Opinion ID: 3027229
Heading Depth: 2
Heading Rank: 3

Heading: Supreme Court and Courts of Appeals

Text: Precedent The Goldlawr Court distinguished between transfers and 7 Proponents of this view argue that if a suit is filed in the wrong district, then transferred pursuant to § 1406, the limitations statute of the transferee forum should apply as if the suit were initiated there on the date it was transferred in order to prevent plaintiffs from forum-shopping. However, while forumshopping is a concern “where parties purposely file an action in a district with improper venue simply to take advantage of the forum’s longer statute of limitations,” Richard Maloy, Forum Shopping? What’s Wrong with That?, 24 Quinnipiac L. Rev. 25, 48 (2005), here the limitations period in either jurisdiction is two years. Thus, we need not fear the specter of forumshopping that might appear if our holding allowed plaintiffs to file in any federal forum in bad faith. Moreover, there is no allegation of bad faith here. 13 dismissals under § 1406(a). The problem which gave rise to the enactment of [§ 1406(a)] was that of avoiding the injustice which had often resulted to plaintiffs from dismissal of their actions merely because they had made an erroneous guess with regard to the existence of some elusive fact of the kind upon which venue provisions often turn. . . . [D]ismissal here would have resulted in plaintiff’s losing a substantial part of its cause of action under the statute of limitations merely because it made a mistake in thinking that the respondent corporations could be “found” or that they “transact . . . business” in the Eastern District of Pennsylvania. . . . The language of § 1406(a) is amply broad enough to authorize the transfer of cases, however wrong the plaintiff may have been in filing his case as to venue . . . . 14 If by reason of the uncertainties of proper venue a mistake is made, Congress, by enactment of § 1406(a), recognized that “the interest of justice” may require that the complaint not be dismissed but rather that it be transferred in order that the plaintiff not be penalized by . . . “time-consuming and justice-defeating technicalities.” 369 U.S. at 466–67 (emphasis added) (citations omitted).8 Goldlawr’s discussion of § 1406(a) acknowledges that dismissals will bar actions that are not refiled in the proper forum within the forum state’s statute of limitations. By contrast, transfers, “‘in the interest of justice,’” “remov[e] whatever obstacles [that] may impede an expeditious and orderly adjudication of cases and controversies on their merits.” 8 The Supreme Court recently affirmed the principles set forth in Goldlawr in the context of convenience transfers. It noted that Congress codified the doctrine of forum non conveniens in §§ 1404(a) and 1406(a), and “has provided for transfer, rather than dismissal,” when a transferee venue is the “more convenient place for trial of the action.” Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. __, 127 S. Ct. 1184, 1190–91 (2007) (citing, inter alia, Goldlawr, 369 U.S. at 466). 15 Id. at 466–67 (quoting 28 U.S.C. § 1406(a)).9 Goldlawr establishes the following: (1) the provision is designed to preserve claims that rigid application of dismissal rules may bar; (2) § 1406(a) transfers do not require that prejudice should result from filing an action in an improper forum if the initial filing was made in good faith; and (3) the filing itself of a lawsuit, even in an improper forum, “shows the proper diligence on the part of the plaintiff which such statutes of limitation were intended to insure,” and “toll[s] whatever statutes of limitation would otherwise apply.” 369 U.S. at 466–67. We affirmed these Goldlawr principles in Carteret Sav. Bank, F.A. v. Shushan when we noted that “section 1406(a) is read broadly so that a plaintiff properly laying venue but unable to proceed in the transferor court because of jurisdictional problems does not lose its day in court by reason of the running of the statute of limitations in another forum.” 919 F.2d 225, 228, 231–32 (3d Cir. 1990). But the question presented in Shushan was different than the one here, for there we considered whether a district court could transfer under § 1406(a) over a 9 In its comparison of these venue-transfer provisions two years after the Goldlawr decision, the Supreme Court maintained the distinction between transfers and dismissals by reiterating that “both sections were broadly designed to allow transfer instead of dismissal.” Van Dusen, 376 U.S. at 633–34. 