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Fifth Circuit Grants Venue Transfer in Closely Watched Case

By Sherry L. Talton, Litigation News Associate Editor – November 26, 2008

A 10–7 decision in In Re: Volkswagen of America Inc. [PDF], a product liability case, has caused speculation about the future of the busiest patent infringement docket in the country. The Fifth Circuit, sitting en banc, ruled that an Eastern District of Texas court abused its discretion by denying a defendant’s motion to transfer an action arising from a fatal car accident.


The case had been assigned to the Marshall Division of the Eastern District of Texas, which is known for its “rocket docket” local patent rules. A combination of those rules and a perceived friendliness to plaintiffs has increased the number of patent suits filed in that division since 2001. Some legal analysts say the Fifth Circuit decision has the potential to increase the number of change of venue motions filed and may undercut the rationale of filing in that jurisdiction.


Background of the Dispute
In May 2005, the plaintiffs’ Volkswagen Golf was hit from behind and driven into a flat-bed trailer. The plaintiffs allege that a defective front passenger seat collapsed in the accident, killed their 7-year-old daughter, and left the girl’s grandfather a paraplegic.


Although the car was purchased and the accident occured in Dallas County, TX, the plaintiffs filed suit in the Marshall Division of the Eastern District of Texas. Volkswagen moved to transfer venue to the Dallas Division of the Northern District of Texas under 28 U.S.C. § 1404(a).


The district court held that Volkswagen failed to show that the “balance of convenience and justice substantially weighs in favor of transfer” to overcome the “paramount consideration” of the plaintiffs’ choice of forum.


In a per curiam opinion, a Fifth Circuit panel affirmed the denial of transfer, and Volkswagen moved for rehearing. The panel withdrew its decision, and then the plaintiffs moved for rehearing en banc. The Fifth Circuit held that Volkswagen’s petition for a writ of mandamus met the requirements under the U.S. Supreme Court’s decision in Cheney v. U.S. District Court of “exceptional circumstances amounting to a judicial usurpation of power or a clear abuse of discretion.”


The en banc court found for Volkswagen and directed the district court to transfer the matter to the Northern District. The Fifth Circuit’s decision included a rebuke of the district court’s refusal to transfer venue.


“Concluding that the district court gave undue weight to the plaintiffs’ choice of venue, ignored our precedents, misapplied the law, and misapprehended the relevant facts, we hold that the district court reached a patently erroneous result and clearly abused its discretion,” the court opinion states.


Impact on the Patent Bar
Volkswagen’s impact on patent infringement cases in the Eastern District of Texas or on motions to transfer venue in other circuits is still unclear. The opinion has drawn the attention of patent litigators across the country because the Eastern District of Texas has more patent law cases than any other district in the nation. The Administrative Office of U.S. Courts reports [PDF] that 359 patent cases were filed in that district during the 12 months ending September 30, 2007.


Numerous patent litigators and other commentators have speculated in the media and at CLEs that the Volkswagen decision may finally bring a long-awaited reprieve from the rocket docket in Marshall, TX, for defendants in patent infringement cases.


Others, like Michael J. Garvin, Cleveland, OH, cochair of the ABA Section of Litigation Intellectual Property Litigation Committee, doubt that Volkswagen will have any practical impact on patent cases, which normally base venue on product sales within the district.


In addition to the inherent differences between products liability and patent infringement cases, Garvin explains that “it’s unlikely that this case will be seen as any kind of bellwether because of its very specific facts.”


Volkswagen is an “anomaly” necessitated by the “extreme facts” of the case, agrees David A. Soley, Portland, ME, cochair of the Section’s Trial Practice Committee.


Soley does not foresee other circuits adopting the use of mandamus for transfers of venue. The Fifth Circuit’s decision could be viewed as a possible signal of that court’s desire to curb the trend in which “one division of one court becomes almost solely responsible for one kind of case—in this instance, automotive products liability cases,” he notes.


A first reading of the Volkswagen opinion is a reminder of the judicial adage attributed to Justice Oliver Wendell Holmes Jr. that “hard cases make bad law,” Soley says. “The Fifth Circuit had no choice but to transfer the case because of its abnormally bad facts,” he opines.


The American Intellectual Property Law Association, an Arlington, VA, group of over 17,000 members interested in intellectual property issues, filed an amicus brief in the Fifth Circuit case in favor of transfer. It urged the court to hold that a plaintiff’s choice of venue is just the “presumptive starting point” of the transfer analysis that is not entitled to “substantive weight.”


In response, a group of East Texas lawyers formed the Ad Hoc Committee of Intellectual Property Trial Lawyers in the Eastern District of Texas [PDF] to offer the view that the Eastern District has been wrongly depicted as jurisdiction to which unwilling defendants are “dragged against their will.”


Keywords: writ of mandamus, venue transfer, patent infringement, product liability, Fifth Circuit, Eastern District of Texas.


 

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