Court Opinion

ID: 9961163
Source: CourtListenerOpinion
Date Created: 2024-04-18 00:01:10.579073+00
Date Added: 2024-06-11T08:20:21.298810
License: Public Domain

Case: 24-40103 Document: 111-1 Page:1 Date Filed: 04/17/2024

GQnited States Court of Appeals

fo r th er Fitth Circuit United States Cour of Appeals
FILED
April 17, 2024

No, 24-40103 Lyle W. Cayce
Clerk

IN RE SPACE EXPLORATION TECHNOLOGIES, CORPORATION,

Petitioner.

Petition for a Writ of Mandamus
to the United States District Court
for the Southern District of Texas

USDC No. 1:24-CV-1

ON PETITION FOR REHEARING EN BANC
PUBLISHED ORDER

Before ELROD, HAYNES, and DOUGLAS, Circuit Judges.

PER CURIAM:

Treating the petition for rehearing en banc as a motion for
reconsideration (STH Cir. R. 35 I.0.P.), the motion for reconsideration
is DENIED. The petition for rehearing en banc is DENIED because, at
the request of one of its members, the court was polled, and a majority did
not vote in favor of rehearing (FED. R. App. P. 35 and 5TH Cir. R. 35).

In the en banc poll, eight judges voted in favor of rehearing (Chief
Judge Richman and Judges Jones, Smith, Elrod, Willett, Duncan,
Engelhardt, and Oldham), and eight judges voted against rehearing (Judges
Stewart, Southwick, Haynes, Graves, Higginson, Wilson, Douglas, and

Ramirez).

* Judge James C. Ho did not participate in the consideration of the rehearing en

banc.
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No, 24-40103

By EpITH HOLLAN JONES, SMITH, ELROD, DUNCAN,
ENGELHARDT, and OLDHAM, dissenting from denial of rehearing en

banc:

It is hard to improve on Judge Elrod’s dissent from the single-line
panel order transferring this case to the Central District of California. For
all the reasons stated therein, mandamus ought to have been granted by the

panel. Therefore, I attach her opinion and add a few points.

I.

28 U.S.C. §1391(b)(2) authorizes a plaintiff to sue in any federal

judicial district where a “substantial part of the events or omissions giving

rise to the claim occurred.” Jd. In identical language, 28 U.S.C.
§ 1391(e)(1)(B) authorizes a plaintiff to sue an agency of the federal
government in any federal judicial district where “a substantial part of the
events or omissions giving rise to the claim occurred.” This language is
identical for at least two reasons. First, it provides plaintiffs with a broad
range of venue choices in federal court.’ Second, it places suits against the
federal government, a defendant with limitless litigating resources, on a par

with those against private defendants.

Unfortunately, the district court’s transfer order, based on the theory
that venue in the Southern District of Texas was improper,’ contravenes
both rationales. First, it erroneously denied SpaceX as plaintiff its choice of
forum to litigate about alleged unfair labor practices that, if sanctioned, will
govern its relations with hundreds of Texas and thousands of nationwide

employees. Second, it misapplied the term “substantial part,” crafting a

’ As Judge Elrod’s dissent explains, Congress amended Section 1391 in 1990 to
substitute this broader language for the former limitation of venue to where “the cause of
action arose.” Jn re Space Expl. Techs., Corp., 96 F.4th 733 (5th Cir. 2024) (Elrod, J.,
dissenting).

2 28 U.S.C. § 1406(a).

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comparative test that no federal court would use were this a case against
private defendants. A simple hypothetical suffices. If a California airline
passenger claimed injury from a plane crash over Nevada and sued five
defendants (the airline, the plane manufacturer, two component
manufacturers, and a maintenance facility) in another venue distinguishable
from all others solely because one of the defendants manufactured rivets in
that venue, would any court find that allegedly defective rivets could not be
“a substantial part” of the claim?

That is the problem with this case that justified the “extraordinary”
writ of mandamus to overturn the district court’s erroneous transfer
decision. The decision’s comparative approach to “substantiality” either
grossly privileges federal defendants over civil defendants or, equally
troubling, provides fodder for endless jockeying in cases where private
defendants will try to use a comparative “substantial part” analysis to assert

improper venue or just prolong the litigation.

Either way, “a substantial part” cannot be construed textually to
mean “more” or “most substantial,’ as the district court’s analysis
repeatedly suggests. “Substantial” is a qualitative, not a comparative term.
One dictionary definition uses the terms “of real importance,” “of
considerable amount,” “having substance, not illusory.” Substantial,
LITTLE OXFORD DICTIONARY (6th ed. 1990). For further exegesis,
antonyms for “substantial” include “insubstantial” (of course), “little,”
“minor,” “slight,” “negligible,” “insignificant.” Substantial, MERRIAM-
WEBSTER THESAURUS, https://www.merriam-
webster.com/thesaurus/substantial (last visited Apr. 11, 2024). Not to be
“substantial,” therefore, means to be a little, minor, slight, etc. part of “the

events or omissions giving rise to the claim.”

