In a decision that could make it easier for defendants to challenge plaintiffs’ choice of venue, the 5th U.S. Circuit Court of Appeals, sitting en banc, granted a car manufacturer’s petition for writ of mandamus to force a trial judge to move a products liability case from Marshall to Dallas.
On Oct. 10, the 5th Circuit ruled 10-7 in In Re: Volkswagen of America Inc., et al. that U.S. District Judge T. John Ward of Marshall clearly abused his discretion when he denied Volkswagen’s motion to transfer from Marshall to Dallas a products liability suit stemming from a fatal motor vehicle accident that occurred in Dallas. The 5th Circuit determined it could grant Volkswagen’s petition for a writ of mandamus because of Ward’s clear abuse of his discretion.
Judge E. Grady Jolly wrote for the 5th Circuit majority that “the only factor that favors keeping the case in Marshall, Texas, is the plaintiffs’ choice of venue.” [See the court's opinion.]
Under 28 U.S.C. §1391(c), when a suit is filed in a multidistrict state, like Texas, a plaintiff can sue a corporation in any district in the state. While §1391 grants the plaintiff the privilege of choosing venue for a suit, that privilege is tempered by the considerations of inconvenience under 28 U.S.C. §1404(a), according to the majority opinion.
“The underlying premise of Section 1404(a) is that courts should prevent plaintiffs from abusing their privilege under Section 1391 by subjecting defendants to venues that are inconvenient under the terms of Section 1404(a),” Jolly wrote in the majority opinion.
Houston solo Martin Siegel, who argued for the plaintiffs before the 5th Circuit in the mandamus action, writes in an e-mail, “The plaintiff’s initial choice of venue now has somewhat less weight in the discretionary transfer analysis than many trial courts have given it, and the court of appeals has signaled a greater willingness to use mandamus to police what it sees as erroneous transfer decisions.”
In an interview, Siegel says the plaintiffs are considering the possibility of petitioning the U.S. Supreme Court for a writ of certiorari.
Ian Ceresney, an attorney representing Volkswagen and a member of Herzfeld & Rubin in New York City, refers questions about the case to Volkswagen spokesman Steve Keyes.
“We’re pleased with the way the decision came down,” Keyes says. He declines further comment, because the case is still pending.
Fatal Crash
The 5th Circuit’s majority opinion provides the following background on the case: Mariana Singleton, 7, died from injuries she sustained when a front passenger seat collapsed on her during a 2005 motor vehicle accident on a Dallas freeway. The child was a back-seat passenger in a Volkswagen Golf her grandmother, Ruth Singleton, was driving. Richard Sin-gleton, the child’s grandfather, who was sitting in the seat that collapsed, also suffered serious injuries in the accident that occurred when the Volkswagen vehicle was struck from be-hind, propelling it into a flat-bed trailer parked on the shoulder of the freeway. He was left a paraplegic. In May 2006, the grandparents and Mariana’s mother, Amy Singleton, sued Volkswagen and its parent company Volkswagen AG in the U.S. District Court for the Eastern District of Texas in Marshall, alleging that the design defects in the Volkswagen Golf caused Richard Singleton’s injuries and the 7-year-old’s death. Pursuant to §1404(a), Volkswagen moved to transfer Singleton v. Volkswagen of America Inc., et al. to Dallas.
Ward denied the motion in September 2006 and denied Volkswagen’s motion for reconsideration in December 2006. Among other findings, Ward determined that citizens of Marshall would have an interest in the product liability case, because the product at issue in Singleton is available in Marshall.
As noted in the majority opinion, Volkswagen petitioned the 5th Circuit for a writ of mandamus, which issued a per curiam opinion denying the mandamus petition in a 2-1 deci-sion in February 2007. Judge Emilio Garza wrote in a dissenting opinion that the only connection between Singleton and the Eastern District was the plaintiffs’ decision to file there. Volkswagen filed a petition for rehearing en banc, which the panel interpreted as a petition for panel rehearing. Vacating its order, the original panel ordered the mandamus proceeding set for oral arguments. In October 2007, a second panel made up of Jolly, and Judges Edith Brown Clement and Priscilla Owen granted Volkswagen’s mandamus petition. The plaintiffs filed a petition for rehearing en banc, which the 5th Circuit granted this year.
