United States District Court, E.D. Texas
MEMORANDUM AND ORDER
A. CRONE UNITED STATES DISTRICT JUDGE
before the court is Defendant Northeast Texas Rural Rail
Transportation District's (“NETEX”) Rule
12(b)(3) Motion to Transfer Venue (#3). NETEX seeks to
transfer this action to the Eastern District of Texas, Tyler
Division, on the grounds that the Eastern District of Texas,
Beaumont Division, is an improper venue. NETEX claims the
Operating Agreement between it and Plaintiff the Blacklands
Railroad (“Blacklands”) requires transfer to the
Tyler Division in view of the forum selection clause included
in the agreement. Having reviewed the pending motion, the
submissions of the parties, the pleadings, and the applicable
law, the court is of the opinion that the Beaumont Division
is an improper venue and the Sherman Division is the proper
venue. Therefore, NETEX's Motion is GRANTED in part and
DENIED in part.
initiated this action in the 62nd Judicial District Court of
Hopkins County, Texas. Blacklands alleges that NETEX: (1)
breached the Operating Agreement, which gave Blacklands
exclusive, complete control over NETEX's right-of-way and
track, by soliciting business relations from Blacklands'
competitors; (2) anticipatorily repudiated the Operating
Agreement; (3) falsely published disparaging statements
regarding Blacklands' capabilities; (4) misappropriated
Blacklands' trade secrets; (5) tortiously interfered with
Blacklands' contract with Union Pacific Railroad, Iowa
Northern Railway, and the Mount Vernon Economic Development
Corporation; and (6) violated 49 U.S.C. § 11904 (#1-7,
3). On June 10, 2019, NETEX removed the case from Hopkins
County to this court. On June 17, 2019, NETEX filed the
instant motion requesting the court to transfer this case to
the Tyler Division pursuant to the parties' Operating
Agreement (#3, 1). The Operating Agreement states: “In
the event any litigation arises in connection with this
Agreement, the parties agree that jurisdiction will lie with
either any Texas State court in Hunt County or Federal court
in the Eastern District of Texas, Tyler division.”
2, 2019, Blacklands filed a response asserting that venue in
the Tyler Division is improper and the case should be
transferred to the Eastern District of Texas, Sherman
Division, in accordance with Texas law. Blacklands argues
that the action was properly filed prior to removal in
Hopkins County, which the Sherman Division geographically
encompasses, because the Operating Agreement's venue
provision cannot be enforced under state law. Blacklands
further alleges that venue selection clauses cannot waive
mandatory venue provisions unless a statute grants such
ability. Tex. Civ. Prac. Rem. Code § 15.020; In re
Fisher, 433 S.W.3d 523, 533-34 (Tex. 2014). Accordingly,
Blacklands contends that Hopkins County is the mandatory
venue for state court actions against NETEX pursuant to Texas
law (#1-7, 2). Tex. Civ. Prac. & Rem. Code §§
15.0151, 15.017, 15.004.
response, NETEX argues that the forum selection clause is
valid and enforceable, and that Blacklands has not met its
burden of proof to avoid enforcement (#11, 3). Further, NETEX
states the court should take into consideration the following
public interest factors in determining whether venue is
proper in the Tyler Division: (1) the administrative
difficulties flowing from court congestion; (2) the local
interest in having localized interests decided at home; (3)
the familiarity of the forum with the law that will govern
the case; and (4) the avoidance of unnecessary problems of
conflict of laws in the application of foreign law (#11, 3).
NETEX argues that there are not “any administrative
difficulties . . . or local interests that would require
venue to remain in the Beaumont Division and both [the
Beaumont and Tyler Divisions] would apply the same
courts are authorized to transfer venue under both 28 U.S.C.
§§ 1404(a) and 1406. “[T]he determination of
whether § 1406 or § 1404(a) applies turns on
whether venue is proper in the court in which the suit was
originally filed. If venue is improper in that court, then
§ 1406 or Rule 12(b)(3) applies. If venue is proper in
that court, then § 1404(a) applies.” In re
Atl. Marine Constr. Co., Inc., 701 F.3d 736, 739 (5th
Cir. 2012), rev'd on other grounds, 571 U.S. 49
(2013). Because NETEX asserts that venue is improper in the
Beaumont Division, the court first considers § 1406 and
Rule 12(b)(3)'s application before considering the
relevance of the Operating Agreement.
28 U.S.C. § 1406 and Rule 12(b)(3)
Federal Rules of Civil Procedure authorize a court, upon
suitable showing, to dismiss an action where venue in that
court is improper.” J.D. Fields, Inc. v. Indep.
Enterprises, Inc., 4:12-CV-2605, 2012 WL 5818229, at *8
(S.D. Tex. Nov. 13, 2012) (citing Fed.R.Civ.P. 12(b)(3));
accord Herman v. Cataphora, Inc., 730 F.3d 460, 463
(5th Cir. 2013); Williamson- Dickie Mfg. Co. v.
M/V HEINRICH J, 762 F.Supp.2d 1023, 1026 (S.D. Tex.
2011). The relevant statute provides:
The district court of a district in which is filed a case
laying venue in the wrong division or district shall dismiss,
or if it be in the interest of justice, transfer such case to
any district or division in which it could have been brought.
28 U.S.C. § 1406(a); Atl. Marine Constr. Co., Inc.
v. U.S. Dist. Court for the W. Dist. of Tex., 571 U.S.
49, 55 (2013) (hereafter “Atl. Marine”).
If the court determines that venue is improper in this
district, it may dismiss the case or transfer it to the
proper venue in the interest of justice. 28 U.S.C. §
1406(a); Atl. Marine, 571 U.S. at 55;
Herman, 730 F.3d at 466; Zurich Am. Ins. Co. v.
Tejas Concrete & Materials Inc., 982 F.Supp.2d 714,
720 (W.D. Tex. 2013).
general venue statute, 28 U.S.C. § 1391, usually governs
whether venue is proper or improper in a district. Subsection
(a) states that § 1391, “[e]xcept as otherwise
provided by law . . . shall govern the venue of all
civil actions brought in district courts of the United
States.” 28 U.S.C. § 1391 (emphasis added). The
United States Supreme Court has interpreted this language to
mean that the federal venue provisions “alone define
whether venue exists in a given forum.” Atl.
Marine, 571 U.S. at 56. Thus, “[w]hen venue is
challenged, the court must determine whether the case falls
within [the federal venue provisions]. If it
does, venue is proper; if it does not, venue is improper, and
the case must be dismissed or transferred under §
1406(a).” Id. As a consequence, the
parties' inclusion of a forum selection clause in their
contract “has no bearing on whether a case falls”
under a federal venue provision. Id.
removal statute, 28 U.S.C. § 1441 supersedes § 1391
in removed actions. Polizzi v. Cowles Magazines,
Inc., 345 U.S. 663, 665-66 (1953); Ashton v. Knight
Transp., Inc., Civ. A. 309-CV-0759-B, 2009 WL 2407829,
at *2 (N.D. Tex. Aug. 6, 2009); Republic Capital Dev.
Grp., L.L.C., v. A.G. Dev. Grp., Inc., Civ.A. H-05-1714,
2005 WL 3465728, at *8 (S.D. Tex. Dec. 19, 2005); Dunn v.
Babco Textron, 912 F.Supp. 231, 232 (E.D. Tex. 1995). In
such actions, venue is proper in “the district court of
the United States for the district and division ...