Almondnet, Inc. v. Yahoo! Inc.
Almondnet, Inc. v. Yahoo! Inc.
Opinion of the Court
Pending before the Court is a motion to reconsider the denial of a motion to dismiss for improper venue filed by the Defendant on June 12, 2017. Dkt. No. 70. The Plaintiff's opposition to the motion was predicated upon its assertion that the Defendant has waived its right to that relief *82and, alternatively, it cross moved to transfer venue to the Southern District of New York. Dkt. No. 71. Oral argument was heard on September 1, 2017 at the conclusion of which the Court denied the motion to dismiss from the bench-having determined, for the reasons stated on the record, that waiver was incontrovertible. Dkt. No. 90.
The Defendant then petitioned the Federal Circuit Court of Appeals to mandamus this Court to set aside the denial of its motion to dismiss, but was advised by that Court that moving this Court to reconsider that denial would be the appropriate course to follow in the light of its decision in In re Micron Technology ,
The Defendant's belief that reconsideration is warranted and that its motion should be granted may be summarily rejected by adverting to Rule 6.3 of the Local Rules of the Eastern and Southern Districts Courts of New York, which requires the memorandum in support of such a motion to set forth concisely the matters or controlling decisions which counsel believes the court has overlooked. In this motion to reconsider, the judge, in a real sense, is asked to confess error-to acknowledge that he overlooked some crucial fact or decision announcing a principle of law which should have required a ruling in favor of the movant. Aware of that psychological ego impacting factor, I am also mindful of the admonition Learned Hand is said to have urged be engraved over the portals of every courthouse in the land, namely, Oliver Cromwell's letter to the General Assembly of the Church of Scotland on August 5, 1650: "Think I beseech ye, in the bowels of Christ, that ye may be wrong."
The thrust of the defendant's motion is that I was wrong in my view that TC Heartland v. Kraft Foods Group Brands , --- U.S. ----,
The amount of litigation spawned by TC Heartland on venue in patent infringement cases and on waiver of venue is staggering, *83as is the effect it has had on the number of those cases filed in the Delaware District Court since that case was decided.
A more expansive disposition of this motion requires a response to two assertions made vigorously by the Defendant on the argument of the original motion to dismiss, Tr. Dkt. 90, and made again on its motion to reconsider and in its Memoranda of Law in support of those motions. DE 23, 34, 97-1 and 105. Those are: (1) that TC Heartland changed the law governing venue in patent infringement cases; and (2) that prior to that change in the law, this motion to dismiss on venue grounds was not available and invoking waiver, therefore, would offend a fundamental understanding of the law of equity. I address those arguments in turn.
I. A Change In the Law
The judicial ink that has been spilled on these issues is considerable and I will refrain from unnecessarily spilling more. The view that the Supreme Court announced a change in the law when it decided TC Heartland requires the counterintuitive acceptance of the understanding that a Federal Circuit Court of Appeals can overrule (or ignore) what has been the law as decided by The Supreme Court of the United States for decades. The Appeals Court ostensibly achieving that result is VE Holding Corp. v. Johnson Gas Appliance Co. ,
That concluding inference is puzzling given the court's discussion in the pages immediately preceding it, viz. ,: "The Supreme Court in 1942 and again in 1957 took a restrictive view of venue in patent infringement cases, holding in effect that the meaning of the terms used in § 1400 (b) was not to be altered or supplemented by other provisions found in the venue statute."
