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Snyders Heart Valve LLC v. St. Jude Medical S.C., Inc.

United States District Court, E.D. Texas, Sherman Division

June 25, 2018

SNYDERS HEART VALVE LLC
v.
ST. JUDE MEDICAL S.C., INC., ET AL.

          MEMORANDUM ADOPTING IN PART REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Came on for consideration the report of the United States Magistrate Judge in this action, this matter having been heretofore referred to the United States Magistrate Judge pursuant to 28 U.S.C. § 636. On March 7, 2018, the report of the Magistrate Judge was entered containing proposed findings of fact and recommendations (“the Report”) (Dkt. #316) that Defendants St. Jude Medical S.C., Inc., St. Jude Medical, Cardiology Division, Inc., and St. Jude Medical, LLC's (collectively, “St. Jude” or “Defendants”) Motion for Summary Judgment of Improper Venue (Dkt. #178) be granted and the case be dismissed for improper venue. Snyders Heart Valve, LLC's (“Snyders” or “Plaintiff”) filed objections to the Report (Dkt. #319), to which Defendants filed a response (Dkt. #321). The Court held a hearing on the objections on May 30, 2018.

         The Court has made a de novo review of the objections raised by Plaintiff and is of the opinion that the Magistrate Judge's ultimate conclusion that venue is improper in the Eastern District of Texas is correct and the objections are without merit as to the Magistrate Judge's ultimate conclusion. The Court hereby adopts the conclusions of the Magistrate Judge to the extent explained below and supplements the Report with the following findings and conclusions.

         Because of the procedural posture of this case, the Court first discusses the relevant background. Defendants made their first challenge to improper venue, asserting a challenge based on the safe harbor provision, on January 17, 2017 (Dkt. #20); however, the motion was withdrawn (Dkt. #29) pursuant to the parties' Joint Motion Re: Discovery and Briefing Schedule for the St. Jude Medical Defendants' Jurisdiction/Venue/Transfer Motion (Dkt. #27). In this joint motion, the parties agreed to a schedule for preliminary discovery on jurisdiction and venue, allowing for Defendants to file preliminary motions on jurisdiction, venue, and transfer after completion of discovery (Dkt. #27).

         On February 13, 2017, after the parties completed discovery, Defendants filed their Opposed Motion to Dismiss Under Fed.R.Civ.P. 12(b)(3) and Plaintiff's and Defendants' Joint Motion to Hold Defendants' Opposed Motion to Dismiss in Abeyance (Dkt. #33). In that motion, Defendants contended that venue was improper under both prongs of § 1400(b), and the parties jointly requested the Court to hold the motion in abeyance pending the Supreme Court's ruling in TC Heartland (Dkt. #33). The Court denied the parties' request to hold the motion in abeyance (Dkt. #42); accordingly, briefing on the motion to dismiss proceeded as prescribed by the Eastern District of Texas Local Rules and the Federal Rules of Civil Procedure. In Defendants' Brief in Support of its Opposed Motion to Dismiss Under Fed.R.Civ.P. 12(b)(3), Defendants raised their challenge to venue based on the safe harbor provision (Dkt. #44). However, on May 12, 2017, the Court denied the motion to dismiss explaining that even though the Supreme Court of the United States had granted certiorari in In re TC Heartland, the Federal Circuit had determined venue in cases alleging patent infringement was proper in “‘any district where there would be personal jurisdiction over the corporate defendant at the time the action is commenced.'” (Dkt. #98 at p. 2 (quoting VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583 (Fed. Cir. 1990); In re TC Heartland LLC, 821 F.3d 1338, 1342-43 (Fed. Cir. 2016)).

         On May 22, 2017, the United States Supreme Court decided TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017). In TC Heartland, the Supreme Court decided that “[a] domestic corporation ‘resides' only in its State of incorporation for purposes of the venue statute.” 137 S.Ct. at 1517. In light of the new decision, St. Jude filed their Motion to Reconsider the Court's May 12, 2017 Order Denying St. Jude's Motion to Dismiss for Improper Venue (Dkt. No. 98), and St. Jude's Renewal of the Same (Dkt. #110). In the motion for reconsideration, St. Jude again argued that venue was not proper under either prong of § 1400(b), asserting a challenge based on the safe harbor provision (Dkt. #110). Instead of contesting the facts surrounding the safe harbor, Snyders argued that the safe harbor was irrelevant to the venue consideration and that St. Jude stipulated[1] to the fact that it sold accused products in the district (Dkt. #125).

