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Civil Procedure Fall 2014

Notes on Transfer of Venue

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Subsequent Legislative Action

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Blaski was superseded in part by the Federal Courts Jurisdiction and Venue Clarification Act of 2011, Pub. L. 112-63, 125 Stat. 758.  Following this revision, § 1404(a) now permits a district court to transfer an action to any district to which all parties have consented, even if the action originally could not have been brought in that district.  On the other hand, if one of the parties does not consent, Blaski still controls: the action may only be transferred to a district in which it originally could have been brought (as understood in Blaski).

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Improper Venue in the Transferor

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Section 1404 governs a transfer of venue only if the transferor court is itself a proper venue.  See 15 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3844 (3d ed. 2013).  By contrast, when the original court is not a proper venue, 28 U.S.C. § 1406 directs the court to dismiss the case, or, “if it be in the interest of justice,” to transfer it to a district “in which it could have been brought.”

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Lack of Personal Jurisdiction in the Transferor

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Federal law allows a district court to transfer an action even if it lacks personal jurisdiction over the defendant; however, the precise statutory basis for this power has caused some confusion.

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In Goldlawr v. Heiman, 396 U.S. 463 (1962), the Supreme Court held that § 1406 extends to cases in which the transferor court lacks personal jurisdiction.  See id. at 466.  The Court reasoned that such transfers further the statute’s goal of “expeditious and orderly adjudication of cases and controversies on their merits,” and that the statute’s language “is amply broad enough to authorize” such transfers.  Id. at 466–67.  Some subsequent lower-court cases applied this logic to § 1404 transfers as well.  See, e.g., United States v. Berkowitz, 328 F.2d 358, 361 (3d Cir. 1964).  In 1982, Congress passed a new statute that explicitly authorizes a district court to transfer a case when it “finds that there is a want of [personal] jurisdiction.”  See 28 U.S.C. § 1631 (2006).

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In the wake of this legislation, lower courts have split over how to handle cases in which the transferor court lacks personal jurisdiction.  Wright and Miller have identified the three main approaches that these courts have taken: Some “freely employ Section 1404(a) in situations in which personal jurisdiction is lacking.”  Wright & Miller, supra, § 3842.  Others treat § 1631 as “the only appropriate transfer mechanism when personal jurisdiction is lacking.”  Id.  Still others do not distinguish among the three, employing any or all of them.  See id.  Despite this divergence, Wright and Miller conclude that “the particular transfer provision applied generally has little or no effect on the case or the transfer motion itself.”  Id.

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Choice of Law in the Transferee Court

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Following a transfer of venue, the transferee court must decide whether it will apply the law of the state or circuit in which it sits, or that of the transferor court’s state or circuit. I will discuss the matter here but it will make more sense once we have discussed choice of law later in the course. This decision turns on a number of factors:

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(1) If the transferor court is a proper venue and has jurisdiction over the defendant. — In a diversity action, the transferee court will follow the law applicable in the transferor court.  See Van Dusen v. Barrack, 376 U.S. 612, 639 (1964).  This is true even if the plaintiff initiates the transfer.  See Ferens v. John Deere Co., 494 U.S. 516, 525 (1990).  In federal question cases, lower courts generally agree that “transferee courts are obligated to follow their own interpretation of the relevant law,” Murphy v. FDIC, 208 F.3d 959, 965 (11th Cir. 2000), although they may give the law of the transferor court “close consideration.”  In re Korean Air Lines Disaster, 829 F.2d 1171, 1176 (D.C. Cir. 1987), aff’d on other grounds sub nom. Chan v. Korean Air Lines, Ltd., 490 U.S. 122, (1989).

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(2) If the transferor court is not a proper venue or does not have jurisdiction over the defendant. — If the transferor court either lacks jurisdiction over the defendant or is not a proper forum, or both, the transferee court is obligated to follow its own law.

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Multidistrict Litigation

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28 U.S.C. § 1407 authorizes transfers of venue of related complex actions in order to coordinate pretrial proceedings, such as discovery.  According to this provision, “civil actions involving one or more common questions of fact” may be transferred to the same district “for coordinated or consolidated pretrial proceedings.”  Such transfers are “made by the judicial panel on multidistrict litigation . . . upon its determination that transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions.”  The panel must remand consolidated cases to their original districts for trial.  See Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 40 (1998).

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Forum Selection Clauses and Transfer of Venue 

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In 2014, the Supreme Court considered how forum selection clauses impact transfer of venue in Atlantic Marine v. U.S. District Court for W.D.T.X., 134 S.Ct. 568 (2014). Atlantic Marine had subcontracted with another company for construction work; their contract included a forum selection clause specifying that all disputes would be litigated in E.D.V.A.. However, the subcontractor sued Atlantic Marine in W.D.T.X., and Atlantic Marine moved to transfer or dismiss under 28 U.S.C. § 1406(a) (venue is "wrong") and FRCP 12(b)(3) (venue is "improper"). After the District Court and the Fifth Circuit denied their petition, the Supreme Court granted cert. 

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First, the Court held that neither 28 U.S.C. § 1406(a) nor FRCP 12(b)(3) were appropriate, since W.D.T.X. was not "wrong" or "improper" under 28 U.S.C. § 1391(b), which does not consider forum selection clauses. The Court, however, then argued that 28 U.S.C. § 1404(a) was the proper framework for forum selection clauses, because the initial forum does not need to be "wrong." Under 1404(a), the Court held that given the presence of a valid forum selection clause, the initial court should grant transfer in all but exceptional circumstances. In that circumstance, the Court articulated a modified balancing test to achieve their holding -- a forum selection clause negates the weight a court would give to the plaintiff's choice of forum and removes private interests from the balancing,  leaving only public interests, which a forum selection clause will almost always outweigh. In addition, a forum selection clause negates the Van Dusen rule above (that a Federal court sitting in diversity applies the law of the state from which the action was transferred; more on this when we get to Erie) and the transferee court should apply the law of its jurisdiction.

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