Based on the text of Sections 1391(b)(2) and 1391(e)(1)(B), the

district court’s comparative, even quantitative approach to venue was
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plainly incorrect... As Judge Elrod’s dissent explains, SpaceX has large and
important operations in the Southern District of Texas. The remedy sought
by NLRB would regulate all SpaceX’s Texas employees. The conduct
forming the basis of NLRB’s complaint intentionally included employees in
this district. And the Charging Parties’ Open Letter that generated the
complaint was received by all and responded to by some 200 Texas
employees, and it disrupted SpaceX’s operations in the Southern District.
These operative facts are “substantial” under the statute. Returning to the
comparison with litigation against private defendants, what court would
hold venue “improper” by finding the rivets to be “small” or “few in
number” compared with the allegations that other components contributed
to the crash, or “not enough on their own compared with other alleged
factors”? A comparative analysis like that employed by the district court is
at odds with the proposition that “[i]t has always been clear that there can
be more than one district in which a substantial part of the events giving rise
to the claim occurred.” 14D C. Wright, A. Miller, & R. Freer, FEDERAL
PRACTICE AND PROCEDURE § 3806 (4th ed. 2023).

This comparative interpretation will inevitably affect ordinary civil
litigation by incentivizing otherwise unlikely 1406(a) motions and some
erroneous transfer orders. However, its detriment in litigation against
federal agencies is hard to underestimate. Where companies with
geographically widespread operations seek to challenge regulations or

agency actions, an agency may now compare the “substantiality” of the

regulations’ or actions’ effect in the company’s chosen venue against effects

in other venues. In many cases, the default venue, from the agency’s
perspective, would be the District of Columbia. To the extent such

2 The court calculated that“one-sixth” of the relevant events allegedly occurred_—__

in Texas, and this was “insubstantial in number.” Even if this were an accurate
calculation, which is dubious, “one sixth” is not “insubstantial” as explained by other
antonyms of “substantial” according to the above authorities.

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maneuvers succeeded, they would wholly undercut the expansive text—and
purpose—of Section 1391(e)(1)(B).* That the government’s litigation
resources are virtually limitless compared with those of private citizens and
entities adds to the problematic nature of a decision that facilitates

government motions for_changes of venue under this provision.
Il.

That mandamus is warranted under this court’s precedents is well
demonstrated in Judge Elrod’s dissent. Legally, this court is bound to
correct manifest errors of law regarding venue transfers. See In re Clarke, 94
F.4th 502, 516 (5th Cir. 2024); In re Volkswagen of Am., Inc., 545 F.3d 304,

319 (5th Cir. 2008) (en banc). Indeed, our court has-censistenth-held that
mandamus relief in venue transfer cases is “particularh—apprepriate-when

the issues also have an importance beyond the immediate case.” Jn re
Volkswagen, 545 F.3d at 319; see also In re Clarke, 94 F.4th at 516 (same); Jn re
TikTok, Inc., 85 F.4th 352, 367 (5th Cir. 2023) (same); Defense Distributed v.
Bruck, 30 F.4th 414, 426 (5th Cir. 2022) (same). For instance, in Clarke, we
exercised discretion to grant mandamus because venue transfer decisions
“often have importance beyond the immediate case because [they] are rarely
reviewed, and district courts have applied our tests with too little regard for

consistency of outcomes.” 94 F.4th at 516 (citation and quotations omitted).

The present controversy represents a scenario likely to have
significant consequences in this circuit. The district court’s decision, for
instance, conflicts with cases in which courts in this circuit have held that
venue is proper against a federal agency where (1) the plaintiff has a
significant presence in the forum; and (2) the plaintiff is subject to an actual

* Indeed, Congress enacted § 1391(e) “to broaden the venue of civil actions”
against government agencies, officers, and employees. Schlanger v. Seamans, 401 U.S.

487, 490 n.4, 91S. Ct. 995, 997 n.4 (1971};-see-also- L4D-C_Waight A. Miller, & R. Freer,

FEDERAL PRACTICE AND PROCEDURE § 3815 (4th ed. 2023).
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or imminent burden should the challenged action take effect. Career Colls.
& Schs. of Tex. v. U.S. Dept of Educ., No. 23-cv-206, 2023 WL 2975164, at
*2 (N.D. Tex. Apr. 17, 2023); see also Texas v. United States, 95 F. Supp. 3d
965, 973 (N.D. Tex. 2015) (injunction terminated on other grounds).
Because venue transfer decisions, and petitions for writs of mandamus
based thereon, have been fraught with uncertainty, it behooves this court to

ensure that venue law is clarified both legally and procedurally.°
Ill.

