In Re Volkswagen (5th Circuit Court of Appeals 07-40058)

Richard and Ruth Singleton lived in Marshall Texas. While visiting Dallas, traveling in their Volkswagen Golf, with their seven-year-old granddaughter, Amy, they were hit from behind. The car was propelled into a disabled flat-bed trailer parked on the shoulder of the road. Amy was killed in the crash, trapped beneath the front passenger seat, which collapsed on impact. They sued Volkswagen in Marshall, in the Eastern District of Texas. But then moved to Dallas.

Volkswagen moved to have the case transferred to Dallas. The district court denied the motion. 2-1, a 5th Circuit appeals court panel backed the district court. An en banc rehearing went 10-7 for granting Volkswagen's petition of writ of mandamus for venue transfer, based primarily that all the witnesses were in Dallas, and so Dallas was more convenient.

Quoting from the en banc majority ruling:

Although the Supreme Court has never decided mandamus in the context of § 1404(a), the Supreme Court holds that mandamus is an appropriate remedy for "exceptional circumstances amounting to a judicial usurpation of power or a clear abuse of discretion." Cheney v. U.S. Dist. Ct., 542 U.S. 367, 380 (2004) (citations and internal quotation marks omitted). Thus, the specific standard that we apply here is that mandamus will be granted upon a determination that there has been a clear abuse of discretion.

The general venue statute is 28 U.S.C. § 1391. For patent litigation, as with other civil litigation, a plaintiff may file in any district in which an accused infringer conducts business. Typically, that is any district. The change of venue statute is 28 U.S.C. § 1404(a).

Because large corporations, like Volkswagen, often have sufficient contacts to satisfy the requirement of § 1391(c) for most, if not all, federal venues, the general venue statute "has the effect of nearly eliminating venue restrictions in suits against corporations." 14D Wright, Miller & Cooper, Federal Practice & Procedure § 3802 (3d ed. 2007) (noting also that, because of the liberal, general venue statute, "many venue disputes now are litigated as motions to transfer venue under Section 1404 of Title 28").

Congress, however, has tempered the effects of this general venue statute by enacting the venue transfer statute, 28 U.S.C. § 1404. The underlying premise of § 1404(a) is that courts should prevent plaintiffs from abusing their privilege under § 1391 by subjecting defendants to venues that are inconvenient under the terms of § 1404(a). See Norwood v. Kirkpatrick, 349 U.S. 29 (1955); cf. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947) ("[The general venue] statutes are drawn with a necessary generality and usually give a plaintiff a choice of courts . . . . But the open door may admit those who seek not simply justice but perhaps justice blended with some harassment."). Thus, while a plaintiff has the privilege of filing his claims in any judicial division appropriate under the general venue statute, § 1404(a) tempers the effects of the exercise of this privilege.

District courts have considerable discretion in deciding to keep or transfer a case.

As to the appropriate standard, in Humble Oil we noted that "the avoidance of dismissal through § 1404(a) lessens the weight to be given" to the plaintiff's choice of venue and that, consequently, "he who seeks the transfer must show good cause." 321 F.2d at 56. This "good cause" burden reflects the appropriate deference to which the plaintiff's choice of venue is entitled. When viewed in the context of § 1404(a), to show good cause means that a moving party, in order to support its claim for a transfer, must satisfy the statutory requirements and clearly demonstrate that a transfer is "[f]or the convenience of parties and witnesses, in the interest of justice." Thus, when the transferee venue is not clearly more convenient than the venue chosen by the plaintiff, the plaintiff's choice should be respected. When the movant demonstrates that the transferee venue is clearly more convenient, however, it has shown good cause and the district court should therefore grant the transfer.

The overarching guide to venue transfer: "the convenience of parties and witnesses and in the interest of justice."

We have adopted the private and public interest factors first enunciated in Gulf Oil Corp. v Gilbert, 330 U.S. 501 (1947), a forum non conveniens case, as appropriate for the determination of whether a § 1404(a) venue transfer is for the convenience of parties and witnesses and in the interest of justice. See Humble Oil, 321 F.2d at 56.

The private interest factors are: "(1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive." In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004) [hereinafter In re Volkswagen I] (citing Piper Aircraft, 454 U.S. at 241 n.6). The public interest factors are: "(1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws [or in] the application of foreign law." Id.

For patent suits, the private interest factors provide no succor to a defendant wanting transfer out of a rocket docket such as the Eastern District of Texas, which comparatively easily minimizes "all other practical problems that make trial of a case easy, expeditious and inexpensive," with the facets of access to evidence and facility of witnesses being a wash, hence favoring plaintiff's choice.

The public interest factors weigh even more heavily in a patent plaintiff's favor. (1) Although the popularity of rocket docket venues has loaded their dockets, they still maintain an edge in time-to-trial. (3) Patent rocket dockets are popular precisely because the judges there are experienced with patent cases. The other factors are seldom germane to patent suits. (2) There is no particular local interest in a patent case. (4) There are almost never "problems of conflict of laws" in patent matters.

The dissenting opinion rightly noted that Volkswagen had no local interest in what was a product liability matter, not a personal liability matter. Volkswagen's witnesses were coming from Germany. As to other witnesses, some were in Dallas and some in Marshall. The fact basis for transfer was thereby by no means clear-cut, and hence the majority had insufficient legal basis to find the requisite "clear abuse of discretion" by the district court.

In order to enable the majority to correct the district court's "errors" in applying § 1404(a), the majority misapplies the "clear abuse of discretion" standard provided by the Supreme Court by divorcing the standard from the context that gave it meaning. The Court, in Bankers Life, held that "clear abuse of discretion" does not involve a district court's possibly erroneous exercise of its conceded authority; rather, clear abuse occurs when the district court lacks the judicial power or authority to make the decision that it did. In Bankers Life, the petitioner was a plaintiff in a private antitrust suit naming numerous defendants, one of whom resided outside the district in which the suit was filed. 346 U.S. at 380. Based on the applicable venue statute, the district court held that venue was improper as to that nonresident defendant and transferred the case pursuant to 28 U.S.C. § 1406(a).4 Id. at 380-81. In seeking the writ, the petitioner's sole argument was that the district court had the power to order the transfer only if venue was improper and that venue was, in fact, proper. Id. at 381. The Court, however, declined to review the district court's possibly erroneous interlocutory decision and held that the alleged error in applying the statute was not a clear abuse of discretion. Id. at 382-83.

For the Court, no "clear abuse of discretion" occurred because there was no question that the district court had the power or authority to do what it purported to do--transfer a case from an improper venue to a proper venue--and the petitioner's sole argument regarding a possibly erroneous interlocutory order did not involve a "clear abuse of discretion." That is, for the purposes of mandamus, a "clear abuse of discretion" occurs when the district court has acted outside the scope of its power or authority.5 It is therefore a mistake to equate the kind of ordinary error that might be labeled an "abuse of discretion" on appeal with the kind of error that justifies mandamus, as the majority does. Our inquiry on mandamus should center on reviewing errors that implicate a district court's power to act as it did. There is no claim here that the district court did not have the judicial power to deny the transfer motion. The claim is that it erred in the judgment that it made when it exercised the power that it concededly has. That is not the basis for a writ.

Volkswagen is already being cited to drive patent cases out of the Eastern District of Texas. That's one vehicle that shouldn't start.