16 plaintiff’s objections an action where venue was proper. We concluded that it could not because, even though we read § 1406(a) broadly, we do not allow courts to force transfers “in the interest of justice” where venue was otherwise proper. Id. at 232, 233. Relevant to the question before us today is that Shushan acknowledged that were the § 1406(a) transfer permissible, the plaintiff would not have “los[t] its day in court by reason of the running of the statute of limitations in another forum.” Id. at 231–32. Prior to Shushan, in United States v. Berkowitz, 328 F.2d 358 (3d Cir. 1964), we recognized implicitly a distinction between transfers and dismissals under §§ 1404(a) and 1406(a). In Berkowitz, the Government filed in the Eastern District of Pennsylvania (where it alleged the tax liability arose) a civil action against Morton Berkowitz to recover back taxes. Id. at 359. He filed a motion to dismiss the action on the ground that the Eastern District of Pennsylvania Court had no personal jurisdiction, as he had abandoned his Pennsylvania residence and become a New York citizen by the time the action was filed. Id. Because the New York limitations period had expired by this time, the Government requested that the Eastern District of Pennsylvania Court transfer the action to the Eastern District of New York rather than dismiss it. Id. Concluding that it was without power to transfer under § 1404(a) because it had not acquired personal jurisdiction over Berkowitz, and that it could not transfer under § 1406(a) because venue was proper (as the tax liability arose in Pennsylvania), the Eastern District of 17 Pennsylvania Court denied the transfer request and dismissed the action. Id. We reversed, holding that a § 1404(a) transfer was available even though there was no personal jurisdiction. Our decision was an extension of the Goldlawr rule, which allowed venue transfers under § 1406 in the absence of jurisdiction, to § 1404(a) transfers. Id. at 360. In doing so, we acknowledged the difference between transfers and dismissals noted in Goldlawr. In Young v. Clantech, Inc., we also recognized an implicit distinction between dismissals and transfers. 863 F.2d 300 (3d Cir. 1988). We addressed the timeliness of a wrongful death action brought against a New Jersey company on behalf of James Young, who was killed in an industrial accident in Canada in August 1983. His wife filed suit in a Michigan state court in August 1985, two weeks shy of the two-year limitations statute. The Michigan state court dismissed the action for lack of personal jurisdiction, and the wife re-filed in federal court (the District of Washington) in August 1986, almost a year after the Michigan dismissal and far outside the limitations window. The District of Washington Court transferred the action to the District of New Jersey immediately because it lacked personal jurisdiction and also because of forum non conveniens.10 Approximately two years later, in May 1988, the New Jersey 10 Our Court did not, however, specify which statute was used for the transfer; presumably the District Court used § 1406(a). 18 District Court dismissed the case as untimely. We affirmed, holding that “the [timely] filing of a case against a defendant in a court which did not have jurisdiction over the action tolled [the transferee court’s] statute of limitations only if the court in which the case was originally filed had authority to transfer the case to the proper court.” Id. at 301. Because the Michigan state court in which the case initially was filed dismissed, rather than transferred, the action, there was no equitable tolling. Id. Moreover, although the federal court in which the case was filed following the dismissal (the District Court of Washington) transferred the action to a third court (the District Court of New Jersey), the action had been refiled almost a year outside of New Jersey’s two-year statute of limitations,11 and therefore was untimely. In implying that it would have permitted the use of a transfer to overcome potential timeliness bars in the transferee state had the Washington action been timely filed in the transferor state (which did not occur because the action in the Michigan state court was dismissed), the Young Court’s reasoning appears to follow our recognition in Berkowitz of the difference between transfers and dismissals set out in Goldlawr. Our sister Courts of Appeals have split on the general question of how to treat limitations issues in cases transferred 11 The parties in Young did not dispute the District Court’s conclusions that New Jersey law, under which the statute of limitations is two years, governed their case. Young, 863 F.2d at 301. 19 under § 1406(a). The Eighth Circuit Court of Appeals applies the limitations statute of the transferor court in such a transfer. Mayo Clinic v. Kaiser, 383 F.2d 653, 656 (8th Cir. 1967) (“[Under] Goldlawr . . . [,] the purpose for making transfers would be obliterated in many cases if the statute of limitations of the transferee forum were applied at the date of transfer, and that if such were the rule there would be little purpose in transferring the case instead of dismissing it.”). The Fourth, Seventh, and Eleventh Circuit Courts apply the limitations statute of the transferee court, viewing the date of the transfer as the initial filing date for limitations calculations. See LaVay Corp. v. Dominion Fed. Sav. & Loan Ass’n, 830 F.2d 522, 526 (4th Cir. 1987) (to avoid forum-shopping); Geehan v. Monahan, 382 F.2d 111, 114 (7th Cir. 1967) (upon agreement of counsel for both