RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE.
Before the Court are five Motions: (1) Intex Recreation Corp. and Intex Trading Ltd.'s (collectively, "Intex") Motion to Sever Claims for Misjoinder (Dkt. No. 86); (2) Intex's Motion to Sever, Change Venue, and Stay (Dkt. No. 88); (3) Bestway (USA), Inc.'s ("Bestway") Motion to Sever and Transfer (Dkt. No. 93); (4) the Coleman Company, Inc.'s ("Coleman") Motion to Sever Claims for Misjoinder (Dkt. No. 94); and (5) Coleman's Motion to Sever, Change Venue, and Stay (Dkt. No. 96.) Having considered the Motions, the Court is of the opinion that the Motions should be and hereby are
On March 29, 2017, Team Worldwide Corporation ("TWW") filed suit against Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, Wal-Mart.com USA LLC, Sam's West, Inc. d/b/a Sam's Club (collectively, "Walmart" or "Defendants"), alleging infringement of U.S. Pat. No. 9,211,018, U.S. Pat. No. 7,346,950, and U.S. Pat. No. 7,246,394 (collectively, the "Asserted Patents"). On June 5, 2017, Walmart filed its answer. (Dkt. No. 16.) In July, this Court held a scheduling conference where counsel for TWW and Walmart appeared before the Court.
On August 2, 2017, Intex sought this Court's permission to intervene pursuant to Fed. R. Civ. P. 24. (Dkt. No. 29.) One day later, Coleman sought this Court's permission to intervene. (Dkt. No. 35.) On October 5, 2017, Bestway (USA), Inc. ("Bestway") also sought this Court's permission to intervene. (Dkt. No. 64.) In their Motions, each intervenor also expressed an intent, after being allowed to intervene, to seek severance for misjoinder, and to seek transfer of the newly severed cases for improper venue or convenience. On December 7, 2017, the Court allowed Intex, Coleman, and Bestway to intervene as of right.
Under Section 19(d) of the Leahy-Smith America Invents Act, P.L. 112-29 ("the AIA") (codified as 35 U.S.C. § 299), plaintiffs may only join multiple defendants accused of patent infringement (notwithstanding Rule 24) if:
35 U.S.C. § 299(a) (emphasis added).
If parties are "misjoined" under § 299, then Fed. R. Civ. P. 21 provides a remedy.
"Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b); TC Heartland LLC v. Kraft Foods Group Brands LLC, ___ U.S. ___, 137 S.Ct. 1514, 197 L.Ed.2d 816 (2017). This statutory language permits venue under either of two distinct inquiries. The first depends on
Section 1404(a) provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). The purpose of Section 1404(a) is "to prevent the waste `of time, energy and money' and `to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen v. Barrack, 376 U.S. 612, 616, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) (quoting Cont'l Grain Co. v. Barge F.B.L. — 585, 364 U.S. 19, 26, 27, 80 S.Ct. 1470, 4 L.Ed.2d 1540 (1960)).
Each intervenor argues that this Court is required to sever the claims against them based on Fed. R. Civ. P. 21 and 35 U.S.C. § 299 because their intervention in this case is as of right. Thus, the intervenors contend that they are entitled to raise, personally, any defenses Walmart, the original party, could have raised. (See, e.g., Dkt. No. 86.) In their view, severance is required "because Plaintiff cannot plausibly allege that there is any overlap or shared technology between the Accused Products and Competitor products" and "there is no allegation of a joint venture." (Id. at 11.)
In response, TWW argues that § 299 does not and should not apply because the intervenors have entered this action under Rule 24 (intervention) and not Rule 20 (joinder). (See, e.g., Dkt. No. 102 at 2 ("
TWW also argues that if the Court finds Section 299 applicable in this case, the intervenors and Walmart have waived their "misjoinder" defense. (See, e.g., id. at 4-5 (citing § 299(c))). While recognizing the limited authority on § 299 waiver, TWW maintains that "th[is] situation is akin to the other jurisdiction waiver that courts have applied to intervention," such as personal jurisdiction and venue. (Dkt. No. 102 at. 5.)
