Courts Cannot Delay Transfer Rulings, Repeats Federal Circuit—Prompting Another West Texas Denial

  • March 11, 2021
  • Category: Patent Litigation Feature
    Market Sector: Mobile Communications and Devices

The past year has seen a growing rift develop between the Federal Circuit and Western District of Texas Judge Alan D. Albright on the issue of convenience transfers, a form of relief he has rarely granted since taking the bench in 2018. This divide has encompassed both Judge Albright’s substantive handling of such transfer motions, and increasingly, his tendency to let those motions sit undecided for months while proceeding with other issues. The latter trend has continued with another recent Federal Circuit ruling: on March 8, the appellate court partly granted a mandamus petition filed by TracFone Wireless, staying litigation filed against it by Precis Group LLC until Judge Albright decided a venue challenge that has remained pending for eight months. Three days later, Judge Albright issued that ruling—declining to dismiss or transfer the case.

While delays have not been a primary focus of all prior Federal Circuit decisions addressing convenience transfer decisions by Judge Albright, it has previously advised him that district courts must prioritize the resolution of such motions. In particular, the appellate court did so in its November 2020 In re: Apple opinion, a divided ruling that mainly faulted Judge Albright for his application and weighing of the public and private interest factors but also involved a similar delay.

In Apple, the defendant moved for transfer in November 2019, requesting a stay until the court ruled on its motion. However, Judge Albright denied the stay three days later, with the associated docket entry stating that his ruling would come “as quickly as the Court’s docket allows”. Judge Albright did not decide the motion until six months later, denying it without further explanation at the end of the May 2020 motion hearing—in the meantime, holding a Markman hearing, issuing a claim construction order, hearing a discovery dispute, and handing down a protective order. A month after that decision, at which point Judge Albright had not yet issued a written order explaining why he had denied the transfer motion, Apple filed its mandamus petition.

A Federal Circuit majority flagged this delay in its November 2020 decision on Apple’s petition, stating that “[a]lthough district courts have discretion as to how to handle their dockets, once a party files a transfer motion, disposing of that motion should unquestionably take top priority”. The court contrasted that principle with what actually happened, noting that “[i]nstead, the district court barreled ahead on the merits in significant respects”. (See here for a deep dive on the In re: Apple holding.)

The Federal Circuit next addressed the topic of delay head-on in its February 2021 In re: Hynix decision. In that litigation, defendant SK Hynix sought the appellate court’s intervention in January after its motion to transfer litigation filed by Netlist to California sat fully briefed for eight months, during which time Judge Albright moved forward with claim construction. The Federal Circuit found in its February 1 order partly granting that petition “that the district court’s handling of the transfer motion up until this point in the case has amounted to egregious delay and blatant disregard for precedent”. Citing its Apple decision, the court “reiterated” its holding that transfer motions “should unquestionably take top priority” despite the district court’s general discretion over docket management. “No such priority was given to the motion here”, the Federal Circuit underscored, “as it simply lingered unnecessarily on the docket while the district court required the parties to proceed ahead with the merits”. However, while the Federal Circuit granted SK Hynix’s request to stay the case, it declined to reach the merits of its transfer motion, as by that point Judge Albright had indicated that a ruling was forthcoming.

Most recently, the Federal Circuit found in its In re: TracFone decision that the circumstances leading up to the company’s petition were “strikingly similar” to those in Hynix. In that litigation, which Precis filed in April 2020, TracFone moved in June to dismiss the case for improper venue or to transfer it to the Middle District of Florida for convenience, and sought a stay in October as its transfer motion sat unresolved. On December 21, as the case neared a scheduled Markman hearing—and with no ruling having issued on the motion to stay, either—TracFone filed another motion requesting that the court rule on its transfer motion before dealing with claim construction. However, the court still held the Markman hearing on December 29, though the associated docket entry acknowledged that “[t]here is a venue motion that is ripe for a ruling”. According to that same entry, Judge Albright purportedly stated that “he will get with the law clerks to either make a ruling or set another hearing to hear arguments on that motion”. However, three months passed with no ruling on its transfer motion, prompting TracFone to file its mandamus petition on March 2—asking the Federal Circuit to either order that the case be transferred, or mandate a stay until the district court issued its ruling.

In its March 8 decision granting the petition as to the requested stay, the Federal Circuit detailed further how it has previously required district courts to prioritize transfer motions—citing Hynix as well as its July 2015 In re: Google decision. In the latter holding, which also addressed an eight-month delay under similar circumstances to TracFone, the Federal Circuit “explained that lengthy delays in resolving transfer motions can frustrate the intent of § 1404(a) by forcing defendants ‘to expend resources litigating substantive matters in an inconvenient venue while a motion to transfer lingers unnecessarily on the docket’”. “Our decisions in Google and SK hynix rest on a principle well-established in Fifth Circuit law”, continued the Federal Circuit: “That district courts must give promptly filed transfer motions ‘top priority’ before resolving the substantive issues in the case”.

Having detailed the applicable precedent, the Federal Circuit then stated that it agreed “with TracFone that the circumstances here are comparable to those in Google”, in which the court also ordered a stay. It further held that “[a]s in Google, the facts here establish that the district court has clearly abused its discretion. And, unlike in SK hynix, the court to date has taken no action to suggest it is proceeding towards quick resolution of the motion”.

The Federal Circuit concluded by staying the case until Judge Albright ruled on TracFone’s transfer motion, advising Judge Albright that his ruling must not take into account any added familiarity with the case acquired as a result of the delay: “we remind the lower court that any familiarity that it has gained with the underlying litigation due to the progress of the case since the filing of the complaint is irrelevant when considering the transfer motion and should not color its decision”.

As was the case in Hynix, that stay was short-lived; Judge Albright issued his decision on March 11. Here, Judge Albright found that venue was proper in the Western District of Texas under the patent venue statute, 28 USC Section 1400(b), as interpreted in TC Heartland. Since it was undisputed that TracFone is incorporated in Texas, satisfying the statute’s first prong, his decision turned on the second prong, establishing that venue is proper “where the defendant has committed acts of infringement and has a regular and established place of business”. Judge Albright found that Precis had met its burden under both parts of that prong, having shown that TracFone owns and operates a store in San Antonio and that it sells the accused products (prepaid phone cards) there.

Turning to TracFone’s convenience transfer motion, Judge Albright ruled “that the Southern District of Florida is slightly more convenient”, but that the circumstances do “not reach the level of clearly more convenient justifying transfer”. Among the factors that Judge Albright found to weigh in favor of transfer was the “relative ease of access to proof”, as the TracFone’s servers physically containing such digital files were in the Southern District of Florida—though, as he has done in the past, Judge Albright argued that the applicable Fifth Circuit precedent does not adequately account for electronic documents. Judge Albright also found that the “court congestion” factor also weighed slightly in favor of transfer, given his district’s shorter time to scheduled trial, though he held that “this factor is the most speculative and will generally not outweigh the other factors”—in contrast to prior rulings rejected by the Federal Circuit in which he weighed this factor more heavily.

The most significant factor, per Judge Albright, was the one addressing cost of attendance of willing witnesses. Here, he gave “significantly more weight to the inconvenience of non-party witnesses”, which he found were located closer to his district—tipping this factor against transfer. He further characterized the compulsory process, “practical problems”, and local interest factors, among others, to be neutral in the analysis.

For more on Judge Albright’s handling of convenience transfer motions, see RPX’s coverage of the In re: Apple decision: “Divided Federal Circuit Reverses Another Convenience Transfer Denial by Judge Albright” (November 2020).

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