, Inc., Toyota Motor Manufacturing, Kentucky, Inc., and Toyota

Motor Manufacturing, Indiana, Inc. (collectively “Toyota”), as well as Gulf States Toyota, Inc.’s

(“Gulf States”) Motion to Stay Pending Decision on Motion to Sever, Stay, and Transfer (Doc. 

No. 237) (“Toyota’s Motion to Stay”). Plaintiff American Vehicular Sciences LLC (“AVS” or 

“Plaintiff”) has responded (Doc. No. 243) and Toyota replied (Doc. No. 245). Additionally, 

AVS filed a Motion for Reconsideration (Doc. No. 249) to which Toyota responded (Doc. No. 

250). Having considered the Federal Circuit’s Order, the parties’ arguments, and for the reasons 

set forth below, the Court DENIES AVS’ Motion for Reconsideration, SEVERS and STAYS 

all claims against Gulf States, and TRANSFERS all actions and claims against Toyota to the 

Eastern District of Michigan. Toyota’s Motion to Stay is DENIED AS MOOT

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BACKGROUND

On June 25, 2012, AVS simultaneously filed seven separate lawsuits alleging 

infringement of 24 patents against Toyota and five simultaneous lawsuits against BMW 

Defendants.1 AVS has since filed sixteen cases against Hyundai, Kia, Honda, Subaru, and 

Mercedes.2 Each suit alleges infringement of various patents, all of which are a part of a 

common patent portfolio directed to “electronic sensors for automotive safety and telematics 

systems.” COMP.

On October 4, 2012, Toyota and Gulf States filed a Motion to Change Venue and to 

Sever and Stay Claims against Gulf States (Doc. No. 19) asserting that the majority of the 

asserted patents are related to patents that have already been litigated in the Eastern District of 

Michigan (“EDMI”), the transferee forum. Some of the asserted patents claim priority to those 

litigated in the Eastern District of Michigan or claim priority to the same patent applications; 

others are parents to the prior litigated patents. Id. at 5. As a result, some of the claim terms at 

issue in these matters have already been construed by the court in Michigan. Id. Additionally, 

the Motion sought to sever all claims brought by AVS against Gulf States, a regional Toyota 

distributor.

The Court denied that Motion on June 12, 2013 (Doc. No. 131). Toyota then moved for 

reconsideration (Doc. No. 134), which was denied on November 22, 2013 (Doc. No. 179). The 

Court of Appeals for the Federal Circuit vacated that decision on April 3, 2014, holding that 

“putting Gulf States aside, Toyota has a clear right to transfer” and further directing this Court to 

 1 The actions against BMW have since been dismissed. See American Vehicular Sciences LLC v. BMW Group, 

a/k/a BMW AG, et al., No. 6:12cv411. 2 See American Vehicular Sciences LLC v. Hyundai Motor Company, et al., No. 6:12cv774; American Vehicular 

Sciences LLC v. Kia Motors Corporation, et al., No. 6:12cv147; American Vehicular Sciences LLC v. American 

Honda Motor Co., Inc., et al., No. 6:13cv226; American Vehicular Sciences LLC v. Subaru of America, Inc., No. 

6:13cv229; American Vehicular Sciences LLC v. Hyundai Motor Company, et al., No. 6:13cv270; and American 

Vehicular Sciences LLC v. Mercedes-Benz U.S. International, Inc., et al., No. 6:13cv307.

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reconsider the motion to sever and stay Gulf States, transferring the remainder of the case if the 

claims are severed. Doc. No. 235 at 5-6.

On April 8, 2014, the Court sua sponte stayed this case for 30 days due to the Federal 

Circuit’s order (Doc. No. 239) and continued the instituted stay until the conclusion of the 

mandamus proceedings on April 30, 2014 (Doc. No. 244). In the interim, Toyota filed a Motion 

to Stay Pending Decision on Motion to Sever, Stay, and Transfer (Doc. No. 237) and AVS filed 

a Motion for Reconsideration or, in the Alternative, Motion for Supplemental Briefing and to Reopen Discovery in Relation to Toyota’s Opposed Motion to Sever, Stay, and Transfer (Doc. No. 

249).

On June 6, 2014, the Court of Appeals for the Federal Circuit denied AVS’ Petition for 

Rehearing En Banc (Doc. No. 247). The Court now considers AVS’ Motion for Reconsideration 

and the Gulf States portion of Toyota’s Motion to Sever, Stay, and Transfer.