The necessity for en banc rehearing is enhanced because of improper
conduct on the part of NLRB attorneys. In their zeal to deprive this court of
mandamus jurisdiction and nullify the stay of the transfer order issued by
the panel, NLRB lawyers misrepresented facts to this court and have failed
to acknowledge error. A transfer order takes effect only when the
transferred case is actually docketed in the transferee court. Low ».
Belzberg, 834 F.2d 730, 733 (9th Cir. 1987). When questions arose whether
the case had actually been transferred to the Central District of California,
the attorneys attempted to persuade the Central District of California to
ignore this court’s correct determination that it had retained jurisdiction.
Fortunately, the Central District of California followed this court’s directive

° Indeed, in the wake of this controversy, the Southern District of Texas adopted
a local rule that requires a 21-day waiting period for transfers to another district to allow
an opportunity for stay or appellate review. See S.D. Tex. General Order No. 2024-2.
Many other courts have adopted similar rules. See, eg., In re Warrick, 70 F.3d 736, 739
(2d Cir. 1995) (“The court rules of the District of Connecticut provide that, ‘[i]n a case
ordered transferred to another District Court...the Clerk shall,’ absent filing of a
motion for reconsideration, mail the papers on file in the case ‘on the eleventh day
following the order of transfer....’” (quoting D. CONN. L. CIV. R. 18)); see also 15 C.
Wright, A. Miller, & R. Freer, FEDERAL PRACTICE AND PROCEDURE § 3846 (4th ed.
2023) (“[T]he better practice, codified in some local district court rules, is to stay the
effect of transfer orders for a sufficient period to enable appellate review to be sought.”).
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rather than government counsel’s signed notice to ignore this court’s

jurisdictional determination.°

By filing suit in the Southern District of Texas, SpaceX selected what
it perceived as a statutorily permissible venue for its challenge to the
constitutional setup of NLRB adjudication procedures. It did not
misrepresent facts to the courts or attempt to manipulate filing procedures.
That federal attorneys, who are paid by the people, responsible to the
people, and acting for the people, engaged in shabby tactics to accomplish
their own forum shopping result is abhorrent. This court could thwart
future abuses by clarifying the venue law applicable here. Sadly, in recent
years, Justice Jackson’s famous admonition that the prosecutor may strike
hard blows but not foul ones has too often been ignored. Courts must deal
with such unethical tactics, lest they destroy the evenhandedness of the
courts in resolving naturally uneven contests between private citizens and

the federal government.

I respectfully dissent from the denial of rehearing en banc.

ATTACHMENT~—Elrod dissent

® Notably, counsel for the U.S. Attorney for the Souther DistrictufFexas stated
that it took no part in these actions.
Case: 24-40103 Document: 111-1 Page:8 Date Filed: 04/17/2024

No. 24-40103

JENNIFER WALKER ELROD, Circuit Judge, dissenting:

Space Exploration Technologies seeks a writ of mandamus in order to
keep the lawsuit it filed against NLRB in the Southern District of Texas. To-
day, in a one-line order, the panel denies that relief. In doing so, the panel

permits an erroneous view of the requirements for filing claims in our circuit,

risks confusion amongst the district courts_of our circuit, and deprives plain-
tiffs of the opportunity to seek justice in a lawful venue. Because the district
court committed legal error by asking where the “most significant part of the
events” took place and because the other mandamus factors are satisfied, I
would conclude that mandamus relief is appropriate and direct the district
court to: (1) vacate its transfer order dated February 15, 2024; and (2) rule

expeditiously on the pending motion for a preliminary injunction.

SpaceX originally filed suit in the Southern District of Texas, seeking
preliminary injunctive relief from administrative hearings before the NLRB.
SpaceX contends that the structure of the hearings violates Article II, the
Fifth Amendment, and the Seventh Amendment of the Constitution of the
UmtedStates. The district court granted NLRB’s motion to tramsferthe
casetothe Central District of California, reasoning that the Central District
is where most of the events giving rise to the case occurred. SpaceX peti-
tioned for a writ of mandamus, and we administratively stayed the transfer
order so that we could review SpaceX’s petition. Because the stay was en-

tered before transfer of the case was complete,! we confirmed that we re-

tained jurisdiction over the case. The Central District of California stated

that it would return the case upon request from the Southern District of

' Transfer was not complete because although the case had been sent electronically,
it had not been docketed in the transferee court. In re Space Exploration Technologies, Corp.,
No. 24-40103, Order (Feb. 26, 2024)_(citing Lou ». Belzberg, 834 F.2d 730, 733 (9th Cir.

1987).

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Texas. On March 1, 2024, the Southern District of Texas requested that the
case be returned, and the Central District of California ordered that the case
be returned on March 4, 2024. The Southern District of Texas docketed the
case on March 5, 2024.

Mandamus is an “extraordinary remedy reserved for really extraordi-
nary cases.” Defense Distributed v. Bruck, 30 F.4th 414, 427 (5th Cir. 2022).

