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Midwest Athletics and Sports Alliance LLC v. Xerox Corp.

United States District Court, D. Nebraska

December 6, 2018

XEROX CORP., Defendant.


          Robert F. Rossiter, Jr. United States District Judge

         Plaintiff Midwest Athletics and Sports Alliance LLC (“MASA”) is a Delaware limited liability company with its principal place of business in Omaha, Nebraska. On November 3, 2017, MASA acquired 96 patents from Eastman Kodak Company (“Kodak”). Shortly thereafter, MASA separately sued defendants Xerox Corp. (“Xerox”) and Ricoh USA, Inc. (“Ricoh”) in this district, alleging they each infringed many of the patents MASA recently acquired from Kodak.[1] See 35 U.S.C. § 299 (limiting the joinder of accused infringers in patent cases).

         Now pending before the Court are Xerox's Motion to Transfer (Filing No. 57 in 8:17CV478) its case to the Western District of New York and Ricoh's Motion to Transfer (Filing No. 40 in 8:18CV10) its case to the Eastern District of Pennsylvania. See 28 U.S.C. § 1404(a). The magistrate judge[2] issued a findings and recommendation in each case (Filing No. 70 in 8:17CV478 and Filing No. 53 in 8:18CV10) recommending that the transfer motions be granted. MASA has filed a Statement of Objections in each case (Filing No. 71 in 8:17CV478 and Filing No. 54 in 8:18CV10) pursuant to Federal Rule of Civil Procedure 72(b) and Nebraska Civil Rule 72.2. For the reasons stated below, MASA's objections are overruled and the motions to transfer are granted.

         I. BACKGROUND

         Formed on June 23, 2017, MASA is a wholly-owned subsidiary of Midwest Youth A&S, Inc., a Delaware public benefit corporation. See Del. Code Ann. tit. 8, § 362. MASA registered to do business in Nebraska on August 2, 2017. Since then, MASA, through its President, Geoffrey S. Thomas (“Thomas”), has made significant contributions to provide funding and equipment for youth-sport organizations in Omaha. MASA conducts its daily operations in Nebraska and maintains its files and records at its home office in Omaha. MASA does not have any employees or offices outside of Nebraska.

         On December 13, 2017, just months after forming and weeks after acquiring the Kodak patents, MASA sued Xerox (Filing No. 1 in 8:17CV478) for patent infringement in this Court. See 35 U.S.C. § 271(a). With leave, MASA amended its complaint (Filing No. 40 in 8:17CV478) on April 20, 2018, to add factual allegations to support its claims. In support of venue in Nebraska, MASA alleges Xerox “has a regular and established place of business located in” Nebraska; hires employees to work here, “such as Field Service Technicians”; and “has committed acts of patent infringement in Nebraska, and throughout the United States, because it makes, uses, sells, offers for sale and/or imports” infringing products in Nebraska.

         Xerox is a New York corporation with its headquarters in Norwalk, Connecticut. It manufactures and sells office-technology products, such as document systems, copiers, computers, scanners, and printers, worldwide. Though registered in all fifty states, Xerox reports its largest base of employees, including most of its design, engineering, sales and marketing employees, work in and around its offices in Rochester, New York, and Webster, New York. Xerox has specifically identified several New York employees that have relevant knowledge regarding the development and technical aspects of the specific Xerox products MASA alleges infringe on MASA's patents. Xerox further avers that relevant documents identified in the Amended Complaint are located at Xerox's New York offices.

         Xerox also maintains several places of business in Nebraska. Xerox states it has fewer than fifty employees in Nebraska and their activities are limited to sales, marketing, and repair-activities that are not unique to Nebraska and occur in almost every state. According to Xerox, no Xerox employee in Nebraska has any “unique relevant technical knowledge regarding the” allegedly infringing products, and none of those products were developed or manufactured in Nebraska.

         On January 5, 2018, MASA filed a similar patent-infringement suit in this Court against Ricoh (Filing No. 1 in 8:18CV10). In its Amended Complaint (Filing No. 26 in 8:18CV10), MASA again asserts this Court has venue because Ricoh has offices in Nebraska, including “a full service sales dealer, ” and “has committed acts of patent infringement in Nebraska, and throughout the United States, because it makes, uses, sells, offers for sale and/or imports” infringing products in Nebraska.

         Ricoh is an Ohio corporation with its principal place of business and corporate headquarters in Malvern, Pennsylvania. Ricoh states it provides “document management systems, IT services, commercial and industrial printing, digital cameras, and industrial systems.” According to Ricoh, it has some executives at its former headquarters in West Caldwell, New Jersey, and elsewhere, but its “key executives and senior leaders . . . are located in Malvern” and its “strategic planning, supply operations, sales and marketing, managed services, and technical services are run” from there.

         Like Xerox, Ricoh states it has a satellite office in Nebraska but explains its activities in Nebraska are limited to routine sales and customer service. Ricoh states most of its 100 Nebraska employees “are managed services operations employees housed at customer sites.” Ricoh specifically identifies witnesses located in Pennsylvania, New Jersey, Georgia, Ohio, New York, and Colorado that may have knowledge about the patents and products at issue and agreements between Ricoh's corporate parent and Kodak. Ricoh further states it does not develop or manufacture products in Nebraska and avers “there are no Ricoh documents or witnesses with unique information or knowledge relevant to the patent infringement claims at issue located within Nebraska.” Most of Ricoh's product development occurs overseas.