Ultimately, the Court agrees with TWW. Section 299 does not and should not apply in this case because the intervenors did not enter this case under the joinder rules of Rule 20. By its own terms, Section 299 applies to joinder:
Any discussion of intervention is also absent from the legislative history of § 299.
H.R. REP. NO. 112-98 pt.1 at 54-55 (2011) (emphasis added). Congressman Smith, a named author of the bill, also explained:
157 Cong. Rec. H4420 (June 22, 2011) (statement of Rep. Smith) (emphasis added). In the Senate, one key architect
157 Cong. Rec. S5402 (Sept. 8, 2011) (statement of Sen. Kyl) (citations omitted) (emphasis added).
This legislative history further buttresses the text of the statute and confirms the Court's holding that § 299 does not apply here. The intervenors' argument only succeeds if Rule 24 Intervention and Rule 20 Joinder are one in the same, a proposition they actually advance. Intervenors are wrong. As Courts have repeatedly acknowledged, Rule 20 (joinder) is not the same as Rule 24 (intervention). For example, in Binson v. J.E. Robert Co., the district court stated that "[u]nlike a motion for joinder under Rule 20, which must be made by an existing party to the action, Rule 24 allows for the intervention of a new party to an action in the absence of a motion from an already existing party." No. 03-cv-3562 (JG), 2006 U.S. Dist. LEXIS 101012, at *30-31 (E.D.N.Y. June 27, 2006).
In the glaring absence of support from within the statutory text or legislative history, the intervenors ask the Court to focus on the "policies" behind § 299.
Ultimately, the intervenors' policy arguments are unavailing. First, courts exist to interpret and apply the law, not to write it.
See David O. Taylor, Patent Misjoinder, 88 N.Y.U.L. Rev. 652, 654-655, 720-21 (2013) (emphasis added).
In sum, absent a total abrogation of Rule 24, as compared to Rule 20, in patent cases, the Court is neither inclined nor empowered to sever the Intervenors into separate cases pursuant to § 299.
Each intervenor has also asked the Court to sever each intervenor into its own case, and then transfer each to a separate
However, TWW argues that by intervening into the case, the intervenors waived their ability to object to venue. (Dkt. No. 101 at 2 ("There is ample authority stating that an intervenor, even one of right, waives its right to challenge venue. For example, when this Court granted Intex's motion to intervene, it also held that by requesting intervention, Intex waived its right to object to venue or request transfer. In so finding, the Court is in good company; many other courts have held the same.") (citations omitted).)
The intervenors disagree, stating that "[t]here is substantial precedent that a defendant intervening as of right and with the express purpose of challenging venue has not waived venue." (See, e.g., Dkt. No. 88 at 13.) However, the intervenors lean heavily on a single case, S.E.C. v. Ross, 504 F.3d 1130 (9th Cir. 2007), which held that `[i]f the third party is intervening of right, as [intervenor-defendant] was here, we see little reason to deprive him of any of his procedural defenses merely because the original plaintiff failed to name him as a defendant....'" Id. The intervenors argue that "[t]he exact reasoning in Ross is applicable here." (See, e.g., Dkt. No. 88 at 14.)
The intervenors also urge that "[f]inding waiver under such circumstances `would effectively eliminate the unqualified right provided by Rule 12(b) of raising jurisdictional defenses either by motion or answer....'" (Id. (citing to Rates Tech. Inc. v. Nortel Networks Corp., 399 F.3d 1302 (Fed. Cir. 2005)). According to the intervenors, "[t]his would be particularly unfair to a defendant who is a party of right in this case." (See, e.g., Dkt. No. 88 at 14.) The intervenors also argue that there is nothing in the Federal Rules of Civil Procedures or in the venue statutes that provides that "an objection to venue is waived per se by an intervenor as of right" and that Rule 12 provides only specific circumstances in which 12(b) defenses may be waived. (Id.)
