TC Heartland Changed Controlling Law for Waiver of the Right to Object to Venue Under Rule 12
The Federal Circuit recently decided In re Micron, in which the panel resolved a district court split, holding that TC Heartland v. Kraft Foods changed controlling law for the purposes of Rule 12 waiver. Micron petitioned the Federal Circuit for a writ of mandamus to set aside the district court’s denial of Micron’s post-TC Heartland motion to dismiss or to transfer the case for improper venue. The district court held that Micron had waived its venue objection under Rule 12(g)(2) and (h)(1)(A) by failing to object to venue in its initial motion to dismiss, concluding that TC Heartland was not a change of law that would make waiver inappropriate. The Federal Circuit granted the petition for mandamus, vacated the district court order, and remanded.
A defendant objecting to venue may file a motion to dismiss for improper venue under Rule 12(b)(3). The ability to file a Rule 12(b)(3) motion, however, is constrained by Rule 12(h)(1)(A), which says a venue defense under Rule 12 is waived if it is omitted from an earlier filed motion to dismiss under Rule 12, in which the venue defense was “available to the defendant.” The question before the Federal Circuit was “whether the [TC Heartland] venue defense was available to Micron in August 2016.” The panel answered in the negative because “until the Supreme Court decided TC Heartland…, it would have been improper, given controlling precedent, for the district court to dismiss or to transfer for lack of venue.”
The Federal Circuit in VE Holding v. Johnson Gas Appliance held that the general venue state 28 U.S.C. § 1391(c), as amended in 1988, furnished a definition of “resides” that applies to the patent-specific venue provision of 28 U.S.C. § 1400(b). Thus, under VE Holding, “a corporate defendant was deemed to reside in any judicial district in which it was subject to personal jurisdiction at the time the action was commenced.” “It is undisputed that Micron comes within that broad definition.” And the 2011 amendment to § 1391(c) did not change this conclusion.
The Supreme Court, however, changed the controlling law in May 2017 when it decided TC Heartland. The Supreme Court rejected VE Holding and concluded that the definition of “resides” in the general venue statute of § 1391(c) “does not apply” to the patent-specific § 1400(b), instead holding that a domestic corporation “resides” only in its State of incorporation for purposes of § 1400(b). “That change of law, by severing § 1400(b) from § 1391(c), made available to Micron in this case the objection that it does not come within the meaning of ‘resides’ for purposes of venue under § 1400(b).” For this reason, the TC Heartland venue objection “was not available under Rule 12(g)(2) when Micron made its motion to dismiss in 2016.” Accordingly, Rule 12(h)(1)(A)’s waiver rule was not applicable.
The Federal Circuit remanded so the district court could consider whether Micron lost its right to object to venue “on grounds separate from Rule 12(h)(1)(A).” The district court under its “inherent powers” may find forfeiture “on sound determinations of untimeliness or consent.” On remand, if there are no sound non-Rule 12(h)(1)(A) forfeiture arguments, the district court is to consider the merits of venue under § 1400(b).
This decision provides ammunition to both defendants and plaintiffs in objecting to venue and in defending against a venue objection. On one hand, TC Heartland venue defenses may now be proper despite not having been raised in a prior Rule 12 motion to dismiss. On the other hand, the district court may nonetheless find the defense forfeited due to untimeliness or consent.