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Cutsforth, Inc. v. LEMM Liquidating Company, LLC

United States District Court, D. Minnesota

February 13, 2018

Cutsforth, Inc., Plaintiff,
LEMM Liquidating Company, LLC f/k/a Fulmer Company, LLC, Westinghouse Air Brake Technologies Corporation, and Motivepower, Inc., Defendants.

          Mathias W. Samuel, Conrad A. Gosen, Joseph A. Herriges, Michael E. Florey, Rob Courtney, and Ann Motl, Fish & Richardson, counsel for Plaintiff.

          Gina Alyse Jenero, Devon Curtis Beane, Benjamin E. Weed, Jason A. Engel, and Alan L. Barry, K & L Gates, LLP, Olivia Moreland Cooper and Robert D. Brownson, Brownson Norby, PLLC,, counsel for Defendants.



         This matter is before the Court on Defendants' Supplemental Motion to Transfer Venue [Doc. No. 431]. For the reasons stated herein, Defendants' Motion is granted, and this case is transferred to the Western District of Pennsylvania.

         I. BACKGROUND

         As set forth in the factual recitation of this Court's August 4, 2017 Order [Doc. No. 419], incorporated herein by reference, this dispute concerns allegations that Defendants have infringed various patents held by Plaintiff Cutsforth, Inc. (“Cutsforth”) for the design and manufacture of “brush holders” used by utility companies to facilitate the generation of electricity. (See, e.g., Second Am. Compl. (“SAC”) ¶ 27 [Doc. No. 45].) Cutsforth filed suit on May 17, 2012, asserting, among other things, that venue in this district was proper “pursuant to at least 28 U.S.C. §§ 1391(b) and (c) and 1400(b).” (See Compl. ¶ 8 [Doc. No. 1].) Defendants answered this first complaint on July 6, 2012, admitting Cutsforth's venue allegations. (See Westinghouse Air Brake Techs. Corp. (“Wabtec”) Answer ¶ 8 [Doc. No. 17]; Fulmer Co. LLC Answer ¶ 8 [Doc. No. 18].) The complaint was subsequently amended on July 13, 2012, and again on September 25, 2012-in both instances, Defendants agreed that venue was proper in Minnesota. (See, e.g., LEMM Liquidating Co. Answer to Am. Compl ¶ 18 [Doc. No. 47]; MotivePower, Inc. Answer to Am. Compl. ¶ 18 [Doc. No. 48]; Wabtec Answer to Am. Compl. ¶ 18 [Doc. No. 49].)

         After the entry of a stay from June 2013 through September 2016, during inter partes review before the U.S. Patent Trial and Appeal Board, this litigation resumed. (See Aug. 4, 2017 Order at 2.) In May 2017, the U.S. Supreme Court issued TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017). Shortly thereafter, Defendants sought permission to amend their answers to deny that venue was proper in this district, and to move to dismiss or transfer this case for improper venue, arguing for the retroactive application of TC Heartland. (See Defs.' Mem. Supp. Mot. to Transfer at 1 [Doc. No. 404].)

         Based on TC Heartland, in August 2017, this Court granted Defendants' Motion to Transfer Venue. (See Aug. 4, 2017 Order at 5, 9-10.) Finding that TC Heartland provided an intervening change in law that excused Defendants from raising venue defenses earlier, the Court held that Defendants did not waive their venue objections under Federal Rule of Civil Procedure 12(g)(2) and (h)(1)(A). (See id. at 6-9.) The Court therefore ordered the transfer of venue to the Western District of Pennsylvania, as the parties did not dispute the propriety of venue in that district. (See id. at 12-13.)

