In Re: Oath Holdings Inc.
Opinion
ORDER
This is the second petition for a writ of mandamus filed by Oath Holdings Inc. (formerly known as Yahoo Holdings, Inc.) to challenge the district court's conclusion that Oath missed its opportunity to object to venue in the Eastern District of New York for the patent case filed against it. When Oath first sought mandamus, we denied the request, stating that Oath should ask the district court to reconsider its initial conclusion in light of
In re Micron Technology, Inc.
,
I
In March 2016, AlmondNet, Inc., Datonics, LLC, and Intent IQ, LLC-the respondents in this court-sued Oath in the United States District Court for the Eastern District of New York, alleging patent infringement. Certain facts relevant to venue are undisputed as this matter has come to us: although Oath conducts business in the State of New York, it is incorporated in Delaware, and it does not have "a regular and established place of business" in the Eastern District within the meaning of the venue provision for patent cases,
In July 2016, Oath moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint for failure to state a claim but did not include an objection to venue under Rule 12(b)(3). Oath later withdrew its Rule 12 motion, and in January 2017, it filed an answer to respondents' complaint. In that answer, Oath both admitted the complaint's venue allegations and expressly "reserve[d] the right to challenge venue based upon any change in law, including the Supreme Court's upcoming decision in
TC Heartland LLC v. Kraft Foods Group Brands, LLC
, No. 16-341." Appx. 38. One month earlier, the Supreme Court had granted certiorari in that case to address the meaning of
On May 22, 2017, the Supreme Court issued its decision.
TC Heartland LLC v. Kraft Foods Grp. Brands LLC
, --- U.S. ----,
On June 12, 2017, within 21 days of the Supreme Court's decision in TC Heartland , Oath filed a motion, pursuant to Rule 12(b)(3), to dismiss for improper venue. It argued that, given TC Heartland 's holding as to the narrow meaning of "resides," the requirements of § 1400(b) are not satisfied: Oath is not incorporated in New York; and it undisputedly lacks a regular and established place of business in the Eastern District. Respondents opposed, but not by arguing that venue is proper in this case. Rather, they argued that Oath had waived its venue defense under Rule 12(g)(2) and 12(h)(1) because that defense was "available" at the time that Oath filed its July 2016 Rule 12 motion (before TC Heartland ), yet Oath had failed to present the defense in that motion. The district court agreed with respondents that Oath had waived its venue defense and therefore denied Oath's venue motion. AlmondNet, Inc. v. Yahoo! Inc. , No. 1:16-cv-01557-ILG-SMG (E.D.N.Y. Sept. 1, 2017), ECF No. 82.
In October 2017, Oath petitioned this court for a writ of mandamus that would direct the district court to grant the motion to dismiss. In November 2017, while that petition was pending, this court held in
Micron
that "
TC Heartland
changed the controlling law in the relevant sense: at the time of the initial motion to dismiss, before the Court decided
TC Heartland
, the 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 rule of Rule 12(g)(2) and (h)(1)(A) inapplicable."
We recently held that the Supreme Court's decision in TC Heartland effected a relevant change in the law and, more particularly, that failure to present the venue objection earlier did not come within the waiver rule of Federal Rule of Civil Procedure 12(g)(2) and (h)(1). In light of that decision, we deem it the proper course here for Yahoo to first move the district court for reconsideration of its order denying the motion to dismiss.
In re Yahoo Holdings Inc.
,
Oath promptly moved the district court for reconsideration, and respondents filed a cross-motion to transfer to either the Southern District of New York or the District of Delaware if the Eastern District of New York was found to be an improper venue for the case. More than eight months later, the district court denied Oath's motion. Most of the court's opinion explains why the court was rejecting Oath's "assertion that I was wrong in deciding that
TC Heartland
did not change the law."
AlmondNet, Inc. v. Yahoo! Inc.
, No. 1:16-CV-01557-ILG-SMG,
Oath now petitions for a writ of mandamus once again, asking us to direct the district court to dismiss the action. Respondents oppose, seeking to defend the district court's decision not to follow our ruling in Micron . They contend, among other things, that Micron is not controlling because it arose out of a district court case from within the First Circuit and the present case comes from within the Second Circuit, which "applies a standard for waiver different from that discussed in In re Micron ." Resp. to Pet. For Writ of Mandamus 3. Respondents also argue that, if we find mandamus appropriate, we should not require dismissal, but instead should include the possibility of transfer in the alternative. 1
II
A
The court may issue a writ of mandamus as "neces-sary or appropriate in aid of [its] ... jurisdiction[ ] and agreeable to the usages and principles of law."
