Matthews v. Tidewater, Inc. rejects a challenge to a forum-selection provision that required dismissal of a Louisiana toxic-tort case in favor of England. The plaintiff, a Jones Act seaman, argued that the dismissal contravened the public policy enunciated in a Louisiana statute about litigation fora, but the Fifth Circuit disagreed.

The present case, as did [a prior case], involves a plaintiff who is not a Louisiana resident and an international employment contract requiring litigation in a foreign forum. We also stress Matthews’s lack of connections to Louisiana. Matthews worked for Tidewater, Inc., a Delaware corporation, and Tidewater Crewing, Ltd., a Cayman Islands corporation. He filed suit for injuries sustained outside the United States while servicing Egyptian oil wells in the Red Sea. Further, just as the [earlier] court observed Section 23:921A(2) protects Louisiana citizens from being forced to litigate their case in a foreign forum. Matthews is not a Louisiana citizen and has scant, if any, connections to Louisiana. He, therefore, is not the object of the statute.

No. 23-30305 (July 17, 2024) (citation omitted).

In Chamber of Commerce v. Consumer Financial Protection Bureau, the district court (for the second time) transferred a challenge to a new CFPB rule to the District of the District of Columbia. The district court reasoned, inter alia:

“Under Plaintiffs’ theory, there isn’t a city in the country where venue would not lie, as every city has customers who may potentially be impacted by the Rule. Plaintiffs could find any Chamber of Commerce in any city of America and add them to this lawsuit in order to establish venue where they desire. It appears that this is exactly what Plaintiffs attempted to do by recommending transfer to the Eastern District of Texas, Tyler Division. Here, once again, the only tie to the Eastern District of Texas, Tyler Division, was that one of the Plaintiffs happens to be there. None of the events occurred there and there is only a possibility that tangential harm could be felt by the Rule.” 

(citation omitted, emphasis added). The Fifth Circuit found an abuse of discretion in that conclusion, granting mandamus relief (for a second time) to prevent the transfer. It reasoned, inter alia, that the request for a nationwide injunction materially affected the analysis:

“Final Rules are not meant to be ‘localized’—they are usually designed to affect the entire nation. That’s why plaintiffs seek nationwide injunctions when a final rule is poised to go into effect—they seek to block the effect across the nation. Therefore, this case is not one where Fort Worth citizens have a lesser stake in the litigation than D.C. citizens.”

In re Chamber of Commerce, No. 24-10463-CV (June 18, 2024). While that reasoning seems destined to drive administrative-law challenges to the MDL process rather than the district courts of the Fifth Circuit, it reflects the present state of the law on this issue.

After much Sturm und Drang, the District of the District of Columbia returned Clarke v. CFTC to the Texas district court where that case started, reasoning:

[T]he Court will follow the weight of authority and transfer this case back to the requesting jurisdiction because the record establishes that it was transferred prematurely. The Court makes no decision on the Parties’ respective arguments on whether transfer would otherwise be appropriate. It certainly would be easy for the Court to keep this case—the Court currently has a case involving the same challenge against Defendant that is fully briefed and scheduled for argument soon. Nor does the Court quite understand how the District Court in Texas abused its discretion in making its determination. But the weight of authority instructs the Court on how such requests are routinely addressed, and the Court will follow that course of action here.

Clarke v. CFTC (citation omitted) (D.D.C. May 22, 2024).

As noted previously, the Fifth Circuit denied en banc review by an 8-8 vote in a contentious forum dispute. The breakdown of the votes is follows (the entire panel majority opinion appears in the chart, and the panel dissent is reproduced as an exhibit to the dissent from the denial of en banc review):

Recent dialogue about the benefits and drawbacks of single-judge judicial district has led to further public remarks, which have in turn drawn interesting rebuttal from commentators in Above the Law and Balls and Strikes.

(It bears mention in this discussion that the Alliance for Hippocratic Medicine – the lead plaintiff in the mifepristone litigation that touched off the present debate – was created three months before that litigation by several out-of-state anti-abortion groups, as explained in an informative Intercept article that discusses the broader history of such groups.)

Resolving another of the simmering venue disputes that have drawn considerable attention in recent weeks, the full Fifth Circuit denied en banc review (an 8-8 tie vote) of the denial of mandamus relief in In re SpaceX – a challenge to the district court’s order that transferred a dispute between SpaceX and the NLRB to the Central District of California.

After a Fifth Circuit panel granted mandamus relief about a transfer of a case involving the CFPB to the District of Columbia, the district court there entered this Minute Order on April 10:

This case was received from the U.S. District Court in the Northern District of Texas on March 29, 2024. On April 8, 2024, the Court received a copy of the Order Reopening Case and Providing Notice to the United States District Court of the District of Columbia … issued by the Texas district court in accordance with In re Fort Worth Chamber of Commerce, No. 24-10266 (5th Cir. Apr. 5, 2024) (attached to Notice and Order). The Fifth Circuit found that the district court lacked jurisdiction to transfer the case while an appeal was pending before the Court of Appeals, and it ordered the district court to “reopen the case and to give notice to D.D.C. that its transfer was without jurisdiction and should be disregarded.” While the Court is not inclined to “disregard” a case on its docket, and it has considerable discretion to supervise its own cases, a review of the Notice and Order, as well as the docket in the Northern District of Texas, reflects that the case is now proceeding there under the supervision of another district court. Therefore, the case will be terminated on this court’s docket at this time without prejudice. This order should not be read to express any view on the transfer question, which has not been presented to this Court to decide. The Clerk of Court is directed to terminate this case on the docket of the District Court for the District of Columbia.

