Opinion
1:00cv18-C
May 8, 2000
ORDER
THIS MATTER is before the court on defendant's Motion to Dismiss or Transfer for Lack of Personal Jurisdiction and Improper Venue Under Rule 12(b)(2) and (3) F.R.C.P., Motion to Change Venue Under 28 U.S.C. § 1406(a), and Motion to Change Venue Under 28 U.S.C. § 1404(a). Also before the court is plaintiff's Motion to Enlarge the Page Limitations for Plaintiff's Opposition and Memorandum in Support. Plaintiff timely filed a consolidated response to defendant's motions, and defendants, in turn, filed a timely reply. Having carefully considered the wellreasoned briefs of respective counsel, the court enters the following findings, conclusions, and order transferring this matter to the South District of Indiana.
Inasmuch as this court has determined that transfer of this matter is appropriate under Section 1404(a), the motions that would have been case dispositive have not been substantively considered. As is the practice with this court, Section 1404(a) motions are disposed of by way of order under 28, United States Code, Section 636(b), and the standing orders of designation.
In this second-filed patent action, plaintiff primarily seeks a declaration of noninfringement, unenforceability, and invalidity of United States Patent No. 5,849,645 ("the 645 patent"). Plaintiff also makes a number of common-law claims for tortiouus interference with existing and prospective business relationships, unfair trade practices, common-law and statutory commercial defamation claims, and federal claims for unfair competition. The first action, North American Green, Inc. v. Colbond Geosynthetics, Greenfix America, Inc., and PVC Plastics Co., Inc., No. IP00-0196C-M/S (S.D.Ind. 2000), was filed two days before this action in the Southern District of Indiana. In that first-filed case, plaintiff therein (defendant herein) filed an action for infringement of the 645 patent.
Both plaintiff and defendant manufacture an erosion-control matting used in areas having little or no ground cover. Plaintiff manufacturers its matting at a plant in Enka, North Carolina; defendant manufactures its product in Indiana. The matting consists of natural fibers that, over time, fertilize, protect, and promote the development of underlying ground cover, while the netting provides structural integrity to the matting. It is plaintiff's contention in this action that its matting does not infringe the 645 patent; it is defendant's contention in the Indiana action that it does. Without doubt, all the issues raised in either action could be asserted in either forum as direct or counter claims (subject, however, to appropriate Rule 12 or Rule 56 motions). Central to the pending motions and prior to the institution of this action, defendant, as noted above, filed its action for patent infringement in the Southern District of Indiana. Defendant contends that this matter should be transferred to the Southern District of Indiana based on the "first-to-file" rule.
As was first expressed in Smith v. McIver, 22 U.S. 532(1824), and more recently addressed in Genentech, Inc. v. Eli Lilly and Co., 27 U.S.P.Q.2d 1241 (Fed. Cir. 1993), abrogated on different grounds, Wilton v. Seven Falls Co., 515 U.S. 277 (1995), the first-to-file rule simply provides that the forum of the first-filed case is favored unless considerations of judicial and litigant economy and the just and effective disposition of disputes requires otherwise. The Court of Appeals for the Federal Circuit found in Genentech, Inc. that while there are exceptions, departure from the rule must be based upon "sound reason[s] that would make it unjust or inefficient to continue the first filed action." Id., at 1244.
Significantly, the district court in Indiana has moved that action forward. In addition, all parties purportedly involved in the alleged infringement are already present in the Indiana cause, but have not been haled into this action. The defendants in Indiana include: Colbond, Inc., which purportedly originated imports of the alleged infringing product from Europe; Greenfix America, Inc., which purportedly manufactures and distributes the alleged infringing product; and PVC Plastics Company, Inc., the seller of the alleged infringing product.
The factors pertinent to determination of appropriate venue in this district are set forth in Jim Crockett Promotions, Inc. v. Action Media Group. Inc., 751 F. Supp. 93 (W.D.N.C 1990). In that case, the court established a litany of considerations applicable to any motion to transfer.
In order to determine whether transfer is proper, a balance must be struck between the competing interests; and unless the balance is tipped strongly in favor of the moving party, Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984), plaintiff's choice of forum should not be disturbed. Upon a motion to transfer, the moving party carries the burden, 1A Moore's Federal Practice, para. 0.345[5] at 4360 (Matthew Bender 1990); and the burden is heavy, Datasouth Computer Corp. v. Three Dimensional Technologies, Inc., 719 F. Supp. 446, 451 (W.D.N.C. 1989).
A defendant carries a particularly heavy burden when it moves pursuant to [Section] 1404(a) to transfer an action from a district where venue is proper. As this court has noted previously, it is "black letter law," that "plaintiff's choice of a proper forum is a paramount consideration in any determination of a transfer request, and that choice . . . should not be lightly disturbed."Phillips v. S. Gumpert Co., Inc., 627 F. Supp. 725, 726-27 (W.D.N.C. 1986) (citations omitted) (quoting Western Steer Mom 'N' Pop's v. FMT Invs., Inc., 578 F. Supp. 260, 265 (W.D.N.C. 1984)).
