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Roadie, Inc. v. Baggage Airline Guest Services, Inc.

United States District Court, D. Delaware

November 2, 2017

ROADIE, INC.
v.
BAGGAGE AIRLINE GUEST SERVICES, INC. and BAGS, INC.

          MEMORANDUM

          KEARNEY, J.

         Two federal courts should generally avoid deciding the flip side of the same issue between the same parties. We should carefully scrutinize a Delaware citizen's request for a declaratory judgment of noninfringment of a patent which it filed after being sued in Florida for infringing the same patent. When, as today, the convenience of the parties and witnesses weighs heavily in favor of continuing resolving both the claim and defense in the first filed forum, we find the parties should resolve their patent dispute in the Florida District where it began. In the accompanying Order, we grant a motion to transfer venue to the first filed district to resolve the claims between the patent holder and alleged infringer.

         I. Facts relating to jurisdiction and venue.

         Roadie, Inc. is a Delaware Corporation with its principal place of business in Atlanta, Georgia.[1] Bags, Inc. is a Florida corporation with its principal place of business in Orlando, Florida.[2] On July 6, 2017, Bags, Inc. accused Roadie of infringing on United States Patent No. 9, 659, 336 (“'336 patent”) based on Roadie's use of its delivery network.[3]

         Baggage Airline Guest Services, Inc. is a Florida corporation with its principal place of business in Orlando, Florida.[4] On July 6, 2017, Baggage Airline sued Roadie for infringement of the '336 patent in the United States District Court for the Middle District of Florida (“Florida Action”).[5] Bags, not Baggage Airline, held the '336 patent at the time of filing the Florida Action.[6] On August 3, 2017, Roadie moved to dismiss the Florida Action arguing Baggage Airline lacked standing because it did not own the '336 Patent.[7] On the same day, Roadie filed this action seeking a declaratory judgment of non-infringement, invalidity, and unenforceability of the same '336 Patent (“Delaware Action”).[8]

         On August 24, 2017, Bags assigned the '336 patent to Baggage Airline and Baggage Airline sued Roadie again for patent infringement properly alleging its ownership of the '336 patent (“Second Florida Action”).[9] The Honorable Roy B. Dalton, Jr. dismissed the Florida Action on September 1, 2017 because Baggage Airline was not a proper plaintiff and had already initiated the Second Florida Action post-assignment as the proper plaintiff.[10]

         II. Analysis

         Baggage Airline and Bags now move to dismiss for lack of subject matter jurisdiction and lack of personal jurisdiction or in the alternative, to transfer this case to the Middle District of Florida.[11] We grant Bags's motion to dismiss for lack of subject matter jurisdiction because it is not the patent holder and transfer Roadie's declaratory judgment action to the Middle District of Florida.

         A. We dismiss the claim against Bags for lack of subject matter jurisdiction.

         Baggage Airline and Bags argue we lack subject matter jurisdiction over the action against Bags because it does not own the patents-in-suit and is not a license of the patents-in-suit. Roadie does not oppose the dismissal of Bags.

         Absent opposition, and since Bags no longer exists as a corporation and assigned all of its rights to the '336 patent to Baggage Airline, Bags lacks standing to sue Roadie for patent infringement. Bags is not a proper party here and we dismiss the claims against Bags for lack of subject matter jurisdiction.

         B. The first-to-file rule favors transfer to the Middle District of Florida.

         Roadie argues they may proceed in the Delaware Action because it filed suit twenty-one days prior to the Second Florida Action. Baggage Airline argues the first-to-file rule applies in its favor because Roadie filed the Delaware Action prior to the dismissal of Baggage Airline's Florida Action.

         “The first-to-file rule is used to dismiss or stay a later-filed action” and applies when “there are parallel proceedings in different federal courts, the first court in which jurisdiction attaches has priority to consider the case.”[12] Generally, “the court which first has possession of the subject matter must decide it.”[13] The first-to-file rule serves the purpose of avoiding duplicative litigation over the same subject matter.[14] Our court of appeals instructs the first-to-file rule “is not a mandate directing wooden application of the rule without regard to rare or extraordinary circumstances, inequitable conduct, bad faith, [anticipatory filing] or forum shopping.”[15] In EEOC v. University of Pennsylvania, the Equal Employment Opportunity Commission refused to modify a subpoena against the University of Pennsylvania and threatened to institute an enforcement hearing if the University failed to comply.[16] Three days before the Commission's deadline to institute the enforcement hearing, the University filed suit in the District of Columbia.[17] The court held the first-to-file rule “is based on principles of comity and equity” and “should not apply when at least one of the filing party's motives is to circumvent and preempt an imminent subpoena enforcement action.”[18] The court determined upholding such an action would promote an “unseemly race to the courthouse” with anticipatory filing.[19]