Meanwhile, back in New Orleans, the Fifth Circuit has asked for supplemental briefing about “whether or not an ownership interest in a nonparty large credit card issuer would be substantially affected by the outcome of this litigation,” for purposes of evaluation potential judicial recusal. On May 3, the panel released a revised opinion.

Several disputes about inter-circuit venue transfers are ongoing (I was recently interviewed by Bloomberg about this phenomenon):

• SpaceX. In a dispute between SpaceX and the NLRB, the Fifth Circuit is considering whether to review a transfer order en banc. The NLRB recently filed its response to an unusual order from the panel asking the NLRB to explain several actions taken earlier in the proceedings. The gist of the NLRB’s response was:

Only one court may have jurisdiction at a time. The transferee court was notobliged to follow the February 26 order, and zealous advocacy required the NLRB to present its legal arguments as to why it should not be followed to the Central District of California. Thus, the NLRB urged that court, not to ignore this Court’sorder, but to acknowledge it and respectfully decline retransfer. 

• CFTC. In a dispute involving the Commodities Futures Trading Commission, the District of the District of Columbia has received the district court’s request to return the case, along with briefing and argument from the parties about the appropriate next step, and as of April 6 continued to have that request under consideration.
• CFPB. In a dispute involving the CFPB and a new rule about credit-card late fees, a 2-1 panel decision granted mandamus relief on April 5–after a case had been transferred to the District of the District of Columbia, concluding:

Because the Chamber had a short window of time to either (1) comply with the Final Rule, or (2) seek a preliminary injunction, the district court’s inaction amounted to an effective denial of the Chamber’s motion for a preliminary injunction. That effective denial is properly before us on appeal. The district court lacked jurisdiction to transfer the case after this appeal was docketed because doing so would alter its status. … The district court is ORDERED to reopen the case and to give notice to D.D.C. that its transfer was without jurisdiction and should be disregarded.

• CFPB dissent. The dissent in the CFPB case concluded: “For the foregoing reasons, I believe that the new proposition of law created by the majority is incompatible with district court discretion over docket management and prudent policing of forum shopping. Finally, I am confident the District Court for the District of Columbia will give the suggestion that it should disregard a case docketed by it its closest attention.”
• HHS. The Court has expedited argument (to May 1) of National Infusion Center v. Becerra , a challenge to the dismissal of a case about 2022 drug-reimbursement regulations on venue grounds (after the dismissal of a party for jurisdictional reasons).

Several matters involving inter-circuit venue transfers are ongoing:

• In a dispute between SpaceX and the NLRB, the Fifth Circuit is considering whether to review a transfer order en banc. The panel recently issued this unusual order asking the NLRB’s counsel to explain several actions taken earlier in the proceedings.
• In a dispute involving the CFTC, the District of the District of Columbia has received the district court’s request to return the case, and is receiving briefing and argument from the parties about the appropriate next step.
• In another dispute involving the CFPB, the Fifth Circuit has administratively stayed a transfer order and referred the matter to the next available argument panel.

Earlier this month, the Fifth Circuit granted mandamus relief, including the issuance of a writ of mandamus to the Western District of Texas, requiring that the district court request the return of a case from the District of the District of Columbia. That request was made on March 7. As of March 19, that court had not ruled on the request, and the CFTC continues to urge that the court delay action until it has received further briefing on the venue issue.

Last week, the Central District of California returned a case to Texas district court, after the Fifth Circuit pointed out that it had issued a stay order (in a mandamus proceeding brought to challenge the venue transfer) before the California court had docketed the transferred matter.

Then, after the return of the case to Texas, the Court denied mandamus relief. The majority did not write an opinion. A dissent would have granted the writ. In re SpaceX, No. 24-40103 (March 5, 2024). It remains to be seen what court will act next.

After a case was transfered to the District of Columbia, the Fifth Circuit granted mandamus relief about that transfer in In re Clarke, focusing on the district court’s analysis of the “local interest” factor

          [E]vents giving rise to the suit can be separated into two categories: The first concerns individual traders who purchased contracts on the marketplace. Five of them are based in Austin, bought their contracts from Austin, and have been harmed in Austin. The second category deals with marketplace service providers—Aristotle and PredictIt. Based in D.C., they “expended significant resources to assist Victoria University in developing and operating the PredictIt Market” and “will be forced to incur massive administrative, labor, time, and other costs if forced to liquidate pending contracts prematurely.”

          Given those events, there is an obvious connection between the facts giving rise to this case and the Western District of Texas. And, if we assume that Aristotle’s and PredictIt’s development and operations activities occurred in D.C., there is also a factual connection with D.D.C.

          Additionally, the effect of this suit is completely diffuse. Should plaintiffs prevail on their APA challenge, this court must “set aside” CFTC’s ultra vires recission action, with nationwide effect. That affects persons in all judicial districts equally.

No. 24-50079 (March 1, 2024) (footnote omitted). As with last week’s decision in a similar posture involving SpaceX, it remains to be seen whether the transferee district court will return the case.

In 2022, a venue skirmish in a contentious firerarms-manufacturing case led to a Pennsylvania district court declining to return a transferred case to the Fifth Circuit. Echoes of that skirmish can be heard in In re Space Exploration Technologies Corp., a dispute between SpaceX and the NLRB, where the following occurred:

SpaceX petitioned this court for a writ of mandamus on February 16, 2024, requesting that we direct the district court to vacate its transfer order.  Our court stayed the Southern District of Texas’s transfer order on February 19, 2024. Nevertheless, the Central District of California docketed the case four days later, on February 23, 2024, as case number 2:24-cv-1352-CBM-AGR. 

Accordingly, the Fifth Circuit directed the district court to ask the California court to return the case. The Fifth Circuit’s order points out that the California court lacks jurisdiction, since the docketing did not occur until after the stay issued. And unlike the 2022 gun case, the transferee court agreed with the Fifth Circuit, and has indicated that it will return the case to Texas when it receives the official request from the Texas trial court. No. 24-40103 (Feb. 26, 2024) (unpublished order).

A series of cases about the EPA’s regulation of small refineries led to a disagreement about Circuit venue over this kind of administrative-agency challenge. A majority appled a two-part test focused on whether the agency action was “nationally applicable”; the dissent rejected the majority’s analysis as inconsistent with statutory text, purpose, and structure. No. 22-60266 etc. (Nov. 22, 2023).

In re TikTok, Inc. returns to the ground plowed by In re Volkswagen in 2008 and In re Radmax in 2014: a mandamus petition about the erroneous denial of a motion to transfer venue under 28 USC § 1404(a). In this case (an intellectual-property case brought against TikTok by another Chinese business), The Fifth Circuit noted several missteps by the district court that justified mandamus relief, inter alia:

• Relative ease of access to sources of proof–source code. “The district court concluded that the source code was accessible as easily in Texas as in California because one member of the California engineering team with the needed security clearance worked remotely in Irving, Texas. But the court erred by comparing Texas with California when it should have been comparing the Western District of Texas with the Northern District of California.”
• Relative ease of access to sources of proof–people. “Neither the district court nor Meishe identifies any record evidence showing that any employee in the Western District of Texas possesses proof relevant to this case. The district court relied on deposition testimony and witness declarations from several of petitioners’ employees. That evidence, however, only establishes that a high-ranking company executive and other employees worked in Austin as members of a “Global Business Solutions Group.” It does not tie those individuals to this case, or show that they do any work related to the video-editing functionality or its implementation, or support the proposition that any of them would have physical proof relevant to the adjudication of Meishe’s claims. … [I]t is pure speculation whether any of petitioners’ Austin-based employees possesses or has access to proof relevant to this case.”
• Court-created delay. “Petitioners filed their § 1404(a) motion timely, yet the district court took no action on the motion for months, with the record showing no adequate reason for the delay. Moreover, the court failed to grant a stay, so the case proceeded through discovery for almost a year. When the court finally ruled, it used the case progress its delay engendered as a reason for denying transfer. If we were to hold that this is a proper exercise of discretion, a district court would have absolute control over whether these two factors weighed in favor of transfer.”

In re Jefferson Parish involved a mandamus petition about the interplay between a putative class action (“Ictech-Bendeck“) with a 500-plaintiff mass action (“Addison“). The Fifth Circuit denied relief, as the opinion’s introduction deftly summarizes:

… This mandamus proceeding arose because the defendants object to the district court’s scheduling of a small group of Addison plaintiffs for trial before Ictech-Bendeck will finish its class certification process, which the defendants have repeatedly delayed.

Petitioners ask us to stop the Addison trial and to order the district court to rule on class certification in Ictech-Bendeck before allowing any further proceedings in Addison. Petitioners raise the novel theory that under Rule 23 of the Federal Rules of Civil Procedure, the filing of a putative class action bars any possible class members from reaching the merits of their own, separate suits until class certification proceedings conclude in the putative class action. …

… Rule 23 establishes a mechanism for plaintiffs to pursue their claims as a class. It does not cause the filing of a putative class action to universally estop all separate but related actions from proceeding to the merits until the class-certification process concludes in the putative class action, after years of motions practice.

No. 23-30243 (Aug. 24, 2023).

Defense Distributed markets design files from which a rudimentary firearm can be made on a 3-D printer. This controversial product has drawn substantial attention from regulators, which in turn has led to litigation.

One part of that litigation, involving the New Jersey Attorney General, was transferred from Texas federal court to New Jersey federal court, after which a Fifth Circuit panel held that the transfer was erroneous. But New Jersey is not in the Fifth Circuit (right), and the New Jersey district court declined a request to voluntarily return the case.

Defense Distributed thus reloaded in Texas, “advanc[ing] two procedural theories to establish that the district court now has jurisdiction over their new request for a preliminary injunction against NJAG. One is that our court’s order to vacate the district court’s sever-and-transfer order automatically ‘revived’  plaintiffs’ claims against NJAG by operation of law. The second is that Federal Rule of Civil Procedure 15 allows plaintiffs to ‘refile’ their claims against NJAG, and they did so when they requested leave to amend to add NJAG to the existing case against the State Department in the Western District of Texas.”  (emphasis added).

The Fifth Circuit found that neither theory was viable after a case had been transferred out of its jurisdiction. It observed that “[t]here was a solution to the jurisdictional morass in which plaintiffs found themselves: [t]hey could have moved for a stay of the district court’s transfer order before the case was transferred.” Defense Distributed v. Platkin, No. 22-50669 (Dec. 15, 2022) (Haynes, J., concurring in the judgment only).

The Fifth Circuit found an improper use of the Declaratory Judgment Act, and thus declined to apply the “first-filed” rule to a Louisiana lawsuit and deferring to another proceeding in Texas, when the record showed these facts:

“In June 2021, Bee Sand sued Pontchartrain in Texas state court. Pontchartrain removed the case to federal court in July. Later that month, Bee Sand voluntarily dismissed the case, and explained to Pontchartrain that it intended to refile in September— after a new Texas law governing attorney’s fees went into effect. Bee Sand also offered to refile in federal court to spare Pontchartrain the expense of a second removal, and Pontchartrain said that it would consider the matter. Instead of responding to this offer, Pontchartrain sought to preempt Bee Sand by suing in Louisiana state court on August 26, 2021. Pontchartrain requested a declaratory judgment in its favor.”

Pontchartrain Partners, LLC v. Tierra de los Lagos, LLC, No. 22-30286 (Sept. 15, 2022).

Legal instruments often contain polite phrases before they get to the actual command in the instrument (“you have been sued and must file an answer,” or “you have been drafted,” etc.) Defense Distributed v. Platkin presents an unusual example of polite language in a legal instrument with no accompanying command, the background for which is as follows:

• Earlier this year, a 2-1 Fifth panel decision ordered a district judge, who had transferred a case about 3-D printed firearms to the District of New Jersey, to request the retransfer of that case back to Texas. (Judge Jones wrote the opinion, joined by Judge Elrod, with Judge Higginson dissenting).
• The New Jersey court considered the matter and declined the request on July 27.
• The Texas judge then closed the file, prompting further proceedings in the Fifth Circuit.

On September 16, the Court issued a routine order setting the matter for the earliest available argument date–but with a concurrence joined by two judges, asking that the New Jersey court reconsider the issue of transfer back to Texas:

“We can think of no substantive reason—and none has been offered to us—why this case should nevertheless proceed in New Jersey rather than Texas, other than disagreement with our decision in Defense Distributed. The Attorney General of New Jersey confirmed as much during oral argument. So we respectfully ask the District of New Jersey to honor our decision in Defense Distributed and grant the request to return the case back to the Western District of Texas—consistent with the judiciary’s longstanding tradition of comity, both within and across the circuits ….”

No. 22-50669 (Sept. 16, 2022) (Judge Ho concurring, joined by Judge Elrod, but not Judge Graves).

A surprising amount of case law addresses not whether a particular legal conclusion is correct, but whether it is “correct enough”–qualified immunity, for example, as well as mandamus cases about whether a “clear error” occurred in applying the law. Another such area involves whether the Fifth or the Federal Circuit has appellate jurisdiction over “Walker Process cases”–antitrust claims based on enforcement of a fraudulent patent. In Chandler v. Phoenix Services LLC, the Fifth Circuit held:

“We differ with the Federal Circuit over whether we have appellate jurisdiction over Walker Process cases. But the Supreme Court has told us to accept circuit-to-circuit transfers if the jurisdictional question is ‘plausible.’ While we continue to disagree with the Federal Circuit on this point, we do not find the transfer implausible. We therefore accept the case and affirm the district court’s judgment.”

No. 21-10626 (Aug. 15, 2022) (citations omitted).

28 USC § 1631 says: “Whenever a civil action is filed in a court as defined in section 610 of this title . . . and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court . . . in which the action or appeal could have been brought at the time it was filed . . ., and the action or appeal shall proceed as if it had been filed in . . . the court to which it is transferred on the date upon which it was actually filed in . . . the court from which it is transferred.” In Franco v. Mabe Trucking Co., the Fifth Circuit concluded that “want of jurisdiction” included both personal and subject-matter jurisdiction, observing:  “[I]t appears no circuit split currently exists on this issue, and while we cannot predict how those circuits who have left the question open will ultimately resolve the matter, we decline to now create a split by adopting an overly restrictive reading of § 1631. Because no amount of legislative history can defeat unambiguous statutory text, we join the weight of circuit authority and conclude that the use of the term ‘jurisdiction’ in § 1631 encompasses both subject-matter and personal jurisdiction.” No. 19-30316 (March 18, 2021) (footnote and citation omitted). The Court also found no Erie problem in section 1631’s definition of the relevant filing date for limitations purposes.

Ekhlassi sued National Lloyds in Texas state court for a flood-insurance claim, arising out of a “Write Your Own” insurance policy issued in the carrier’s name but underwritten by the federal government. His filing may have satisfied the one-year statute of limitations for such a claim – the parties disputed the trigger event – but his choice of a state forum proved fatal. The panel majority, applying Circuit precedent and authority from other Circuits, found that the grant of “original exclusive jurisdiction” in federal court by 28 U.S.C. § 4072 applied to his suit. A dissent argued that this statute, by its terms, applied only to a suit against FEMA’s Administrator and not a “WYO” carrier. Ekhlassi v. National Lloyds Ins. Co., No. 18-20228 (June 4, 2019).

Xitronix Corp. alleged that KLA-Tencor Corp. violated the antitrust laws by fraudulently obtaining a patent from the U.S. Patent and Trademark Office. The trial court granted summary judgment to KLA, appeal was taken to the Federal Circuit, which then transferred the appeal to the Fifth Circuit – who then transferred the case back to the Federal Circuit in Xitronix Corp. v. KLA-Tencor Corp. Distinguishing the recent Supreme Court case about an attorney malpractice claim involving patent law, Gunn v. Minton, 133 S.Ct. 1059 (2013), the Fifth Circuit observed:

“This case concerns a patent that is currently valid and enforceable, issued following a PTO proceeding heretofore viewed as lawful. This litigation has the potential to render that patent effectively unenforceable and to declare the PTO proceeding tainted by illegality. This alone distinguishes the present case from Gunn. The adjudication of this Walker Process claim also implicates the interaction between the PTO and Article III courts. The district court’s acerbic statements about the PTO at summary judgment point to the complexity of relations between proceedings in federal court and before the PTO.”

No. 18-50114 (Feb. 15, 2019).

