Wednesday, November 15, 2017

CAFC states TC Heartland changed the law so venue waiver under FRCP 12(g)(2)/12(h)(1)(A) not applicable to "in between" cases; but there is a remand...

Micron won on the 12(g)(2) issue, which gives some guidance to district courts,
BUT the venue matter is not over, so there is still uncertainty in this area:

But that waiver rule [12(g)(2)], we also conclude, is not the only basis on
which a district court might reject a venue defense for
non-merits reasons, such as by determining that the
defense was not timely presented. A less bright-line,
more discretionary framework applies even when Rule
12(g)(2) and hence Rule 12(h)(1)(A) does not. We grant
the petition, vacate the order, and remand for consideration
of forfeiture under that framework.

The CAFC in Micron stated as to FRCP 12(g)(2):

We find this case to present special circumstances justifying
mandamus review of certain basic, unsettled,
recurring legal issues over which there is considerable
litigation producing disparate results. After the Supreme
Court decided TC Heartland, corporate defendants in
many pending patent cases newly presented venue objections
under 28 U.S.C. § 1400(b), asserting lack of residence
in the judicial district where the case was filed. In
many of those cases, the timing of the venue objection
presented a question about waiver under Rule 12(g)(2)
and (h)(1)(A)—in particular, whether TC Heartland
effected a change of controlling law such that the Rule
12(h)(1)(A) waiver rule was inapplicable. The district
courts have deeply split on the answer. All of that is
made clear in the district court’s decision in this case, so
we need not multiply citations. Harvard, 2017 WL
3749419, at *3–4.
Answering the fundamental change-of-law question
regarding the applicability of Rule 12(g)(2) and (h)(1)(A)—
as well as the equally fundamental question whether
those provisions provide the only basis for finding that a
defendant can no longer make a venue objection—is
important to proper judicial administration. Doing so
would reduce the widespread disparities in rulings on the
fundamental legal standards, while leaving the exercise of
such discretion as is available in applying those standards
subject to case-by-case review. In these circumstances,
we think that mandamus is a proper vehicle for considering
the fundamental legal issues presented in this case
and many others.

The meaning of the word "available" arises:

Accordingly, the Rule 12 waiver question presented
here is whether the venue defense was “available” to
Micron in August 2016. We conclude as a matter of law
that it was not. The venue objection was not available
until the Supreme Court decided TC Heartland because,
before then, it would have been improper, given controlling
precedent, for the district court to dismiss or to
transfer for lack of venue.
This is a common-sense interpretation of Rule
12(g)(2). Where controlling law precluded the district
court, at the time of the motion, from adopting a defense
or objection and on that basis granting the motion, it is
natural to say, in this context, that the defense or objection
was not “available” to the movant. The law of precedent
is part of what determines what law controls. The
language “was available” focuses on the time of the motion
in the district court, not some future possibility of
relief on appeal, thus pointing toward how the district
court may permissibly act on the motion at the time—i.e.,
where the motion is for dismissal, whether it can dismiss
the case and thereby avoid wasting resources on continued
litigation. Because what Rule 12(g)(2) addresses is
the omission of a defense or objection from an initial
motion for one of the forms of relief specified in the Rule,
subsection (g)(2) is naturally understood to require the
availability of that relief at the time of the initial motion
(here, dismissal based on improper venue). That understanding
is supported by the purpose of Rule 12(g)(2),
which is to consolidate defenses and to promote early
resolution of such issues. See Fed. R. Civ. P. 12 advisory
committee notes (1966) (“[Rule 12(g)’s] required consolidation
of defenses and objections in a Rule 12 motion is
salutary in that it works against piecemeal consideration
of a case.”); see also id. (“Amended subdivision (h)(1)(A)”
specifies waiver of available defenses not raised in a preanswer
Rule 12 motion because “[a] party who by motion
invites the court to pass upon a threshold defense should
bring forward all the specified defenses he then has and
thus allow the court to do a reasonably complete job.”).


This reading is also supported
by the instruction stated in Federal Rule of Civil Procedure
1—that the Rules “should be construed, administered,
and employed by the court and the parties to secure
the just, speedy, and inexpensive determination of every
action and proceeding.”


No decision of the Supreme Court or a circuit court to
which we have been pointed runs counter to this commonsense
interpretation.3 The rationale for this interpretation,
moreover, is consistent with the general approach,
which is neither rigid nor context-independent, that is
reflected in opinions from the Supreme Court and the
circuit courts in various settings—i.e., a sufficiently sharp
change of law sometimes is a ground for permitting a
party to advance a position that it did not advance earlier
in the proceeding when the law at the time was strongly
enough against that position. See, e.g., Blonder-Tongue
Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350 (1971)

Of "V.E. Holding":

On the
patent-specific issue of the proper interpretation of 28
U.S.C. § 1400(b), the district court was bound by this
court’s precedent. See In re Cray, 871 F.3d at 1360 (“Federal
Circuit law, rather than regional circuit law, governs
[the] analysis of what § 1400(b) requires.”); see also Foster
v. Hallco Mfg. Co., Inc., 947 F.2d 469, 475 (Fed. Cir.
1991); Panduit Corp. v. All States Plastic Mfg. Co., Inc.,
744 F.2d 1564, 1573 (Fed. Cir. 1984). Circuit-court precedent
is binding on district courts notwithstanding the
mere possibility that the Supreme Court might come to
disapprove that precedent. See Eulitt ex rel. Eulitt v.
Maine, Dep’t of Educ., 386 F.3d 344, 349 (1st Cir. 2004).
It does not appear, indeed, that Harvard disputes those
This court held in V.E. Holding Corp. v. Johnson Gas
Appliance Co., 917 F.2d 1574, 1575 (Fed. Cir. 1990), that
the 1988 amendments to 28 U.S.C. § 1391(c) furnished a
definition of “resides” that applied to § 1400(b). In so
ruling, this court recognized that the Supreme Court had
held in Fourco Glass Co. v. Transmirra Products Corp.,
353 U.S. 222, 229 (1957), that the then-current version of
§ 1391(c) did not apply to § 1400(b); but this court concluded
that the 1988 amendments to § 1391(c)—which of
course were not before the Court in Fourco—produced a
different statutory prescription. V.E. Holding, 917 F.2d
at 1579–80. Under the 1988 version of § 1391(c), a corporate
defendant was “‘deemed to reside in any judicial
district in which it [wa]s subject to personal jurisdiction
at the time the action [wa]s commenced.’” Id. at 1578
(quoting statute). It is undisputed that Micron comes
within that broad definition.


The crucial holding of V.E. Holding was that
§ 1391(c)’s definition of “resides,” after the 1988 amendments,
applied to § 1400(b). On that crucial point, there
is no substantial argument for distinguishing the 2011
amendments to § 1391(c) from the 1988 amendments that
V.E. Holding addressed. Indeed, we so held in In re TC
Heartland LLC, 821 F.3d 1338, 1341–43 (Fed. Cir. 2016),
rev’d on other ground, 137 S. Ct. 1514 (2017), and the
Supreme Court in TC Heartland did not disturb that
Thus, if V.E. Holding is taken as a binding precedent,
§ 1391(c)’s current definition of “resides” applies to
§ 1400(b). It follows that controlling precedent, which the
district court here was bound to follow, would plainly
have barred the district court from adopting a venue
objection had Micron made one before the Supreme Court
decided TC Heartland.


In this case, the district court considered whether to
excuse what it found to be a Rule 12(h)(1)(A) waiver but
did not consider whether Micron lost its right to assert
the absence of venue on grounds separate from Rule
12(h)(1)(A). We remand for the court to consider any such
properly raised non-Rule 12(h)(1)(A) arguments that
Micron has forfeited its venue defense and, if there are no
such sound arguments, to consider the merits of venue
under § 1400(b).

FOOTNOTE: Dennis Crouch at PatentlyO has an interesting take on
"controlling" law:

Although the court [CAFC] is absolutely correct that its approach is the common-sense approach since we have been operating under the old rule for decades. However, the major analytical problem with the court’s decision here is its notion that its misinterpretation of Supreme Court law is somehow “controlling” law. Rather the Supreme Court decided the identical issue in Fourco (1957) and then in TC Heartland (2017) held the minor amendments made to the guiding statutes did not alter the holding of Fourco. In other words, the “controlling law” this entire time has been the Supreme Court precedent. Supreme Court writes:

The issue in this case is whether [the amendment to the statutes] supplants the definition announced in Fourco and allows a plaintiff to bring a patent infringement lawsuit against a corporation in any district in which the corporation is subject to personal jurisdiction. We conclude that the amendments to §1391 did not modify the meaning of §1400(b) as interpreted by Fourco.

Regardless of this technicality, the rule appears now that district courts should be considering and granting improper venue decisions moving forward.


In passing, the IPBiz post

is related to what Dennis is saying.

Is a district court free to interpret Supreme Court precedent in a way that is completely negated by a holding of the regional circuit?

UPDATE, from DocketReport on 17 Nov 2017:

Omission of Venue Challenge From First Rule 12(b) Motion Precludes Defendant From Invoking Intervening Change of Law to Excuse Waiver
The court denied defendant's motion to dismiss or transfer plaintiff's consolidated patent infringement actions for improper venue because defendant waived its venue defense. "It is well settled that an improper venue defense is waived if it is not included in 'a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course.' [Defendant's] Motion to Dismiss the Complaint in [the first action] did not raise a defense of improper venue. The defense was therefore waived. . . . Even if the TC Heartland decision was an intervening change in law, the 'omission of improper venue from [a party]⁠'s first 12(b) motion constitutes a "procedural misstep,"' which precludes a party from '"invok[ing] intervening Supreme Court case law" in order to "correct" it.'. . . As to [defendant's] venue challenge in [the second action], [defendant] has already admitted that venue is proper. It may not now 'take back' this admission or otherwise seek to avoid its effects."
Nichia Corporation v. VIZIO, Inc., 2-16-cv-01453 (TXED November 15, 2017, Order) (Gilstrap, USDJ)




Post a Comment

<< Home