Our circuit has held that mandamus is the “appropriate means to test a dis-

trict court’s ruling on a venue transfer motion.” Jn re Volkswagen of America,
Inc., 545 F.3d 304, 308 (5th Cir. 2008). Indeed, NLRB does not contest this

point. The Supreme Court has laid out three requirements that must be met

before a reviewing court can grant mandamus relief: (1) the party seeking a
writ of mandamus must have no other adequate means to attain the relief he

desires”; (2) the petitioner must demonstrate that his “right to issuance of
the writ is clear and indisputable”; and (3) even if the first two requirements
are met, “the issuing court, in the exercise of its discretion, must be satisfied
that the writ is appropriate under the circumstances.” Jn re Volkswagen, 545
F.3d at 311 (quoting Cheney v. U.S. Dist. Court for Dist. of Columbia, 452 U.S.
367, 380-81 (2004)).

I
In the motion to transfer context, “this circuit has established that the

first ‘mandamus requirement [of no other adequate means of relief] is satis-
fied.’” In re TikTok, Inc., 85 F.4th 352, 358 (5th Cir. 2023) (quoting Jn re
Radmax, Ltd., 720 F.3d 285, 287 n.2 (5th Cir. 2013) (per curiam)).7 NLRB

admits as much. The fact that this case involves an out-of-circuit transfer

* These holdings arose in the context oftransfers under 28 U.S.C. § 1404(a).
Because 1406(a) is an “analogous” provision, “which shares the same statutory context”
as § 1404(a), the same logic applies to 28 U.S.C. § 1406(a). Van Dusen v. Barrack, 376 U.S.
612, 621 n.11 (1964).

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only strengthens the case for mandamus. See 15 Charles Alan Wright, Arthur
R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3935.4
(4th ed.) (noting that “completion of proceedings in the receiving court is
likely to exert a strong pressure to affirm rather than set aside a completed

trial solely because it would better have been held in the transferring court”).
II

In this case, the second prong is the one “most strenuously de-
bate[d].” Bruck, 30 F.4thrat427-Hrequires SpaceX to demonstrate a “clear
and indisputable right tothe-writorectearabnse of discretion by the district
court.” Jd. (citing Cheney, 452 U.S. at 381). “A district court by definition
abuses its discretion when it makes an error of law.” Jd. (citing Koon v. United
States, 518 U.S. 81, 100 (1996)); see also Cooter & Gell v. Hartmarx Corp., 496
U.S. 384, 405 (1990) (“[A] district court would necessarily abuse its discre-

tion if it based its ruling on an erroneous view of the law.”’).

Here, the district court’s abuse of discretion concerns its determina-
tion that venue in the Southern District of Texas was improper. A civil action
against an agency of the United States may be brought in a judicial district

where “(A) a defendant in the-acttorr-restdes;{B}= substantial part of the

events or omissions giving rise to the claim occurred, .. . or (C) the plaintiff

resides if no real property is involved in the action.” 28 U.S.C, § 1391(e)(1).

The parties did not and do not dispute that because no party resides in the
Southern District of Texas, § 1391(e)(1)(B) is the only potential path to venue
in the Southern District of Texas.

Section 1391(e)(1)(B) does not ask the district court to determine

whether the current venue is the best venue. Safety Nat. Cas. Corp. v. U.S.

Dept of Treasury, No. CIV.A H-07-643, 2007 WL 7238943, at “5 (S.D. Tex.
Ave20- 2007). The plain text of the statute permits a plaintiff to bring an

action against the United States in any district where “a substantial part of

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the events or omissions giving rise to the claim occurred.” 28 U.S.C.
§ 1391(e)(1)(B). The statute requires that the events (or omissions) in the
Southern District were “a substantial part,” not the most substantial part, of
the events giving rise to the claim. See 15 Charles Alan Wright, Arthur R.
Miller & Edward H. Cooper, Federal Practice and Procedure § 3806 (4th
ed.) (“It has always been clear that there can be more than one district in

which a substantial part of the events giving rise to the claim occurred.”).

The language in 28 U.S.C. § 1391 tstdentt in the
general venue statute--284ES-E. § 1391(b)(2) (permitting venue in “a judi-

cial district in which a substantial part ofthe events-or-ommssions giving rise
to the claim occurred”’).* This language is generally referred to as “transac-

tional venue.”

But in conducting its § 1391(e)(1)(B) analysis, the district court em-
ployed a “most substantial part of the events” test. The basis for the district
court’s approach seems to be Andrade v. Chojnacki, a 1996 district court opin-
ion that, in a footnote, determined venue was improper if the activities tran-
spiring in the forum district were insubstantial compared to the totality of

events giving rise to the case. 934 F, Supp. 817, 827 n.18 (S.D. Tex. 1996).

The Andrade test is, of course, not binding.

