“Even under the deferential standard of review required on mandamus, we agree that the record supports the finding that Netflix urges, and the court’s contrary finding rested on legal error.” – CAFC
The U.S. Court of Appeals for the Federal Circuit (CAFC) today granted Netflix, Inc.’s Petition for Writ of Mandamus to transfer a case brought against it by CA Inc. and Avago Technologies from Judge Rodney Gilstrap’s Eastern District of Texas court to the Northern District of California. The Order is the latest in a series of decisions from the CAFC censuring Texas courts for their refusal to transfer cases.
In today’s ruling, the CAFC said the district court’s denial of transfer was a clear abuse of discretion and ordered the court to transfer the case, but did not address Netflix’s motion to dismiss the case for lack of venue. CA alleged that Netflix infringed five of its patents and filed suit in the Marshall Division of the Eastern District of Texas. While Netflix has no physical presence in the Eastern District of Texas, CA contended that venue was proper due to the “location of servers installed at internet service providers (ISPs) under contracts with Netflix that are part of Netflix’s ‘Open Connect’ content delivery network allowing local delivery of content to Netflix customers.”
Netflix moved for transfer, arguing that both Netflix and CA are headquartered in the Northern District of California, among other reasons. Netflix also cited In re Google LLC, 949 F.3d 1338 (Fed. Cir. 2020) in arguing for lack of venue. In that case, the CAFC found that the presence of Google’s ISP-hosted servers in the district did not establish venue. The district court denied both motions, distinguishing the present case from In re Google and finding on balance that the relevant factors weighed against transfer or were neutral.
In assessing whether to transfer, the district court determined that the “local interest” factor favored transfer “because the Northern District of California was the locus of the events giving rise to this suit.” However, the factors addressing administrative difficulties from court congestion, the relative ease of access to evidence, and availability of compulsory process each weighed slightly against transfer. The court found the remaining factors neutral, favoring neither forum.
The CAFC disagreed with this analysis and found in favor of Netflix, explaining that mandamus was warranted due to a clear abuse of discretion on the part of the district court:
In this case, we agree with Netflix that the district court clearly erred in disregarding potential sources of proof and witnesses in the Northern District of California. And we conclude that correction of those errors, when combined with the district court’s own determination regarding the local interest factor, means that the court clearly abused its discretion in denying transfer to the Northern District of California as the “center of gravity” of this case.
The CAFC added that Netflix had proven that all of the relevant sources of proof in the case are located at its headquarters in California, and the evidence identified by CA and the court “are merely duplicative of records also in the California forum.” The CAFC explained: “Even under the deferential standard of review required on mandamus, we agree that the record supports the finding that Netflix urges, and the court’s contrary finding rested on legal error.”
With respect to the district court’s reasoning that Netflix had not been precise enough in describing how the sources of proof it referenced supported its claim, the CAFC said that “the district court did not cite and CA has not cited authority that imposes a requirement of precision greater than was present here.”
Netflix also identified 13 non-party witnesses located in California that would provide relevant testimony, but the district court determined that Netflix had not shown their testimony would be important to the case. Quoting In re Hulu, the CAFC said “we have cautioned that ‘[r]equiring a defendant to show that the potential witness has more than relevant and material information at this point in the litigation or risk facing denial of transfer on that basis is unnecessary.’”
Finally, as to the district court’s analysis that faster trial times in the Eastern District of Texas weighed in favor of denying transfer, the CAFC said “there is no sound basis” for such a decision, invoking its precedent on the matter:
We have held that when other relevant factors weigh in favor of transfer or are neutral, “then the speed of the transferee district court should not alone outweigh all of those other factors.” Genentech, 566 F.3d at 1347; see Juniper, 14 F.4th at 1322. Under our relevant precedents, we conclude that the time-to-trial statistics provided here are plainly insufficient to warrant keeping this case in the Texas forum given the striking imbalance favoring transfer based on the other convenience factors.
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