ANALYSIS

I. Sever and Stay of the Claims Against Gulf States

Toyota argues, and the Court agrees, that the claims against Gulf States should be severed 

and stayed because the remaining claims are peripheral to the severed claims, adjudication of the 

severed claims would dispose of the claims against Gulf States, and the § 1404(a) factors, as 

instructed by the Federal Circuit, warrant transfer of the severed claims. Doc. No. 19 at 14; See 

Shifferaw v. Emson USA, No. 2:09-CV-54-TJW-CE, 2010 WL 1064380, at *1 (E.D. Tex. Mar. 

18, 2010) (citations omitted). The Court does not agree with AVS’ assertion that Gulf States 

“acts as Toyota in Texas.” Doc. No. 79 at 15. Gulf States is a distributor to various Toyota 

dealerships, dependent on “literature and other information provided by Toyota” in creating its 

own marketing materials related to the accused systems and structures. Doc. No. 19-2, Ex. 2, 

Declaration of Scott R. Cordes (“Cordes Decl.”) ¶¶ 6-7. As discussed below, Gulf States is 

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charged with infringement solely on the grounds that it distributes Toyota vehicles with no role 

in the installation, manufacture, research, development or engineering of the accused structures 

and systems contained within the Toyota vehicles.

Rule 21 of the Federal Rules of Civil Procedure allows the court to sever any claim 

against any party. FED.R.CIV.P. 21. When deciding whether to sever, the district court has 

“broad discretion.” Shifferaw, 2010 WL 1064380, at *1 (citing Anderson v. Red River Waterway 

Comm’n, 231 F.3d 211, 214 (5th Cir. 2000)). The party seeking severance under Rule 21 “bears 

the burden of proving that such action is necessary.” Aspen Tech., Inc. v. Kunt, No. 4:10-cv1127, 2011 WL 86556, at *3 (S.D. Tex. Jan. 10, 2011) (citations omitted). Severance may be 

permitted when three factors are met: (1) whether the remaining claims are peripheral to the 

severed claims; (2) whether adjudication of the severed claims would potentially dispose of the 

remaining claims; and (3) whether the § 1404(a) factors warrant transfer of the severed claims. 

Shifferaw, 2010 WL 1064380, at *1 (citations omitted).

Turning to the issue of whether the AVS’ claims against Gulf States are peripheral to the 

claims against the Toyota Defendants, the Court concludes that they are. Gulf States is merely a 

distributor, and therefore secondarily involved in the present patent litigation claims by AVS. 

Cordes Decl. ¶ 3. Gulf States is a private, independently owned and operated entity that is the 

contracted exclusive distributor of Toyota branded vehicles in Arkansas, Louisiana, Mississippi, 

Oklahoma and Texas. Id. The vehicles Gulf States distributes are purchased from Toyota Motor 

Sales, USA, Inc. (“TMS”), the U.S. sales and marketing arm of Toyota in all U.S. states other 

than Hawaii. Cordes Decl. ¶ 3. As a distributor, Gulf States has no part in the manufacture, 

research, development, or engineering of vehicles, nor the installation of any items that alter the 

accused structures or systems. Id. ¶¶ 3, 5. AVS has proffered no evidence or attempted to argue 

that Gulf States has any role in the design or manufacture of the accused products. See generally

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Doc. No. 79. ”Where a single manufacturer is the only entity in the U.S. who makes and sells 

the only accused products to retailers, a patent infringement claim against a retailer is peripheral 

to the claims against the manufacturer.” Shifferaw, 2010 WL 1064380, at *3; see also Toshiba 

Corp. v. Hynix Semiconductor, Inc., No. Civ.A 3:04-CV-2391-L, 2005 WL 2415960, at *5 (N.D. 

Tex. Sept. 30, 2005).

Additionally, Gulf States is “fully indemnified” by TMS and has “no financial stake or 

interest of its own in any of these cases.” Cordes Decl. ¶ 9. A claim against a retailer is much 

more likely to be considered “peripheral” when a manufacturer has “indemnified and is funding 

the defense” of the retailer.” Shifferaw, 2010 WL 1064380, at *3. Thus the claims against Gulf 

States are clearly peripheral to the claims against the remaining Toyota Defendants.

Severance is also appropriate because adjudication of the remaining claims against 

Toyota would likely dispose of AVS’ claims against Gulf States as a severed Defendant. See Id. 

