In Re: Bigcommerce, Inc. , 890 F.3d 978 ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
In re: BIGCOMMERCE, INC.,
Petitioner
______________________
2018-120
______________________
On Petition for Writ of Mandamus to the United
States District Court for the Eastern District of Texas in
No. 6:17-cv-00186-JRG-JDL, Judge J. Rodney Gilstrap.
---------------------------------------------------------------------------------
In re: BIGCOMMERCE, INC.,
Petitioner
______________________
2018-122
______________________
On Petition for Writ of Mandamus to the United
States District Court for the Eastern District of Texas in
No. 2:17-cv-00160-JRG-RSP, Judge J. Rodney Gilstrap.
______________________
MARK A. LEMLEY, Durie Tangri LLP, San Francisco,
CA, for petitioner. Also represented by CLEMENT ROBERTS,
TIMOTHY C. SAULSBURY.
BRETT RISMILLER, Husky Finch, St. Louis, MO, for
respondent Diem LLC, in 18-120.
2 IN RE: BIGCOMMERCE, INC.
TIMOTHY DEVLIN, Devlin Law Firm, Wilmington, DE,
for respondent Express Mobile, Inc., in 18-122. Also
represented by ROBERT DEAN KIDDIE, JR.
______________________
ON PETITION
______________________
Before REYNA, LINN, and HUGHES, Circuit Judges.
LINN, Circuit Judge.
ORDER
These petitions each seek a writ of mandamus, chal-
lenging the United States District Court for the Eastern
District of Texas’s orders denying motions to dismiss Case
No. 6:17-cv-00186-JRG-JDL and transfer Case No. 2:17-
cv-00160-JRG-RSP for improper venue under 28 U.S.C.
§ 1406(a). Because a domestic corporation incorporated in
a state having multiple judicial districts “resides” for
purposes of the patent-specific venue statute, 28 U.S.C.
§ 1400(b), only in the single judicial district within that
state where it maintains a principal place of business, or
failing that, the judicial district in which its registered
office is located, and because Petitioner BigCommerce,
Inc. (“BigCommerce”) does not “reside” in the Eastern
District of Texas, the petitions are granted.
BACKGROUND
Respondents in these cases, Diem LLC and Express
Mobile, Inc., each filed patent infringement suits against
BigCommerce in the District Court for the Eastern Dis-
trict of Texas. BigCommerce is incorporated in the State
of Texas and lists its registered office as being situated in
Austin, Texas, where it is also headquartered. Austin lies
in the Western District of Texas. It is undisputed that
BigCommerce has no place of business in the Eastern
District of Texas.
IN RE: BIGCOMMERCE, INC. 3
During the discovery phase of the cases, the Supreme
Court issued its decision in TC Heartland LLC v. Kraft
Foods Group Brands LLC, 137 S. Ct. 1514, 1521 (2017),
which reaffirmed that a domestic defendant corporation
“resides” under § 1400(b) only in its state of incorporation.
Soon thereafter, BigCommerce moved to dismiss Diem’s
case and transfer Express Mobile’s case, arguing that
under the Court’s decisions in TC Heartland and Stonite
Products Co. v. Melvin Lloyd Co., 315 U.S. 561 (1942), it
resides only in the Western District of Texas.
In Diem’s case, the magistrate judge recommended
denying BigCommerce’s motion, concluding that the
objection had been waived under Federal Rules of Civil
Procedure 12(h) and 12(g)(2). The district court adopted
the magistrate judge’s recommendation, but additionally
concluded that even if the defense had not been waived,
venue in the Eastern District of Texas would still be
proper. In doing so, it explained that “a domestic corpora-
tion resides in the state of its incorporation and if that
state contains more than one judicial district, the corpo-
rate defendant resides in each such judicial district for
venue purposes.” Diem LLC v. BigCommerce, Inc., No.
6:17-cv-00186, 2017 WL 3187473, at *2 (E.D. Tex. July 26,
2017) (“Diem Order”).
In Express Mobile’s case, the magistrate judge issued
an order denying BigCommerce’s motion to transfer,
stating that the district court had “already considered and
rejected” BigCommerce’s arguments in the Diem Order
and “Defendant has articulated no reason to distinguish
this case from that earlier ruling.” Express Mobile, Inc. v.
BigCommerce, Inc., No. 2:17-cv-00130, slip op. at 1 (E.D.
Tex. Nov. 8, 2017). BigCommerce then petitioned for a
writ of mandamus in both cases.