The larger issue is that Andrade takes its test from Thornwell v. United
States, a 1979 case that predates the 1990 amendments to § 1391. 471 F. Supp.
344 (D.D.C. 1979); see also 15Charles Alan Wright, Arthur R.

3 Because §§ 1391 and 1392 use identical language, cases construing § 1391(b)(2)
are particularly helpful in construing § 1391(e)(1)(B). E.V. ». Robinson, 200 F. Supp. 3d
108, 113 n.2 (D.D.C. 2016) (“Because § 1391(e)(1)(B) is identical to 28 U.S.C. §
1391(b)(2), cases construing that general venue provision are ‘helpful in construing this
provision.’” (quoting 15 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice and Procedure § 3815 (4th ed.))).

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Miller & Edward H. Cooper, Federal Practice and Procedure § 3815 (4" ed.)
(“Originally, the statute permitted venue where the ‘cause of action’
arose. This ambiguous language was jettisoned in favor of the current ver-
sion in 1990.”). Thornwell’s interpretation could not have survived the 1990
amendments because those amendments made clear that venue can be
proper in multiple districts. “Ifthe selected district’s contacts are ‘substan-
tial,’ it should make no difference that another’s are more so, or the most
so.” Crowe & Dunlevy, P.C. v. Stidham, 609 F. Supp. 2d 1211, 1221 (N.D.
Okla. 2009), aff'd, 640 F.3d 1140 (10th Cir. 2011); see also Zurich Am. Ins. Co.
vy. Tejas Concrete & Materials. Inc., 982 F. Supp. 2d 714, 722-23 (W.D. Tex.
2013).

Further, it creates the possibility that venue would be improper eve-
rywhere. Suppose the activity giving rise to an action is equally distributed
across ten districts, so each district contains 1/10 of the activity. Each district
would conclude that the activity in its district, constituting 10% of the total
activity, was insubstantial compared to the totality of the activity underlying
the case. That result is plainly inconsistent with the text of § 1391, which
does not contemplate lack of venue everywhere. Because Andrade’s footnote
is inconsistent with the amended version of § 1391, the district court erred by

relying on it.

The district court may have properly recited the distinction between
proper venue and best venue, see District Court Order at 2 (“The Court
should determine whether venue is proper but need not determine the ‘best’
venue.” (citation omitted)), but the opinion repeatedly uses comparative lan-
guage when evaluating the events taking place in the Southern District of
Texas as opposed to the Central District of California. We have previously
granted mandamus relief in venue transfer cases where the district court, de-
spite reciting the legal rule, “misperceived and thus misapplied” the stand-
ard the law demands. Bruck, 30 F.4th at 429.

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The most obvious example of this misapplication occurs in the district
court’s conclusion: “As has been made clear, the Central District of Califor-
nia is the venue in which the most events giving rise to this case occurred.”
District Court Order at 4-5 (emphasis added); see also id. at 3 (stating that
events in this district are “far less significant than those occurring in Califor-
nia”); zd. at 3 (stating that “an even larger disruption should be expected to
have occurred in Hawthorne”’); zd. at 4 (stating that “these effects would be
expected to have far more relevance to the Hawthorne facility”); id. at 3 (stat-
ing that “most related events... occurred at and in relation to the Haw-

thorne facility”).

Here application_of an erroneous legal standard was dispositive be-

cause “a substantial part of the events or omissions giving rise to the claim
occurred” in the Southern District of Texas.” 28 U.S.C. § 1391(e)(1).

There are three distinct buckets under which the Southern District of Texas

satisfies this standard: (1) NLRB’s action seeks to regulate SpaceX’s conduct
in the Southern District of Texas; (2) the allegedly unfair labor practices took
place, at least in substantial part, in the Southern District of Texas; and (3)
the open letter was intentionally sent to SpaceX’s facilities in the Southern
District of Texas and the Charging Parties purposefully solicited responses
from employees in that district. Any one of these buckets is sufficient to sat-
isfy the transactional venue test on its own. Taken together, the test is clearly

satisfied.

A

Venue is proper in the Southern District of Texas because NLRB
seeks to regulate SpaceX’s conduct in that district. SpaceX is challenging the
constitutionality of NLRB proceedings that seek to regulate SpaceX in the
Southern District of Texas where it has a substantial presence through its

Starbase and Houston facilities. Although scheduled to take place in
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California, the administrative proceedings initiated by NLRB would regulate
SpaceX’s operations and policies everywhere, including the Southern Dis-
trict of Texas. The administrative action is not limited in geographic scope
to California employees and facilities. In fact, the very allegations in the ad-
ministrative proceeding assert that SpaceX violated the NLRA at all of its
facilities, including the ones in the Southern District of Texas.

