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U.S. District Court Examines Motion to Transfer Venue Standard Under 28 U.S.C. § 1404(a)

Endeavor Meshtech, Inc. v. Aclara Technologies LLC
No. 13-1618 (United States District Court for the District of Delaware, February 25, 2015)
by Richard J. Medoff, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.ded.uscourts.gov/sites/default/files/opinions/gms/2015/february/13-1618.pdf

In Endeavor Meshtech, Inc. v. Aclara Technologies LLC, a case involving a motion to transfer a patient infringement action filed in the U.S. District Court for the District of Delaware to the U.S. District Court for the Eastern District of Missouri pursuant to 28 U.S.C. §1404(a), the United States District Court for the District of Delaware concluded that the interests of convenience and justice warranted transfer of the action. Therefore, Judge Gregory M. Sleet granted the Defendant’s Motion to Transfer Venue.

By way of factual background, on September 27, 2013, the plaintiff Endeavor Meshtech, Inc. ("Endeavor") initiated a patient infringement action against Aclara Technologies LLC ("Aclara") in the U.S. District Court for the District of Delaware, alleging that Aclara infringed U.S. Patent No. 7,379,981 (the "981 Patent"). Endeavor, the owner of the 981 Patent, was incorporated under the laws of Delaware, with its principal place of business located in Half Moon Bay, California. Aclara is a limited liability company organized under the laws of Ohio, with its principal place of business in Hazelwood, Missouri. Aclara filed a Motion to Transfer the action to the Eastern District of Missouri, pursuant to 28 U.S.C. § 1404(a).

28 U.S.C. § 1404(a) provides:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.

Under 28 U.S.C. § 1404(a), a district court has "broad discretion to determine, on an individualized, case-by-case basis, whether the convenience and fairness considerations weigh in favor of transfer." Jumara v. State Farm Ins. Co., 55 F.3d 873, 883 (3d Cir. 1995). In making that determination, the court engages in a two-step inquiry. First, "the court must determine whether the action could have originally been brought in the proposed transferee forum." Memory Integrity, LLC v. Intel Corp., No. 13-1804-GMS, 2015 WL 632026, at *2 (D. Del. Feb. 13, 2015). If, yes, the court then asks whether transfer would "best serve the interests of justice and convenience." Id. (quoting Smart Audio Techs., LLC v. Apple, Inc., 910 F. Supp. 2d 718, 724 (D. Del. 2012)). At each step of the inquiry, it is “the defendant's responsibility to demonstrate that transfer is appropriate,” and the court's analysis is guided by the general principle that, ''unless the balance of convenience of the parties is strongly in favor of defendant, the plaintiff's choice of forum should prevail." Memory Integrity, 2015 WL 632026, at *2 (quoting Shutte v. Armco Steel Corp., 431F.2d22, 25 (3d Cir. 1970)).

A Propriety of the Transferee Forum

The court began its analysis by noting that the parties did not dispute that Endeavor's lawsuit could have originally been filed in the Eastern District of Missouri. As such, the court proceeded to consider whether transfer to the Eastern District of Missouri would serve the interests of convenience and justice.

B. Jumara Analysis

The court began by explaining that under Third Circuit precedent, this step of the inquiry requires "an individualized analysis, considering the various private and public interests guarded by§ 1404(a)," Jumara, 55 F.3d at 879, and that in conducting this analysis, the court “considers each of these 'Jumara factors' on a case-by-case basis." Id. The court first noted that, under Jumara, the private interests at stake may include:

[1] plaintiffs forum preference as maintained in the original choice; [2] the defendant's preference; whether the claim arose elsewhere; [3] the convenience of the parties as indicated by their relative physical and financial condition; [4] the convenience of the witnesses-but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and [5] the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).

Id. Next, the court noted that the relevant public interests may include:

[1] the enforceability of the judgment; [2] practical considerations that could make the trial easy, expeditious, or inexpensive; [3] the relative administrative difficulty in the two fora resulting from court congestion; [4] the local interest in deciding local controversies at home; [5] the public policies of the fora; and [6] the familiarity of the trial judge with the applicable state law in diversity cases.

