Federal Circuit Vacates Eastern District Of Texas’s Order Denying Transfer For Providing Insufficient Explanation
On October 19, 2022, the Federal Circuit, on a petition for writ of mandamus, vacated and remanded an order by Judge Mazzant of the Eastern District of Texas (EDTX) denying FedEx Corporate Services, Inc.’s motion to transfer the case to the Western District of Tennessee (WDTN). In re FedEx Corp. Servs., Inc., No. 2022-156 (Fed. Cir. Oct. 19, 2022). The Court found that the district court had erred in its analysis of the local interest factor and had failed to provide a sufficient explanation regarding witness-related factors, the latter of which left the Court “unable to effectively conduct mandamus review on the present record.”
After plaintiff R2 Solutions LLC sued FedEx in EDTX, FedEx moved to transfer the case for reasons of convenience under 28 U.S.C. § 1404(a) to WDTN, where FedEx is headquartered. The district court denied the motion, and FedEx petitioned for a writ of mandamus from the Federal Circuit. The Federal Circuit’s review focused on two aspects of the district court’s analysis: the local interest factor and witness-related factors.
As to the local interest factor, the Federal Circuit held the district court was correct in finding that WDTN had a significant local interest in the dispute because that was where the accused products were researched, designed, developed, and maintained. The district court erred, however, in concluding that the factor was neutral on the basis that R2, the patent owner, is located in Texas. The Federal Circuit found that “R2’s general presence in Texas and mere ownership of the patents” did not reflect a “significant connection” between EDTX and the events giving rise to the suit. Rather, R2’s presence in the district, consisting of a small, recently-established, shared office space, appeared to be “recent, ephemeral, and an artifact of litigation,” which should properly be afforded little or no weight. Thus, the local interest factor should have favored transfer.
With respect to the witness-related factors, the Federal Circuit held that the district court had failed to provide an adequate explanation for its conclusions. The Federal Circuit noted that there were numerous factual disputes about the relevance and materiality of the witnesses each party had identified. For example, R2 disputed that WDTN witnesses identified by FedEx had relevant information about the search functionalities in an accused system, while FedEx argued that the FedEx witnesses in EDTX identified by R2 had mere general knowledge and experience similar to numerous FedEx employees elsewhere in the United States. The Federal Circuit found that, even though these issues were “at the very heart of the parties’ disputes,” the district court failed to make findings or provide any explanations about potential witnesses. The Federal Circuit found that the district court had simply tallied the number of individuals identified in each forum, and did so in a manner inconsistent with the record.
Due to the district court’s lack of explanation regarding the witness-related factors, the Federal Circuit concluded that it was impossible, on the present record, to determine whether the district court had abused its discretion. Therefore, the Federal Circuit vacated the order denying transfer and remanded the case, instructing the district court to “provide an adequate explanation for its findings and rationale for its conclusions regarding both the willing witness and compulsory process factors.”