         The facts, on close examination, compel finding Roadie's Delaware Action is anticipatory warranting application of the first-to-file rule. Baggage Airline filed the Florida Action on July 6, 2017.[20] While the Florida Action was pending, Roadie filed the Delaware Action on the same day it move to dismiss the Florida Action. Roadie filed the Delaware Action in anticipation of the Florida action being dismissed for lack of subject matter jurisdiction. Baggage Airline decided not to amend its first filing but instead filed the Second Florida Action correcting the issue regarding its standing to sue.[21] Acknowledging the properly filed Second Florida Action, the Judge Dalton, Jr. dismissed the Florida Action.[22]

         Similar to EEOC v. University of Pennsylvania, where the court applied first-to-file when University filed its action in an attempt to circumvent the opposing party's ability to file an unfavorable action, we find Roadie's Delaware Action anticipatory. Although the first-to-file rule supports transferring to the Middle District of Florida, “the requirements of 28 U.S.C. § 1404(a) must also be met.”[23] We now assess the appropriateness of transferring this case to the Middle District of Florida under 28 U.S.C. § 1404(a).

         C. We transfer this defensive declaratory judgment action to the Middle District of Florida.

         Baggage Airlines and Bags ask us to transfer this action to the Middle District of Florida. We find the parties' private interests and the public interest favors transfer to the Middle District of Florida.

         For the convenience of the parties, we may transfer to “any district or division in which [this action] could have been brought.”[24] In a declaratory judgment action “for patent noninfringement and invalidity, [venue] is governed by the general venue statute, 28 U.S.C. § 1391(b) and (c), and not the special patent infringement venue statute, 28 U.S.C. § 1400(b).”[25] Under § 1391(b), a civil action can be brought: (1) in a district where any defendant resides, if all defendants reside in the same state; (2) where a substantial part of the events or omissions giving rise to the claim occurred; or (3) where a defendant is subject to the court's personal jurisdiction, if no other proper venue exists under (1) or (2).[26] A corporation resides wherever the court has personal jurisdiction over it.[27]

         “[F]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.”[28] Roadie's “choice of venue should not be lightly disturbed.”[29] “[T]he burden of demonstrating that the alternative forum is more appropriate than the current one” rests on the defendant.[30]

         We must “balance both public and private interests to determine whether ‘the litigation would more conveniently proceed and the interest of justice be better served by transfer'” to the Middle District of Florida.[31] Private interests include: the plaintiff's preferred forum “as manifested in the original choice, […] the defendant's preference, […] whether the claim arose elsewhere, […] the convenience of the parties as indicated by their relative physical and financial condition, […] the convenience of witnesses - but only to the extent that the witnesses may actually be unavailable for trial in one of the fora, […] and the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).”[32] Public interests include: “the enforceability of judgment […] practical considerations that could make the trial easy, expeditious, or inexpensive […] the relative administrative difficulty in the two for a resulting from court congestion […] the local interest in deciding local controversies at home […] the public policies of the fora […] and the familiarity of the trial judge with the applicable state law in diversity cases.”[33]

         1. Roadie could have sought declaratory relief in the Middle District of Florida.

         Roadie could have brought the Delaware Action in the Middle District of Florida because Baggage resides in Florida. Baggage Airline is incorporated in Florida and its principal place of business is in Orlando, Florida.[34] Accordingly, we will analyze whether the Jumara factors favor transfer to the Middle District of Florida.

         2. Roadie's preference

         Generally, we defer to the plaintiff's choice of forum and require the defendant “to demonstrate that the interests of justice and convenience weigh strongly in favor of transfer.”[35]But, “[t]he existence of a related action in another district is a sound reason for favoring transfer when venue is proper there, even though the transfer conflicts with the plaintiff's choice of forum.”[36] Because we find Roadie's Delaware Action anticipatory under the first-to-file rule, Roadie's choice of forum in our District is entitled to less deference.

         3. Baggage Airline's forum preference.

         Baggage Airline prefers to litigate in the Middle District of Florida where the Second Florida Action is pending. Typically, a defendant's choice of forum is entitled to less deference compared to the plaintiff's choice. Because Roadie filed the Delaware Action while the Florida Action was still pending in violation of the first-to-file rule, we find Baggage Airline's preference of forum weighs in favor of transfer.[37]

         4. The claim arose in the Middle ...


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