This district has developed an 11-step guide for determining whether transfer is proper. In Jim Crockett Promotions, Inc. v. Action Media Group, Inc., supra, Honorable Robert D. Potter, United States District Judge, set forth the relevant considerations:
1. The plaintiff's initial choice of forum;
2. The residence of the parties;
3. The relative ease of access of proof;
4. The availability of compulsory process for attendance of witnesses and the costs of obtaining attendance of willing witnesses;
5. The possibility of a view;
6. The enforceability of a judgment, if obtained;
7. The relative advantages and obstacles to a fair trial;
8. Other practical problems that make a trial easy, expeditious, and inexpensive;
9. The administrative difficulties of court congestion;
10. The interest in having localized controversies settled at home and the appropriateness in having the trial of a diversity case in a forum that is at home with the state law that must govern the action; and
11. The avoidance of unnecessary problems with conflict of laws.Id. at 7-8. Courts should make both a quantitative and qualitative analysis of the factors. McDevitt Street Co. v. Fidelity and Deposit Co., 737 F. Supp. 351, 354 (W.D.N.C. 1990).
1. Plaintiff's Choice of Forum
Considering the first factor, a plaintiff's choice of forum is traditionally given great weight. In light of the first-to-file rule, this factor must be weighed in favor of defendant. The forum-shopping exception, which is well argued by plaintiff, does not appear to come into play, inasmuch as it cannot be surmised that defendant herein engaged in "pure" forum shopping. The first-to-file rule is nullified
when the choice of the forum of the first-filed case was the result of pure forum shopping if the balance of convenience favors the second forum, or if the first filed action is against a customer of the alleged infringer and the second involves the infringer himself.Novo Nordisk of North America, Inc. v. Genentech, Inc., 874 F. Supp. 630, 632 (S.D.N.Y. 1995). In K F Mfg. Co. Inc. v. Western Litho Plate Supply Co., 831 F. Supp. 661 (N.D.Ind. 1993), the district court held, as follows:
Genentech was grounded on concerns of national uniformity in patent law. Although Genentech conceded that dismissal might be appropriate "when forum shopping was the only motive for the filing" of the declaratory judgment action, 998 F.2d at 937, national uniformity substantially discounts concern about forum shopping. An alleged infringer no longer may file in a regional circuit with more favorable law to avoid another circuit's law; the law of the Federal Circuit follows patent cases to all corners of the nation. A declaratory judgment plaintiff may achieve a more convenient forum, but cannot achieve a tactical advantage in choice of controlling precedent. Thus, although Genentech resented considerations not present here, the advent of the Federal Circuit amply supports the application in this case of its holding: "We prefer to apply in patent cases the general rule whereby the forum of the first-filed case is favored, unless considerations of judicial and litigant economy, and the just and effective disposition of disputes, require otherwise." 998 F.2d at 936.Id., at 663-64.
Plaintiff herein argues that defendant raced to the courthouse in Indiana in response to a written threat of imminent litigation days before the February 2, 2000, filing. Taking such allegation as true, it is also undisputed that defendant herein filed such infringement action in its home district, the Southern District of Indiana. This is nearly identical to the scenario in Novo Nordisk of North America, Inc., supra:
Since the burden of proof is on [the proponent of the exception] it must prove that the sole reason that Novo Nordisk filed its action in New York was motivated by forum shopping. However, Genentech cannot meet its burden because plaintiff's principal place of business is in the Southern District of New York. Genentech contends that the second suit should have priority because Novo Nordisk's suit was commenced under a direct threat of imminent litigation, and, therefore, was an improper anticipatory filing. To support its argument, Genentech points to the fact that Novo Nordisk filed its complaint the same day as the ALJ ruled in the case before the ITC. Moreover, Novo Nordisk filed an action seeking a declaratory judgment. However, "[a] party has a right to seek declaratory judgement where a reasonable apprehension exists that if it continues an activity it will be sued by another party." 800-Flowers, 860 F. Supp. at 132. The two parties, Novo Nordisk and Genentech, had been involved in a long litigation history before an ALJ. There is no way that Novo Nordisk could have lulled Genentech into a relaxed posture and then "raced to the courthouse", as defendant claims to catch Genentech by surprise. These facts indicate that Novo Nordisk did have legitimate reasons for filing this action in the Southern District.Id., at 633 (emphasis added). The filing of an action in the plaintiff's home district prevents a moving party from carrying its burden of proving that the first-to-file rule should be disregarded under the pure forum-shopping exception. The first factor weighs in favor of transfer to the Southern District of Indiana.
2. The Residence of the Parties
The second factor is neutral. Defendant is a corporation organized under the laws of the State of Indiana, having its principal place of business in the Southern District of Indiana. Plaintiff is a corporation organized under the laws of Delaware and has a principal place of business in Enka, North Carolina, which is within this district. The court will assume, therefore, that Colbond is a corporate resident of the State of North Carolina. Plaintiff apparently does substantial business in Indiana and maintains therein a Colbond distributor; defendant apparently does little of its overall business in North Carolina and has no employees within this state. Each party to this action is a sophisticated business and sells its products nationwide.
