Fifth Circuit Grants Mandamus to Transfer Products Liability Case From Eastern District of Texas; May Affect Patent Cases

October 15, 2008

The Eastern District of Texas (EDTX) has been a favorite venue for plaintiffs (and patent trolls) in patent cases. The impression that juries in EDTX favor plaintiffs, the front-loaded procedural rules that impose of heavy burden on defendants early in a case, and the relative speed of the Court have contributed to EDTX as a preferred locale for plaintiffs. In addition, the fact that it has been virtually impossible to transfer cases out of EDTX has added to its appeal. But the Fifth Circuit may have just dealt a blow to the transfer issue.

On October 10, 2008, in In re Volkswagen, ___ F.3d ___, 2008 WL 4531718 (5th Cir.) (en banc), a divided en banc panel of the Fifth Circuit held that a district court “clearly abused its discretion” by refusing to transfer a products liability case from the Eastern District of Texas, which had no connection to the case other than plaintiffs’ filing, to the Northern District of Texas, where the witnesses and all other factual connections existed.

The Fifth Circuit emphasized that the EDTX court had given “inordinate weight to the plaintiffs’ choice of venue” and had ignored the statutory requirements that a transfer motion under 28 U.S.C. § 1404(a) “is for the convenience of parties and witnesses, [and] in the interest of justice.” The Fifth Circuit also rejected the EDTX court’s reasoning on the factors to be considered under a 1404(a) transfer, including the court’s conclusion that “copying technology and information storage” made access to sources of proof a neutral factor.

Several of the factors to be considered in transferring a patent infringement case differ from a products liability case. For example, even though the defendant in a patent infringement case may have no presence in the Eastern District of Texas, the accused products may be sold in the Eastern District of Texas. However, In re Volkswagen will lead to more defendants seeking to transfer cases out of EDTX when neither the plaintiff nor the defendant has any real connection to the district.