sides); Manley v. Engram, 755 F.2d 1463, 1467 (11th Cir. 1985) (regardless which party requested transfer). The other Courts of Appeals that have considered this issue—the Second, Fifth, and Sixth—seem to have once applied the laws of the transferor forum, but their latest decisions require courts to apply the transferee forum’s rules, without specific reference to the calculation of a limitations statute upon a transfer. In the Second Circuit, compare Schaeffer v. Village of Ossining, 58 F.3d 48, 50 (2d Cir. 1995) (“Following a § 1406(a) transfer, . . . ‘the transferee court should apply whatever law it would have applied had the action been properly commenced there.’”) (citations omitted), with Corke v. Sameiet M.S. Song of Norway, 572 F.2d 77, 79–80 (2d Cir. 1978) (dismissal and 20 refiling would bar the action with great prejudice to the plaintiffs). In the Fifth Circuit, compare Jackson v. West Telemarketing Corp. Outbound, 245 F.3d 518, 523 (5th Cir. 2001) (“[F]ollowing a section 1406(a) transfer . . . [,] the transferee court must apply the choice of law rules of the state in which it sits.”) (quoting Ellis v. Great Southwestern Corp., 646 F.2d 1099, 1110 (5th Cir. 1981)), with Dubin v. United States, 380 F.2d 813, 814, 816 (5th Cir. 1967) (action filed in improper forum and subsequently transferred to proper venue under § 1406(a) was timely even though the statute of limitations in the transferee forum had expired). In the Sixth Circuit, compare Flynn v. Greg Anthony Constr. Co., 95 Fed. Appx. 726, 732 n.5 (6th Cir. 2003) (“[A]s a general rule the law of the transferee court applies after a § 1406 transfer . . . .”), with Taylor v. Love, 415 F.2d 1118, 1120 (6th Cir. 1969) (affirming the validity and timeliness of filing suit in the improper forum and then transferring it to a proper forum, even if the suit was filed initially “just to stop the running of the statute of limitations [in the transferee forum]”). To repeat, the question before us does not necessarily turn on whether the laws of the transferor or transferee forum apply, as the ordinary rule is that, following transfers, the transferee forum’s substantive laws apply. See supra, at 10–11 (citing Moore’s Federal Practice, supra, §§ 111.02, 111.38; Wright, Miller & Cooper, supra, § 3827 at 581 n.22). Instead, we address which date should be considered the filing date for purposes of limitations calculations: the date of initial filing in 21 the transferor forum or the date of transfer to or docketing in the transferee forum. In our view, the sounder interpretation is that the transferee forum’s limitations statute applies and the date of the initial filing in the improper forum counts as the date of the filing in the transferee forum for limitations purposes when the case is transferred rather than dismissed under § 1406(a). Thus, the initial complaint filed here within the transferee forum’s limitations period is timely. This interpretation accords with the Supreme Court’s treatment of § 1406(a) transfers in Goldlawr, as well as its discussions of other transfers in Van Dusen, Ferens, and Sinochem. It also accords with our Court’s decision in Shushan, which mentioned the statute of limitations issue, as well as our decisions in Berkowitz and Young, which touched on the difference between dismissals and transfers. This interpretation finds additional support in the common canon of statutory construction that similar statutes are to be construed similarly (also known by its Latin label of in pari materia). See, e.g., Wachovia Bank v. Schmidt, 546 U.S. 303, 126 S. Ct. 941, 943–44 (2006) (“[U]nder the in pari materia canon, statutes addressing the same subject matter generally should be read ‘as if they were one law.’”) (citations omitted); Cook v. Wikler, 320 F.3d 431, 434 (3d Cir. 2003) (applying the in pari materia canon).12 In this regard, our 12 Although §§ 1404(a) and 1406(a) address different situations, the doctrine of in pari materia nevertheless applies because both provisions deal with venue. 22 interpretation today parallels the treatment of transfers pursuant to 28 U.S.C. § 1631 (“Transfer to cure want of jurisdiction”), which states as follows: Whenever a civil action is filed in a court . . . or an appeal, including a petition for review of administrative action, is noticed for or filed with such a court and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was actually filed in or noticed for the court from which it is transferred. (emphasis added); see Nelson v. Int’l Paint Co., 716 F.2d 640, 643 n.3 (9th Cir. 1983) (“For cases transferred for lack of jurisdiction in the transferor court after October 1, 1982, 28 U.S.C. § 1631[] provides that the action ‘shall proceed as if it had been filed in . . . the court to which it is transferred . . . .’”) 