         Cutsforth subsequently petitioned the Federal Circuit for a writ of mandamus directing this Court to vacate its transfer order, which the Federal Circuit granted. In re Cutsforth, Inc., No. 2017-135, 2017 WL 5907556, at * 2 (Fed. Cir. Nov. 15, 2017). In the Cutsforth mandamus order, the Federal Circuit referenced a related ruling issued on the same day, In re Micron Technology, Inc., 875 F.3d 1091 (Fed. Cir. 2017). In In re Micron, the Federal Circuit held, consistent with this Court's earlier ruling in the instant case, that because TC Heartland effected a change in the relevant venue law, a defendant's failure to earlier raise a venue objection did not constitute a waiver of that objection. Id. at 1096-1100. But the Federal Circuit further stated that Rule 12 is not the only basis under which a district court may reject the timeliness of a venue defense. Id. at 1100-01. The court pointed to Federal Rule of Civil Procedure 1 as another basis for evaluating the timeliness of a venue defense. Id. at 1100 (citing Dietz v. Bouldin, Inc., 136 S.Ct. 1885, 1891 (2016)). It observed that under Rule 1, district courts possess inherent powers to “manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Id. (citing Link v. Wabash R.R. Co., 370 U.S. 626, 630-31 (1962)).

         In light of the changed analysis under In re Micron, the parties here agreed to file supplemental briefing to address the issues raised by the Federal Circuit. Defendants filed the instant motion, renewing their request to transfer venue. They argue that transfer is still required when considering non-Rule 12-based factors. (Defs.' Supp'l Mem. Supp. Mot. Transfer at 8 [Doc. No. 432].) They further note that this Court has already recognized that Defendants moved to transfer as soon as reasonably possible in light of the change in the law, and did not otherwise demonstrate any sort of undue delay, bad faith, or dilatory motive. (Id. at 8-9) (citing Aug. 4, 2017 Order at 10.) Moreover, they assert that this case is not close to trial, (id. at 13-14), and that Cutsforth's claims of prejudice are irrelevant to the legal analysis. (Id. at 14-16.) But even if Cutsforth's alleged prejudice were relevant, Defendants argue, such prejudice should not outweigh Defendants' prejudice of being subject to legally improper venue. (Id. at 16-17.)

         In response, Cutsforth argues that in this Court's Rule 1 analysis, it should consider Defendants' “tactical conduct” in allegedly delaying the filing of their motion to transfer. (See Pl.'s Supp'l Opp'n Mem. at 7 [Doc. No. 436].) Although TC Heartland was issued on May 22, Cutsforth asserts that Defendants made no mention of the case, or of the possibility of a motion to transfer venue, at the May 26, 2017 summary judgment hearing. (Id.) Rather, Cutsforth asserts that Defendants “plainly waited until [they] had gauged the Court's reaction to summary judgment argument before filing [their] venue motion.” (Id. at 7.) It further contends that wasted resources, prejudice, and the advanced stage of the case preclude transfer. (Id. at 11-15.)


         In TC Heartland, 137 S.Ct. at 1518-19, the U.S. Supreme Court clarified that the narrower, patent-specific venue statute, 28 U.S.C. § 1400(b), determines venue in patent infringement suits. Further, the Court held that the general venue statute, 28 U.S.C. § 1391, under which venue is proper in “any judicial district in which any defendant is subject to the court's personal jurisdiction, ” does not affect the terms or interpretation of the patent venue statute. Id. Under § 1400(b), venue for patent infringement actions properly lies either: (1) in the district where the defendant “resides;” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). The Court here reaffirms its previous findings under Rule 12 that because none of the Defendants reside in Minnesota, and there is no evidence that Defendants committed acts of infringement in Minnesota, or that Defendants maintain “a regular and established place of business” here, venue is improper under both prongs of § 1400(b). (See Aug. 4, 2017 Order at 11-14.)[1] Also, the Court restates its prior finding that TC Heartland constituted an intervening change in the law sufficient to excuse waiver under Rule 12(g)(2) and (h)(1)(A), (see id. at 9-10)-consistent with the Federal Circuit's subsequent ruling in In re Micron, 875 F.3d at 1096-1100.

         At issue on remand is whether other non-merits, non-Rule 12-based considerations justify a finding of forfeiture of the defense of improper venue. Cutsforth, 2017 WL 5907556, at *2; see also In re Micron, 875 F.3d at 1101-02. As noted, the Federal Circuit directs this Court to Rule 1 as a source of authority for such ...

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