Id. at 879-80. The court then proceeded to address each of these "Jumara factors" in turn.

1. Private Interest Factors

a. Plaintiff's Forum Preference

The first private interest factor the court considered was the "plaintiff's forum preference as manifested in the original choice." Jumara, 55 F.3d at 879. The court explained that “ordinarily, a plaintiff's choice of a proper forum is a paramount consideration ... and should not be lightly disturbed." Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970). The court noted, however, that the court will afford "something less than maximum deference" to the plaintiff's chosen forum where the plaintiff is “not truly at home in the forum state." In re Link_ A_ Media Devices Corp., 662 F.3d 1221, 1223 (Fed. Cir. 2011). The court further explained that "while a corporate entity's state of incorporation is part of its 'home turf,' it is not alone dispositive in the analysis.” In re Microsoft Corp., 630 F.3d 1361, 1364 (Fed. Cir. 2011).

On this issue, Aclara argued that Endeavor's decision to incorporate in Delaware "was solely driven by litigation strategy," and that therefore its choice of forum "should be entitled to little or no weight;" however, the court did not agree. While the court found that Endeavor did not conduct any business in Delaware, the court explained that a plaintiffs forum selection is afforded "some degree of heightened deference," even where that plaintiff's "organization [in Delaware] was motivated significantly by the instant litigation." Ithaca Ventures k.s. v. Nintendo of Am. Inc., No. 13-824-GMS, 2014 WL 4829027, at *2-3 (D. Del. Sept. 25, 2014). Accordingly, the court found that Endeavor's forum preference was entitled to "heightened-but not paramount consideration."

b. Defendant's Forum Preference

The next private interest factor the court considered was "Aclara's forum preference." The court found that this factor "weigh[ed]in favor of transfer," as Aclara had "legitimate reasons" for preferring the Eastern District of Missouri, related to that fact that its principle place of business was located there. The court noted, however, that under Third Circuit precedent, "[a defendant's] preference for an alternative forum is not given the same weight as [a plaintiffs] preference." Intellectual Ventures, 842 F. Supp. 2d at 759.

c. Whether the Claims Arose Elsewhere

The third private interest factor the court considered was "whether the claim arose elsewhere." The court explained that as a matter of law, a claim for patent infringement "arises whenever someone has committed acts of infringement," and accordingly, "where the defendant in a patent infringement action operates on a national level, this factor is often neutral." Cellectis S.A. v. Precision Biosci., Inc., 858 F. Supp. 2d 376, 381 (D. Del. 2012). However, the court recognized that "to some extent, infringement claims arise where the allegedly infringing products are designed and manufactured," and thus, this factor "may favor transfer to a district where the defendant's accused infringing products originate." ChriMar Sys., Inc. v. Cisco Sys., Inc., No. 11-1050-GMS, 2013 WL 828220, at *5 (D. Del. Mar. 6, 2013). Accordingly, the court found that this factor "slightly favor[ed]transfer," because Aclara's products were marketed from its headquarters in Hazelwood, Missouri, and thus, the claims had "'deeper roots' in the Eastern District of Missouri than in the District of Delaware, where Aclara does not even conduct any sales."

d. Convenience of the Parties

The fourth private interest factor the court considered was "whether the proposed transferee forum would be more convenient for the parties." The court explained that in making this assessment, the court weighs several considerations, including:

(1) the parties' physical location; (2) the associated logistical and operational costs to the parties' employees in traveling to Delaware (as opposed to the proposed transferee district) for litigation purposes; and (3) the relative ability of each party to bear these costs in light of its size and financial wherewithal.