23 (footnote omitted). Accordingly, we conclude that filing a complaint (otherwise proper) in a “wrong division or district” does not make the complaint disappear, only to appear anew when it is transferred to a proper forum.13 When a judge elects to transfer 13 We note that there is disagreement on the usage of “wrong” to describe venue or jurisdictional issues that may give rise to § 1406(a) transfers. Wright & Miller criticize judicial statements that “venue is ‘wrong’” when referring to an absence of personal jurisdiction over the defendant, as that “blurs the very different concepts of venue and personal jurisdiction.” Wright, Miller, & Cooper, supra, § 3827. In contrast, Moore says that “the concepts of venue and personal jurisdiction [have become] essentially coextensive,” and therefore, venue can be “technically proper” when “it complies with the applicable venue statute” but “wrong” when there is “some other procedural obstacle in the original court, such as a lack of personal jurisdiction over the defendant.” Moore’s Federal Practice, supra, § 111.02. These differences do not affect our case, as there is no issue of personal jurisdiction here. Moreover, Goldlawr clarified that courts may use § 1406(a) to transfer cases involving defendants over whom they lack personal jurisdiction. Here, we use “wrong” district or “improper” venue simply to refer to any impediment to deciding the case on the merits, and without pejorative connotations. See, e.g., Dubin, 380 F.2d at 815 (“Looking to the language of § 1406, the statute is couched in terms of ‘laying venue in the wrong division or 24 rather than dismiss a case filed in an improper forum, he elects to allow parties to preserve their claim “in the interest of justice.” Thus, when cases, timely filed in an improper forum within the limitations periods of the transferor and transferee forums, are transferred rather than dismissed pursuant to § 1406(a), the date of filing is the initial filing date in the transferor forum, even if the case is not docketed in the new forum until after the limitations period there has run. In arriving at a contrary conclusion, the District Court pointed to our statement in Overfield v. Pennroad Corp. that “[i]f the action is barred by a Pennsylvania statute of limitations, no action can be maintained in Pennsylvania even though the action is not barred elsewhere.” Lafferty, 397 F. Supp. 2d at 605 (quoting Overfield, 146 F.2d 889, 898 (3d Cir. 1944)). Overfield, however, did not involve a § 1406(a) transfer. Moreover, it was decided before the Supreme Court clarified the distinction between transfers and dismissals under § 1406(a) in Goldlawr. district.’ The statute does not refer to ‘wrong’ venue, but rather to venue laid in a ‘wrong division or district.’ We conclude that a district is ‘wrong’ within the meaning of § 1406(a) whenever there exists an ‘obstacle [to] . . . an expeditious and orderly adjudication’ on the merits.”); see also Porter v. Groat, 840 F.2d 255, 257 (4th Cir. 1988) (“‘[W]rong division or district’ . . . mean[s] an impediment to a decision on the merits for some reason other than a mere lack of venue.”). 25 The District Court also relied on our statement in Weaver v. Marine Bank that “in the context of diversity jurisdiction, . . . a state statute that bars a person from utilizing a state court likewise precludes suit in the federal court.” 683 F.2d 744, 747 n.2 (3d Cir.), rev’d on other grounds, 455 U.S. 551 (1982). The case involved a state enabling statute by which federal courts transferred claims to state courts. Id. at 747 (“The question presented . . . is whether the district court, once having acquired jurisdiction, can transfer the matter to a state court by virtue of a state enabling statute. We are persuaded that it can.”). Where parties improperly filed in federal courts, Weaver required those courts to transfer claims to state courts rather than dismiss them. 683 F.3d at 745. Contrary to the District Court’s conclusion here, Weaver did not condition the transfer requirement on an initial filing according to Pennsylvania rules. Id.; cf. Lafferty, 397 F. Supp. 2d at 607 (“[T]he statute of limitations for an action governed by Pennsylvania law is not tolled until it is commenced, that is, filed [under those rules].”). Moreover, it is not controlling because the issue here is not a federal-to-state transfer via a state enabling statute but a federal-to-federal transfer via § 1406(a). Finally, the District Court reasoned that Pennsylvania law, 42 Pa. Cons. Stat. Ann. §§ 5103(a), b(1), bars this claim because “this action was not commenced, that is filed, within the relevant two-year limitations period in a Pennsylvania state court or in a federal court for a district embracing any part of the Commonwealth.” 