TWW challenges the intervenors' reliance on Ross, arguing that "decisions [like Ross] finding no jurisdictional waiver by intervenors are not persuasive, referring to them as a `minority view point' with `with questionable validity.'" (Dkt. No. 101 at 3.) TWW also maintains that Federal Rule of Civil Procedure 24 allows the Court to restrict challenges to venue and that even intervention as of right does not provide the intervenors the opportunity to go back in time and pretend that Plaintiff brought claims against the intervenors in the first instance. (Id. at 3-4.)
The intervenors further argue that the contrary authorities identified by TWW are distinguishable. Specifically, the intervenors say that the Second Circuit's holding in Trans World Airlines, Inc. v. C.A.B., 339 F.2d 56 (2d Cir. 1964) is not controlling. (Dkt. No. 88 at 15.) In Trans World Airlines, Inc., the Second Circuit held that a person intervening on either side of the controversy may not object to improper venue. However, the court qualified such waiver by stating that "[b]y doing so without simultaneously or soon thereafter raising a motion directed to venue, [the intervenor] waive[s] a defense of improper venue it may have possessed as an intervenor." (Dkt. No. 88 at 15 (citing Trans World Airlines, Inc., 339 F.2d at 64).) The intervenors argue that they have met this qualification. (See, e.g., Dkt. No. 88 at 15.)
In this case, the intervenors arguments are unavailing. By definition, an intervenor
This choice to intervene (or consent to proceed in a particular jurisdiction and venue) has real and far-reaching consequences. For example, and unsurprisingly, courts have held that any objection to personal jurisdiction is waived when an absentee party intervenes and through intervention consents to jurisdiction. See, e.g., In re Bayshore Ford Truck Sales, Inc., 471 F.3d 1233, 1249 (11th Cir. 2006) ("Whereas it would not have been the case absent intervention, Westgate willingly submitted to the personal jurisdiction of the district court, and thereby agreed to be bound by the court's decision granting Ford the injunction it requested"); see also Cty. Sec. Agency v. Ohio Dep't of Commerce, 296 F.3d 477, 483 (6th Cir. 2002) ("[A] motion to intervene is fundamentally incompatible with an objection to personal jurisdiction.") Gradel v. Piranha Capital, L.P., 495 F.3d 729, 731 (7th Cir. 2007) ("But can a court in Chicago issue an order that will affect funds held by a court in California? In this case it can, because the receiver intervened in the Chicago suit and by doing so submitted himself to the jurisdiction of the court in which that suit was pending.")
Even the right to sovereign immunity provided by the Eleventh Amendment to the Constitution can be waived by intervention. In 84 Video/Newsstand, Inc. v. Sartini, for example, the district court noted that the Supreme Court in Clark v. Barnard explained:
No. 1:07 CV 3190, 2009 WL 10656014, at *22 (N.D. Ohio June 22, 2009) (citing Clark v. Barnard, 108 U.S. 436, 447, 2 S.Ct. 878, 27 S.Ct. 780 (1883)), aff'd, 455 Fed.Appx. 541 (6th Cir. 2011).
Directly in line with this rationale, and relevant to the instant motions, the Supreme Court has held that intervenors cannot question venue, where a defendant has not exercised that privilege. See Cent. Tr. Co. v. McGeorge, 151 U.S. 129, 14 S.Ct. 286, 38 S.Ct. 98 (1894). In Central Trust Co. v. McGeorge, a corporation had waived the fact that it was sued in the wrong district by a general appearance and consent to the appointment of a receiver. An objection to venue was subsequently made by stockholders and creditors who intervened and challenged the appointment of the receiver. Despite deciding that neither the complainant nor defendant were residents of the district, the court ruled that the objection, though meritorious, had been waived. Id.
Id. at 135, 14 S.Ct. 286. It is precisely this sort of "overruling" which the intervenors now seek.
