In re Volkswagen Grp. of Am., Inc.

Citation28 F.4th 1203
Decision Date09 March 2022
Docket Number2022-108, 2022-109
Parties IN RE: VOLKSWAGEN GROUP OF AMERICA, INC., Petitioner In re: Hyundai Motor America, Petitioner
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Mark A. Hannemann, Shearman & Sterling LLP, New York, NY, for petitioner Volkswagen Group of America, Inc. Also represented by Ahmed Eldessouki, Eric Sebastian Lucas, Thomas R. Makin.

RYAN KEN YAGURA, O'Melveny & Myers LLP, Los Angeles, CA, for petitioner Hyundai Motor America. Also represented by CLARENCE ROWLAND, NICHOLAS WHILT.

Michael Songer, White & Case LLP, Washington, DC, for respondent StratosAudio, Inc. Also represented by Henry Huang, Hallie Elizabeth Kiernan, Jonathan J. Lamberson, Palo Alto, CA; Daniel Sternberg, Boston, MA.

Mark S. Davies, Orrick, Herrington & Sutcliffe LLP, Washington, DC, for amicus curiae Alliance for Automotive Innovation. Also represented by Alexandra Bursak, New York, NY.

Before Dyk, Reyna, and Chen, Circuit Judges.

ON PETITION

ORDER

Per Curiam.

Volkswagen Group of America, Inc. (Volkswagen or VW) and Hyundai Motor America (Hyundai or HMA) (collectively, the "Petitioners") both seek a writ of mandamus to vacate the United States District Court for the Western District of Texas's denial of their motions to dismiss or transfer for improper venue. The district court held venue was proper over each car distributor under 28 U.S.C. § 1400(b). The court based that conclusion on the presence of independently owned and operated Volkswagen or Hyundai car dealerships in the Western District of Texas, determining those independent dealerships constituted "a regular and established place of business" of the Petitioners. § 1400(b). Because there has been disagreement on this issue in the district courts, we deem it appropriate to now take up the issue. We conclude that the district court clearly abused its discretion in failing to properly apply established agency law and reaching a patently erroneous result. We therefore grant both petitions.

I.

In December 2020, StratosAudio, Inc. (Stratos) filed these patent infringement complaints in the United States District Court for the Western District of Texas, Waco Division, against Volkswagen and Hyundai, car distributors that are incorporated in New Jersey and California, respectively, and hence do not "reside[ ]" for venue purposes in the Western District. 28 U.S.C. § 1400(b) ; TC Heartland LLC v. Kraft Foods Grp. Brands LLC , ––– U.S. ––––, 137 S. Ct. 1514, 197 L.Ed.2d 816 (2017). Volkswagen and Hyundai moved to dismiss or transfer the cases under 28 U.S.C. § 1406(a) and Federal Rule of Civil Procedure 12(b)(3).

The district court denied the motions, concluding that venue in the Western District over Volkswagen and Hyundai was proper. It reached that conclusion based on independent car dealerships located in the Western District that sell and service cars after purchasing them from the Petitioners under franchise agreements imposing, inter alia, transfer restrictions, staffing and reporting requirements, minimum inventory levels, employee training, and equipment requirements on the dealerships. The district court concluded those agreements gave the Petitioners sufficient control over the dealership locations to establish a regular and established place of business of the Petitioners despite the fact that Texas law prohibits auto manufacturers and distributors from directly or indirectly "operat[ing] or control[ling] a franchised dealer or dealership." Tex. Occ. Code (TOC) § 2301.476(c)(2)(A).