Smart Audio Techs., 910 F. Supp. 2d at 730. Endeavor argued that neither District was "more convenient than the other," thus making this factor neutral; however, the court disagreed. The court found that the Eastern District of Missouri was "certainly more convenient for Aclara," as its principal place of business was located in Missouri, and reasoned that it would be "unwise and unfair … to subject all parties to an inconvenient forum when a forum exists that would significantly reduce the burden of at least one of the parties." Id. at *4 (citing In re Nintendo Co., 589 F.3d 1194, 1198 (Fed. Cir. 2009)). Accordingly, the court concluded that this factor “favored transfer.”

e. Convenience of the Witnesses

The next Jumara factor the court considered was "the convenience of the witnesses - but only to the extent that the witnesses may actually be unavailable for trial in one of the fora." Jumara, 55 F.3d at 879. The court determined this factor was "neutral" as neither party was "aware of any witnesses that would only be available in one district versus the other."

f. Location of Books and Records

The final private interest factor the court considered was "the location of books and records, similarly limited to the extent that the files could not be produced in the alternative forum." The court explained that in patent infringement cases, "the bulk of the relevant evidence usually comes from the accused infringer," and consequently, "the place where the defendant's documents are kept weighs in favor of transfer to that location." ChriMar, 2013 WL 828220, at *6 (quoting In re Genentech, Inc., 566 F.3d 1338, 1345 (Fed. Cir. 2009)). The court found that many, but not all, of the documents related to Aclara's products at issue were maintained in the Eastern District of Missouri; and thus, the court concluded that this factor "weigh[ed] slightly in favor of transfer."

2. Public Interest Factors

In considering the relevant public interest factors, the court first noted that the parties "d[id] not dispute three of the public interest factors: enforceability of the judgment, public policies of the forum, and the familiarity of the presiding judge with the applicable law." Accordingly, the court considered these factors neutral, and excluded them from its analysis.

a. Practical Considerations

The first public interest factor the court analyzed was the "practical considerations that could make the trial easy, expeditious, or inexpensive," specifically looking to the "public costs of litigation." Jumara, 55 F.3d at 879. Endeavor argued that there were "numerous co-pending cases in the District of Delaware concerning the 981 Patent" and that this "counsel[ed] against transfer;" however, the court was not persuaded. The court noted that this action had "not yet been consolidated with the co-pending District of Delaware cases," and that "independent trials [would] likely be necessary regardless." Accordingly, the court concluded that this factor "weigh[ed] minimally against transfer or [was] neutral."

b. Court Congestion

The next public interest factor the count considered was the "relative administrative difficulty in the two fora resulting from court congestion." Jumara, 55 F.3d at 879. The court explained that "increased times from filing to disposition and trial are important factors that do influence the court's calculus." Ithaca Ventures, 2014 WL 4829027, at *6.The court found that recent Federal Court Management Statistics, including median time from filing to trial for civil cases, indicated that the District of Delaware may be more congested than the Eastern District of Missouri. The court explained, however, that this factor is "speculative" because "whether a matter will proceed to trial is unpredictable." Nonetheless, the court found that, "to the extent it [could] be relied upon," this factor weighed "slightly in favor of transfer."

c. Local Interest in the Litigation

The final interest factor the court examined was "any local interest in deciding local controversies at home." Jumara, 55 F.3d at 879. The court explained, however, that "patent litigation … raises national and even global concerns, thus the notion that a district holds a local interest in the litigation is almost always unpersuasive." Helicos Bioscis. Corp. v. Illumina, Inc., 858 F. Supp. 2d 367, 375 (D. Del. 2012). Accordingly, the court concluded that this factor was neutral.

3. Conclusion

In weighing the Jumara factors, the court noted that "only Endeavor's forum preference weighs against transfer," but that preference "did not warrant maximum deference” because of Endeavor's minimal connection to the District of Delaware, while the remaining factors "weigh[ed] strongly in favor of transfer or, at least, [were] neutral." Under these circumstances, the court concluded that "in the interests of convenience and justice … transfer [was] warranted." Accordingly, the court held that Aclara had "satisfied its burden of showing that the relevant Jumara factors strongly support transfer," and granted Aclara's Motion to Transfer the action to the Eastern District of Missouri, pursuant to 28 U.S.C. 1404(a).