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Rillito River Solar LLC v. Wencon Development Inc.

United States District Court, D. Arizona

November 20, 2017

Rillito River Solar LLC dba EcoFasten Solar, an Arizona limited liability company, Plaintiff,
v.
Wencon Development Incorporated dba Quick Mount PV, a California corporation, Defendant.

          ORDER

          Douglas L. Rayes, United States District Judge.

         Before the Court are Defendant Wencon Development Incorporated d/b/a Quick Mount PV's (“Quick Mount”) motion for leave to amend its answer and motion to dismiss or, in the alternative, to transfer venue. (Docs. 40, 45.) The motions are fully briefed and neither party requested oral argument. For reasons stated below, the motions are granted and this case is transferred to the Northern District of California.

         I. Background

         Plaintiff Rillito River Solar LLC d/b/a EcoFasten Solar (“EcoFasten”) and Quick Mount manufacture and market roof mounts for solar panels. At issue is technology used to secure solar panels to roofs in a manner that avoids damage. EcoFasten, which claims to be the inventor of this technology, filed a complaint against Quick Mount in September 2016, alleging that Quick Mount infringes on its patents. (Doc. 1.) In its complaint, EcoFasten alleged that venue is proper in this district because a substantial part of the events or omissions giving rise to its claims occurred here. (¶ 8.)

         In November 2016, Quick Mount filed an answer to EcoFasten's complaint and counterclaimed for declaratory judgments that EcoFasten's patents are invalid. (Doc. 12.) In response to EcoFasten's venue allegation, Quick Mount responded that it “lacks information and belief sufficient to answer these allegations and on that basis neither admits nor denies them.” (Id. at 2 ¶ 8.) With respect to its counterclaims, Quick Mount alleged that venue is proper in this district. (Id. at 8 ¶ 3.)

         EcoFasten later filed an amended complaint alleging additional claims related to the patents at issue. (Doc. 16.) Like its predecessor, EcoFasten's amended complaint alleges venue is proper in this district. (¶ 8.) In December 2016, Quick Mount filed an answer to the amended complaint. (Doc. 21.) In response to EcoFasten's venue allegation, Quick Mount responded that it “lacks information and belief sufficient to answer these allegations and on that basis denies them.” (Id. at 2 ¶ 8.) Though Quick Mount denied EcoFasten's venue allegation, it did not at that time move under Federal Rule of Civil Procedure 12(b)(3) to dismiss for improper venue, or to transfer this case to the proper venue.

         The parties thereafter proceeded to litigate. In February 2017, the Court issued a scheduling order setting certain case management deadlines. Of note, the Court set a March 1, 2017 deadline for amending pleadings, deadlines running from March 17, 2017 to July 14, 2017 for claims construction disclosure, discovery, and briefing, and a Markman hearing for August 11, 2017. (Doc. 29 ¶¶ 2-12.)

         During this time, on May 22, 2017, the United States Supreme Court issued its decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017), which made clear that a corporation “resides” only in its state of incorporation for purposes of 28 U.S.C. § 1400(b), the patent venue statute. In doing so, the Supreme Court affirmed its 1957 decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957), and reversed the Federal Circuit's 1990 decision in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (1990), by clarifying that the patent venue statute, not the general venue statute, 28 U.S.C. § 1391(c), defines where a domestic corporation “resides” for purposes of patent infringement litigation. In Fourco, the Supreme Court held that § 1400(b) was the sole and exclusive provision controlling venue in patent infringement actions, and that it was not to be supplemented by the general venue provisions of § 1391(c). 353 U.S. at 229. In 1988, however, Congress amended § 1391(c) to provide that “[f]or purposes of venue under this chapter, ” a defendant corporation shall be deemed “to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” Two years later, the Federal Circuit in VE Holding held that the newly added phrase “[f]or purposes of venue under this chapter” was “exact and classic language of incorporation” and therefore § 1391(c), as amended, established the definition for all other venue statutes, including § 1400(b): “On its face, § 1391(c) clearly applies to § 1400(b), and thus redefines the meaning of the term ‘resides' in that section.” 917 F.2d at 1578-80. VE Holding remained good law for nearly 30 years until it was abrogated by TC Heartland in late May of this year.

         On July 28, 2017-approximately two months after the Supreme Court issued its TC Heartland decision, and two weeks after the completion of claims construction briefing-Quick Mount filed the present motion under Rule 12(b)(3) to dismiss for improper venue or, alternatively, to transfer this case to the Northern District of California, Quick Mount's state of incorporation. (Doc. 40.) Relatedly, on August 5, 2017, Quick Mount moved for leave to amend its answer to deny that venue is proper, rather than deny based on insufficient knowledge or belief. (Doc. 45.) EcoFasten opposes both requests. (Doc. 42, 49.)

         On August 9, 2017, after receiving full briefing on Quick Mount's motion to dismiss (but before full briefing on its motion for leave to amend), the Court held a telephonic status conference to discuss the impending Markman hearing. The Court advised the parties, based on its preliminary review of the briefs, that it likely would grant Quick Mount's motion and transfer this matter to the Norther District of California. (Doc. 48.) Though understanding that the Court's assessment was preliminary, the parties agreed that August 11, 2017 Markman hearing should be vacated pending resolution of the venue issue.

         II. Motion for Leave to Amend

         Quick Mount has moved for leave to amend its answer to affirmatively deny that this district is a proper venue. (Doc. 45.) Because Quick Mount's motion comes five months after the Scheduling Order's deadline for amended pleadings, it must first satisfy Rule 16(b)'s good cause standard. Fed.R.Civ.P. 16(b)(4) (providing that deadlines established in a scheduling order “may be modified only for good cause and with the judge's consent.”). “Good cause” exists when deadlines “cannot reasonably be met despite the diligence of the party seeking the extension.” Fed.R.Civ.P. 16 Advisory Comm.'s Notes (1983 Am.). Thus, “Rule 16(b)'s ‘good cause' standard primarily considers the diligence of the party seeking the amendment.” Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). If good cause supports deviation from the scheduling order, the Court then assesses the propriety of the motion for leave to amend by considering factors such as bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the pleading previously has been amended. See Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990).

         A. Good Cause Supports Deviation from the Scheduling Order

         Good cause supports deviation from the scheduling order because Quick Mount's improper venue defense was not available to it until after the Supreme Court issued its decision in TC Heartland in late May of this year. In Re Micron Tech., Inc., ___ F.3d ___, 2017 WL 5474215, at *3-6 (Fed. Cir. Nov. 15, 2017) (“The venue objection was not available until the Supreme Court decided TC Heartland because, before then, it would have been improper, given controlling precedent, for the district court to dismiss or to transfer for lack of venue.”); see also OptoLum, Inc. v. Cree, Inc., No. CV-16-03828-PHX-DLR, 2017 WL ...


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