Balthasar Online, Inc. v. Network Solutions, LLC

• Decision Date: 15 September 2009
• Docket Number: Civil Action No. 2:08-CV-430.
• Citation: 654 F.Supp.2d 546
• Parties: BALTHASAR ONLINE, INC., Plaintiff, v. NETWORK SOLUTIONS, LLC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Texas

654 F.Supp.2d 546

BALTHASAR ONLINE, INC., Plaintiff, v. NETWORK SOLUTIONS, LLC., et al., Defendants.

Civil Action No. 2:08-CV-430.

United States District Court, E.D. Texas, Marshall Division.

September 15, 2009.

COPYRIGHT MATERIAL OMITTED

Christopher J. Renk, Michael J. Harris, Thomas K. Pratt, and Timothy C. Meece of Banner & Witcoff LTD, for Nike, Inc.

ORDER

DAVID FOLSOM, District Judge.

Before the Court is the California Defendants' Motion to Transfer Venue. Dkt. No. 168. Also before the Court are Balthasar's Response (Dkt. No. 206), California Defendants' Reply (Dkt. No. 239) and California Defendants' Notice of Supplemental Authority (Dkt. No. 271). The Court heard oral argument on this Motion on June 10, 2009. See Dkt. No. 303 (transcript). On July 30, the Court ordered additional briefing by both parties on the threshold issue of whether venue and jurisdiction would be proper in the proposed venue. Dkt. No. 312. These supplemental briefs are also before the Court. Dkt. Nos. 346-47. After considering the papers and argument of counsel in light of the relevant case law, the Court finds the California Defendants' Motion should be GRANTED-IN-PART and DENIED-IN-PART.

BACKGROUND

This is a patent infringement case in which Balthasar has alleged that numerous Defendants infringe its patent, U.S. Patent No. 7,000,180 ('180 Patent). Dkt. No. 1, at 6. The '180 Patent, entitled "Methods, Systems, and Processes for the Design and Creation of Rich-Media Applications via the Internet" generally claims systems and methods for "providing users with the ability to create rich-media applications via the Internet." '180 Patent at 2:19-21.

Balthasar filed its original complaint on November 4, 2008 and then filed an amended complaint — without opposition — on January 15, 2009 to add several Defendants,¹ in response to the Federal Circuit's decision in In re TS Tech, 551 F.3d 1315 (Fed.Cir.2009). See Dkt. No. 124 (amended complaint); Dkt. No. 303, at 17 (hearing transcript).²

In the present motion, the California Defendants — by the Court's estimation about half of the original defendants — seek a transfer of this case — pursuant to 28 U.S.C. § 1404(a) — to the Northern District of California (NDCA), their claimed residence. Dkt. No. 168, at 21.

LEGAL PRINCIPLES

Title 28, section 1404(a) of the United States Code provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." A district court has broad discretion in deciding whether to order a transfer. In re Volkswagen of Am., Inc. (Volkswagen II), 545 F.3d 304, 315 (5th Cir.2008). The Supreme Court of the United States has noted that § 1404(a) is intended to place discretion in the district court to adjudicate motions to transfer according to an "individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988); Van Dusen v. Barrack, 376 U.S. 612, 622, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964).

The Supreme Court and Fifth Circuit have made it clear that the first "threshold" determination a district court must make in considering transfer under § 1404(a) is whether the plaintiff's claims could have been brought in the proposed transferee district. Hoffman v. Blaski, 363 U.S. 335, 343-44, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960) ("If when a suit is commenced, plaintiff has a right to sue in that district, independently of the wishes of defendant, it is a district where (the action) might have been brought. If he does not have that right, independently of the wishes of defendant, it is not a district where it might have been brought." (quoting with approval Blaski v. Hoffman, 260 F.2d 317, 321 (7th Cir.1958) & Behimer v. Sullivan, 261 F.2d 467, 469 (7th Cir. 1958))); Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (5th Cir. 1984) ("As interpreted by Hoffman v. Blaski, the ["where it might have been brought"] requirement [of § 1404(a)] remains a barrier to transfer at the defendant's instance, over the plaintiff's objection, if at the time suit was originally brought the transferee district would have lacked jurisdiction over the defendant or if venue there would have been improper."), overruled on other grounds by In re Air Crash Disaster Near New Orleans, Louisiana, 821 F.2d 1147 (5th Cir.1987); In re Volkswagen AG (Volkswagen I), 371 F.3d 201, 203 (5th Cir.2004). See generally 15 Charles Alan Wright, Arthur R. Miller and Edward H. Cooper, Federal Practice and Procedure § 3845 (3d ed. 2007). To hold otherwise "would not only do violence to the plain words of § 1404(a), but would also inject gross discrimination." Hoffman, 363 U.S. at 344, 80 S.Ct. 1084.

