Appeals court scheduled to hear arguments over forum shopping

Michelle Massey, East Texas Bureau May 20, 2008, 8:18am

The John Minor Wisdom building in New Orleans, which houses the U.S. 5th Circuit Court of Appeals

MARSHALL – The U.S. Fifth Circuit Court of Appeals is scheduled to rehear arguments over its previous decision In re VW IIb, which established the "100-mile threshold" for venues in product liability cases.

The court vacated its previous decision pending the en banc proceedings scheduled for May 23 in New Orleans.

The arguments arise out of an automobile accident that occurred within the Dallas division of the Northern District of Texas. The victim's family filed a product liability suit against Volkswagen in the Marshall Division of the Eastern District.

Volkswagen sought to change the venue to Dallas because the witnesses and plaintiffs reside in Dallas, the car at issue was purchased in Dallas, the accident occurred in Dallas, medical care was obtained in Dallas, and no parties or witnesses reside in Marshall.

District Judge John Ward denied the transfer motion stating, "The plaintiff's choice of forum is a paramount consideration in any determination of a transfer request and that choice should not be light distributed." After Judge Ward denied a motion for reconsideration regarding the transfer, Volkswagen appealed the decision to the Fifth Circuit.

Initially, the appeals court upheld the lower court's decision. However, at a rare oral argument for reconsideration, the Fifth Circuit agreed with Volkswagen that the district court abused its discretion by applying the wrong legal standard and not properly weighing interest factors.

The vacated opinion asserts a 100-mile threshold between the existing location and the proposed location. The court found that "the factor of inconvenience to witnesses increases in direct relationship to the additional distance traveled."

The court remanded the case to the lower court with instructions to transfer to the Dallas Division. The ruling was viewed as giving parties seeking transfer of a product liability case a slight advantage. The Fifth Circuit granted the plaintiff's petition to review the previous appellate decision.

If the panel agrees with the "100-mile" threshold, East Texas judges will be forced to transfer more cases out of the district. However, the case will not affect other forms of litigation unless the appeals court applies it appropriately.

With what many see as a plaintiff-friendly venue, the Eastern District of Texas is considered an attractive forum for intellectual property litigation. And the district is also considered to have a "rocket docket" -- a speedy time to trial -- which also attracts litigation.

The American Intellectual Property Law Association (AIPLA) filed an amicus brief, urging the appeals court to prevent the continued forum shopping that is occurring in the Eastern District of Texas.

In the interest of justice, the brief states, courts are supposed to transfer cases "for the convenience of parties and witnesses."
The AIPLA argues the Eastern District of Texas has "misapplied the transfer statute" by giving "undue difference" to the plaintiff's venue choice, not properly weighing the convenience to parties and witnesses, by requiring "unrealistically high degree of specificity" demonstrating a more convenient forum, and overstating the district's public interesting in retaining a case.

The AIPLA is also a supporter of the Patent Reform Act of 2007, patent reform legislation that, among other factors, will limit forum-shopping, limit the amount infringement damages and clearly defines willful infringement. The House passed the Act but Senate Majority Leader Harry Reid pulled the bill from the floor schedule as it has stalled in committee.

Case No: 07-40058

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