         On May 5, 2018, Xerox moved (Filing No. 57 in 8:17CV478) to transfer its case to “the Western District of New York pursuant to 28 U.S.C. § 1404(a), for the convenience of the parties and witnesses.” Ricoh followed suit on June 22, 2018, requesting transfer (Filing No. 40 in 8:18CV10) to the Eastern District of Pennsylvania on the same grounds. Neither Xerox nor Ricoh claims that venue in this district is improper. Rather, they each argue “the predominance of witnesses, records, and documents necessary for” their respective cases reside within their preferred districts. As a second alternative to Nebraska, Ricoh requests that the Court transfer its case to the Western District of New York, if, and only if, the Court finds transfer to Pennsylvania inappropriate.

         MASA adamantly opposes transfer. As MASA sees it, its choice of venue in Nebraska is entitled to great deference and the efficiency of keeping both cases here requires denying Xerox's and Ricoh's requests for transfer.


         A. Standard of Review

          Xerox's and Ricoh's transfer motions were referred to the magistrate judge pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72. Section 636(b)(1) and Rule 72 establish two types of referral and concomitant “levels of review depending on the scope and significance of the magistrate's decision.” Gomez v. United States, 490 U.S. 858, 871 (1989). Section 636(b)(1)(A) authorizes the Court to

designate a magistrate judge to hear and determine any pretrial matter pending before the court, except a motion for injunctive relief, for judgment on the pleadings, for summary judgment, to dismiss or quash an indictment or information made by the defendant, to suppress evidence in a criminal case, to dismiss or to permit maintenance of a class action, to dismiss for failure to state a claim upon which relief can be granted, and to involuntarily dismiss an action.

         A magistrate judge's rulings on a nondispositive pretrial matter under § 636(b)(1)(A) is subject to review by this Court when the ruling “is clearly erroneous or contrary to law.” See also Fed. R. Civ. P. 72(a).

         With respect to dispositive motions like those excepted in subparagraph (A), the Court may designate a magistrate judge to conduct hearings, if necessary, and submit to the Court “proposed findings of fact and recommendations for the disposition” of the pending motion. 28 U.S.C. § 636(b)(1)(B); see also Fed. R. Civ. P. 72(b). If a party timely objects to the magistrate judge's findings, § 636(b)(1) requires the Court to “make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” See also Fed. R. Civ. P. 72(b).

         Here, the parties dispute whether Xerox's and Ricoh's transfer motions are dispositive, and, in turn, which standard of review should apply. MASA contends the transfer motions are dispositive and thus subject to de novo review. Xerox and Ricoh argue the motions are not dispositive and subject only to review if clearly erroneous or contrary to law. Both positions find some support in the law. Compare In re Howmedica Osteonics Corp, 867 F.3d 390, 398 n.2 (3d Cir. 2017) (noting the magistrate judge “had granted the [defendants' § 1404(a)] transfer motions pursuant to his authority under 28 U.S.C. § 636 and Federal Rule of Civil Procedure 72(a)”), and Koning v. Baisden, No. 4:08CV3087, 2008 WL 4482839, at *3 (D. Neb. Oct. 1, 2008) (explaining a magistrate judge's order denying a §1404(a) transfer motion addressed “a nondispositive pretrial matter within the ambit of 28 U.S.C. § 636(b)(1)(A)”), DietGoal Innovations LLC v. Wegmans Food Markets, Inc., 993 F.Supp.2d 594, 599 (E.D. Va. 2013) (agreeing “with the district courts that routinely treat such motions as nondispositive”), with Payton v. Saginaw Cty. Jail, 743 F.Supp.2d 691, 692-93 (E.D. Mich. 2010) (discussing the split of authority on this issue before deciding a magistrate judge does not have authority to enter a transfer order).

         Although the Court is inclined to agree with the Third Circuit and others that a transfer motion is not dispositive and that a magistrate judge has authority under § 636(b)(1)(A) to rule directly on such a motion, the Court need not pick sides today. The magistrate judge in this case did not directly rule on Xerox's and Ricoh's transfer motions and issue an order subject to review under § 636(b)(1)(A) and Rule 72(a). She made findings and a recommendation in each case subject to review upon objection under § 636(b)(1)(B) and Rule 72(b). And even under the more-stringent de novo standard MASA requests, the Court finds MASA's objections should be overruled and the transfer motions should be granted as the magistrate judge recommends.

         B. Transfer of Venue under 28 U.S.C. § 1404(a)

         As noted above, Xerox and Ricoh have each moved to transfer their respective patent cases pursuant to 28 U.S.C. § 1404(a) to districts that are home to their key offices. Under § 1404(a), this Court has broad discretion to transfer a case “to any other district . . . where it might have been brought” if the transferee district is more convenient for the parties and witnesses or if transfer is “in the interest of justice.” See, e.g., Steen v. Murray, 770 F.3d 698, 702 (8th Cir. 2014). MASA does not dispute that these cases could have been brought in Xerox's and Ricoh's preferred districts, se ...

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