The plaintiff in Al Copeland Investments LLC v. First Specialty Ins. Corp. sued on an insurance policy about a claim for property damage to its business. It argued that this forum selection clause in the policy:

“The parties irrevocably submit to the exclusive jurisdiction of the Courts of the State of New York and to the extent permitted by law the parties expressly waive all rights to challenge or otherwise limit such jurisdiction.”

was trumped by this Louisiana statute:

“No insurance contract delivered or issued . . . in [Louisiana] . . . shall contain any condition, stipulation, or agreement . . . [d]epriving the courts of [Louisiana] of the jurisdiction of action against the insurer.”

The Fifth Circuit disagreed and affirmed dismissal based on forum non conveniens: “[The statute] prohibits provisions in an insurance contract that would deprive Louisiana courts of jurisdiction. ‘A forum-selection clause is a provision . . . that mandates a particular state, county, parish, or court as the proper venue in which the parties to an action must litigate . . . .’ As the district court recognized, venue and jurisdiction are ‘separate and distinct.'” No. 17-30557 (March 9, 2018) (emphasis in original).

Trois owned a gun collection and contracted with Apple Tree, an auction center based in Ohio. The auction did not go as well as Trois hoped, and he sued in Texas for breach of contract and fraudulent inducement. The Fifth Circuit found no personal jurisdiction over the contract claim: “The only alleged Texas contacts related to contract formation or breach are Schnaidt [Apple Tree’s principal]’s . . . conference calls negotiating the agreement while Trois was in Texas.” But as to fraud: “Although Schnaidt did not initiate the conference call to Trois in Texas, Schnaidt was not a passive participant on the call. Instead, he was the key negotiating party who made representations regarding his business in a call to Texas.” Trois v. Apple Tree Auction Center, Inc., No. 16-51414 (Feb. 5, 2018). The Court went on to find venue was also proper in Texas over the tort claim.

The four-part venue test adopted by the Eastern District of Texas after the Heartland opinion was short-lived, as the Federal Circuit granted mandamus relief in In re Cray, noting: “[O]ur analysis of the case law and statute reveal 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.”

While not within the usual subject matter of this blog, the general importance to Texas business litigation of the Eastern District’s June 30 decision in Raytheon Co. v. Cray, Inc. warrants attention. Raytheon sued Cray in the Marshall Division of the Eastern District for alleged infringement of at least two patents about supercomputer systems. After the Supreme Court’s recent opinion in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), Cray moved to transfer, arguing that it (1) did not reside in the district and (2) had not committed acts of infringement or had a regular and established place of business there. The Eastern District adopted a four-factor test and denied the motion, examining —

1. physical presence “including but not limited to property, inventory, infrastructure, or people”;
2. defendant’s representations “internatlly or externally, that is has a presence in the district”;
3. benefits received from the defendant’s presence in the district, “including but not limited to sales revenue”; and
4. “the extent to which a defendant interacts in a targeted way with existing or potential customers, consumers, users or entities within a district, including but not limited to through localized customer support, ongoing contractual relationships, or targeted marketing efforts.”

No. 2:15-CV-01554-JRG (June 29, 2017).

While arising from the Federal Circuit’s patent jurisdiction rather than the Fifth Circuit, the Supreme Court’s unanimous May 22 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC is of great interest to all local corporations involved in patent litigation: “As applied to domestic corporations, ‘reside[nce]’ in [28 U.S.C.] § 1400(b) refers only to the State of incorporation.”

A former employee of a defense contractor sued for unpaid benefits; the forum selection clause said: “This Contract shall be governed by and interpreted exclusively under the laws of Kuwait and all disputes between the Parties shall be resolved exclusively in Kuwait.” Noting a potential threshold issue as to whether federal or Texas law governs the “validity” of a forum selection clause (while federal law clearly governs their “enforceability”), the Fifth Circuit found it enforceable under either standard. Kuwait – where the work was done – had a stronger interest in application of its laws than Texas, and the most relevant law was a statute of repose rather than limitation, which “operates as ‘a substantive definition of, rather than a procedural limitation on, rights.'” Barnett v. Dyncorp Int’l LLC, No. 15-10757 (July 26, 2016).

The forum selection clause in Weber v. Pact XPP Technologies AG, written in German, referred to the “Sitz” of defendant Pact AG, which could be translated as “residence” or “corporate seat.”  After determining that a mixed de novo / abuse of discretion standard of review was appropriate after Atlantic Marine, the Fifth Circuit affirmed dismissal of a Texas case in favor of Germany.  The Court found that the defendant’s broader reading of the clause was better-reasoned, that German law applied to its review (“A contract between a German corporation and a member of its board seems strongly to implicate German policy”), and that the plaintiff did not have a legally cognizable policy argument against enforcing the clause.  No. 15-40432 (Jan. 26, 2016).

In the cases of In re: Radmax and In re: Volkswagen of America, the Fifth Circuit asserted its power to oversee the transfer of cases under 28 USC § 1404(a).  In the recent case of In re: Archer Directional Drilling Co., the Court stayed and partially remanded a venue appeal for the district court to make findings on the relevant factors: “Here, unlike in Volkswagen and Radmax, the district court failed to provide any analysis supporting its denial of Archer’s motion to transfer the case. Articulating the basis for the denial of a change of venue motion is ‘the better practice’ for a district court. . . . In the present case, the lack of explanation makes it impossible for us to determine whether the district court clearly abused its discretion, which is required in order for us to decide whether to
grant mandamus relief.” (citations omitted).  No. 15-41539 (Jan. 13, 2016, unpublished).