District courts within our circuit have held that under 28 U.S.C.
1391(e)(1), venue “is proper where an unlawful rule imposes its burdens.”
Career Colls. & Schs. of Tex. v. U.S. Dep’t of Educ., No. 23-cv-206, 2023 WL
2975164, at *2 (N.D. Tex. Apr. 17, 2023) (internal quotations omitted); see
also Umphress v. Hall, 479 F. Supp, 3d 344, 351-52 (N.D. Tex. 2020); Texas
vy. United States, 95 F. Supp. 3d 965, 973 (N.D. Tex. 2015) (injunction termi-
nated on other grounds). In these cases, transactional venue was held to be
proper where: (1) the plaintiff has a significant presence in the forum; and
(2) the plaintiff was subject to actual or imminent burden within the forum

should the contested agency action take effect. See Career Colls., 2023 WL
2975164, at *2.

SpaceX easily satisfies both requirements. It has a significant presence
in the Southern District of Texas through its Starbase facility. The district
court’s order suggests that there are six total SpaceX facilities, one of which
is in the Southern District of Texas. SpaceX has consistently represented
that it also has two facilities in the Southern District of Texas (the Starbase
facility and a “human spaceflight mission operations and integration facility
in Houston”). For purposes of this analysis, the exact number of facilities

does not matter. Starbase is a substantial part of SpaceX’s operations. Even

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if the district court’s factual assertions are correct* and Starbase is the only
facility in the Southern District of Texas, that would still constitute a sub-
stantial_presence in the Southern District of Texas. Under the district
court’s factual determination, Starbase alone accounts for one sixth of
SpaceX facilities which are spread out across Texas, Florida, and California.
Further, Starbase is where SpaceX is “developing, manufacturing, and

launching Starship, the most powerful rocket ever built.”

SpaceX also satisfies the second transactional venue requirement be-
cause it is subject to substantial burdens imposed by government action on
its operations and policies in the Southern District of Texas. NLRB has ini-
tiated proceedings against SpaceX for unlawful employment practices in vio-
lation of the NLRA. It is undisputed that the remedy NLRB seeks to imple-
ment would burden SpaceX employees and facilities in the Southern District

of Texas by requiring them to post notices and conduct mandatory training.

NLRB argues that the substantial burden requirement can only be met
by the sort of notice-and-comment rulemaking found in Career Colleges and
Texas v. United States.* This distinction cannot be grounded in the statutory
language or in caselaw. Section 1391’s unambiguous text makes no subject
matter distinctions. It does not distinguish between an administrative adju-
dication and notice-and-comment rulemaking. Both can burden potential
plaintiffs in numerous districts and those burdens, wherever they occur, can

constitute a “substantial part of the events” giving rise to the claim. See 28

* The district court did not make any mention of judicial notice and seems to have
gone outside briefing as it cited SpaceX’s website to determine the total number of
facilities.

> NLRB does not address the fact that Umphress did not involve notice-and-
comment rulemaking. That case involved efforts to regulate the actions of an individual
plaintiff within the forum in which he filed suit. Umphress, 479 F. Supp. 3d at 347-48.

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No. 24-40103

U.S.C. § 1391(e)(1). NLRB could have limited the effect of its adjudication
to the California facilities. See Seariver Maritime Financial Holdings, Inc. v.
Pena, 952 F. Supp. 455 (S.D. Tex. 1996) (holding that venue was improper in
Texas because the challenged statute only regulated activities in Alaska).
Having decided to target all SpaceX facilities and employees, NLRB cannot
now escape the implications of that decision.

B

SpaceX can also satisfy the transactional venue standard because the
alleged unfair labor practices in the administrative complaint took place, in
substantial part, in the Southern District of Texas. The alleged unfair labor
practice is an e-mail sent from SpaceX’s President and COO, Gwynne Shot-
well, from McGregor, Texas to al] SpaceX employees, including those lo-

cated at the Starbase and Houston facilities.

The district court considered this event to be mere “incidental” con-
tact with the Southern District of Texas. This misunderstands the nature of
the event. NLRB is charging SpaceX with-unfatrtabor-practices based on a
communication that was sent to all employees. Far from being merely inci-
dental, this e-mail was a purposeful choice, and one that NLRB contends was
unlawful as to all of SpaceX’s employees in the Southerr-Brstrret of Fexas:
Fhat is a substantial part of the events. Wetravethettthat communications
sent to Texas can constitute a substantratpart ofthe events giving rise to the
plaintiffs claims so long as those claims derive directly from those commu-
nications. Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d 485, 493 (5th Cir.

2018); see also Long v. Grafton Executive Search, LLC, 263 F. Supp. 2d 1085,
1090 (N.D. Tex. 2003) (categorizing an e-mail sent to Texas recipients as a

substantial Texas-based event for purposes of transactional venue).

Despite recognizing this binding precedent, the district court distin-

guished 7yozs by stating that this case derived directly from the administrative

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No. 24-40103

proceeding that stemmed from Shotwell’s e-mail. It claimed that Shotwell’s
e-mail and the letter to which it was responding only reached the Starbase

and Houston facilities “incidentally.”