As in Shifferaw and Toshiba, where the distributor would only be liable if the main defendants as 

manufacturers of the accused devices were found to have infringed the patents, in this case Gulf 

States could only be found liable if AVS’ patent infringement claims against Toyota are resolved 

in AVS’ favor. Id;Toshiba, 2005 WL 2415960, at *6. 

The only remaining factor is whether AVS’ claims against Toyota should be transferred 

pursuant to section 1404(a). As discussed in the next section, the Federal Circuit has directed 

that Toyota has a clear right to transfer. Thus, severance of AVS’ claims against Gulf States is 

warranted. 

Further, the Court determines that in the interest of justice, the claims against Gulf States 

should be severed and stayed pending disposition of the transferred claims against the Toyota 

Defendants in the Eastern District of Michigan. See Corry v. CFM Majestic 16 F.Supp.2d 660, 

666 (E.D. Va. 1998); Landis v. North American Co., 299 U.S. 248, 254-5, 57 S.Ct. 163, 81 L.Ed. 

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153 (1936) (“The power to stay proceedings is incidental to the power inherent in every court to 

control the disposition of causes on its docket, with economy of time and effort for itself, for 

counsel, and for the litigants.”).

II. Toyota’s Transfer to the Eastern District of Michigan

In its opinion, the Court of Appeals for the Federal Circuit stated that “putting Gulf States 

aside, Toyota has a clear right to transfer...If the district court severs the claims against Gulf 

States, the remainder of the case must be transferred.” Doc. No. 235 at 6. As discussed supra, 

the Court has severed the claims against Gulf States and should therefore transfer the remainder 

of the case. In its Motion for Reconsideration, AVS argues recent developments have 

undermined the Federal Circuit’s decision. Doc. No. 249. Specifically, AVS argues that the 

grant of inter partes review (“IPR”) of several patents and Toyota’s announcement that its 

United States headquarters is moving to Plano, Texas justifies that this Court exercise “its 

inherent authority to reconsider its transfer order or, in the alternative, that this Court open 

supplemental briefing and re-open venue-related discovery.” Id. at 15. As Toyota notes in its 

Opposition, Toyota’s IPR petition was filed well in advance of the Federal Circuit’s ruling, and 

the Federal Circuit was aware of the IPR proceeding. Doc. No. 250 at 3. Additionally, AVS 

relied on Toyota’s announcement of the headquarters move to Texas in its briefing to the Federal 

Circuit. Id. at 4. So the Federal Circuit was aware of both the IPR proceedings and Toyota 

Headquarters’ move when it granted mandamus and denied AVS’ request for rehearing en banc. 

Moreover, whether transfer is appropriate is determined at the time of filing. Jones v. Cooper, 

Civil Action No. 09-0086, 2009 WL 4823837, at *3 (W.D. La. Dec. 14, 2009) (citing. St. Paul 

Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998)). Therefore, AVS’ 

argument does not undermine the Federal Circuit’s Order for this Court to transfer all claims 

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against the Toyota Defendants to the Eastern District of Michigan now that it has determined the 

claims against Gulf States should be severed and stayed. 

CONCLUSION

For the reasons stated herein and pursuant to the Federal Circuit’s decision (Doc. No. 

235), AVS’ Motion for Reconsideration is DENIED and the 6:12cv404, 6:12cv405, 6:12cv406, 

6:12cv408 and 6:12cv410 actions as against Toyota Motor Corporation, Toyota Motor Sales, 

U.S.A., Inc., Toyota Motor Engineering & Manufacturing North America, Inc., Toyota Motor 

Manufacturing, Kentucky, Inc., and Toyota Motor Manufacturing, Indiana, Inc. are hereby 

TRANSFERRED as separate actions to the Eastern District of Michigan. Toyota’s Motion to 

Stay is DENIED AS MOOT. Otherwise all pending motions are deferred to the transferee 

court. Further, the Court SEVERS AVS’ claims against Gulf States Toyota, Inc. and retains 

those claims in the aforementioned actions. Finally, the Court STAYS and 

ADMINISTRATIVELY CLOSES these actions pending the resolution of AVS’ claims against 

the Toyota Defendants in the Eastern District of Michigan. The clerk of court shall effect the 

transfer in accordance with the usual procedure. 

.

 ___________________________________

 JOHN D. LOVE

 UNITED STATES MAGISTRATE JUDGE So ORDERED and SIGNED this 10th day of July, 2014.

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