4 IN RE: BIGCOMMERCE, INC.
DISCUSSION
A.
A party seeking a writ bears the heavy burden of
demonstrating to the court that it has no “adequate
alternative” means to obtain the desired relief, Mallard v.
U.S. Dist. Court for the S. Dist. of Iowa, 490 U.S. 296, 309
(1989), and that the right to issuance of the writ is “clear
and indisputable,” Will v. Calvert Fire Ins., Co., 437 U.S.
655, 666 (1978) (internal quotation marks omitted).
Further, even if these two prerequisites have been met, a
court issuing a writ must, in its discretion, “be satisfied
that the writ is appropriate under the circumstances.”
Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367, 381
(2004). Moreover, mandamus review of an improper
venue decision under § 1406(a) is rarely granted in the
absence of exceptional circumstances. Bankers Life &
Cas. Co. v. Holland, 346 U.S. 379, 382–84 (1953); see
Comfort Equip. Co. v. Steckler, 212 F.2d 371, 374–75 (7th
Cir. 1954) (denying mandamus review of a denied im-
proper-venue motion); Gulf Research & Dev. Co. v. Leahy,
193 F.2d 302, 304–06 (3d Cir. 1951). This court found
such exceptional circumstances in In re Cray Inc., 871
F.3d 1355 (Fed. Cir. 2017), and In re Micron Tech., Inc.,
875 F.3d 1091 (Fed. Cir. 2017), which were both § 1406(a)
cases. We considered those decisions necessary to address
the effect of the Supreme Court’s decision in TC Heart-
land, which itself was yet another § 1406(a) case. 137 S.
Ct. at 1517, rev’g and remanding In re TC Heartland,
LLC, 821 F.3d 1338 (Fed. Cir. 2016).
Importantly, the Supreme Court has confirmed that
mandamus relief may be appropriate in certain circum-
stances to decide “basic” and “undecided” questions.
Schlagenhauf v. Holder, 379 U.S. 104, 110 (1964). In
addition, mandamus may be appropriate “to further
supervisory or instructional goals where issues are unset-
tled and important.” In re Queen’s Univ. at Kingston, 820
IN RE: BIGCOMMERCE, INC. 5
F.3d 1287, 1291 (Fed. Cir. 2016) (citation omitted); see
also Micron, 875 F.3d at 1095–96; Cray, 871 F.3d at
1358–59; In re BP Lubricants USA Inc., 637 F.3d 1307,
1313 (Fed. Cir. 2011).
These petitions present just such an issue. There is
no doubt after the decisions in TC Heartland and Fourco
Glass Co. v. Transmirra Products Corp., 353 U.S. 222(1957), that a domestic corporation defendant is deemed
to reside only in its state of incorporation. But different
district courts have come to different conclusions about
whether a corporation “resides” under § 1400(b) in every
judicial district within its state of incorporation when the
state has more than one judicial district. See Zin-Plas
Corp. v. Plumbing Quality AGF., Co., 622 F. Supp. 415,
423 (W.D. Mich. 1985) (recognizing a split of authority on
this issue even before the TC Heartland decision); com-
pare Realtime Data LLC v. Nexenta Sys., Inc., No. 2:17-cv-
07690-SJO-JC (C.D. Cal. Jan. 23, 2018), with Diem Order.
This question was not addressed in Cray or Micron, is
“basic,” and will inevitably be repeated. The petitions,
thus, are deemed to present sufficiently exceptional
circumstances as to warrant their immediate considera-
tion via mandamus.
Our review is not precluded by the district court’s
waiver determination. We do not read the district court
as having found waiver in Express Mobile’s case. The
merits issue is therefore squarely before this court in that
case. Moreover, Respondents concede that, under Micron,
the waiver determination in Diem’s case was clearly
incorrect as a matter of law. 875 F.3d at 1096 (concluding
that the venue objection at issue here was not available
for purposes of Rule 12 until TC Heartland issued).
Respondents have not offered any non-Rule 12 basis for
waiver to suggest that additional proceedings before the
district court are needed, and the district judge and
magistrate judge based their waiver determinations solely
on Rule 12. Moreover, remand for consideration of waiver
6 IN RE: BIGCOMMERCE, INC.
apart from Rule 12 under the framework set forth in Dietz
v. Bouldin, Inc. is not necessary in this case. See 136 S.
Ct. 1885, 1891–92 (2016). BigCommerce moved to dis-
miss for improper venue nine days after TC Heartland
issued, and at the time of the motion, the case had only
been pending for approximately two months. These
considerations weigh against a finding of waiver under
Dietz. See Micron, 875 F.3d at 1101–02 (concluding that
the district court may exercise its inherent powers to find
waiver outside of Rule 12 under the framework of Dietz,
including consideration of the timeliness of an improper
venue objection with respect to the progress of the case
towards trial and with respect to when the objection
became available).
Nor must BigCommerce have asked the district court
in Express Mobile’s case for reconsideration of the magis-
trate judge’s decision as a predicate to seeking manda-
mus. While the availability of seeking reconsideration
ordinarily weighs heavily against granting a writ, courts
have recognized that such a general rule should give way
in circumstances where reconsideration by the district
court would have been futile. See Cole v. U.S. Dist. Court
for the Dist. of Idaho, 366 F.3d 813, 820 (9th Cir. 2004).
Here, given the district court’s conclusions in the Diem
case, it likely would have been futile for BigCommerce in
Express Mobile’s case to have sought reconsideration.
B.
We first address the question of whether a domestic
corporation incorporated in a state having multiple judi-
cial districts “resides” for purposes of the patent-specific
venue statute, § 1400(b), in each and every judicial dis-
trict in that state. We hold that it does not. That conclu-
sion finds clear support in the statute’s language, history,
purpose, and precedent.
IN RE: BIGCOMMERCE, INC. 7
We begin with the language of the statute. Mallard,
490 U.S. at 300. Title 28, § 1400(b) (emphases added)
states:
Any civil action for patent infringement may be
brought in the judicial district where the defend-
ant resides, or where the defendant has committed
acts of infringement and has a regular and estab-
lished place of business.
A plain reading of “the judicial district” speaks to
venue in only one particular judicial district in the state.
See NLRB v. Canning, 134 S. Ct. 2550, 2561 (2014) (cita-
tion omitted); Rumsfeld v. Padilla, 542 U.S. 426, 434
(2004) (“The consistent use of the definite article in refer-
ence to the custodian indicates that there is generally
only one proper respondent[.]”); see also Hertz Corp. v.
Friend, 559 U.S. 77, 93 (2010) (explaining that because
“place” in the phrase “principal place of business” in 28
U.S.C. § 1332, is singular, it must be a single place). This
language is simply inconsistent with the understanding
that a defendant resides in all districts in the state. The
district court’s contrary interpretation finds no textual
support in the statute.
The interpretation that “the judicial district” means a
single district is also supported by the provision’s struc-
ture. The use of the disjunctive “or” coupled with a com-
ma after “resides” indicates that “the judicial district”
modifies only the first of the two venue tests in § 1400(b).
See Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979);
Winthrop Res. Corp. v. Eaton Hydraulics, Inc., 361 F.3d
465, 470 (8th Cir. 2004). This strongly suggests that
Congress had in mind one judicial district where the
defendant resides, and at the same time allowed for suit
in any judicial district where the defendant committed
acts of infringement and had a regular and established
place of business.
8 IN RE: BIGCOMMERCE, INC.
The history of § 1400(b) bears this out. Section
1400(b)’s predecessor statute provided that jurisdiction
could only be established “in the district of which the
defendant is an inhabitant, or in any district in which the
defendant, whether a person, partnership, or corporation,
shall have committed acts of infringement and have a
regular and established place of business.” Act of Mar. 3,
1897, ch. 395, 29 Stat. 695 (emphases added). It is fur-
ther evident that despite the 1948 language changes in
§ 1400(b), Congress intended to maintain the substance of
the law as it existed and was defined by its predecessor
statute. See Fourco, 353 U.S. at 226, 228.
It is also evident from the general venue rules at the
time that when Congress wanted venue to potentially lie
in multiple judicial districts, it said so clearly. While
maintaining a restrictive view in patent cases, Congress
expanded the definition of where a corporation resides in
other areas, authorizing suit “in any judicial district in
which it is incorporated or licensed to do business or is
doing business, and such judicial district shall be regard-
ed as the residence of such corporation for venue purpos-
es.” 28 U.S.C. § 1391(c) (1952) (emphasis added). The
lack of similar language in § 1400(b) indicates that Con-
gress did not intend for residence to include all judicial
districts. TC Heartland, 137 S. Ct. at 1518 (“[Congress]
‘placed patent infringement cases in a class by themselves
outside the scope of general venue legislation.’” (quoting
Brunette Mach. Works, Ltd. v. Kockum Indus., Inc., 406
U.S. 706, 713 (1972))).
The same conclusion also flows from the general
principle of statutory construction that “where words are
employed in a statute which had at the time a well-known
meaning at common law or in the law of this country, they
are presumed to have been used in that sense unless the
context compels to the contrary.” Standard Oil Co. v.
United States, 221 U.S. 1, 59 (1911); see also Safeco Ins.
Co. of Am. v. Burr, 551 U.S. 47, 58 (2007); Neder v. United
IN RE: BIGCOMMERCE, INC. 9
States, 527 U.S. 1, 23 (1999). Here, by establishing venue
in the judicial district where the defendant “resides,”
Congress specifically used a term of art that had a settled
meaning in the law.
Prior to 1948, it was widely accepted that “for purpos-
es of venue a corporation was a resident only of the state
in which it was incorporated, and that it could be sued
only in the judicial district within that state in which it
kept its principal office and transacted its general corpo-
rate business.” 14D Charles A. Wright & Arthur R.
Miller, Federal Practice & Procedure § 3811 (4th ed.
2017); see Galveston, H. & S.A. Ry. Co. v. Gonzales, 151
U.S. 496, 504 (1894) (explaining that “[i]f the corporation
be created by the laws of a State in which there are two
judicial districts, it should be considered an inhabitant of
that district in which its general offices are situated, and
in which its general business, as distinguished from its
local business, is done”).
The Supreme Court has cited this line of authority in
giving meaning to “resides” in § 1400(b), see Fourco, 353
U.S. at 226 (citing Shaw v. Quincy Mining Co., 145 U.S.
444 (1892)), and has applied this understanding in the
context of § 1400(b)’s predecessor. In Stonite, the patent
owner sued two corporate defendants that were both
incorporated in the state of Pennsylvania but maintained
principal places of business in different judicial districts.
The Western District of Pennsylvania dismissed the suit
as to Stonite Products Company, which had its principal
place of business in the Eastern District of Pennsylvania.
Melvin Lloyd Co. v. Stonite Prods. Co., 119 F.2d 883, 884
(3d Cir. 1941). On appeal, the Third Circuit reversed,
concluding that jurisdiction over Stonite was proper
under a general venue provision that permitted suits
against two defendants residing in different districts
within the same state to be filed in either district. Id. at
887. The Supreme Court disagreed. The “Stonite Prod-
ucts Company,” the Court noted, was “an inhabitant of
10 IN RE: BIGCOMMERCE, INC.
the Eastern District of Pennsylvania without a regular
and established place of business in the Western District
of that State.” Stonite, 315 U.S. at 562–63. Because
“[t]he Act of 1897 was adopted to define the exact jurisdic-
tion of the federal courts in actions to enforce patent
rights,” and because “there is little reason to assume that
Congress intended to authorize suits in districts other
than those mentioned in” the 1897 Act, the Court re-
versed, upholding the district court’s dismissal. Id. at
565, 567. While it is true that the Court did not expressly
spell out the standard for “inhabitant” in its decision, we
are not free to ignore the clear import of its view on the
issue: a corporation incorporated in a multi-district state
is not a resident of every district in the state.
Respondents offer three arguments in support of the
district court’s contrary interpretation. First, Respond-
ents contend that the definition of “resides” or “inhabits”
as previously understood in cases like Shaw, Galveston,
and Stonite is in tension or inconsistent with the Supreme
Court’s post-1948 cases, in particular Fourco. We disa-
gree. Fourco said that the words “inhabitant” and “resi-
dence” are synonymous and “in respect of corporations,
mean the state of incorporation only.” See Fourco, 353
U.S. at 226 (citing Shaw, 145 U.S. 444). That Fourco said
“state of incorporation only” and not “district within the
state of incorporation only” does not imply that venue is
thereby proper in every district within the state of incor-
poration. The better reading of Fourco is that the Court
simply did not address the corporate venue at the district
level of granularity, and set a necessary but not necessari-
ly sufficient condition for corporate residence for venue
under § 1400(b). We do not view Fourco as departing
from the full scope of Shaw, which also stands for the
proposition that incorporation in the state, while satisfac-
tory for venue in single-district states, is not a sufficient
condition in cases where the state is divided into multiple
districts. See Shaw, 145 U.S. at 449 (stating that a corpo-
IN RE: BIGCOMMERCE, INC. 11
ration is a citizen and resident “only in the State and
district in which it has been incorporated” (emphasis
added)). This conclusion finds sound support in the
Court’s statement that no substantive change in the law
was made from the time of Stonite. TC Heartland, 137 S.
Ct. at 1519; Fourco, 353 U.S. at 228.
Second, Respondents urge that more flexibility should
be allowed given the realities of modern business. See
Diem’s Response at 7–8 (“The days of corporations only
operating local shops that only conduct local business are
long gone. Modern businesses are fluid, amorphous
entities that operate on an interstate and international
level, often completely removed from the state in which
they incorporate.”). But this argument is a non-starter.
“The requirement of venue is specific and unambiguous; it
is not one of those vague principles which, in the interest
of some overriding policy, is to be given a ‘liberal’ con-
struction.” Schnell v. Peter Eckrich & Sons, Inc., 365 U.S.
260, 264 (1961) (quoting Olberding v. Ill. Cent. R.R. Co.,
346 U.S. 338, 340 (1953)). We cannot ignore the require-
ments of the statute merely because different require-
ments may be more suitable for a more modern business
environment. Such policy-based arguments are best
directed to Congress.
Finally, Respondents contend that this narrow inter-
pretation of § 1400(b) may make the statutory provision
more difficult to apply in states having multiple judicial
districts. Respondents note, for example, that defendants
do not always have principal offices or other indicia of
inhabitance in any location in the state in which they
incorporate or may have facilities in more than one dis-
trict. This raises the question: “Which single judicial
district in a multi-district state is the proper judicial
district for purposes of venue under § 1400(b) in an in-
fringement suit against a corporate defendant?”
12 IN RE: BIGCOMMERCE, INC.
The answer depends on whether the corporate de-
fendant maintains a principal place of business in the
state. If so, the judicial district where the principal place
of business is located would be the proper venue under
the statute. Galveston, 151 U.S. at 504 (holding that
corporate inhabitance is determined “by the principal
offices of the corporation, where its books are kept and its
corporate business is transacted”); 8 Fletcher Cyc. Corp.
§ 4030.10 (Sept. 2017) (“[T]he Supreme Court has held
that a corporation’s principal place of business, for diver-
sity jurisdiction purposes, is its nerve center. This means
the place where a corporation’s officers direct, control, and
coordinate the corporation’s activities. This should nor-
mally be the place where the corporation maintains its
headquarters, provided that the headquarters is the
actual center of direction, control, and coordination, and
not simply an office where the corporation holds its board
meetings, for example, attended by directors and officers
who have traveled there for the occasion.” (citations
omitted)). We note that the “principal place of business,”
as it relates to the “resides” prong of § 1400(b), is to be
distinguished from the “regular and established place of
business” prong of the statute. Cf. Hertz, 559 U.S. at 93(distinguishing “principal place of business” from “general
business activities” for purposes of diversity jurisdiction);
Cray, 871 F.3d at 1362–64 (noting considerations for
determining the “regular and established place of busi-
ness” of the defendant).
If the corporation does not maintain its principal
place of business within the state in which it is incorpo-
rated—yet for purposes of venue is considered to be a
resident of the state in which it is incorporated, TC Heart-
land, 137 S. Ct. at 1521—then the natural default is to
deem it to reside in the district in which its registered
office, as recorded in its corporate filings, is located, see
Shaw, 145 U.S. at 449. A universally recognized founda-
tional requirement of corporate formation is the designa-
IN RE: BIGCOMMERCE, INC. 13
tion of a registered office that will serve as a physical
presence within the state of the newly formed corporation.
In the absence of an actual principal place of business as
noted above, the public is entitled to rely on the designa-
tion of the registered office, as set forth in publicly availa-
ble corporate filings, as the place where the corporation
resides.
For the foregoing reasons, we hold that for purposes of
determining venue under § 1400(b) in a state having
multiple judicial districts, a corporate defendant shall be
considered to “reside” only in the single judicial district
within that state where it maintains a principal place of
business, or, failing that, the judicial district in which its
registered office is located.
Here, it is uncontested that BigCommerce maintains
both its principal place of business and its registered
office in Austin, Texas, within the Western District of
Texas. Big Commerce has no corporate connection at all
with the Eastern District. Thus, venue is proper under
the resides prong of § 1400(b) only in the Western District
of Texas.
Accordingly,
IT IS ORDERED THAT:
The petitions are granted, the order denying the
motion to dismiss in Diem’s case and the order denying
the motion to transfer in Express Mobile’s case are vacat-
ed, and the cases are remanded for further proceedings
consistent with this Order.
FOR THE COURT
May 15, 2018 /s/ Peter R. Marksteiner
Date Peter R. Marksteiner
Clerk of Court