Reiteration of more of the holding of TC Heartland may smack of gilding the lily. Having decided that it did not change the law, I do so given the Defendant's insistence that it did and the numerous cases citing VE ostensibly of the same view. In that regard, see The Trail Of The Calf,
*84After tracing the history of the relevant statutes beginning with the Judiciary Act of 1789, the Supreme Court in TC Heartland reached the Act of March 3, 1897, which "placed patent infringement cases in a class by themselves, outside the scope of general venue legislation .... At the time, a corporation was understood to 'inhabit' only the State in which it was incorporated." TC Heartland ,
The Supreme Court's continued review of the statutory history arrived at the Act of June 25, 1948 and following some brief discussion concluded that Stonite was reaffirmed in Fourco Glass Co., v. Transmirra Products Corp. ,
"The landscape remained effectively unchanged" the Court wrote, until 1985 when § 1391(c) was amended to provide that as regards venue, a corporation is deemed to reside wherever it is subject to personal jurisdiction when the action is begun. § 1400(b) remained unchanged but VE Holding decided it was Congress's undisclosed intent that 1391(c) and 1400(b) were to be read together redefining, in the process, the meaning of the term "resides" in 1400(b). The Court then disavowed VE Holding stating, unequivocally, that:
In Fourco , this Court definitively and unambiguously held that the word "reside[nce]" in § 1400(b) has a particular meaning as applied to domestic corporations: It refers only to the State of incorporation. Congress has not amended § 1400(b) since Fourco , and neither party asks us to reconsider our holding in that case. Accordingly, the only question we must answer is whether Congress changed the meaning of § 1400(b) when it amended § 1391. When Congress intends to effect a change of that kind, it ordinarily provides a relatively clear indication of its intent in the text of the amended provision. See United States v. Madigan,300 U.S. 500 , 506,57 S.Ct. 566 ,81 L.Ed. 767 (1937) ("[T]he modification by implication of the settled construction of an earlier and different section is not favored"); A. Scalia & B. Garner, Reading Law 331 (2012) ("A clear, authoritative judicial holding on the meaning of a particular provision should not be cast in doubt and subjected to challenge whenever a related though not utterly inconsistent provision is adopted in the same statute or even in an affiliated statute").
xxx
The current version of § 1391 does not contain any indication that Congress intended *85to alter the meaning of § 1400(b) as interpreted in Fourco . Although the current version of § 1391(c) provides a default rule that applies "[f]or all venue purposes," the version at issue in Fourco similarly provided a default rule that applied "for venue purposes."
TC Heartland ,
In rejecting VE Holding , the Supreme Court noted that the circuit court's statutory construction which divined the intent of Congress was "belied by the text of § 1391(a)(1)," which states "[e]xcept as otherwise provided by law ... this section shall govern the venue of all civil actions."
Finally, there is no indication that Congress in 2011 ratified the Federal Circuit's decision in VE Holding . If anything, the 2011 amendments undermine that decision's rationale ... In short, nothing in the text suggests congressional approval of VE Holding . As applied to domestic corporations, "reside[nce] in § 1400(b) refers only to the State of incorporation.137 S.Ct. at 1521
A reading of TC Heartland as discussed above can only be understood as re-affirming the law as it is was announced in Stonite and Fourco and even before them in Shaw v. Quincy Mining Company ,
The literature on the construction of statutes is vast and the judicial responses to that challenge was recently assembled by Gluck and Posner, Statutory Interpretation On The Bench: A Survey Of Forty-Two Judges On The Federal Courts Of Appeals, 131 Harvard L. Rev. 1298 (2018) ; see also, Katzmann, Judging Statutes (Oxford Press 2014).
An insightful observation on that subject was made by Justice Frankfurter who wrote that in construing a statute "[i]t makes a great deal of difference whether you start with an answer or with a problem." Some Reflections On The Reading Of Statutes,
The mating of the Mandate and Micron being the progenitor of this motion to reconsider, a consideration of that case is appropriate. Given my strongly held view that TC Heartland did not change the law in force when it was decided, the Micron opinion would beseech me to think I may be wrong. I have thought of that possibility and resist the beseechment. My reading of TC Heartland, explicated above, is completely inconsistent with the two defining *86issues decided in Micron, viz.: (1) "We conclude that TC Heartland changed the controlling law in the relevant sense" and (2) "[t]he venue defense now raised by Micron (and others) based on TC Heartland 's interpretation of the venue statute was not 'available,' thus making the waiver of Rule 12(g)(2) and (h)(1)(A) inapplicable."