The logic of Central Trust Co. has been repeatedly echoed by courts and commentators since 1894. See Wright and Miller, 7C Fed. Prac. & Proc. Civ. § 1918 (3d ed.) ("The intervenor cannot question venue. By voluntarily entering the action the intervenor has waived the privilege not to be required to engage in litigation in that forum."); accord 6 Moore's Federal Practice, § 24.22[3] (3d Ed.) ("A person who intervenes as plaintiff or defendant may not object to the venue chosen for the action. Since the intervenor specifically invoked the jurisdiction of the court, any potential venue objections are considered waived."); see also Trans World Airlines, Inc. v. C.A.B., 339 F.2d 56, 63-64 (2nd Cir.1964) ("Venue is a privilege personal to a defendant in a civil suit and a person intervening on either side of the controversy may not object to improper venue."); see Commonwealth Edison Co. v. Train, 71 F.R.D. 391, 394 (N.D. Ill. 1976) (finding waiver of transfer pursuant to 28 U.S.C. § 1404(a)); Intrepid Potash-New Mexico, LLC v. U.S. Dep't of Interior, 669 F.Supp.2d 88, 91 (D.D.C. 2009) ("Courts have noted that an intervenor-defendant cannot assert that venue is improper ... because such a defendant voluntarily participated in the case and assumed the risk that a court could order relief or enter a judgment against it."); Beam Laser Systems, Inc. v. Cox Communications, Inc., 117 F.Supp.2d 515, 517 (E.D.Va. 2000) (determining that "as an intervenor, SeaChange may not question venue"); Asbury Glen/Summit Ltd. Partnership v. Southeast Mortg. Co., 776 F.Supp. 1093, 1096 (W.D.N.C. 1991) ("As a general matter, it is true that the intervenor cannot question venue.") (citation and internal punctuation omitted); Recht v. Metro Goldwyn Mayer Studio, Inc., 2008 WL 4460379, *2 (W.D.Wis. Sept. 29, 2008) ("Even if she were allowed to intervene, Ms. Recht would have no standing to question the venue in this case."); Dexia Credit Local v. Rogan, 2008 WL 4543013, *6 (N.D.Ill. Oct. 9, 2008) (observing that intervenors "likely have waived any objection to venue by intervening in this proceeding").
Moreover, as one district court aptly stated, the concept waiver of venue by intervention follows from a line of cases that "are not antiquated, dust-encrusted relics, but instead date all the way through present." Defs. of Wildlife v. Bureau of Ocean Energy Mgmt., Regulation, & Enf't, 791 F.Supp.2d 1158, 1174 (S.D. Ala. 2011) (collecting cases).
The intervenors maintain that Ross is controlling. This court disagrees. First, Ross is not binding authority on this District or the Federal Circuit. Second, at least one Court and "at least one commentator [have] described the Ninth Circuit's approach in Ross, with respect to its finding that intervenors do not waive personal jurisdiction objection, as a `minority position' of `questionable' validity." Defs. of Wildlife, 791 F.Supp.2d at 1174 (citing to 6
In sum, the intervenors cannot now question the propriety or convenience of a venue they chose to enter. Commonwealth Edison Co. v. Train, 71 F.R.D. at 394 ("The purpose of venue is to alleviate the hardship on a defendant arising from his being forced to defend a suit in an inconvenient forum. Such a consideration does not apply to an intervenor.") The intervenors voluntarily entered this proceeding and now must litigate in this, their chosen venue.
Accordingly, and for the reasons set forth above, the Court finds that (1) Intex Recreation Corp. and Intex Trading Ltd.'s (collectively, "Intex") Motion to Sever Claims for Misjoinder (Dkt. No. 86); (2) Intex's Motion to Sever, Change Venue, and Stay (Dkt. No. 88); (3) Bestway (USA), Inc.'s ("Bestway") Motion to Sever and Transfer (Dkt. No. 93); (4) the Coleman Company, Inc.'s ("Coleman") Motion to Sever Claims for Misjoinder (Dkt. No. 94); and (5) Coleman's Motion to Sever, Change Venue, and Stay (Dkt. No. 96) should be and hereby are
Additionally, in light of this Order, the following two Motions are hereby