On November 15, 2017, the Federal Circuit granted Micron Technology Inc.’s petition for writ of mandamus and held that the Supreme Court’s decision in TC Heartland was a change in the law. As a result, defendant Micron did not waive its venue defense by not objecting to venue in its first motion to dismiss, because such venue defense was not “available” to Micron in August 2016 when the action was filed. Rule 12(b) normally requires a motion to dismiss objecting to venue to be raised in the first responsive pleading. If not raised, the issue is considered waived. In response to the May 2017 Supreme Court ruling in TC Heartland, many district courts have dispensed with new venue challenges by invoking the Rule 12(b) waiver provision. On the Micron writ of mandamus, the Federal Circuit put an end to that practice and held that Micron was not precluded from challenging venue on the basis of a Rule 12(b) waiver.
Prior to the Supreme Court’s May 2017 ruling in TC Heartland, the district court was bound by the patent-specific issue of the proper interpretation of 28 U.S.C. § 1400(b). As noted by the Federal Circuit, “Circuit-court precedent is binding on district courts notwithstanding the mere possibility that the Supreme Court might come to disapprove that precedent.” In TC Heartland, the Supreme Court “rejected V.E. Holding and concluded that the definition of ‘resides’ in § 1391(c) does not apply to § 1400(b).”
As a general rule, a defendant objecting to venue may file a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3). The ability to file a Rule 12(b)(3) motion, however, is constrained by other provisions of that Rule. A venue defense is waived if it is omitted from a motion in the circumstances described in Rule 12(g)(2), or not made by motion or included in responsive pleading. Rule 12(g)(2), in relevant part, states that “a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion.” Thus, whether the defense was waived hinges on whether such defense “was available to the party.”
The Federal Circuit has clarified that TC Heartland represents a change in law. The Federal Circuit stated:
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). That position was not available for the district court to adopt before the Court decided TC Heartland, because controlling precedent precluded adoption of the position. For that reason, the objection was not “available” under Rule 12(g)(2) when Micron made its motion to dismiss in 2016. Accordingly, contrary to the district court’s conclusion, Rule 12(h)(1)(A)’s waiver rule is inapplicable here.
This reprieve, however, does not mean all venue challenges will be considered. Rather, the Federal Circuit held that district courts still maintain inherent power to manage their own affairs to achieve the orderly and expeditious disposition of cases. Dietz v. Bouldin, Inc., 136 S. Ct. 1885, 1891 (2016). The Federal Circuit held that the Dietz framework is applicable to venue challenges and can provide the justification to deny belated venue challenges. The Federal Circuit held:
For those reasons, we think it clear that, apart from Rule 12(g)(2) and (h)(1)(A), district courts have authority to find forfeiture of a venue objection. This authority is properly exercised within the framework of Dietz, which requires respecting, and not “circumvent[ing],” relevant rights granted by statute or Rule.
What This Means to You
The full implication of the In re Micron Technology Inc. holding is yet to be seen. Defendants who did not raise a venue defense in the first responsive pleading may now have an opportunity to make such a challenge, on the ground that TC Heartland was a change in the law. But the invocation of Dietz may prove problematic for many. The district court can still exercise its inherent authority to reject a belated venue defense, as long as the court reasonably exercised its inherent power “in response to a specific problem” and the power did not “contradict any express rule or statute.”