The Fifth Circuit reversed a ruling that declined to enforce a Moroccan judgment in the case of Dejoria v. Maghreb Petroleum Exploration, S.A., No. 14-51022 (Sept. 30, 2015).  Acknowledging that the Moroccan court system has been criticized for a lack of independence from that country’s king, the Court concluded that “we cannot agree that the Moroccan judicial system lacks sufficient independence such that fair litigation in Morocco is impossible,” and that the defendant had not shown that “Morocco would not recognize an otherwise enforceable foreign judgment only because the judgment was rendered in Texas.”  The Court distinguished other cases involving Iranian “revolutionary courts” and the Liberian court system during that country’s civil war, saying they “exemplify how a foreign judicial system can be so fundamentally flawed as to offend basic notions of fairness.”

Revisiting the forum non conveniens question whether Mexico is an “available alternative” forum for a tort claim, the Fifth Circuit reaffirmed that the damages caps imposed by Mexican law do not disqualify it as a forum, and that this defense may be raised even in the context of moving to set aside a default judgment.  Moreno v. LG Electronics, USA, Inc., No. 14-40563 (Sept. 8, 2015).

Red Barn Motors sued its lender in a Louisiana district court.  That court transferred the case to Indiana based on a forum selection clause.  Three months later, the dealer sought mandamus relief from the Fifth Circuit, which denied its request.  The Court noted that the case was no longer in the Circuit – meaning that the only possible remedy would be to ask the Indiana court to return the case, which would require a “very extreme case.”  “Despite the potential availability” of this limited opportunity for mandamus relief, the Court found that the unexplained three-month delay in seeking review showed a lack of diligence that defeated the petition.  In re: Red Barn Motors, Inc., No. 15-30067 (July 20, 2015).

Pearl Seas sued Lloyd’s Register North America (“LRNA”) for inadequate performance in certifying a cruise ship (the “Pearl Mist,” seen to the right.)  LRNA moved to dismiss on the grounds of forum non conveniens in favor of England, citing a forum selection clause contained in its rules.  The district court denied the motion without explanation and the Fifth Circuit reversed in a 2-1 panel opinion.  In re Lloyd’s Register North America, Inc.. No. 14-20554 (Feb. 24, 2015), re-released after initial publication as a per curiam opinion on February 18.

The Court held: (1) as in the case of In re: Volkswagen, 545 F.3d 304 (5th Cir. 2008) (en banc), which involved the denial of a motion to transfer venue, mandamus is appropriate in the context of forum non conveniens; (2) it is an abuse of discretion to “grant or deny a[n FNC] motion without written or oral explanation” as to the relevant factors; and (3) the plaintiff was plainly bound by LRNA’s rules under the doctrine of direct-benefit estoppel, since its claim “referenced duties that must be resolved by reference to the classification society’s rules.”  (citing Hellenic Inv. Fund v. Det Norkse Veritas, 464 F.3d 514 (5th Cir. 2006)).  (A panel reached a similar result in Vloeibare Pret Limited v. Lloyd’s Register North America, Inc., No. 14-20538 (April 16, 2015, unpublished).

A dissent by Judge Elrod argued that the majority’s analysis of direct-benefit estoppel expanded the Court’s prior holdings in two areas — the degree to which the claim incorporated the relevant rules, and the timing of when the plaintiff learns of the rules.  The dissent also expressed concern that the substantive claim would not be recognized in England.

The point of division between the majority and dissent — whether an error is “clear” or not — resembles a similar split between the majority and dissent in the mandamus case of In re Radmax, 720 F.3d 285 (5th Cir. 2013), which granted the writ as to the erroneous denial of an “intra-district” motion to transfer venue.  Interestingly, Judge Higginson was the dissenter in Radmax, and also dissented from the denial of en banc review of that panel opinion, while here he forms part of the two-judge majority that grants mandamus relief. Judge Smith, who was in the majority of the Radmax panel opinion, is the author of this opinion after its initial release as per curiam.

In the press of year-end business, I neglected to cover a notable mandamus opinion in 2014 from the Federal Circuit, In re Google, Inc, No. 2014-147, 2014 WL 5032336 (Oct. 9, 2014).  Reminiscent of that Court’s opinion in In re Genentech, 566 F.3d 1338 (2009), and the Volkswagen/Radmax line of cases from the Fifth Circuit, In re: Google addresses the denial of a motion to transfer patent litigation from the Eastern District of Texas.

The district court focused on “each defendant mobile phone manufacturer’s ability to modify and customize” the relevant platform. The Federal Circuit disagreed and granted mandamus relief, emphasizing the  “substantial similarity involving the infringement and invalidity issues in all the suits.”   That Court also rejected an argument based on the first-filed rule, finding that on these facts, “the equities of the situation do not depend on this argument.”  (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip Co., 342 U.S. 180, 186 n.6 (1952).  Concluding with a review of the practical considerations listed by 1404(a), the Court noted that the product at issue was developed in the Northern District of California, and thus the “bulk of the relevant evidence” is there as well.

A helicopter crashed in the Gulf of Mexico.  Its owner sued three defendants — Rolls-Royce, who built the engine bearing in question; the designer of the “pontoon flotation” system that deployed after the crash; and a repair company that worked on that system. Rolls-Royce sought severance and transfer to Indiana, based on a forum selection clause in its warranty, and relying on the recent case of Atlantic Marine Construction v. Western District of Texas, 134 S. Ct. 568 (2013).  The district court denied its motions; in a 2-1 decision, the Fifth Circuit reversed.   In re: Rolls Royce Corp., 775 F.3d 671 (5th Cir. 2014).