The 5th Circuit held that Volkswagen’s petition for a writ of mandamus met the requirements under the U.S. Supreme Court’s 2004 decision in Cheney v. U.S. District Court. The high court held in Cheney that a mandamus writ is an appropriate remedy for “exceptional circumstances amounting to a judicial usurpation of power or a clear abuse of discretion.”
Under Cheney, for a mandamus writ to issue, the petitioner must have no other adequate way to obtain relief and show that his right to issuance of the writ is clear and indis-putable. Cheney also requires the court issuing the writ to determine that mandamus is appropriate under the circumstances of the case.
Rationale “Stretches Logic”
Jeremy Gaston, a partner in Pillsbury Winthrop Shaw Pittman, says the 5th Circuit’s determination in In Re: Volkswagen that an appellate court can review a trial judge’s trans-fer decision in response to the defendant’s mandamus writ petition gives an additional tool that defendants can use to seek the transfer of cases.
“Just the threat of being able to do that is valuable,” says Gaston, a litigator who handles patent, products liability and other types of cases. A defendant’s threat to seek man-damus could make it possible to negotiate a venue change or possibly a settlement, he says.
Gaston says he thinks the 5th Circuit’s decision makes it easier for a defendant to get a case transferred. But, he adds, “it certainly doesn’t make it automatic.”
David George, a partner in Connelly•Baker•Wotring in Houston, says he thinks a lot more defendants, particularly in personal-injury cases, will file petitions for writs of manda-mus as a result of the 5th Circuit’s decision.
“I think this definitely benefits defendants,” George says of In Re: Volkswagen.
George, who filed an amici curiae brief with the 5th Circuit on behalf of Union Pacific Railroad Co. and BNSF Railway Co., says the appeals court has clarified that if the venue proposed by a defendant seeking to transfer a case is clearly more convenient than one chosen by the plaintiff, the trial court must transfer it.
According to the railroads’ amici brief, Union Pacific is a defendant in eight personal-injury suits and BNSF is a defendant in four such cases, all filed in the U.S. District Court for the Eastern District in Lufkin. Union Pacific and BNSF allege in their amici brief that a majority of the plaintiffs in those cases, all current or former employees of the two railroad com-panies, have never worked in Texas and their claims have no relationship to this state.
George says the 5th Circuit’s decision in the Volkswagen case has been highly anticipated. “Anybody who practices in the 5th Circuit was waiting for this decision,” he says.
Lonny Hoffman, a University of Houston Law Center professor who is counsel for more than a dozen law professors from around the country who filed an amici brief with the 5th Circuit, says the perspective of the majority opinion in In Re: Volkswagen is anti-plaintiff.
“It acts like the only one forum-shopping in this story is the plaintiff,” Hoffman says. “It ain’t true. What about the defendant?”
The law professors argued in their amici brief that defendants are “equally incentivized” to try to gain as many forum advantages as possible.
Jolly noted in the majority opinion that Volkswagen asserted in the district court that the case should be transferred because, among other things, all documents and physical evidence related to the accident are in Dallas as are the witnesses to the accident and police and medical personnel who responded to it.
According to the majority opinion, it is more convenient for the witnesses identified by Volkswagen, and for Richard and Ruth Singleton, who live in Collin County, if the case is tried in Dallas, not 155 miles away in Marshall.
Ward’s rationale that citizens of Marshall have an interest in Singleton because the product involved is sold there, and for that reason jury duty would not be a burden on them “stretches logic in a manner that eviscerates the public interest that this factor attempts to capture,” Jolly wrote.
Effect on Patent Cases
The Eastern District has become known for its rocket docket for patent suits, but patent litigators differ in their opinions on the impact the 5th Circuit’s decision in In Re: Volkswagen will have in the Eastern District.