The district court similarly distin-
guished Long by stating that the e-mail in that case was a “direct communi-
cation to Texas; the content caused the claim, and the injury was experienced

in Texas.” This distinction is nearly impossible to grasp.

First, the district court never explains what constitutes a “direct” as
opposed to “indirect” or “incidental” communication. As I see it, any com-
munication purposefully sent to a person or persons within a district is a di-
rect communication.° It seems the district court may be using “indirect” or
“incidental” to refer to the fact that “Texas is only one of the many locations
that the open letter reached.” To the extent that is the case, this constitutes
clear legal error. Merely sending a message to persons in multiple forums

cannot render the contact resulting from that decision as “incidental.”

As has been made clear, transactional venue contemplates multiple le-
gally permissible venues. See Umphress, 479 F. Supp. 3d at 351 (“Under the
amended statute it is now absolutely clear that there can be more than one
district in which a substantial part of the events giving rise to the claim oc-
curred.”); Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1165-
1166 (10th Cir. 2010); Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004);
Pecoraro v. Sky Ranch for Boys, Inc., 340 F.3d 558, 563 (8th Cir. 2003) (deter-

mining whether venue was proper requires “ask|ing| whether the district the

plaintiff chose had a substantial connection to the claim, whether or not other
forums had greater contacts”). The district court’s purported rule could cre-

ate cases with no proper venue because a message sent to multiple districts

® An indirect communication might be at play when someone who received an
initial message forwarded that message to another district.

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No. 24-40103

would be “incidental” as to all of those districts.

Second, the content-ofthe-emattsent by Shotwell is the very act al-
leged to be an unfair labor practice, leading to the administrative proceedings
against SpaceX.

Third, and as discussed in Part I.A., SpaceX is subject to burdensome
and binding regulation as a result of the administrative proceedings resulting

from this letter.
C

The facts that gave rise to NLRB’s proceedings against SpaceX also
have substantial ties to the Southern District of Texas, providing a third basis
for satisfying § 1391(e)(1)(B). The Charging Parties, (former employees who
filed NLRB charges against SpaceX), wrote an Open Letter to all SpaceX em-
ployees, including those located in the Southern District of Texas. This let-
ter linked to surveys soliciting feedback and support for their letter. In other
words, the Charging Parties reached into the Southern District and specifi-
cally involved SpaceX employees in that district. The open letter led to nu-
merous meetings, discussions, and decreased productivity by employees in
the Southern District of Texas. SpaceX has stated in declarations that the
Open Letter “derailed technical conversations for a week at Starbase, during
a critical phase in meeting targets for Starship” and that as a result, numerous
unplanned meetings were required “to address disruption and concern re-

sulting from the Open Letter.”

The Open Letter, which was intentionally distributed to SpaceX em-
ployees in the Southern District of Texas, explicitly sought their support.
Thus, the events giving rise to the administrative complaint itself have sub-
stantial involvement with and impact on the Southern District of Texas. Just
because this e-mail was sent to employees in additional districts—possibly
leading to substantial involvement-or-evermmore involvement -with those

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No. 24-40103

districts—does not mean the Southern District of Texas fails to satisfy
§ 1391. See Umphress, 479 F. Supp. 3d at 351 (“Under the amended statute
it is now absolutely clear that there can be more than one district in which a
substantial part of the events giving rise to the claim occurred.” ); 15 Charles
Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and
Procedure § 3806 (4th ed.) (“It has always been clear that there can be more
than one district in whiclrasubstantiatpart of the events giving rise to Tie
tlamroccurred.”’). The district court’s contrary holding was clear error.

D

Any one of these three buckets would be enough to satisfy the trans-
actional venue standard. The district court’s error is made all the more egre-
gious by failing to consider whether all of these connections to the Southern
District taken together amount to a substantial part of the events giving rise

to SpaceX’s claim. Section 1391 nowhere in its text requires courts to dis-

aggregate the various types of events and determine whether each bucket can

individually account for a “substantial part” of the events. Instead, it simply

asks whether a “substantial part of the events or omissions giving rise to the

claim” occurred in the chosen venue.

NLRB’s desire to bind SpaceX in the Southern District of Texas
through administrative proceedings; the allegedly unfair labor practice that
took place—in substantial part—in the Southern District of Texas; and the
purposeful solicitation of SpaceX employees in the Southern District of
Texas by the Charging Parties, combined with the resulting disruption,

clearly amount to a substantial part of the events underlying SpaceX’s claims
against NLRB.