After confirming that mandamus relief was available, despite the novel procedural context of a combined transfer and venue motion, the majority reviewed the applicability of Atlantic Marine.  “For cases where all parties signed a forum selection contract, the analysis is easy: except in a truly exceptional case, the contract controls.”  For a situation such as this one, however, the analysis is more subtle: “While Atlantic Marine noted that public factors, standing alone, were unlikely to defeat a transfer motion, the Supreme Court has also noted that section 1404 was designed to minimize the waste of judicial resources of parallel litigation of a dispute. The tension between these centrifugal considerations suggests that the need — rooted in the valued public interest in judicial economy — to pursue the same claims in a single action in a single court can trump a forum-selection clause.”

The dissent “believe[s] the majority have erroneously and confusingly diminished the scope of Atlantic Marine,” concluding: “Simple two-party disputes are near a vanishing breed of litigation.  It seems highly unlikely that the Supreme Court granted certiorari and awarded the extraordinary relief of mandamus simply to proclaim that a forum selection clause must prevail only when one party sues one other party.  The Court is not naive about the nature of litigation today.”

The forum selection clause in Waste Management of Louisiana LLC v. Jefferson Parish was permissive, not mandatory:

“Jurisdiction: This Agreement and the performance thereof shall be governed, interpreted, construed and regulated by the laws of the State of Louisiana and the parties hereto submit to the jurisdiction of the 24th Judicial District Court for the Parish of Jefferson, State of Louisiana. The parties hereby waiving [sic] any and all plea[s] of lack of jurisdiction or improper venue.”

When Waste Management sued in Louisiana federal court, the defendant’s forum non conveniens motion was denied and the Fifth Circuit declined to review that denial by interlocutory appeal.  No. 14-90040 (Nov. 28, 2014, unpublished).  The Court noted: “Unlike their mandatory counterparts, permissive forum selection clauses allow but do not require litigation in a designated forum. As such, we have never required district courts to transfer or dismiss cases involving clauses that are permissive.”  It held that Atlantic Marine Construction v. District Court, 134 S. Ct. 568 (2013), did not change that rule, as that case involved a mandatory clause, and “[t]he vast majority of district courts deciding this issue have rejected Atlantic Marine’s application to permissive forum selection clauses.”

The Swareks and the Derrs disputed the ownership of a large farm in Issaquena County, Mississippi (at 1400 residents, the least populous county in that state, but also the home of its largest captured alligator).  Their litigation unfolded as follows:

1. In 2005, Swareks sued Derrs in Issaquena County;
2. In March 2009, the Derrs sued Swareks in the — somewhat unlikely — venue of the German Regional Court in Düsseldorf, Germany (population 600,000, and capital of the state of North Rhine-Westphalia);
3. In November 2009, the Swareks voluntarily dismissed their claims in Mississippi;
4. In 2010, the Derrs lost in Germany when that court recognized the dismissal of the Mississippi claims; but then,
5. The Derrs ultimately won on appeal in Germany before the Higher Regional Court of Düsseldorf, obtaining judgment for $300,000 in costs.

The Derrs sought to domesticate the judgment in Mississippi, and the district court rejected their request, citing res judicata and characterizing the German action as an end run around the Mississippi state court.  On appeal, the Fifth Circuit affirmed with these three observations:

1. “Filing a mirror-image lawsuit in a foreign court while domestic litigation is pending is not sufficient, on its own, to preclude recognition of a foreign judgment, and the district court erred in denying comity on this ground.”
2. While dismissal for want of jurisdiction may not have preclusive effect, a voluntary dismissal does: “If the plaintiff chooses to extinguish his rights forever he is entitled to do so, and the defendant will reap the benefit of a res judicata bar to any attempt by the plaintiff
3. As to the German appellate holding: “The German Higher Regional Court’s decision to sidestep the comity determination and re-adjudicate claims that had already been settled in the Chancery Court violated the Mississippi public policy of res judicata and the Swareks’ right to permanently terminate their claims.  Comity must be a two-way street.”

A dissent characterized the interplay between the Mississippi and German holdings differently, and thus would affirm.

In a 9-0 opinion, the Supreme Court reversed a Fifth Circuit panel about the enforcement of a forum selection clause.  Atlantic Marine Construction v. U.S. District Court for the Western District of Texas, 571 U.S. ___ (December 3, 2013).  The panel opinion questioned enforceability when the district of suit was otherwise proper under the federal venue statutes; a strong dissent by Judge Catharina Haynes argued otherwise. The Supreme Court endorsed her position: “When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.  Only under extraordinary circumstances unrelated to the convenience of the parties should a §1404(a) motion be denied. And no such exceptional factors appear to be present in this case.”  Procedurally, while the Supreme Court noted in its introduction that the case arose in a mandamus context, it nowhere discusses how that posture affects the analysis — a significant point that divided the Fifth Circuit’s recent en banc vote in the case of In re Radmax.  

“What does Judge X think about my issue?”  If Judge X has served on the Fifth Circuit for some time, his or her votes in two cases can provide good insight: (1) the denial of en banc rehearing in Huss v. Gayden, 585 F.2d 823 (5th Cir. 2009), a difficult Daubert case, and (2) the en banc opinion of In re Volkswagen,  545 F.3d 304 (5th Cir. 2008), which granted mandamus relief for the denial of a 1404 venue transfer motion from the Eastern District of Texas. A third case has now joined that list — the recent 7-8 vote to deny en banc rehearing for In re Radmax, 730 F.3d 285 (5th Cir. 2013).  The Radmax panel granted mandamus relief to compel an intra-district transfer under section 1404.  Judge Higginson, who dissented from the panel, also dissented from the en banc vote, pinpointing the issue as whether the ruling “propounds appellate mandamus power over district judges which the Supreme Court has said we do not have.”  The votes in Huss, Volkswagen, and Radmax signal much about a judge’s philosophy as to the power and role of a district judge.