         In considering the arguments, the Magistrate Judge recommended that, pursuant to TC Heartland, Defendants did not reside in this District, but used Defendants' stipulation to determine that there were alleged acts of infringement in this District (Dkt. #165). The Magistrate Judge further recommended that because the safe harbor provision was an affirmative defense raised by Defendants, Plaintiff was not required to negate the same to establish venue (Dkt. #165). Both Snyders and St. Jude filed objections to this conclusion (Dkt. #170; Dkt. #171). The Court overruled the objections and adopted the findings and conclusions of the Magistrate Judge as those of the Court (Dkt. #188).

         Subsequently, on September 27, 2017, Defendants filed their Motion for Summary Judgment of Improper Venue, again arguing that based on the safe harbor provision, there were no acts of infringement committed in this District and venue was improper (Dkt. #178). Snyders maintained that the safe harbor provision was irrelevant to venue, while not contesting the alleged facts surrounding the venue challenge (Dkt. #184). This time, the Magistrate Judge recommended that the safe harbor provision, in this case, is relevant to the venue inquiry and recommended granting Defendants' motion for summary judgment (Dkt. #316).

         Before delving into the arguments of the parties, the Court finds that Defendants' motion for summary judgment should be treated as a motion for reconsideration of the Court's previous venue rulings.[2] The Court is permitted to maintain its own docket and reconsider rulings when justice so requires. Fed.R.Civ.P. 60(a). In this case, the Court finds that justice requires the Court to re-examine Defendants' venue challenge at this time. Even though the Court treats this as a motion for reconsideration, as opposed to a motion for summary judgment, the Court still addresses Plaintiff's objections. Plaintiff filed objections to the Report on both procedural and substantive grounds. St. Jude responds that all of Plaintiff's objections are without merit and the Report is correct and well-reasoned. The Court addresses Plaintiff's objections and St. Jude's responses thereto in turn.

         I. Procedural Objections

         According to Plaintiff, “[t]he Report rejects Snyders' procedural challenges to [St. Jude's] motion. But it does not address two of those challenges at all, and errs in rejecting the third.” (Dkt. #319 at p. 1). The Court considers each of Snyders' procedural challenges in turn.

         A. Preclusive Effect of the Court's Rulings on St. Jude's 12(b)(3) Motion

         Plaintiff argues that Defendants were already fully heard on their venue challenge. Plaintiff correctly identifies that Defendants are permitted to submit any evidence available in support of a motion to dismiss for improper venue, and that, in this case, Defendants did submit evidence. Plaintiff maintains that the Court already ruled on Defendants' arguments regarding venue and that Defendants should not be allowed to make their same arguments again before the Court.

         The Court is not persuaded. In a case where a defendant had the “full opportunity to develop his case for lack of venue, following which the court found facts on conflicting evidence to support venue”, then that court is “not obliged to retrace its steps and examine the identical contention in the light of new evidence belatedly offered.'” Ryan v. Glenn, 336 F.Supp. 555, 556- 57 (N.D. Miss. 1971). Although not binding on the Court, the Court finds Ryan persuasive because of the unique procedural grounds of this case.

         Ryan permits the Court to review Defendants' venue challenge at this stage in the litigation. Here, the Court had not yet made factual findings on any of the evidence submitted in support of Defendants' venue challenge prior to Defendants filing the present venue challenge. As opposed to making a factual determination on the evidence submitted by the parties on Defendants' motion to dismiss, the Magistrate Judge recommended, and the Court adopted, a holding that Plaintiff did not need to overcome an affirmative defense on a motion to dismiss, i.e. the Court denied the Defendants' Rule 12(b)(3) motion on procedural grounds without addressing the substantive nature of the motion. Accordingly, this case is factually distinguishable from Ryan because the Court has never considered the evidence submitted in support of Defendants' venue challenge. See Id. Moreover, although a court “is not obliged to retrace its steps”, it is not prevented from doing so. See Id. at 557. Indeed, as previously stated, the Court is permitted to maintain its own docket and reconsider rulings when justice so requires. Fed.R.Civ.P. 60(a). The Court finds that justice requires the Court to “retrace its steps and examine” Defendants' venue challenge despite its previous procedural rulings on Defendants' venue challenge.

         B. Timeliness of St. Jude's Venue Challenge Under Federal ...


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