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Nikola Corp. v. Tesla Inc.

United States District Court, D. Arizona

October 29, 2018

Nikola Corporation, Plaintiff,
v.
Tesla Incorporated, Defendant.

          REPORT AND RECOMMENDATION

          Bernardo P. Velasco United States Magistrate Judge

         Pending before the Court is Defendant Tesla Incorporated's Motion to Transfer Venue. (Doc. 44.) Plaintiff filed a response in opposition (Doc. 50), and Defendant filed a reply (Doc. 52). Tesla asks the Court to transfer this matter to the Northern District of California. (Doc. 44 at 2.) Tesla states that the Court may consider the transfer prior to consideration of the pending Motion to Dismiss, and Plaintiff does not express its opinion about which motion should be determined first. Id. This Court recommends that the case be transferred to the Northern District of California, and that the District Judge deny the pending Motion to Dismiss as moot.

         Nikola filed a claim in the District of Arizona, alleging that Tesla's prototype design for its semi-truck infringes upon Nikola's patents. (Doc. 1 at 26-27.)[1] At the time of filing, Nikola was a Delaware corporation with its current place of business in Salt Lake City, Utah. Id. at 5, ¶26. Tesla is a Delaware corporation with its principal place of business in Palo Alto, California. Id. at 5, ¶ 27. At a glance, there is no reason for this case to be heard in the District of Arizona. However, Nikola's complaint contended that jurisdiction was proper because it “announced that it is moving its headquarters to Arizona in July” and would relocate its manufacturing facility to either Buckeye or Coolidge, Arizona. (Doc. 1 at 5 ¶ 26; Doc. 50 at 4.)

         I. Tesla's Motion to Transfer Venue

          Tesla argues that this matter is best suited in the Northern District of California. First, it states that Nikola's choice of forum should be given little weight because, at the time of filing, Nikola merely had plans to relocate its headquarters to Arizona, and had yet to actually relocate. (Doc. 44 at 2.) In addition, Arizona has no connection to the underlying allegations in this matter: the patent infringement occurred in California and Utah, but not in Arizona. (Doc. 52 at 2.)

         Second, the Northern District of California is more convenient because all of Tesla's witnesses reside in California and there are far more Tesla witnesses than Nikola witnesses. (Doc. 44 at 3, 11.) Even though Tesla has employees and showrooms in Arizona, the Arizona employees did not participate in the creation of the semi-truck at issue and the Arizona showrooms market passenger vehicles, not the semi-truck. Id. at 10. Furthermore, Tesla employees who live outside of Northern California regularly travel there for work. Id. at 7-8. Because of this, it is far less expensive to have the limited number of Nikola witnesses travel to California than the numerous Tesla witnesses to Arizona. Id. Moreover, some of Tesla's witnesses are beyond this district's subpoena power, but could be compelled to appear in Northern California. Id. at 9.

         Third, transfer is appropriate because a majority of the evidence is located in Northern California where the semi-truck was developed. Id. at 11.

         Finally, the Northern District of California has a greater interest in the outcome of this case and greater experience with patent litigation. Id. at 12.

         II. Nikola's Response

         Nikola responds that it does have connections with Arizona, and Tesla has not met its burden of making a “strong showing” that transferring this case to the Northern District of California is prudent. (Doc. 50 at 1, 6.) At the time of filing, Nikola: (1) said it was relocating to Arizona; (2) was negotiating a possible incentive package in Arizona; (3) had leased property in Arizona; and (4) was approved to do business as a foreign for-profit business in Arizona. Id. at 2. In addition, Nikola claims that Tesla's two sales centers in Arizona demonstrate that it has engaged in acts of patent infringement in Arizona by offering the semi-truck to Arizona residents. Id. at 10.

         Second, Nikola asserts that it has four named witnesses who are or will be living in Arizona during the pending litigation, and some Arizona employees who will be testifying as to damages. Id. at 7-8. In addition, Nikola claims the lack of subpoena power over Tesla's employees is a non-issue because depositions may be taken and video conferencing utilized. Id. at 9. It argues that changing venues merely switches the inconvenience from one party to another. Id. at 12.

         Third, Nikola contends that a majority of the evidence is not located in Northern California because all of Nikola's documents and its patented Nikola One semi-truck will be moved to Phoenix by approximately October 2018. (Doc. 50 at 9; Doc. 50-1 at 12.) Nikola claims that since Tesla drives its semi-truck from Utah to California, it can easily make a pit stop in Arizona if necessary. (Doc. 50 at 10.) In the alternate, Tesla can simply submit photos instead of having the Court physically inspect the infringing material. Id.

         Finally, Nikola claims that Arizona has an interest in the matter at issue. Id. at 2.

         Both parties allege the other is engaging in forum shopping. (Doc. 44 at 6; Doc. 50 at 7.)

         III. Standard of Review

          The court determines whether a transfer of venue is appropriate based on the parties' circumstances at the time of filing. See Ventriss, 486 F.3d at 1118; see also In re EMC Corp., 501 Fed.Appx. 973, 976 (Fed. Cir. 2013). The District Court, in its discretion, may transfer any civil action to any other district in which the case may have been filed “[f]or the convenience of the parties and witnesses” or “in the interest of justice.” 28 U.S.C. § 1404(a); Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). Plaintiff's choice of venue is given “substantial weight, ” N. Acceptance Trust v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1970), and may only be upset if defendant “make[s] a strong showing of ...


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