Plaintiffs sued for defamation, based on critical comments about their role in the Chinese drywall MDL that ended up on the “Above the Law” website.  Herman v. Cataphora, Inc., No.12-30966 (Sept. 17, 2013).  The Fifth Circuit agreed with the district court that Louisiana had no jurisdiction over the defendants because that state was not the “focal point” of the statements, citing Calder v. Jones, 465 U.S. 783 (1984) and Clemens v. McNamee, 615 F.3d 374 (5th Cir. 2010).  It took issue, however, with the district court granting the motion to dismiss and then ordering a transfer.  It noted that a district court has authority to transfer (under 28 U.S.C. § 1406(a)) if it determines that it lacks personal jurisdiction, and therefore vacated the dismissal order and remanded with instructions to order transfer.

In BP Exploration v. Johnson, the plaintiff in a Deepwater Horizon case sued in Texas to enforce an alleged settlement agreement.  No. 12-20512 (Aug. 8, 2013, unpublished).  BP asked the MDL panel to consolidate the case with the other Deepwater Horizon matters in the Eastern District of Louisiana.  Before the panel could rule, however, the Texas judge asked for summary judgment briefing and granted summary judgment to the defense on the ground that no agreement had been created.  The Fifth Circuit vacated the judgment and remanded with instructions to transfer to the MDL case, noting the complexity of the Deepwater Horizon litigation, and more generally: “It is typical in such scenarios for the court before which the tort claims are pending to determine whether a binding settlement agreement has arisen, as that court is already familiar with the parties and the claims and the proceedings.”

“Mandamus petitions from the Marshall Division are no strangers to the federal courts of appeals.”  In re Radmax, Ltd., No. 13-40462 (June 18, 2013).  In Radmax, the Fifth Circuit found a clear abuse of discretion in declining to transfer a case from the Marshall Division of the Eastern District of Texas to the Tyler Division.  It found that the district court incorrectly applied the eight relevant 1404(a) factors, giving undue weight to potential delay and not enough weight to witness inconvenience, and quoting Moore’s Federal Practice for the principle that “‘the traditional deference given to plaintiff’s choice of forum . . . is less’ for intra-district transfers.”  Accordingly the Court granted mandamus pursuant to In re Volkswagen, 545 F.3d 304 (5th Cir. 2008) (en banc).  A pointed dissent agreed that the 1404(a) factors favored transfer but saw no clear abuse of discretion, noting that there was no clear Fifth Circuit authority on several of the points at issue in the context of intra-district transfers.  “The majority persuasively fills those doctrinal gaps with citations to Moore’s Federal Practice; that treatise may prove convincing, but it is not binding law.”

The Supreme Court has granted certiorari in the case of In re Atlantic Marine Construction,   701 F.3d 736 (5th Cir. 2012), which declined to grant mandamus relief to enforce a forum selection clause.  The questions for review indicate that the Court plans to resolve a circuit split about the standard for enforcement of a forum selection clause, when the forum of suit would otherwise be proper under the federal venue statutes.  One view uses the test for “improper venue,” while another analyzes the issue under a 1404(a) convenience framework.

A creditor successfully made a “credit bid” under the Bankruptcy Code for assets of a failed golf resort.  Litigation followed between the creditor and guarantors of the debt, ending with a terse summary judgment order for the guarantors: “This is not rocket science.  The Senior Loan has been PAID!!!!”  Fire Eagle LLC v. Bischoff, No. 11-51057 (Feb. 28, 2013).  The Fifth Circuit affirmed in all respects, holding: (1) the bankruptcy court had jurisdiction over the dispute with the guarantors because it had a “conceivable effect” on the estate; (2) the issue of the effect of the credit bid was within core jurisdiction and did not raise a Stern v. Marshall issue; (3) core jurisdiction trumped a forum selection clause on the facts of this case; (4) a transfer into the bankruptcy court based on the first-to-file rule was proper; and (5) the creditor’s bid extinguished the debt.  On the last holding, the Court noted that the section of the Code allowing the credit bid did not provide for fair-market valuation of the assets, unlike other Code provisions.

In re Atlantic Marine Construction denied a mandamus petition about enforcement of a forum selection clause, finding no “clear abuse of discretion.”  No. 12-50826 (Nov. 19, 2012).  The majority and specially concurring opinions exchanged detailed views on whether Fed. R. Civ. P. 12(b)(3) or 28 U.S.C. § 1404(a) controls a forum selection issue when the parties did not select state law to govern enforcement of the clause and venue would otherwise be proper in the district of suit.  The majority opinion reflects a continuing conservatism in recent mandamus cases after 2008’s en banc Volkswagen opinion.

In National Union v. American Eurocopter, a contribution suit arising from settlement of claims about a helicopter crash, a Hawaii district court found no personal jurisdiction and transferred venue to Texas.  No. 11-10798 (Aug. 27, 2012).  The appellant challenged that ruling, and the Fifth Circuit held that it lacked jurisdiction over that issue.  Id at 4 (quoting 28 U.S.C. § 1294, defining appellate jurisdiction as reaching “appeals . . . [f]rom a district court of the United States to the court of appeals for the circuit embracing the district”).  On the merits, the Court affirmed a dispositive choice-of-law ruling for Texas law, noting a Texas choice-of-law provision in a relevant contract, a rough balance between the place of the accident (Hawaii) and the defendants’ headquarters (Texas), and the relatively weak interest of an out-of-state insurer.  Id. at 5-7 (noting Beech Aircraft v. Jinkins,  739 S.W.2d 19 (Tex. 1987)).