Determining Proper Venue in Civil Actions




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Determining Proper Venue in Civil Actions

Debates over the question, “Is this the proper venue?” can arise in all sorts of civil actions. For example, Major League Baseball, a defendant in umpire Angel Hernandez’s racial discrimination lawsuit, recently filed a motion to dismiss, claiming that Cincinnati, Ohio is an improper district to litigate the claim.[1] Until May 2017, plaintiffs routinely filed patent infringement lawsuits in the United States District Court for the Eastern District of Texas because they believed this district had patentee-friendly juries, judges, and procedures, while defendant corporations argued that Tyler, Texas was an improper venue.[2]

Although a court in a given federal district may have subject matter jurisdiction to adjudicate the dispute’s content and may have personal jurisdiction over the disputing parties, it may still decide to not hear the case because it is not the proper venue. Determining proper venue is an exercise in geography. Some states, like Nebraska, only have one federal district which would serve as the venue in all federal cases brought in the state, while other states, like California, can have as many as four federal districts, any of which could be a proper venue depending on the facts of a federal case.[3]

We will explore the federal venue statute, 28 U.S.C § 1391, and will discuss how to discover where a federal civil action may be brought. Additionally, the presentation will differentiate venue from jurisdiction and will tackle the key components of the venue statute.

How does venue differ from jurisdiction?

            Venue and jurisdiction are separate concepts. Just because a plaintiff files a case in the correct venue does not mean that the court has jurisdiction over the parties or the subject matter, and vice versa.

Jurisdiction refers to a federal court’s “power to adjudicate.”[4] Venue doesn’t deal with that. Venue rules determine where litigation may take place with greater precision than that of jurisdiction. [5] Personal jurisdiction deals with whether it’s proper to hail a defendant before any court in a specific state, while determining venue deals with whether it’s proper to hail a defendant before a specific district court in a state with multiple districts or in a given county in a state court proceeding.[6]

For example, federal courts in Texas may have personal jurisdiction over a resident of Houston. The proper venue, though, would be the United States District Court for the Southern District of Texas, which covers Houston.

 28 U.S. Code § 1391

The federal courts’ venue statute is designed to protect the defendant against the risk that a plaintiff will select an inconvenient, or even arbitrary, district to pursue a lawsuit.[7] It provides that venue in civil actions is proper in any of the following:[8]

(1)  a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;

(2)  a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or

(3)  if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to such action.

How is “residence” defined?

§1391(c) clarifies what is meant by “residence” for purposes of §1391(b)(1) for individuals, business entities and nonresidents of the United States.

An individual is deemed to reside in the judicial district in which that person is domiciled, which means the location of his permanent place of dwelling. A business entity defendant resides in any judicial district in which it is subject to the court’s personal jurisdiction. This has wide-ranging ramifications for a business that conducts commercial activities across the United States, because it becomes foreseeable for a business to litigate in many regions.

How do courts approach “substantial part” as provided in (b)(2)? 

In determining where a “substantial part” of the claim occurred, courts will not merely look at the single triggering event prompting the action, but rather at the entire sequence of events underlying the claim.[9] In Henderson v. Laser Spine Inst. LLC, the federal court in the District of Maine held that it was the proper venue for a dispute over fraud, negligence, and intentional infliction of emotional distress. The court looked at how the defendant company had years of contact with the plaintiff in the state of Maine prior to his filing a lawsuit and determined that this was sufficient contact with Maine even if some of the alleged actions occurred elsewhere.[10]

The Fallback Venue Provision

If neither §1391(b)(1) or §1391(b)(2) are satisfied, then the fallback provision, §1391(b)(3), kicks in and courts will deem venue appropriate in any judicial district where any defendant is subject to personal jurisdiction.[11] A plaintiff will typically look to this provision to satisfy venue when defendants are domiciled in different districts, when the defendant is not a United States resident or when the events leading to the civil action occurred outside of the United States. Courts apply §1391(b)(3) stringently, meaning the plaintiff must still prove that there is personal jurisdiction over a defendant in a given district. This ensures that a plaintiff brings his action in the district which makes the most sense for the defendant.

A 1997 case, Dee-K Enterprises v. Heveafil, illustrates the fallback provision in action. Two American manufactures sued a number of Malaysian, Indonesian, and Thai companies, alleging an international conspiracy to restrain trade for rubber products.[12] The plaintiff filed the suit in the Eastern District of Virginia and argued that venue was proper because the defendant had several Virginia-related contacts. The court disagreed and reasoned that while the defendants had sufficient contacts to justify personal jurisdiction in Virginia because the foreign companies had sold its products in Virginia and had interacted with Virginia customers, these contacts were with cities and towns in the Western, not the Eastern, District. As a result, venue was only proper in the Western District because that’s where the defendant was subject to the court’s personal jurisdiction.

Richard Broude, a highly respected bankruptcy attorney, once wrote, “Jurisdiction is about power; venue is about location.[13] This may be a tad simplistic, but determining the proper venue is just as important as establishing a court’s jurisdiction. A case filed in an improper venue faces the threat of being dismissed or transferred.


Footnotes:

[3] John Lenich, “A Simple Question That Isn’t So Simple: Where Do Entities Reside For Venue Purposes?,” 84 Miss. L.J. 253, (2015).

[4] Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, (1939).

[5] Mitchell Page, “After the Judicial Improvements Act of 1990: Does the General Federal Venue Statute Survive as a Protection for Defendants?,” 74 U. Colo. L. Rev. 1153, (2003).

[6] Id.

[7] Leroy v. Great W. United Corp., 443 U.S. 173, (1979).

[8] 28 U.S. Code § 1391.

[9] Henderson v. Laser Spine Inst. LLC, 815 F. Supp. 2d 353, (2011).

[10] Id.  

[11] Jonathan Segal, “Federal Courts Jurisdiction and Venue Clarification Act of 2011,” 36 AK Bar Rag 16, (2012).

[12] Dee-K Enters. v. Heveafil SDN. Bhd., 982 F. Supp. 1138, (1997).

[13] Richard F. Broude, “Jurisdiction and Venue Under the Bankruptcy Act of 1973,” 48 Am. Bankr. L.J. 231, (1974).