Edward Reines, a partner in Weil, Gotshal & Manages in the Silicon Valley and a patent litigator, predicts the decision will discourage a number of plaintiffs from filing in the Eastern District unless their cases have some connection in that district.
“As a plaintiff, you don’t want your case to go through the transfer process, because that could slow your case down,” says Reines, who has represented plaintiffs and defen-dants in patent suits in the Eastern District.
William LaFuze, a patent litigator and partner in Vinson & Elkins in Houston, says he does not expect to see many patent cases transferred out of the Eastern District as a result of the 5th Circuit’s In Re: Volkswagen decision. “There probably will be no more patent cases transferred than there were before,” LaFuze says.
LaFuze says almost every patent infringement suit is distinguishable from the products liability suit against Volkswagen. The 5th Circuit found in the Volkswagen case that the plaintiffs’ choice of forum was the only connection with the Eastern District, LaFuze says. But in a patent case, the plaintiff can allege that the manufacturer, distributor, reseller and consumer infringed a patent and that some of those acts of infringement occurred in the Eastern District, he says.
Patent litigator Steven Malin, counsel at Sidley Austin in Dallas, says he does not think In Re: Volkswagen will have much effect on plaintiffs filing new cases or on pending cases. If much work has been done on a case, the plaintiff is likely to file a motion for waiver in response to a defendant’s motion for transfer, and the judge is going to be less likely to transfer that case, he says.
“So there’s no get-out-of-jail-free card for the pending cases in which there’s been a substantial amount of work,” Malin says.
Malin also says he thinks the 5th Circuit’s decision will have a negligible effect on plaintiffs who want to file in the Eastern District. The majority saw the facts in In Re: Volks-wagen as “very stark in favor of Dallas,” because all the contacts in that case are there. But that is an unusual case, he says.
A plaintiff who wants to file a patent case in Marshall probably will do so, Malin says. The worst thing that could happen, Malin says, is the case is transferred, but there is al-ways the possibility that the defendant will miss the deadline for moving to transfer or will opt not to file such a motion. However, Malin says he does expect an increase in the number of orders granting transfer from the Eastern District for cases filed in the future.
Wesley Hill, an attorney with Tyler’s Ireland, Carroll & Kelley who practices in the Eastern District, also does not believe the In Re: Volkswagen decision will have an effect on patent cases.
Hill, a former law clerk for Ward, says of the decision, “I think it’s more a decision about the propriety of mandamus than it is about venue issues. It doesn’t change substantive venue laws.”
Judge Carolyn Dineen King, who sat on the original 5th Circuit panel that considered In Re: Volkswagen, wrote in a dissenting opinion that the majority, in order to grant the mandamus writ, begins by “plucking the standard ‘clear abuse of discretion’ out of the narrow context provided by the Supreme Court’s mandamus precedent and then confecting a case — not the case presented to the district court — to satisfy its new standard.”
While the majority noted that Singleton is a products liability case, the entire opinion treats it “as if this were simply a case in which victims of a Dallas accident were suing the driver of the offending car,” King wrote.
As noted in the dissenting opinion, the plaintiffs sued Volkswagen, alleging that a defectively designed seat collapsed during the accident. As a design defect case, it will de-pend heavily on expert testimony from the plaintiffs and Volkswagen.
“No claim is made by Volkswagen that any of its experts is Dallas-based, and whether this case is tried in Marshall or Dallas will make little, if any difference — Volkswagen will be able to get its experts (from Germany or elsewhere) to trial regardless,” King wrote.
Judges Eugene Davis, Jacques Wiener Jr., Fortunato “Pete” Benavides, Carl Stewart, James Dennis and Edward Prado joined King in the dissent.
King further noted in the dissent that there is no claim in In Re: Volkswagen that Ward did not have the power to deny the transfer the defendants sought. The claim, according to the dissenting opinion, is that Ward erred in making that judgment.
“That is not the basis for a writ,” King wrote.
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