The Hoffman Court also concluded that the "critical time" to be used as a basis for making this threshold inquiry is the time the lawsuit was filed: "In the normal meaning of words this language of Section 1404(a) directs the attention of the judge who is considering a transfer to the situation which existed when the suit was instituted." 363 U.S. at 343, 80 S.Ct. 1084 (quoting with approval Paramount Pictures, Inc. v. Rodney, 186 F.2d 111, 119 (3d Cir.1951)) (Hastie, J. & McLaughlin, J., dissenting). The Fifth Circuit has held similarly. Liaw Su Teng, 743 F.2d at 1149 ("When the defendant seeks transfer to another forum, over the objection of the plaintiff, the words of § 1404 allowing transfer to a district where suit `might have been brought' direct the attention of the judge to the situation that existed when the suit was brought.").

Transfer of a suit involving multiple defendants is ordinarily proper "only if all of them would have been amenable to process in, and if venue as to all of them would have been proper in, the transferee court." Liaw Su Teng, 743 F.2d at 1148. If suit might have been brought against one or more defendants in the transferee court, the claims against those defendants may be severed and transferred while the other claims are retained in the original court. Id. The case should not be severed, however, where the "the defendant over whom jurisdiction is retained is so involved in the controversy to be transferred that partial transfer would require the same issues to be litigated in two places." Id.

After the Court is satisfied that the transferee venue is one where the suit could have been brought, the district court must then consider the convenience of the parties and witnesses in both forums. Volkswagen I, 371 F.3d at 203; see also Humble Oil & Ref. Co. v. Bell Marine Serv., Inc., 321 F.2d 53, 56 (5th Cir.1963); In re TS Tech USA Corp., 551 F.3d 1315, 1319 (Fed.Cir.2009); Bolt v. Toyota Indus. Corp., 351 F.Supp.2d 597, 599 (E.D.Tex. 2004).

DISCUSSION

A. Jurisdiction and Venue in the NDCA

With respect to the threshold issue of jurisdiction and venue in the transferee district, the California defendants contend that the NDCA is a place where Balthasar could have brought this lawsuit; that is, the California defendants contend that the NDCA is a proper venue and that they are subject to personal jurisdiction in the NDCA. See Dkt. No. 168, at 20-21. In their original motion, the California defendants did not address this threshold issue with respect to the original non-California defendants. Accordingly, the Court ordered additional briefing. Dkt. No. 312. In the supplemental briefing, the California defendants provided affidavits from each of the original non-California defendants but three³ indicating collectively that they are all subject to personal jurisdiction in the NDCA and that the NDCA is a proper venue. See Dkt. No. 346, Exs. 1-11.

In response, Balthasar does not contest that the NDCA would be an appropriate venue; rather, Balthasar contends the California Defendants' Motion must be denied on jurisdictional grounds, because the California Defendants have "failed to submit any evidence proving the existence of even a single California user of the non-California websites." Dkt. No. 347, at 6. Balthasar specifically points to the declaration of the Vice President of Legal Affairs of Scripps (David Arroyo) in which Mr. Arroyo states: "While I do not have personal knowledge of the actual numbers of users in any specific location, I believe it is safe to assume that one or more users of that [accused] website were, in November 2008, located within Northern California. Indeed, I have no reason to believe that is not the case." Dkt. No. 346-8, at 2. In addition to Scripps, Balthasar contends the California Defendants have brought forth no evidence of use of the accused Puma website by California residents. Dkt. No. 347, at 6. Balthasar additionally argues that "[m]ost of the remaining Non-California Defendants offer nothing more than pure guesswork concerning California use of their websites." Id. at 6-7. Finally, Balthasar contends that "[b]y failing to establish whether the Non-California Defendants' websites are commercial in nature, the California Defendants have failed to establish their right to a transfer, even under the cases cited." Dkt. No. 347, at 8.

Where no federal statute controls the Court's exercise of personal jurisdiction, the forum state's jurisdictional statute determines whether it is proper to assert personal jurisdiction. See Core-Vent Corp. v. Nobel Indus., AB, 11 F.3d 1482, 1484 (9th Cir.1993). As a patent case, this is an action where the federal courts have exclusive jurisdiction — under 28 U.S.C. § 1338(a). However, because there is no federal jurisdictional statute, California law would apply if Balthasar had brought this case in the NDCA. The California "long-arm statute provides that `[a] court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.'" Cal.Civ.Proc.Code § 410.10. The limits of the California long-arm statute are...