In re Limitnone, LLC

• Decision Date: 19 December 2008
• Docket Number: No. 08-3499.,08-3499.
• Citation: 551 F.3d 572
• Parties: In re: LIMITNONE, LLC, Petitioner.
• Court: U.S. Court of Appeals — Seventh Circuit

551 F.3d 572

In re: LIMITNONE, LLC, Petitioner.

No. 08-3499.

United States Court of Appeals, Seventh Circuit.

Submitted October 2, 2008.

Decided December 19, 2008.

David A, Rammelt (submitted), Kelley Drye & Warren LLP, Chicago, IL, for Petitioner.

Michael T. Zeller (submitted), Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, CA and Jon Cyrluk, Stetler & Duffy, Chicago, IL, for Respondent.

Before BAUER, COFFEY, and SYKES, Circuit Judges.

PER CURIAM.

In this intellectual-property dispute, the district court ordered the case transferred to the Northern District of California on the basis of forum-selection clauses in two of the contracts between the parties. LimitNone, LLC, filed a petition for a writ of mandamus seeking an order directing the district court to vacate the transfer order. Because LimitNone has not shown an indisputable right to the relief it seeks, we deny the petition for a writ of mandamus.

I. Background

LimitNone is a software development and consulting company. Google, Inc., the real party in interest, also in the computer-software business, developed a suite of applications called "GoogleApps" to compete with the Microsoft Office suite of products. As of January 2007, Google lacked a method for Microsoft Outlook users to move their e-mail, calendar, and contacts to the Google platform. LimitNone developed an application called "gMove" to fill this need. According to LimitNone, Google encourages and solicits third-party developers to develop applications for use with Google's existing products. Accordingly, LimitNone pitched its gMove product to Google in March 2007. Before the meeting LimitNone signed a "Mutual Non-Disclosure Agreement," and both parties signed a "Google Enterprise Professional Agreement." Both agreements provided that the parties agreed to protect the confidentiality of the information that they exchanged. The agreements also contained forum-selection clauses providing that the "exclusive venue for any dispute relating to this Agreement shall be in state or federal courts within Santa Clara County, California." Finally, both agreements provided that any modifications must be made in writing and signed by the parties.

The parties exchanged trade secrets during the meeting, and afterward LimitNone revised gMove to meet Google's additional specifications. LimitNone then provided a "beta" version of gMove to Google. LimitNone asserts that when a Google employee installed the beta version of the gMove software, he electronically agreed to the "Beta License Agreement" on behalf of Google by clicking "accept" on a preliminary screen before proceeding with the program. In September 2007 LimitNone sent Google a final version of gMove. LimitNone maintains that a Google employee clicked "accept" on the "LimitNone License Agreement." This electronic agreement, unlike those signed before the meeting, provided for exclusive jurisdiction and venue in the state courts sitting in Lake County, Illinois, or the United States District Court for the Northern District of Illinois.

The parties continued to refine gMove over the next several months. Then, in December 2007 Google notified LimitNone that it had developed its own alternative to gMove called "Google Email Uploader," which it would give to its customers for free, thus destroying LimitNone's customer base for its gMove product.

In June 2008 LimitNone sued Google in the Circuit Court of Cook County, Illinois, alleging violations of the Illinois Trade Secrets Act, 765 Ill. Comp. Stat. 1065/1 et seq., and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. 505/1 et seq. The next month Google removed the case to the United States District Court for the Northern District of Illinois. See 28 U.S.C. § 1441. Google asserted that removal was proper because the Consumer Fraud Act claim was preempted by the federal Copyright Act, see 17 U.S.C. § 301, and the federal court had supplemental jurisdiction over the Trade Secrets Act claim. LimitNone sought leave of the court, as Judge Manning requires, to file a motion to remand, and Google filed a motion to dismiss or, in the alternative, to transfer the case under 28 U.S.C. § 1404(a) to the Northern District of California. Google asserted that the business relationship between the parties was governed by the Non-Disclosure Agreement and the Google Enterprise Professional Agreement, both of which vested exclusive jurisdiction in the federal and state courts sitting in Santa Clara County, California.

