Petition for Writ of Mandamus to the United States District
Court for the Eastern District of Texas in No.
4:17-cv-00620-ALM-KPJ, Judge Amos L. Mazzant, III.
Charles M. McMahon, McDermott Will & Emery LLP, Chicago,
IL, for petitioner. Also represented by Brian Andrew Jones;
Michael S. Nadel, Jay Reiziss, Washington, DC.
Aubrey Richards, Global IP Law Group, Chicago, IL, for
respondent American GNC Corporation. Also represented by
David P. Berten, Alexander J. Debski.
Reyna, Linn, and Hughes, Circuit Judges.
(USA) Inc. ("ZTE USA") petitions for a writ of
mandamus directing the United States District Court for the
Eastern District of Texas to dismiss this case for improper
venue under 28 U.S.C. § 1406(a). See Am. GNC Corp.
v. ZTE Corp., No. 4:17-cv-00620-ALM-KPJ (E.D. Tex. Nov.
7, 2017) ("Denial Order"). American GNC
Corporation ("American GNC") opposes. Because the
district court incorrectly assigned the burden of proof on
venue and failed to fully consider the factors relevant to
the question of whether the call center in question was that
of ZTE USA, we grant the petition to the extent of vacating
the order denying the motion to dismiss and remanding the
motion for reconsideration consistent with this order.
February 2017, American GNC filed a complaint against ZTE USA
and ZTE (TX) Inc. in the Marshall Division of the Eastern
District of Texas alleging infringement of its patents. ZTE
USA filed a motion to dismiss for improper venue under 28
U.S.C. § 1406 and § 1400(b) in April 2017. While
that motion was pending, ZTE USA and ZTE (TX)
sought transfer to the United States District Court for the
Northern District of Texas or the Northern District of
California under 28 U.S.C. § 1404(a).
magistrate judge concluded that venue was proper in the
Eastern District of Texas for purposes of the § 1404(a)
convenience analysis but did not rule on the motion to
dismiss for improper venue under § 1406(a). In September
2017, the case was transferred from the Eastern District of
Texas's Marshall Division to its Sherman Division, and
assigned to a new district court judge and a new magistrate
judge. After supplemental briefing on the issue of improper
venue, the magistrate judge denied ZTE USA's motion to
dismiss for improper venue, finding that ZTE USA failed to
show it did not have a regular and established place of
business in the Eastern District of Texas as required under
the second prong of 28 U.S.C. § 1400(b). See Am. GNC
Corp. v. ZTE Corp., No. 4:17-cv-00620, 2017 WL 5163605
(E.D. Tex. Oct. 4, 2017) ("Magistrate
magistrate judge noted that "courts are not uniform in
their views as to which party bears the burden of proof with
respect to venue, " but, citing Fifth Circuit law,
placed the burden on the objecting defendant to show improper
venue. Id. at *2.
magistrate judge determined that ZTE USA had contracted with
a call center in Plano, Texas, operated by First Contact LLC
(a subsidiary of iQor U.S. Inc.), which constituted a
physical place, and that ZTE USA, through the call center
employees dedicated to ZTE USA calls, transacted business
there. Id. at *3-4. The magistrate judge explained
that "ZTE USA has failed to meet its burden to show it
does not have a regular and established place of business in
the District." Id. at *3.
objections to the magistrate judge's report, ZTE USA
objected to the finding that the call center in Plano, Texas,
established venue, arguing that it is inconsistent with
In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017). ZTE
USA also argued that the magistrate judge erred by placing
the burden of proof on ZTE USA to establish that venue was
not proper. The district court judge disagreed with both
objections and denied ZTE USA's motion to dismiss for
improper venue. ...