In so doing, the district court found that the agreements give Petitioners sufficient control over dealership operations such that the dealerships are agents of the distributors. See 2022-108 Appx (VW Appx) 8–10; 2022-109 Appx (HMA Appx) 397–99. Based on similar facts, the district court found that Petitioners had ratified the dealerships as their own places of business. See VW Appx 4–8; HMA Appx 391–97. Additionally, the district court determined that the dealerships are conducting Petitioners' business because Volkswagen and Hyundai are "in the business of manufacturing and distributing vehicles to consumers" and "the only way that [Volkswagen and Hyundai] can distribute [their] vehicles to consumers in this District is through [their] authorized dealerships in this District." VW Appx 10; HMA Appx 399. It similarly found the dealerships conducted Petitioners' business of providing "new purchase warranties and services to the consumers through [their] dealerships," VW Appx 10; HMA Appx 399, and in the case of Volkswagen, "establish[ing] the procedures for processing warranty claims and returning and disposing of defective parts," "requir[ing] its dealers to comply with such procedures," and "determin[ing] the rate or price at which a ... dealer will be reimbursed for services," VW Appx 10.

Volkswagen and Hyundai each petitioned this court for a writ of mandamus. The two cases are now consolidated in this court. Both present similar challenges to the district court's conclusions that the dealerships are Petitioners' agents, that Petitioners ratified the dealerships as their own places of business, and that Petitioners' business is conducted from the dealership locations. Volkswagen asks us to vacate the denial of its motion and instruct the district court to dismiss or transfer the action to the United States District Court for the Eastern District of Michigan. Hyundai asks the court to direct dismissal of its case.

II.
A.

Pursuant to the All Writs Act, this court "may issue all writs necessary or appropriate in aid of [our] respective jurisdiction[ ] and agreeable to the usages and principles of law." 28 U.S.C. § 1651(a). Before a court may issue a writ, three conditions must be satisfied: (1) the petitioner must have "no other adequate means to attain the relief he desires"; (2) the petitioner must show that the right to the writ is "clear and indisputable"; and (3) the court "in the exercise of its discretion, must be satisfied that the writ is appropriate under the circumstances." Cheney v. U.S. Dist. Ct. for D.C. , 542 U.S. 367, 380–81, 124 S.Ct. 2576, 159 L.Ed.2d 459 (2004) (citation and internal quotation marks omitted).

Ordinarily, mandamus relief is not available for rulings on motions under 28 U.S.C. § 1406(a). See In re HTC Corp. , 889 F.3d 1349, 1352–53 (Fed. Cir. 2018) ("Unlike a defendant challenging the denial of a § 1404(a) transfer motion, a defendant aggrieved by the denial of an improper-venue motion has an adequate remedy on appeal from a final judgment."). However, "[m]andamus may be used in narrow circumstances where doing so is important to ‘proper judicial administration,’ " In re Micron Tech., Inc. , 875 F.3d 1091, 1095 (Fed. Cir. 2017) (quoting La Buy v. Howes Leather Co. , 352 U.S. 249, 259–60, 77 S.Ct. 309, 1 L.Ed.2d 290 (1957) ), such as when there are "a significant number of district court decisions that adopt conflicting views on the basic legal issues presented in th[e] case" at hand, In re Google LLC , 949 F.3d 1338, 1342 (Fed. Cir. 2020) ( Google II ). Here, given the disagreement among district courts on the recurring issue of whether independent car dealerships are sufficient to establish venue over car distributors, compare Omega Pats., LLC v. Bayerische Motoren Weke AG , 508 F. Supp. 3d 1336 (N.D. Ga. 2020) (finding venue improper); W. View Rsch., LLC v. BMW of N. Am., LLC , Case No. 16-cv-2590, 2018 WL 4367378 (S.D. Cal. Feb. 5, 2018) (same), with Arigna Tech. Ltd. v. Volkswagen AG , Case No. 2:21-cv-00054-JRG, Dkt. Nos. 415 & 424 (E.D. Tex. Jan. 18 & 20, 2022) (report and recommendations finding venue proper)1 ; Blitzsafe Tex., LLC v. Bayerische Motoren Werke AG , Case No. 2:17-cv-00418-JRG, 2018 WL 4849345 (E.D. Tex. Sept. 6, 2018), vacated , 2019 WL 3494359 (E.D. Tex. Aug. 1, 2019) (same)), we determine that these cases involve exceptional circumstances warranting immediate review.2

B.