At the first hearing on the motion to dismiss for improper venue relying upon TC Heartland the Defendant stated, "[f]or the last 27 years the Court's interpretation of the word 'resides' was ... where you could get personal jurisdiction over the corporation ... The TC Heartland case ... drastically changed that interpretation...."
THE COURT: May I interrupt you, sir. If you'll forgive me.
THE COURT: Now, with respect to your last observation that TC Heartland made a drastic change in the law with respect to venue, with all due respect, sir, I think that statement is a little disingenuous. TC Heartland makes it very clear we're not making any change in law. Back as far as 1947 or somewhere in the 1940s, the Supreme Court in Stonite decided precisely what the court reaffirmed in Fourco . And in TC Heartland the Supreme Court very clearly says all we're doing is applying the law as it has existed at least as far back as Stonite . Your argument really requires an assertion that a Circuit Court can overrule a Supreme Court decision which has been undisturbed for well over 60 years.
Tr. September 1, 2017 at 3-4
In denying the motion from the bench I said:
... there is no authority, no conceivable basis upon which a Circuit Court or any other court can overrule or disrupt the Supreme Court decision. That Supreme Court case was out there from the moment this complaint was filed. And you've been litigating along for about a year and a half now relying upon a case which flew in the face of the Supreme Court of the United States.
Tr. September 1, 2017 at 34-35.
In disavowing the federal court's decision in VE Holding and in denying the motion to reconsider, disavowing the affirmation of that court in Micron , I mean no disrespect for that federal circuit court. I take refuge in the principle that "district courts in a circuit owe obedience to a decision of the courts of appeals in that circuit", Moore's Federal Practice § 134.02[2] (3rd ed. 2018). That teaching was conveyed more eloquently by then Circuit Court Judge Ruth Bader Ginsburg in In re Korean Air Lines,
*87However, "[u]nder our form of government and long established law and custom, the Supreme Court is the ultimate authority on the interpretation of ... our laws; its interpretation may not be disregarded." Jaffree v. Wallace ,
Given those unambiguous and forcefully stated principles of law, how does one explain VE Holding and Micron, and the hundreds of cases following in their wake, all indifferent to the Supreme Court's teachings in Fourco and Stonite , cases of which they were aware, as citations to them in their opinions make manifest. See, e.g., VE Holding
In re-reading Micron , I was repeatedly puzzled by the following statement: "We conclude that TC Heartland changed the controlling law in the relevant sense ,"
The meaning of that enigmatic sentence in Micron -" TC Heartland changed the controlling law in the relevant sense"-thus becomes apparent. Justice Rehnquist, dissenting in Hubbard , prophetically foretold VE Holding and Micron . One of the reasons given by the Court for overruling Bramblett, he wrote, was:
styled as an 'intervening development in the law'; under it, decisions of courts of appeals that cannot be reconciled with our earlier precedent are treated as a basis for disavowing, not the aberrant court of appeals decisions, but, mirabile dictu our own decision! This novel corollary to the principle of stare decisis subverts the very principle on which a hierarchical court system is built.
xxx
One of the consequences of this highly selective standard for granting review is that this Court is deprived of a very important means of assuring that the courts of appeals adhere to its precedents. It is all the more important, therefore, that no actual inducements to ignore these precedents be offered to the courts of appeals. But today's decision is just such an inducement; it tells courts of appeals that if they build up a body of case law contrary to ours, their case law will serve as a basis for overruling our precedent. It is difficult to imagine a more topsy-turvy doctrine than this, or one more likely to unsettle established legal rules that the doctrine of stare decisis is designed to protect.