There is no dispute that venue in the Eastern District of New York in this case is contrary to § 1400(b). The only question is whether Oath waived or forfeited the right to have the case dismissed on that basis by waiting too long to invoke it. The district court answered yes to that question. The district court's principal ground for doing so, however, rests on its failure to follow our directly controlling Micron precedent addressing the issue of waiver under Rule 12(g)(2) and (h)(1) as applied to TC Heartland 's rejection of this court's earlier, longstanding VE Holding precedent.
Respondents contend that
Micron
does not apply because it arose under First Circuit law, while this case arises under Second Circuit law. But the result cannot change here on that basis.
Micron
noted that it was not deciding whether Federal Circuit law or relevant regional circuit law governed the waiver issue.
Micron
,
In any event, the district court did not cite, and respondents have not cited, any Second Circuit decision on change of law, let alone a decision in the context of Rule 12(g)(2) and (h)(1), that finds
no
relevant change of law where binding circuit precedent (on § 1400(b) here) is overturned. To the contrary, the Second Circuit's decision in
Gucci America, Inc. v. Li
,
For those reasons, Micron answers the entire question of waiver under Rule 12(g)(2) and (h)(1) for purposes of this case: there was no such waiver. In what is nearly the only basis for the district court's denial of Oath's venue motion, the district court clearly erred in not following the Micron precedent giving that answer. That error war-rants mandamus relief.
B
The remaining question is whether there is an alternative ground to deny mandamus relief from the district court's rejection of Oath's objection to venue. In
Micron
, we noted the existence of a non- Rule 12 basis for a defendant's forfeiting the right to assert a venue objection under § 1406, and we explained that discretion under "[t]his authority must be exercised with caution" to avoid impairment of, among other things, the congressionally granted venue rights.
The district court's passing reference to a non- Rule 12 ground is not a basis for denying mandamus relief from the order rejecting Oath's venue motion. The district court provided no analysis of why the circumstances of this case made a finding of forfeiture under § 1406(b) a sound exercise of discretion. Nor have respondents presented to us any argument that would warrant remanding for further analysis.
See
In re BigCommerce, Inc.
,
Respondents' arguments establish no legitimate basis for concluding that Oath forfeited its § 1406(a) right to seek dismissal or transfer for lack of venue under § 1400(b). Respondents point to the fact that Oath admitted to venue in its answer and Oath's extensive participation before the Supreme Court decided TC Heartland . But Oath cannot be faulted for waiting to present a venue objection until after TC Heartland was decided, where the case was in an early stage, the defense could not properly have been adopted by the district court at the time, and Oath's answer expressly put respondents and the district court on notice that Oath was watching TC Heartland to see if the defense would become available. Respondents also cannot reasonably argue that Oath failed to seasonably raise its defense once available: Oath filed its motion to dismiss within 21 days of the Court's TC Heartland decision. See BigCommerce , 890 F.3d at 982 (finding no basis to remand in part because defendant filed its motion within two weeks of the issuance of TC Heartland ). Nor do respondents identify any conduct post- TC Heartland that would indicate in any way that Oath somehow consented or submitted to venue.
Respondents gain no further ground in pointing out that Oath did not take the opportunity to seek transfer to another venue under a different statutory provision,
i.e.
,
Finally, respondents have not shown that the judicial interest in economy could support a determination of forfeiture of venue rights. As of June 2017, when Oath filed its motion, or September 2017, when the district court first ruled, the case was nowhere close to trial. Even today, as far as we have been informed, the case has not progressed past written discovery and claim construction briefing. The record simply does not indicate the type of significant judicial investment that might, in some circumstances, support a determination of forfeiture.
III
We conclude that Oath has not waived or forfeited its venue rights. Because it is undisputed that venue is improper in the Eastern District of New York, the case may not remain there. Under § 1406(a), the district court now must either dismiss the case or transfer the case to a "district or division in which it could have been brought."
Accordingly,
IT IS ORDERED THAT :
The petition for a writ of mandamus is granted, the orders denying Oath's motion to dismiss for improper venue and motion for reconsideration are vacated, and the case is remanded for the limited purpose of either dis-missing the case or transferring it to a proper venue outside the Eastern District of New York.
Oath requests that we order this case to be reas-signed to a different judge within the Eastern District. Given our conclusion that this case must be dismissed or transferred outside the Eastern District, we deny Oath's reassignment request.
Reference
- Full Case Name
- In RE: OATH HOLDINGS INC., Fka Yahoo Holdings, Inc., Petitioner
- Cited By
- 13 cases
- Status
- Published