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CES Group, LLC v. DMG Corporation

United States District Court, N.D. California, San Jose Division

February 3, 2015

CES GROUP, LLC, Plaintiff,
v.
DMG CORPORATION, et al., Defendants.

ORDER DENYING MOTION TO TRANSFER VENUE [Re: ECF 31]

BETH LABSON FREEMAN, District Judge.

Presently before the Court is the parties' dispute over the proper judicial district in the state of California in which this patent infringement action should be litigated. Defendants DMG Corporation and Energy Labs, Inc. (collectively, "Defendants")[1] request that this action be transferred pursuant to 28 U.S.C. § 1404(a) to the Southern District of California. Def.'s Mot., ECF 31. Plaintiff CES Group LLP requests that this action remain in its chosen venue-the Northern District of California. Pl.'s Opp., ECF 40. Although Defendants requested oral argument, Def.'s Mot. 11, the Court finds that the parties' written submissions clearly set forth the relevant facts and determines that the matter may be submitted without argument. Civ. L.R. 7-1(b). For the reasons stated herein, the Court DENIES Defendants' Motion to Transfer Venue.

I. BACKGROUND

Plaintiff is a limited liability company organized under the laws of Delaware and headquartered in Minnesota. First Amended Compl. (FAC) ¶ 2, ECF 48. Defendant DMG Corporation is a California corporation with offices in Orange County and San Diego. Id. ¶ 4; Decl. of Ron Sweet ¶¶ 4-5, ECF 31-2. Defendant Energy Labs is a California corporation with its principal place of business in San Diego. FAC ¶ 3; Decl. of Ray Irani ¶ 6, ECF 31-3. Energy Labs operates a wholly owned subsidiary, Technologio Del Pacifico, S.A. de C.V. ("TDP"), that is registered and operates in Mexico. Id. ¶ 7. The majority of Energy Labs' employees and servers are located in Tijuana, Mexico, and the "vast majority" of its manufacturing and management activity occurs there as well. Id. ¶¶ 8-11. A third defendant, DMG North, Inc., is a California corporation with its principal place of business in this district. Id. ¶ 5. DMG North did not join Defendants' Motion to Transfer, as it was added after briefing concluded on that motion.

Plaintiff and Energy Labs both manufacture heating, ventilation, and air conditioning ("HVAC") products. FAC ¶¶ 2, 13. DMG Corporation partners with Energy Labs to sell customized HVAC units manufactured by Energy Labs. Id. ¶ 14. Plaintiff is the owner of seven patents ("Asserted Patents") directed toward fan arrays and other components of complex air-handling systems. Id. ¶¶ 16-22. Plaintiff alleges that Defendants' manufacture and sale of custom air handling units, including those that contain Energy Labs' Optiline Fan Array product, infringes each of the Asserted Patents.

II. LEGAL STANDARD

A district court may, in the interest of justice, transfer any civil action "to any other district or division where it might have been brought" for the convenience of the parties and of the witnesses. 28 U.S.C. § 1404(a). The party seeking to transfer a case bears the burden of demonstrating that transfer is appropriate. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).

In a case not involving a forum-selection clause, a district court considering a § 1404(a) motion "must evaluate both the convenience of the parties and various public-interest considerations." Atl. Marine Constr. Co., Inc. v. United States Dist. Court for the Western Dist. of Texas, ___ U.S. ___, 134 S.Ct. 568, 581 (2013). The parties' convenience and other private interests entails consideration of a number of factors including the plaintiff's choice of forum, the parties' contacts with the forum, the contacts relating to the plaintiff's claims in the chosen forum, the "relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses;... and all other practical problems that make trial of a case easy, expeditious and inexpensive.'" Id. at 581 n.6 (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6 (1981)); Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). "Public-interest factors may include the administrative difficulties flowing from court congestion; the local interest in having localized controversies decided at home; [and] the interest in having the trial of a diversity case in a forum that is at home with the law.'" Atl. Marine, 134 S.Ct. at 581 n.6 (quoting Piper Aircraft, 454 U.S. at 241 n.6) (alteration in original).

No single factor is dispositive, though a plaintiff's choice of forum must be accorded some weight in the analysis. Id. Furthermore, a transfer may not be appropriate if it would "merely shift rather than eliminate the inconvenience." Decker, 805 F.2d at 843. Ultimately, a district court weighs the relevant factors and decides whether, "on balance, a transfer would serve the convenience of parties and witnesses' and otherwise promote the interest of justice.'" Atl. Marine, 134 S.Ct. at 581.

III. DISCUSSION

The evidence establishes that Plaintiff and Defendants have employees and offices dispersed around the country, and that there is no one appropriate venue that clearly eclipses the others. There is no dispute that this action could have been brought in the Southern District of California. Def.'s Mot. 5; see generally Pl.'s Opp. Defendants likewise do not appear to dispute that venue would be proper in either this district or the Southern District pursuant to 28 U.S.C. § 1400(b). Nevertheless, because Plaintiff chose to file suit in this district, the Court considers whether Defendants have made a strong enough showing of greater convenience such that transfer to the Southern District would promote the interest of justice.

A. Convenience of the Parties

As an initial matter, Defendants argue that Plaintiff's choice of venue should be accorded little weight because Plaintiff "does not have meaningful roots in the Northern District." Def.'s Mot. 7. Plaintiff is not a resident of California and does not appear to have meaningful ties to either the Northern or the Southern District. Plaintiff avers, however, that members of its senior management are located in the Northern District and, [2] more importantly, that at least one of the infringing acts occurred in connection with Plaintiff and Defendants' competing bids "to supply air handling equipment for a project in San Jose, California." Pl.'s Opp. 3; Decl. of Byron C. Beebe Exhs. 5, 6, ECF 41. Defendants won that bid. Pl.'s Opp. 3. The fact of Plaintiff and Defendants' direct competition in this district is undisputed, though Defendants aver that the San Jose project is their only order in this district. See Def.'s Mot. 7.

Although a plaintiff's choice of venue is entitled to some weight, "[i]f the operative facts have not occurred within the forum and the forum has no interest in the parties or subject matter, [Plaintiff's] choice is entitled to only minimal consideration." Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir. 1987) (plaintiff's choice of forum in derivative lawsuit or class action is entitled to little weight); see also Zut v. Harrah's Entm't, Inc., No. C13-2372 TEH, 2013 WL 5442282, at *2 (N.D. Cal. Sept. 30, 2013). Here, the fact that one of the allegedly infringing acts occurred in this district is sufficient to establish a connection between Plaintiff's claims and this venue, particularly given the nature of the patents and the accused products- custom air handling systems. Unlike products sold over the Internet, where a single sale in this district may create a contact that is merely fleeting or ephemeral, the design and customization of an air handling system for a project in San Jose represents a significant contact with this venue. Furthermore, because the San Jose project also involved directly competing bids between Plaintiff and Defendants, evidence from that project may be highly relevant to Plaintiff's claims for relief. By contrast, although Defendants aver that they sell and install the accused fan arrays "across multiple states" and ...


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