The district court found that the Non-Disclosure Agreement and the Google Enterprise Professional Agreement applied to this dispute and that the other agreements could not have superseded them because according to LimitNone's own description, they were not in writing or signed by the parties. The district court therefore ordered the case transferred to the Northern District of California but did so under 28 U.S.C. § 1406(a), holding that venue in Illinois was improper given the forum-selection clauses. The court never ruled on LimitNone's request for leave to file a motion to remand. LimitNone now petitions for a writ of mandamus directing the district court to vacate its order transferring the case. The district court stayed the transfer pending the resolution of this petition.

II. Analysis

Mandamus is an extraordinary remedy. This court will issue the writ only when two conditions are met:

The first is that the challenged order not be effectively reviewable at the end of the case—in other words, that it inflict irreparable harm. . . . The petitioner must ordinarily demonstrate that something about the order, or its circumstances, would make an end-of-case appeal ineffectual or leave legitimate interests unduly at risk. . . . Second, the order must so far exceed the proper bounds of judicial discretion as to be legitimately considered usurpative in character, or in violation of a clear and indisputable legal right, or, at the very least, patently erroneous.

United States v. Vinyard, 539 F.3d 589, 591 (7th Cir.2008) (quoting In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1295 (7th Cir.1995) (omissions in original)).

This court has approved of the use of mandamus to prevent out-of-circuit transfers under 28 U.S.C. § 1404. See Hicks v. Duckworth, 856 F.2d 934, 935 (7th Cir. 1988) ("It is difficult to see how such an error could be corrected otherwise."). The Supreme Court, however, has suggested that mandamus is not an appropriate remedy for an erroneous transfer order under § 1406(a). Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 380-81, 383-85, 74 S.Ct. 145, 98 L.Ed. 106 (1953).

Bankers Life might control this case except that the district court mischaracterized the transfer as one under § 1406(a) when it was 28 U.S.C. § 1404(a) that provided the necessary authority. Transfer under § 1406(a) is appropriate only when venue is improperly laid. 28 U.S.C. § 1406(a). Venue is proper in a federal-question (or, as here, purported federal-question) case in the judicial district where the defendant resides. Id. § 1391(b). A corporation is deemed to reside in any district "in which it is subject to personal jurisdiction at the time the action is commenced." Id. § 1391(c). Google is licensed to do business in the State of Illinois and does business in the Northern District of Illinois. We have no doubt that the federal court sitting in that district had personal jurisdiction over Google when LimitNone filed its complaint. See Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Kinslow v. Pullara, 538 F.3d 687, 690-91 (7th Cir.2008). Venue was therefore proper, within the meaning of § 1391,¹ in the Northern District of Illinois, notwithstanding the forum-selection clauses. There often may be multiple proper venues, although one, on the basis of a forum-selection clause or for other reasons, may be superior to the rest. See Albion v. YMCA Camp Letts, 171 F.3d 1, 2 n. 1 (1st Cir.1999). Because the Northern District of Illinois was not an improper venue, § 1404(a), rather than § 1406(a), provided the authority for the transfer order.² See also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (applying § 1404(a) to transfer based on forum-selection clause). Mandamus is therefore an appropriate means to challenge the transfer order. See Hicks, 856 F.2d at 935.

LimitNone, however, has not shown the district court's order exceeded its jurisdiction or was otherwise erroneous. LimitNone maintains that the district court exceeded its authority in ordering the case transferred because (1) the district court failed to consider the "convenience, fairness, and judicial economy" of transferring the case before ruling on subject-matter jurisdiction, purportedly contrary to Sinochem International Co. v. Malaysia International Shipping Corp., 549 U.S. 422, 127 S.Ct. 1184, 1192, 167 L.Ed.2d 15 (2007);³ and (2) the district court ruled on matters going to the merits of the dispute without first establishing its own subject-matter jurisdiction. LimitNone relies, if indirectly, on the Supreme Court's repudiation of the doctrine of "hypothetical jurisdiction" in Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

The district court transferred the case before ruling on LimitNone's motion to remand because, it concluded, "the issue of venue is fairly easy to resolve." The district court further noted that the conduct at issue occurred "mostly" in California. The relative ease of determining venue before subject-matter jurisdiction is an issue of judicial economy; the site of the majority of the conduct in question concerns the convenience and fairness of transferring the case. Assuming for the sake of argument that Sinochem imposes on district courts the requirements regarding transfer orders that LimitNone suggests, the district court satisfied...