The burden to establish venue in patent infringement cases rests with the plaintiff. See Westech Aerosol Corp. v. 3M Co. , 927 F.3d 1378, 1382 (Fed. Cir. 2019). Whether venue is appropriate in a patent infringement action is unique to patent law and therefore Federal Circuit law applies. See Celgene Corp. v. Mylan Pharms. Inc. , 17 F.4th 1111, 1119 n.4 (Fed. Cir. 2021) ; In re Cray Inc. , 871 F.3d 1355, 1360 (Fed. Cir. 2017).

Section 1400(b) provides, in relevant part, that "[a]ny civil action for patent infringement may be brought in the judicial district where ... the defendant has committed acts of infringement and has a regular and established place of business." The regular and established place of business inquiry has three general requirements: "(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant." Cray , 871 F.3d at 1360. The second Cray factor requires "the regular, physical presence of an employee or other agent of the defendant conducting the defendant's business at the alleged ‘place of business.’ " Google II , 949 F.3d at 1345. We consider whether these requirements are met with the understanding that the Supreme Court has repeatedly cautioned against a broad reading of the patent venue statute. See Schnell v. Peter Eckrich & Sons, Inc. , 365 U.S. 260, 264, 81 S.Ct. 557, 5 L.Ed.2d 546 (1961) ; Stonite Prods. Co. v. Melvin Lloyd Co. , 315 U.S. 561, 566, 62 S.Ct. 780, 86 L.Ed. 1026 (1942).

Petitioners do not challenge that Stratos has adequately alleged infringement within the Western District for venue purposes. And Petitioners do not dispute that the dealership locations are physical places within the Western District. Nor do they dispute that those physical places are regular and established places of business for the dealerships. The dispute thus boils down to three issues: (1) whether the dealerships are the agents of Petitioners; (2) whether the dealerships conduct Petitioners' business; and (3) whether Petitioners have...

To continue reading

Request your trial
12 cases
  • Wolfe v. McDonough
    • United States
    • U.S. Court of Appeals — Federal Circuit
    • March 17, 2022
    ...that [had] adopt[ed] conflicting views on the basic legal issues presented." Id. at 1342 ; see also In re Volkswagen , No. 22-108, 28 F.4th 1203, 1207, (Fed. Cir. Mar. 9, 2022) ; In re Micron , 875 F.3d 1091, 1095 (Fed. Cir. 2017).8 La Buy involved a district court judge who referred antitr......
  • In re Stingray IP Solutions, LLC
    • United States
    • U.S. Court of Appeals — Federal Circuit
    • January 9, 2023
    ...that "[o]rdinarily, mandamus relief is not available for rulings on motions under 28 U.S.C. § 1406(a)," In re Volkswagen Grp. of Am., Inc. , 28 F.4th 1203, 1207 (Fed. Cir. 2022), because "appeal from a final judgment" is "an adequate remedy," In re HTC Corp. , 889 F.3d 1349, 1352–53 (Fed. C......
  • Biogen Int'l GMBH v. Mylan Pharm. Inc.
    • United States
    • U.S. Court of Appeals — Federal Circuit
    • March 16, 2022
  • In re Monolithic Power Sys., Inc.
    • United States
    • U.S. Court of Appeals — Federal Circuit
    • September 30, 2022
    ...U.S.C. § 1406(a)" because post-judgment appeal is often an adequate alternative means for attaining relief. In re Volkswagen Grp. of Am., Inc. , 28 F.4th 1203, 1207 (Fed. Cir. 2022) (citing In re HTC Corp. , 889 F.3d 1349, 1352–53 (Fed. Cir. 2018) ). We have found mandamus to be available f......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT