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John Council

Texas Lawyer

11-05-2007

The 5th U.S. Circuit Court of Appeals has made it easier for defense attorneys to move their clients' cases out of the Eastern District of Texas.

The Oct. 25 mandamus opinion In Re: Volkswagen of America Inc. could stem the tide of tort suits filed in the district, which is popular with plaintiffs. The 5th Circuit ruled that a federal trial judge abused his discretion by not granting a defense motion to transfer venue to another district.

While the court acknowledged its previous decisions on venue transfer motions "have not been the model of clarity," the 5th Circuit re-asserted that trial courts must consider a "100-mile threshold" between a suit's existing venue and a proposed venue under 28 U.S.C. §1404(a) when weighing a transfer motion proposed for the sake of the convenience of witnesses. In a previous mandamus decision in an unrelated case involving Volkswagen the court wrote that proper venue lies within 100 miles of the place where the underlying events in the suit occurred. [See the court's Feb. 13 opinion and its Oct. 25 opinion.]

According to their 2006 complaint in Singleton, et al. v. Volkswagen, et al., the plaintiffs allege that their daughter, 7-year-old Mariana Singleton, was sitting in the back seat of a 1999 Volkswagen Golf when a defective front passenger seat collapsed on her during a wreck with another vehicle crushing her skull. The plaintiffs, Singleton's surviving family members, chose to file the product liability suit against Volkswagen in the Eastern District's Marshall Division, even though the car accident occurred 150 miles away in Dallas, where the Northern District of Texas is based.

Volkswagen filed a motion to have the case transferred, which U.S. District Judge T. John Ward denied in 2006 after he ruled that Volkswagen had not shown that convenience and justice outweighed the plaintiffs' right to choose to file in "any district in which a defendant resides" pursuant to 28 U.S.C. §1391(a)(1). Volkswagen has several dealerships located in the Eastern District. The Singletons lived in the Eastern District at the time of the accident but have since moved out of the district.

Volkswagen filed a mandamus writ challenging Ward's venue decision with the 5th Circuit.

In a 2-1 per curiam opinion on Feb. 13, a 5th Circuit panel agreed with Ward's decision to keep the case.

Volkswagen appealed by filing a motion for en banc reconsideration of its petition for writ of mandamus. Volkswagen asserted in its motion that §1404(a) allows a defendant to seek to transfer a suit if it can prove to the district judge assigned to the case that allowing the suit to remain on his or her docket would constitute an "unreasonable burden" on the defense.

On April 23, the same panel that considered the mandamus treated the en banc motion as a motion for panel rehearing and vacated its previous ruling, in which Judges Carolyn Dineen King and Patrick Higginbotham were in the majority and Judge Emilio Garza dissented. That same panel also set the mandamus for a rare oral argument.

But because a panel assigned to hear only motions -- not oral arguments -- granted the rehearing, a new panel was assigned to hear the case. That panel, consisting of Judges E. Grady Jolly, Edith Brown Clement and Priscilla Owen, reversed the previous panel's decision.

"The district court's provided rationales could apply to virtually any judicial district and division in the United States; they leave no room for consideration of those actually affected -- directly and indirectly -- by the controversies and events giving rise to a case. Thus, the district court committed a clear abuse of discretion," Jolly wrote.

Michael C. Smith, a partner in The Roth Firm in Marshall who represents the Singleton family on appeal, says he plans to seek an en banc rehearing at the 5th Circuit.

Smith says the decision in In Re: Volkswagen eviscerates a trial court's discretion to make rulings on venue transfer motions.

"They've set aside half a century of case law on how these decisions are made," Smith says of the judges' decision.

Smith also believes the decision ignores the intent of Congress and the federal venue statute, 28 U.S.C. §1391, which give plaintiffs a wide choice of federal forums in which to file suits.

"One of the key issues is whether they can draw a bright-line test," Smith says of the 5th Circuit's 100-mile threshold rule. "It means you can only have a case heard in one division. If that's what it means, it not only eliminates the district judges' discretion but the federal venue statutes, because they provide for much broader venue."

Danny Ashby, a partner in the Dallas office of Hughes & Luce who represents Volkswagen in the case, declines to comment on the ruling.

But Kurt Kern, a partner in Dallas' Hartline, Dacus, Barger, Dreyer & Kern who defends companies in product liability suits in the Eastern District, says the decision in In Re: Volkswagen is the best guidance the 5th Circuit has given federal trial judges on venue transfer motions in a long time.

"To me, the most important factor that kind of goes hand in glove with the 100-mile radius is the effort by the 5th Circuit to point out that there should be a localized interest in the dispute," Kern says.

"I think the plaintiff still has the right to select venue, but it's not an unfettered selection or one that is entitled to absolute selection," Kern adds. "The 5th Circuit just pointed out that there needs to be a balance."

For years, the Eastern District has been a popular place for out-of-district litigants to file product liability and other tort suits.

According to 2006 docket statistics for the Eastern District compiled by the Administrative Office of U.S. Courts -- the most recent figures available -- product liability and personal injury suits are the second most common civil filings in the district, after prisoners' civil-rights suits. Excluding prisoners' suits, of the 1,725 civil cases pending in the Eastern District last year, 318 cases, about 18 percent, were product liability suits or personal-injury cases. That percentage is the highest among all of Texas' four federal districts.

One of the reasons the Eastern District is such a popular venue for product liability suits is because the district's judges dispose of complex litigation efficiently, says Matt Orwig, managing partner of the Dallas office of Sonnenschein Nath & Rosenthal.

Orwig, a former U.S. Attorney for the Eastern District, says in a roundabout way, in In Re: Volkswagen the 5th Circuit recognizes the Eastern District's popularity by clamping down on out-of-district litigants who want to have their tort suits tried there.

Notes Orwig, "I think this is a real clear symbol that the 5th Circuit is going to be more proactive -- some would say activist -- in defining the limits of venue."