3. The Relative Ease of Access of Proof and 4. The Availability of Compulsory Process for Attendance of Witnesses and the Costs of Obtaining Attendance of Willing Witnesses
Without doubt, this matter is going to be a paper-driven case, with testimony rendered by experts of a national scope. This court has found that, with experts, the practical "ease of proof" is often the proximity of the situs of the litigation to a major airport. Asheville indeed has an airport, but it lacks direct flights from most cities other than Charlotte and Atlanta and turns off the lights and abandons the tower at 11 p.m. On the other hand, Indianapolis has major transportation facilities. The ease of access to proof and the costs of obtaining willing witnesses for all parties and potential parties (i.e., those party to the Indiana action and not yet party to this action) favor transfer to the Indiana forum.
5. The Possibility of a View
Based upon the exhibits presented, the court is confident that it has seen either the patented product or the alleged infringing product along many roadsides. It would appear that samples of either product could be easily transported to any courtroom. The possibility of a view, therefore, is neutral.
6. The Enforceability of a Judgment, if Obtained
Not only is the governing law consistent from district to district, a judgment obtained in any federal district is easily transferred to any other federal district. This factor is neutral.
7. The Relative Advantages and Obstacles to a Fair Trial
There appear to be no obstacles to a fair trial in either district. As discussed above, the law governing patents has been developed on a nationwide basis (rather than a circuit-by-circuit basis) under the guidance of the Federal Circuit. There is no greater legal advantage to either party in either district.
8. Other Practical Problems that Make a Trial Easy, Expeditious, and Inexpensive
Trials are never easy, expeditious, or inexpensive. Whether this action is tried in Indiana or North Carolina, it will cost these parties an enormous sum, absent an early, amicable resolution. As discussed above, the practical problem is access to the situs of the litigation, and the mountains of North Carolina simply are not easily accessible by either ground or air transportation. When all practical problems are considered, this factor favors transfer.
9. The Administrative Difficulties of Court Congestion
While this court has the highest caseload per judgeship in the Fourth Circuit and the seventh highest nationwide, the court takes notice that due to a backlog in the appointment process, federal courts, which, at best, operate with minimal manpower, are suffering nationwide from a 10 percent vacancy rate for judgeships. Even though a 12-month target is in place and usually hit for resolution of the standard civil cases, patent cases are often designated as complex litigation. (With such caseloads, brevity and clarity in motions usually goes a long way). The court finds that this caseload favors neither side and that the ninth factor, therefore, is neutral.
10. The Interest in Having Localized Controversies Settled at Home and the Appropriateness in Having the Trial of a Diversity Case in a Forum That is at Home with the State Law that Must Govern the Action and
11. Conflict of Laws
This is not a localized controversy, but concerns products sold nationwide. No doubt, plaintiff herein has alleged several supplemental causes of action under the common and statutory laws of North Carolina. The federal claims, however, predominate over these supplemental claims. In any event, an Indiana court would be familiar with the general law surrounding such routine state-law claims, which appear to find their equivalent in most states.
Quantitatively, the factors favor granting the Motion to Transfer. Qualitatively, the defendant's choice of forum under the first-to-file rule is significant and, when combined with the quantitative analysis, directs the court to a finding in favor of transfer.
ORDER
IT IS, THEREFORE, ORDERED that
(1) defendant's Motion to Change Venue Under 28 U.S.C. § 1404(a) is GRANTED, and this matter is TRANSFERRED to the Southern District of Indiana for disposition;
(2) defendant's Motion to Dismiss or Transfer for Lack of Personal Jurisdiction and Improper Venue Under Rule 12(b)(2) and (3) F.R.C.P. and Motion to Change Venue Under 28 U.S.C. § 1406(a) are administratively DENIED WITHOUT PREJUDICE as MOOT; and
(3) plaintiff's Motion to Enlarge the Page Limitations for Plaintiff's Opposition and Memorandum in Support Thereof is ALLOWED, and all briefs filed with this court by all parties are deemed in compliance nunc pro tunc.
In addition to the usual transmittal, the Clerk of this court is respectfully requested to send via facsimile a copy of this Order directly to the Chambers of Honorable Larry J. McKinney, United States District Judge, Southern District of Indiana.
This Order is entered in response to defendant's Motion to Dismiss or Transfer for Lack of Personal Jurisdiction and Improper Venue Under Rule 12(b)(2) and (3) F.R.C.P. (#7), Motion to Change Venue Under 28 U.S.C. § 1406(a) (#8), and Motion to Change Venue Under 28 U.S.C. § 1404(a) (#11), and the plaintiff's Motion to Enlarge the Page Limitations for Plaintiff's Opposition and Memorandum in Support (#18).