Hubbard v. U.S. ,
The analogy is clear. TC Heartland , decided in 2017, "changed" the body of case law as it had been built up by VE Holding , decided 27 years earlier, in 1990, and by simply obeying the overlooked (or ignored) principle of stare decisis upon which our hierarchical judicial system is based, mirabile dictu "changed" the law as it then was in Fourco , without changing it by one jot or tittle, but by reaffirming it. The significant difference is that in Hubbard , the Supreme Court, which is not bound by stare decisis, overruled its prior decision in Bramblett. Bosse v. Oklahoma , --- U.S. ----,
The burden of advocating the abandonment of the still viable precedent of Fourco and Stonite was to be borne by the Defendant and which is greater when urging the Court to overrule a statute as it was construed by those cases. "Considerations of stare decisis have special force in the area of statutory interpretation, for here ... the legislative power is implicated and Congress remains free to alter what we have done." Patterson v. McLean Credit Union ,
It was in obedience to the principle of stare decisis that the Defendant's venue motion to dismiss was denied as is its motion to reconsider.
II. Waiver
In denying this motion to reconsider, I reject not only the Defendant's assertion that I was wrong in deciding that TC Heartland did not change the law, I also deny their motion to reconsider that I was wrong in deciding that they forfeited the defense of waiver. In that respect, I would agree with the Micron court's conclusion that "waiver ... is not the only basis on which a district court might reject a venue defense for non-merit reasons, such as determining that the defense was not timely presented. A less bright-line, more discretionary framework applies even when Rule 12(g)(2) and Rule 12(h)(1)(A) does not."
I refrain from an extended discussion of the equitable principle of waiver with all its commutations and permutations. I incorporate by reference the docket sheet for this case and rest in confident reliance upon the rule of res ipsa loquitur.
I should add, that in the interest of completeness, I also deny the Plaintiff's pending conditional motion to transfer the case to the Southern District of New York. Dkt. No. 101.
While this motion to reconsider was pending, the Plaintiff sued Oath Holdings, Inc., a corporate successor to this Defendant, in the District Court in Delaware alleging infringement of a related patent. The Plaintiff offered to transfer this case for consolidation with it to Delaware. The Defendant refused the offer, noting that the Plaintiff previously refused the Defendant's offer to move the case to the Northern District of California.
On July 6, 2018, the Plaintiff "conditionally move[d] to transfer this case to the District of Delaware unless the Court denies the defendant's pending motion to reconsider or grants the plaintiff's pending conditional motion to transfer the case to the Southern District of New York." In view of the adverse determination of the conditions precedent to that motion, it is hereby denied as moot.
More than a year of motions has been devoted to venue. Those motions were accompanied, of course, with the ubiquitous memoranda in support of, in opposition to, and in reply to, the opposition. The intellectual effort, the time, the expense devoted to those motions, to say little of the litigator recriminations weaved throughout, gives rise to the question what purpose is served, what significant difference does it really make to these parties who have been litigating in this court for more than two years and have advocated for California, the Southern District, and Delaware as suitable venues?
The purpose of venue in a civil case
These gratuitous observations having been made, induced by this litigiousness, in sum:
• The Defendant's motion to reconsider is denied;
• The Plaintiff's motion to transfer to the Southern District of New York is denied;
• The Plaintiff's conditional motion to consolidate and transfer to Delaware is denied.
The parties are directed to appear at 11:00 a.m. on August 30, 2018 for a status conference.
SO ORDERED.
Addressing the Act of March 3, 1897, the Court in Bowers v. Atlantic G. & P. Co.,
In an opinion of the New York Court of Appeals written more than 150 years ago, two stunning sentences presaging Justice Ginsburg's which are peculiarly applicable to this case were written by the Court as follows:
"I ... hold it to be the duty of every judge and every court to examine its own decisions, and the decisions of other courts without fear, and to revise them without reluctance. But when a question has been well considered and deliberately determined, whatever might have been the views of the court before which the question is again brought ... it is not at liberty to disturb or unsettle such decision, unless impelled by the most cogent reasons. "
Baker v. Lorillard ,
Judge L. Hand said it more engagingly in his dissent in Spector Motor Service v. Walsh ,
In a criminal case, the VI Amendment to the Constitution prescribes venue to be the place where the crime was committed.
Reference
- Full Case Name
- ALMONDNET, INC. v. YAHOO! INC.
- Status
- Published