397 F. Supp. 2d at 609. However, § 5103 26 does not apply to this claim because it governs transfers from state and federal courts sitting within the Commonwealth, not transfers from courts sitting outside the Commonwealth. Subsection (a) requires state courts to treat cases transferred from other state courts “as if originally filed in the transferee court . . . on the date when first filed in the other tribunal [i.e., the transferor state court].” Subsection (b) applies the previous provision to federal courts within the Commonwealth and lays out provisions for “transfer[ring]” (read: refiling) cases that the federal court has dismissed for lack of jurisdiction. Id. These provisions are not applicable here because the District Court in New Jersey sits outside the Commonwealth. As § 5103 is silent about the situation before us, these claims are instead governed by the ordinary rule that Pennsylvania’s limitations period here is two years.14 14 The fact that Pennsylvania procedure requires hand delivery to the defendant and filing with a prothonotary of a Commonwealth court if the action were filed within the Commonwealth, Pa. R. Civ. P. Rules 402, 1007, does not change this outcome. Service of process in a diversity case must accord with federal rules, even when state rules of a transferee court require “delivery in hand,” as they do here. Hanna v. Plumer, 380 U.S. 460, 468 (1965). Rule 3 of the Federal Rules of Civil Procedure states that “a civil action is commenced by filing a complaint with the court,” and Rule 4(d)(2), which lays out the rules for perfecting service, permits mail delivery. These rules “do[] not affect state statutes of limitations.” Walker v. Armco Steel Corp., 446 U.S. 740, 751 (1980) (Rule 3); Hanna, 27 380 U.S. at 468 (Rule 4). Thus, so long as the Laffertys perfected service of process in the New Jersey District Court according to the Federal Rules—and there is no allegation that they did not—the action indeed “commenced” (that is, it was filed) in a timely fashion. Thus, we disagree with the District Court that “the initial filing in the District of New Jersey . . . did not constitute a ‘commencement of an action’ under Pennsylvania law,” as § 5103 does not apply to actions filed in forums outside the Commonwealth. Because the Laffertys filed their diversity action in the District of New Jersey within Pennsylvania’s limitations statute, which neither § 5103 nor Rule 3 affects for actions initiated in a forum outside of the Commonwealth, and then transferred that action to a forum within the Commonwealth, the filing was timely. The rationale for this holding was explained by Hanna: To hold that a Federal Rule of Civil Procedure must cease to function whenever it alters the mode of enforcing state-created rights would be to disembowel either the Constitution’s grant of power over federal procedure or Congress’ attempt to exercise that power in the Enabling Act [28 U.S.C. § 2072]. Id. at 473–74. Furthermore, Erie’s “‘outcome-determination’ test . . . cannot be read without reference to the twin aims of the Erie rule: discouragement of forum shopping and avoidance of 28 Even if § 5103 did apply, the claim we decide would be preserved. Its provisions would require the Eastern District of Pennsylvania Court to consider this case as if it were initially filed there on the date when first filed in the District of New Jersey Court, particularly where, as here, the case has not been dismissed and thus is not subject to the refiling requirements. Perhaps any confusion over whether the transfer in this case would survive the restrictions imposed in subsection (b) is because this clause seems to use “transfer” to mean “refile” when it addresses how litigants may pursue their cases in state court after a dismissal by a federal court for lack of jurisdiction. See 42 Pa. Cons. Stat. Ann. § 5103(b) (“Where a matter is filed in any United States court for a district embracing any part of this Commonwealth and the matter is dismissed by the United States court for lack of jurisdiction, any litigant in the matter filed may transfer the matter to a court or magisterial district of this Commonwealth by complying with the transfer provisions set forth . . . [below].”) (emphases added)). Under subsection (b), such an action would be untimely only if it were dismissed and subsequently refiled out of time. Here, however, we have inequitable administration of the laws.” Id. at 458; see also Ferens v. John Deere Co., 494 U.S. 516, 524 (1990) (explaining the Erie rule to intend that actions in state and federal courts involving the same transaction or accident “should not lead to a substantially different result”). 29 no such a dismissal and refiling. Thus, were § 5103 to apply, the Pennsylvania Eastern District Court would need to proceed under subsection (a), in which case it would consider the filing date in the New Jersey District Court as if it were the initial filing date in the Pennsylvania Eastern District Court. Because the case was timely filed in the New Jersey District Court, it would also be timely under § 5103 after transfer to the Pennsylvania Eastern District Court. In short, neither Overview nor Weaver compels a contrary result because they were not decided with respect to § 1406(a) transfers. Pennsylvania law is not dispositive because it does not address issues of transfer from outside the Commonwealth. To determine the timeliness of cases transferred under § 1406(a) from a district court in New Jersey to a district court in Pennsylvania, we look to Goldlawr and cases from our Court interpreting that provision.