Because the district court in practice applied a “most substantial
events” test, it committed a clear legal error that, by definition, amounts to a
clear abuse of discretion. Bruck, 30 F.4th at 427 (citing Koon, 518 U.S. at

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No. 24-40103

100). Therefore, prong two of the mandamus requirements 1s satisfied.
— III

The third prong of mandamus relief requires exercise of our discre-
tion. We have made clear that mandamus relief is “particularly appropriate”
where the issues presented “have an importance beyond the immediate
case.” In re Volkswagen, 545 F.3d at 319 (citing United States v. Bertoli, 994
F.2d 1002, 1014 (3d Cir. 1993)). We further noted that “venue transfer de-
cisions are rarely reviewed” and that this can lead to the undesirable result
of inconsistent outcomes. Jd. District courts in our circuit need guidance on
venue standards. Permitting an erroneous application of § 1391(e)(1)(B) to
stand without correction provokes uncertainty in the law and may lead to fur-

ther use of the erroneous “most substantial events” test.

Mandamus relief is especially appropriate in the context of a § 1406(a)

transfer of venue. 28 U.S.C. § 1406 permits a case to be transferred only

when the case was filed “laying venue in the wrong division or district.” 28

U.S.C. § 1406(a) (emphasis added). This is different fromrchangeof-venue
under 28 U.S.C. §+464fa}-Fhat statute permits transfer of a case “[f]or the

convenience of parties and witnesses, in the interest of justice” to any district

or division where the case might have been brought.’ Jn re Volkswagen and

’ NLRB, in its motion to transfer the case, argued for transfer under both § 1406
and § 1404. The district court did not address § 1404. Instead, the distritt-court
transferred the case under § 1406. In its response opposing a writ of mandamus, NLRB
did not present the merits of its § 1404 argument. This is likely because the argument for
transfer under § 1404 is a weak one. It is NLRB’s burden to demonstrate that the transferee
venue is “clearly more convenient.” Volkswagen, 454 F.3d at 313-15 (explaining that the
underlying premise of § 1404(a) is that defendants should not be subject to inconvenient
venues). Because SpaceX seeks a preliminary injunction based on purely constitutional
arguments, the need for witnesses unique to California is nearly non-existent, and the
convenience concern underlying § 1404(a) does not favor transfer. Nor do the rest of the
equitable factors under our caselaw clearly favor the Central District of California.

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No. 24-40103

Bruck both dealt with transfers under § 1404. Jn re Volkswagen, 545 F.3d at
319; Bruck, 30 F.4th at 423 (“[I]|n this circuit, mandamus is the prescribed
vehicle for reviewing rulings on transfers of cases pursuant to 28 U.S.C. §
1404(a).”). Despite § 1404 involving much more discretion than § 1406,

those cases still granted mandamus relief.

A transfer under 1406(a) does not permit consideration of the same
sort of equitable principles (“convenience” or the “interest of justice”) as
§ 1404(a). This makes the legal error in determining where a case is permit-
ted to be brought all the more significant. Because § 1406 only permits trans-
fer of a case when the chosen venue is legally impermissible, a legal error un-

der § 1406 is much more significant than a legal error under § 1404. Error

under § 1406 artificially restricts the right of plaintiffs to bring their claims in

our circuit.

Last, the underlying merits of this claim weigh in favor of granting
mandamus relief. Before us are “issues that implicate not only the parties’
interests but those of the judicial system itself.” Bruck, 30 F.4th at 426-27
(quoting Bertoli, 994 F.2d at 1014). SpaceX is challenging the constitutional-

ity of NLRB’s very structure. This case implicates the methods and proce-
dures permitted under our constitution when the federal government regu-

lates employer conduct.

NLRB does not deny that it seeks to avoid our court’s precedent in
SEC »v. Jarkesy, a fact that the district court did not cite or address. 34 F.4th
446 (5th Cir. 2022) (holding that “[t]wo layers of for-cause protection” for
inferior officers is forbidden under “Supreme Court Precedent”), cert.
granted, 143 S. Ct. 2688 (argued Nov. 29, 2023). I do not make any assess-

ment of whether Jarkesy would control this case, but NLRB’s desire to avoid

our circuit’s precedent is further justification for exercising our discretion in

granting mandamus relief.

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No. 24-40103

* * *

In the federal court system, plaintiffs can prefer favorable caselaw and
sue in any appropriate venue. NLRB cannot seek to condemn SpaceX’s past
labor practices in the Southern District of Texas, bind SpaceX’s future prac-
tices in the Southern District of Texas, and at the same time avoid proper
venue in the Southern District of Texas. Failure to follow the plain text of
the venue statutes and settled Fifth Circuit caselaw is disappointing and
should have been corrected.

For the foregoing reasons, I would conclude that mandamus relief is
appropriate to remedy the erroneous transfer of this case. See In re
Volkswagen, 545 F.3d at 319; Bruck, 30 F.4th at 423. We should have exer-

cised our discretion to grant mandamus relief and directed the district court

to: (1) vacate its transfer order dated February 15, 2024; and (2) rule expedi-

tiously on the pending motion for a preliminary injunction.

I respectfully dissent.

16